Who Needs An Insurance Agent?

By Richard A. McGrath, CIC, LIA

We live in a do-it-yourself world, thanks to the Internet.  Consumers are buying and selling just about everything online, ranging from the simplest items to cars and even homes.

But what about purchasing insurance online?  Is it a good idea to buy insurance without professional help?

It would be if all insurance policies were alike, but they’re not.  While you may save the cost of a commission, you may end up paying more and getting less for your money.  Even worse, you may not get the coverage you need to protect yourself and your family.

To determine whether you need an agent, it’s important to understand the role of an agent.

Identifying Your Needs

One of the most important roles of an independent insurance agent is to determine your specific needs.  Your agent should gather detailed information about you and your needs to identify an insurance policy with no gaps in your coverage.  Your agent should also make certain you are not purchasing coverage you don’t need.

For example, the auto insurance needs of an adult driving a luxury car are far different from the needs of a teen driving a budget car.  The teen driver is likely on a tight budget and can save money by buying collision coverage with a high deductible; in fact, collision coverage may not even be needed.  Your agent will also be aware of potential discounts that you or your teen may be eligible for.  Some insurance companies offer discounts to teen drivers who are good students, as well as other discounts that may not be available from online carriers.

Your insurance agent will also be aware of what’s covered by each policy and what is excluded from coverage.  Some online carriers provide bare-bones coverage that may not meet your needs.  Cheap insurance is only cheap until you file a claim – and find that you don’t have adequate coverage.

Determining what needs to be covered requires some knowledge of the industry.  If you were to buy homeowner’s insurance online, as one example, you may make the mistake of buying coverage based on your mortgage or on what your home sold for.  Ideally, though, homeowner’s insurance should be based on what it would cost you to replace your home if it were destroyed.  Buying online, you may also exclude liability coverage, which covers you in case someone is injured on your property.  Without it, you could be putting your home and all of your assets in financial jeopardy in case of a lawsuit.

Knowing Your Insurer

It’s important to know what your options are and what you’re buying, but it’s also important to know the reputation of the company you’re buying insurance from.  If you are considering buying insurance online, you may want to search the company name along with “complaints” to see what other consumers are saying about the company.

Your independent agent should also know the reputation of each carrier and whether the company has a reputation for paying claims fairly and in a timely manner.

Equally important, your agent should have in-depth knowledge of which carriers are financially stable and which carriers are not.  In today’s economy, with many insurance companies in financial trouble, you would not want to purchase insurance from a carrier that may not be in business long-term.  This is especially true if you are buying life insurance, long-term care insurance or any other policy that will be in force for a long time.

Insurance agents not only follow the ratings of insurance carriers from A.M. Best, Standard & Poor’s, Moody’s Investors Services and other agencies, they also keep current on industry news and know which carriers they can depend on for their clients.

Once your agent has determined your insurance needs and all of the carriers that can meet those needs, the agent will obtain quotes for you.  Independent agencies work with many carriers and can obtain competitive quotes to ensure that you are getting the best price for your coverage.

Having your agent take care of all of your insurance needs is especially beneficial, because he or she will have in-depth knowledge about you and the types of coverage you need.  Your agent may also be an opportunity to obtain a significant discount by “bundling” your coverage and buying several policies from the same carrier.

After Buying Your Insurance

The agent’s role should not end after you buy your insurance.  Your agent should keep you up to date about regulatory changes and other factors that may affect your coverage needs.

Your agent can also help when you have to file a claim.  If you buy insurance online, there’s likely to be no one to act on your behalf when you file a claim.  If you have an insurance agent, your agent can tell you if you’re covered and can not only help you file a claim, but may act as an advocate on your behalf if necessary to ensure that your claim is not only paid, but paid in a timely manner.

Because insurance today is more complicated than ever, consumers who buy insurance online have a great deal of work to do.  To ensure that they have the coverage they need at a competitive price, consumers need to have in-depth knowledge about what policies are available, what they cover, deductibles, exclusions, riders and more.  They need to keep up with industry changes, regulatory updates and other factors that can affect their coverage.  And they need to research all of their insurance needs for each policy they purchase.

Or they can just contact an independent insurance agent.


Richard A. McGrath, CIC, LIA is President and CEO of McGrath Insurance Group, Inc. of Sturbridge, Mass.  He can be reached at rmcgrath@mgrathinsurance.com.

This article is written for informational purposes only and should not be construed as providing legal advice.

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