Should you buy car insurance from insurance agents or directly from insurance companies? The truth is that each has its advantages and disadvantages. To know which is best for your personal needs, you'll need to explore the major differences between these options.
When shopping for car insurance, you’ll have plenty of options. That includes how you shop – whether online or through an insurance agent. Each method comes with their own pros and cons.
There are two main types of car insurance agents: captive and independent. Captive agents work for one insurance company. Independent agents generally work for themselves or as part of a small firm. These agents can sell car insurance from a variety of different companies. Many also offer health insurance, life insurance, business liability insurance, and similar products.
An independent agent can provide you with a rate quote from several insurance carriers allowing you to select the one with the lowest rates. Since they're usually not receiving incentives for steering you toward one particular company or policy, the answers you get are likely to be objective and in your best interest.
As for drawbacks, an independent agent will charge a fee for their services on top of your policy premiums. The benefits of their impartial advice can come at a price that many people are unwilling to pay.
If you’re looking for impartial advice and quotes from multiple companies, an independent agent can help you. But how do you find a reputable one with your best interests in mind? Do your research.
First, QuoteWizard can quickly connect you with multiple independent agents in your area. Simply enter your insurance history in and you’ll have a list of agents in your area to choose from.
Second, ask your friends and family. Have they recently shopped for car insurance? Did they use an independent agent? Would they recommend it? It’s hard to beat a word of mouth referral from someone you trust.
Next, hop on the internet and do a Google search for car insurance agents in your area. You should find multiple results, especially if you live in or near a metro area. Be sure to read the reviews of any agent you’re considering, whether you found them online or heard about them through a friend.
Google Reviews and Yelp are great places to start. Like all review sites, though, don’t take the star rating as gospel. Read the reviews, see what people are saying, and find a reputable independent agent.
A captive agent, sometimes called an exclusive agent, works for one particular insurance company. When you buy a policy from a captive agent, you create a relationship that lasts the duration of your policy. And perhaps even longer. Any time you have a question or need help with your policy, your agent will be there to help you.
This interaction with one person benefits policyholders because they have a personal representative when interacting with their insurance company. They can have someone to talk to the company on their behalf if something isn’t going in their favor. You can learn a lot from a captive agent’s responses to your questions about how policies work at their company.
Captive insurance agents have intimate knowledge of all the available policies sold. These policies could include discounts or favorable terms. Captive agents create customized policies for you, instead of cookie-cutter plans that don't meet your needs.
Buying insurance through a captive agent does mean that the agent will receive compensation for their services. This usually results in slightly higher monthly premiums. However, buying insurance from a captive agent will be cheaper overall than an independent agent,. That's because you wouldn’t have to pay a captive agent a commission.
A captive agent may be less forthcoming with information about other carriers than someone who isn't on the insurer’s payroll. There's little chance they'd recommend a competitor’s policy that'd benefit their client more than their employer’s policy.
According to the NAIC, State Farm has the largest insurance market share in the country. More than 10 percent of all car insurance policies come from State Farm. That, in turn, means the company has a sizeable stable of insurance agents. Nearly 65,000 people work for State Farm, some 19,000 of whom are agents. If you pick up the phone and call State Farm, someone will answer.
State Farm received ‘Excellent’ ratings from Consumer Reports for both the ease of reaching an agent, and the courtesy of said agent. Agent availability and customer service are the areas that State Farm most excels in. If that personal touch is important to you, you can’t go wrong with State Farm.
As the insurer with the fourth largest market share in the country, Allstate boasts an impressive array of agents. The company employs more than 70,000 people, many of whom are agents. And Allstate’s Agent Difference ensures that every policyholder gets their own local agent.
But what good is a wide selection of agents if they don’t offer great customer service? Fortunately, with Allstate, you get the best of both worlds. A Consumer Reports survey found that customers rate Allstate’s agent access and courtesy as excellent.
American Family received high praise in the Consumer Reports customer satisfaction survey. Respondents ranked both the ease of accessing and agent and their courtesy as excellent. And J.D. Power’s 2018 insurance shopping study found that AmFam has the third best shopping experience, thanks in large part to their agents.
AmFam doesn’t have a massive presence like State Farm and Allstate – they only have the 16th highest market share – but its still a large and nationally recognized company. That means they have the resources and network to foster a strong agent presence. When you buy an AmFam policy, you get access to your own local insurance agent, and 24/7 phone support.
Nationwide has about 2,000 captive agents and 10,000 independent agents. But that’s poised to change. In 2020, Nationwide will shift entirely to an independent distribution model. Once they transition to independent agents only, they will still “continue to offer direct-to-consumer options for members who choose to do business online or over the phone.“
For now, though, Nationwide agents get the job done. The company has a large network of agents across the country. The Consumer Reports survey found that Nationwide’s ease of reaching an agent is ‘very good,’ and their agent courtesy is ‘excellent.’
