Insurance companies can either sell insurance directly to consumers or they can use agents that represent them. Within the context of agents, there are also a few additional distinctions. Let’s start first with insurance companies that sell directly to consumers who are known as “direct writers.” A direct writing carrier is one that uses its employees to interact directly with its potential policyholders. When you buy insurance online directly from the insurance company without a middleman, you are dealing with a direct writer. You might still interface with an individual, but you should know that individual is a direct employee of the insurance company.
If you are interacting with an individual who is not an employee of the insurance company, you are then dealing with an agent. Some agents are captive agents and others are independent agents. A captive insurance agent can only sell insurance for one insurance company, whereas an independent agent can represent multiple insurance companies. You might think it’s more advantageous to use an agent that represents multiple insurance companies to shop for the best deal, but most insurance companies that use the captive agency method do not allow independent agents to represent them. Therefore, to fully survey the insurance marketplace, you may have to work with both captive and independent agents.
While independent agents can represent multiple insurance companies, they are not able to represent all companies. Many agents tend to limit the insurers they work with because they can fully understand the various insurance products and policies from only a few insurers. This in-depth knowledge is better than having a very minimal knowledge of many insurers and their respective products. When working with an agent for the first time, it’s a good idea to ask them what companies they tend to represent. You can also ask for a breakdown by percentage of the insurance companies with which they do business to understand where they are most likely to place your policy.
When shopping for home insurance, it pays to do your research and shop around. Online, you can often secure quotes directly from insurers without an agent and sometimes even query multiple insurers with a single request. You can click here to secure quick home insurance quotes. Some agents also sell online and may be able to assist you with quotes from the insurance companies they represent without having to meet with you in person.
You should also do your research on any prospective agent or agency with which you consider doing business. Insurance agents must be licensed in each state and their licenses can easily be checked by visiting your state’s department of insurance website. The National Association of Insurance Commissioners website has a map that links you directly to your state for easy research.