3 Myths Everyone Should Know Before Considering Automobile Insurance From A "Direct" Carrier: What The Media Won't Tell You.
The 3 Myths Of Buying Auto Insurance Direct:
Some reasons why buying direct is just a gimmick by some insurance companies to sell, (in many cases) expensive auto insurance by misleading the consumers that agents are just costly middlemen!
Read the Myths at the left to further understand why buying direct is just a gimmick to sell in many cases expensive auto insurance by misleading the consumers that agents are just costly middlemen!
As a consumer, you have the right to know this information! Insurance agents cannot outspend large insurance companies with deep pockets who's only angle is to try to change the mind set of the buying public that the role of a professional insurance agent is just a lazy costly expense. The media will not jump on this story because the media is making advertising dollars previously unheard of by the insurance industry.
Truth be told, the agent helps actually keep the cost of insurance down by trying to keep their clients happy. For instance, if company A has a major price increase and has no other outlet, the consumer has to then spend hours or sometimes weeks trying to find the right company that will take their unique situation. Through an independent Agent, a client can just call their agent and ask them to shop the insurance and the agent knowing the client, usually knows what company is right at that given time to best help the client. That could be Company B, C, D, E and so on. On a level playing field, Independent agents are far and away the most competitive priced way to shop and maintain your insurance!
In the long run, if these large companies had their way they would brainwash the public with their advertising dollars that the agent is an expense instead of an asset. This obviously would hurt the independent agency to extinction giving the insurance companies a monopoly and free reign to control their customers knowing that nobody likes to spend time shopping their insurance thereby keeping prices high and maintain the customers. We refuse to let this happen. Tell everyone you know and for your sake, call your independent Agent! Be a Client, not just a customer.
Myth 1) It’s Less Expensive Dealing Direct: Wrong. Insurance companies price insurance not only by the risk of the customers involved (such as age, driving record, financial responsibility, claims) but also by the costs associated with obtaining those customers. This is generally called the “combined” loss or profit in the industry. This is extremely important to understand. If a company is operating at a combined loss (for every dollar earned in premium, a dollar and change is paid out in costs and claims) and is “low balling” premiums for a time to lure more customers, eventually the premiums obviously, will skyrocket to make up for those losses. You will most likely pay much more later if you are not already unknowingly paying more now!
It is true that an insurance agent is paid a commission for placing their client with a company. This does not cost the insurance company anything additional to actually obtain this customer. The agent actually bears the cost through their own advertising efforts and not the insurance company. The client does not pay for an agent so there really is no “middle man” that bears on the client’s premium. This is actually a very efficient and less costly way for an insurance company to obtain it's customers. That is also why in most cases clients pay less through their local agent for the same company
The only reason some companies do have direct outlets as well as agents, is to compete against the direct carriers and keep more market share among people who will only buy direct for whatever reasons they think they should. More and more people however, through major advertising efforts are being led to believe that buying direct is the less expensive way to go and are not bothering to call their local agents. This will eventually lead to less competition and higher prices!
When obtaining a customer direct, the insurance company must spend large amounts on advertising just to lure the customer to the company. This is one reason you probably will not hear about this on the news. There is big money in advertising. The company then has to pay a large staff of licensed agents (if through a 1800 number) to man the phones as employees of the company, to handle the customers over the phone. This results in an even larger cost then just the small commission an Independent Agent would receive. The company also has to maintain phone banks of licensed agents for customer service. By the time the company pays: Salary, Benefits, Social Security Taxes, Workers Comp (and other misc expenses associated with employees) the costs are obviously higher then dealing with your agent. As costs grow, obviously the consumers pay the price.
A well-managed insurance company in more cases, operates at a better combined through their agency channel as compared to their direct channel. Therefore in most cases it is less expensive to buy from your local insurance agency.
Myth 2) The Service Is Just As Good When Buying Direct: Wrong. There is an old saying that your insurance is as good as your agent. That holds true today. An agent who is in good standing with a company usually airs a certain respect of the company because the agent provide their clients necessary to keep the insurance company profitable. In other words, there is usually a difference in the way an agent is treated by a company while trying to get a special circumstance taken care of as opposed to the customer trying to get the same thing done. The agent usually has a “go to” person with each company when trying to fight on behalf of their clients while the customers are usually at the mercy of the first contact made. That is usually a dead end for the customer, plus who wants to spend all day arguing your point with an insurance company? Hint: your agent does almost daily!! You can always deal with a person who knows you on a personal level and is more willing to go to bat for you as opposed to a random different voice on the phone every time. Remember, with an agent you are a client, not just a customer. If your agent cannot get it done, it probably cannot be done. Read on for more reasons your agent is valuable to you.
Myth 3) The Advice From The Direct Company Is As Good As The Advice From A Local Agent: Wrong. Besides the information above, your local agent has a perspective that only direct contact with you can establish. The local agent knows the area you live in, the opportunities and niche products available and the unique risks associated in the neighborhood. He or she can usually offer all the products that may avoid putting your assets at risk, such as homeowners, liability, umbrella coverage, life insurance, health insurance and discounts from combining some or all of these products. A direct company usually has only one thing in mind, writing the auto policy and moving on to the next call. You usually know when meeting face to face with someone what kind of rapport you have with that person. If you do not feel comfortable with your agent, meet another one in the area! If your agent is independent, he or she usually has many different companies to offer. One thing is certain; you cannot build a “rapport” with a random voice far away over the phone that only represents one company and product!
Conclusion: As a consumer, you have the right to know this! Insurance agents cannot outspend large insurance companies with deep pockets who's only angle is to try to change the mind set of the buying public that the role of a professional insurance agent is just a lazy costly expense. The media will not jump on this story because the media is making advertising dollars previously unheard of by the insurance industry.
Truth be told, the agent helps actually keep the cost of insurance down by trying to keep their clients happy. For instance, if company A has a major price increase and has no other outlet, the consumer has to then spend hours or sometimes weeks trying to find the right company that will take their unique situation. Through an Independent Agent, a client can just call their agent and ask them to shop the insurance and the agent knowing the client, usually knows what company is right at that given time to best help the client. That could be Company B, C, D, E and so on. On a level playing field, independent agents are far and away the most competitive priced way to shop and maintain your insurance!
In the long run, if these large companies had their way they would brainwash the public with their advertising dollars that the agent is an expense instead of an asset. This obviously would hurt the independent agency to extinction giving the insurance companies a monopoly and free reign to control their customers knowing that nobody likes to spend time shopping their insurance thereby keeping prices high and maintain the customers. We refuse to let this happen. Tell everyone you know and for your sake, call your independent Agent! Be a Client, not just a customer.