AAA, alongside their well-known roadside assistance program, sells insurance in all 50 states. With 40,000 full-time employees located in 1,100 offices in North America, AAA has an impressive agent network. J.D. Power’s shopping study gave AAA a ‘better than most’ rating for customer satisfaction.
Do you need an insurance agent? Most insurance providers are now letting clients buy policies directly from them online or over the phone. Within minutes, you'll have quotes on several policies and be well on your way to the coverage you need. Compare quotes from top companies and buy insurance from them directly.
The process of getting a quote and choosing a policy can be lightning-fast. Your premiums will be slightly lower since you're not using an agent’s services for most of your policy interactions.
The nature of the policies and quotes a company gives for direct inquiries can be more easily misunderstood. Users may not read the fine print or could become confused at their policy’s terms. This could keep a policyholder in the dark about the coverage they have access to. They may not even know what their real cost per month will be.
You may have to do a lot of work to compare real quotes from different companies. Agencies that advertise quote comparisons can “cherry pick” the numbers to make their policies look more better than their competitors.
Another issue is that direct customers don't have the luxury of a specific insurance agent working their claims. Companies that use direct buying options still have insurance agents in their employ. But specific agents are rarely assigned to handle a single client’s needs.
You may be talking to someone in a call center with limited knowledge or insight into your problem. Even when you're able to talk to an agent, you may never speak to the same person twice.
In the end, buying insurance from a company directly may save you a few dollars a month. But as the saying goes, “you get what you pay for.” Using an agent, either independent or captive, can give you more insight into your policy options. And you'll probably get better customer service.
If you prefer to shop online for insurance, Progressive's slick website can get the job done. Comparing policies is a breeze with helpful coverage option breakdowns that include real word insurance examples. You won’t need an agent to explain policy choices to you – Progressive’s site makes it easy to understand.
Getting a quote online only takes about six minutes. If you like the quote, you can buy the policy on the spot and download proof of insurance. All in all, Progressive’s website makes buying a policy a painless process. And who doesn’t like Flo?
Whether it’s through their app, website, or phone, you can get int ouch with GEICO 24 hours a day, seven days a week. Their famous slogan “15 minutes could save you 15 percent or more on car insurance” is at least half true in that it doesn’t take long to get a quote.
GEICO’s coverage calculator makes it easy to personalize your policy. And if you run into any issues, an agent is always available. After all, GEICO has the second largest insurance market share in the country.
As one of the first companies to let people directly shop for insurance online without talking to an agent, Esurance earned their spot on this list. And they recently redesigned their website, meaning it’s easier than ever to buy direct. Their site is filled with helpful info from discount options to coverage levels and more. And, to top it off, they earned the seventh best rank in J.D. Power’s claim satisfaction study.
Metromile is a relatively new player in the insurance game. What sets them apart? Their pay-per-mile structure is appealing to many. And with only 200 some employees, Metromile’s business model depends on direct shoppers buying policies through their website. Getting a quote and toggling through various coverage options is a simple process. And you can complete the shopping process without ever picking up the phone. But they are a relatively small company and their policies aren’t available in many states.
It’s no surprise that the company with the largest car insurance market share in America makes it easy to buy insurance directly from them. State Farm’s website got a recent makeover, helping them stay up to date with competitors. It’s a good move, as it allows them to target younger drivers who prefer online shopping to in-person or phone shopping. And at any point during the online quote process, you can pick up the phone and finish the quote with an agent.
Even with these guidelines, every insurance company is going to be different. Some departments or policies may have better service and terms. Often, the area you live in determines the branch office you'll be working with. Because of these variables, you should not make sweeping judgments about entire companies.
Similarly, a bad experience with one captive agent doesn't mean all captive agents are not worth dealing with. As in any industry, the quality of service often comes down to the people assigned to you.
Independent agents can vary greatly in terms of their quality of service and the policies to which they have access. Shopping around for an independent agent becomes just as important as shopping around for a car insurance company. Seek out businesses with a reliable reputation and who specialize in your particular demographic to find the best service.
Buying direct can be a gamble. So don't assume that one good experience characterizes the entire process. In some cases, buying direct can be a great decision. It can save you money without costing you any quality of service or coverage. Other times, trying to repeat a past success you or someone else had could result in disaster.
Remember to shop around and compare quotes before making a final auto insurance purchase. Depending on your priorities, working through a captive agent, an independent agent, or buying direct may be your best option.
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