A lot of people end up paying too much for car insurance, or worse, getting insufficient coverage because they listen to an insurance agent. Yes, many insurance agents are conscientious and helpful, but there are some agents that are not.
It is the things that an insurance agent won’t tell you that can cost you the most money, and in some cases, completely mess up your life. Some of the facts about auto insurance that an insurance agent may not tell you include:
- I might deliberately limit your choices to the policies I make money from. Most insurance agents are paid by commission – that is, insurers pay them to sign people up. This gives an agent a powerful incentive to push higher-priced policies and steer customers to policies from the companies they work with.
- You’ll only get a few choices here. Some agents only work with one insurance company or a few insurance companies. Many agents limit policy choices to a few large national brands that are well recognized.
- I don’t offer the cheapest alternatives. Many agents refuse to work with smaller regional insurance companies, online insurers, and other companies that offer much lower rates. Instead, they work with more expensive companies because they pay higher commissions.
- You can probably find cheaper insurance online. A survey in South Carolina found that premiums for the exact same insurance for the same person and vehicle varied by several hundred dollars a year. The only place you can compare large numbers of insurers is online. Checking out two or three car insurance comparison websites will usually save you more money than going to an agent.
- I cannot help you file a claim any faster. Despite what some people think, you don’t need an agent to file insurance claims anymore. Most insurance companies now offer apps and websites which can allow you to file claims instantly and directly. The agents cannot file claims any faster, and he or she may not always be available. Most insurers now have customer service people available 24 hours a day, seven days a week, so you don’t need an agent to help you file a claim anymore.
- Bundling won’t save you any money. Many agents press you to bundle – that is, buy all of your policies from the same company. Despite what a lot of people think, this doesn’t necessarily save you any money. It limits your choices and makes it harder to switch policies if rates go up.
- I may not tell you if your premium doesn’t get paid and your coverage gets canceled. A lot of insurance agents don’t like giving people bad news, so they wait for the cancellation notices to go directly to the insured. If the notice doesn’t arrive or is ignored by the insured, he or she could be driving around without insurance. Pay the insurance directly and monitor your checking account or credit card to make sure the payment goes through.
- I might pocket your premium instead of sending it to your insurer. It isn’t common, but there are some crooked insurance agents that actually take premiums and pocket them. Paying a premium directly to your agent isn’t a good idea. If the agent asks for a check, make it out to the insurance company, not to his or her agency. If you do write a check, monitor your account and make sure it gets cashed and the money goes to the insurer.
- Payments you make to me could be delayed. Handing the check directly to an agent doesn’t mean your premium gets paid faster. The agent still has to mail it to the insurance company. That can take time, and it increases the chance that the check could get lost or delayed. A better method is to pay the premium directly by using electronic bill pay or a credit card. That way, you can ensure that the money goes to the insurance company and the payment gets made on time.
- I may not sell you adequate coverage. Some insurance agents will not sell you the coverage you actually need because they won’t make more money off it. A classic example of this is stacked and unstacked coverage. A stacked policy covers more than one vehicle. An unstacked policy will only cover one vehicle. In some states like Florida, it isn’t uncommon for agents to sell unstacked policies to people with multiple vehicles. Some of those drivers don’t find out what’s going on until they get into an accident and find out they don’t have enough coverage. Another example of this is uninsured motorists coverage. In some states, it isn’t required, but uninsured motorists can still sue drivers over accidents. Many agents only sell a one-size-fits-all policy that doesn’t meet everybody’s needs.
The bottom line is that the average person doesn’t need an agent to buy auto insurance. Most people can get better coverage and save money by buying auto insurance on their own.