In our marriage, I’m usually the one responsible for vetting people (blame it on good people skills and a compulsive research habit). I typically choose our doctors, Juno’s vet, and any other service professionals that we’re going to have to deal with on a regular basis. But every time we uproot ourselves and move to a new place, finding those people gets to be a more and more difficult task. (Remember to ask me about the time I accidentally took us to a dentist office that was then subject to a class action lawsuit for pulling the wool over its customers’ eyes.) And as we get older, Michael and I find ourselves in search of services that feel way out of our depth, things our parents never taught us about: lawyers, accountants, and insurance agents, oh my.
When it comes to service professionals, trust is everything. And trust is often the hardest thing to gauge from a website, or even seemingly useful tools like Yelp reviews. (Remember the dentist I mentioned above? Well, I left my visit sans one wisdom tooth that didn’t really need to come out and Michael ended up buying a $400 electric toothbrush because they said if he didn’t buy it, all his teeth would fall out, and, to quote, “It’s the dentist! If you can’t trust the dentist, who can you trust?” We did not go back to the dentist, any dentist, for a very long time after that.) So today we asked TrustedChoice.com, a company that represents independent insurance agents, for their advice on how to find an insurance agent you can trust. They put us in touch with Paul Martin, one of their agents and a representative of TrustedChoice.com, who has twenty-nine years of insurance industry experience under his belt, and is a nationally recognized expert and educator on insurance issues and coverage. He has experience as a claims adjuster, underwriter and agent, so he knows his stuff. Trusted Choice was nice enough to give me Paul’s direct email address and phone number (sorry Paul), so if you have questions that aren’t covered here, leave them in the comments and we might just bother Paul for a follow-up post. Now, onto business:
APW: To be honest, it wasn’t until Trusted Choice got in touch with us that I was aware that independent insurance was even a thing. So to get started, what’s the difference between an independent insurance agent and insurance from a larger company?
Paul: Independent insurance agencies are, well, independent. They own their own businesses that represent numerous insurance companies that they trust to be good for their customers. They typically can handle a wide variety of insurance needs for individuals, families, and businesses and stand as a representative of and advocate for the customer. If one insurance company isn’t the fit the customer needs, the independent agent finds another company that is. They shop for insurance for their customer, and most times have many options to match the customer’s needs with the right coverage. This also means you can get all of your insurance policies (home, auto, ATV, business, whatever) through one agent, rather than having to piece it together from various agencies.
The big insurance company names that most consumers recognize are typically represented by what are commonly referred to as “captive agents.” There’s nothing wrong with the company, or the agent, per se. They may be financially sound, good people, with years of experience. The captive agent is just limited to the one insurance company for whom they can write insurance, so they are stuck with what the big brand company has to offer, and that’s it, which can sometimes mean higher premiums, more restrictive coverage, or fewer options to customize the policy.
APW: I think a lot of young people get stuck trying to find insurance in the first place because they don’t necessarily know where to look.
Paul: People are funny about looking for insurance. They seem to rely on three sources of information: family, friends, and advertising. It is very common for someone’s insurance agent to be the same agent that took care of their parents: “If Dad trusted them, so can I.” And that’s fine. But that agent with whom they have a long relationship may not be able to offer access to the insurance companies that best fit your needs, so it can be good to at least occasionally check around and see what’s out there. Friends are also common resources, but they are often as uninformed as you may be. Advertising is the third main way people find insurance, but just because you see something advertised on TV doesn’t mean it’s always the best choice, as with anything else in life.
APW: What are some common mistakes people make when looking for an insurance agent?
Paul: It is common for people to assume that every insurance agency is the same and that all insurance policies are basically the same, kind of like buying a gallon of milk at the store. They just want to grab the cheapest gallon, since they’re all kind of the same. This is not true—once you get past the most bare-bones level of coverage, there really is huge variation in policy options, bundling, and pricing, so you want to find someone who knows what they’re doing and who is focused on your specific needs rather than on just making a sale. Relying too heavily on the places I talked about above, where people generally look for insurance, can also be a mistake if it prevents you from finding an agent you like and trust in favor of the quickest road to checking “get insurance” off your list.
APW: Let’s say you’ve found a potential insurance agent. What questions should you be asking that person to get a feel for their trustworthiness?
Paul: People should ask questions related to three important areas: What is your experience in handling the insurance needs of customers like me? (Feel free to ask for examples or referrals. Hiring an insurance agent is the same as any other vendor.) Then ask them, “What companies do you represent that write insurance for someone like me, and what is the financial health of the insurance company in which they would place my insurance?” Reputable insurance agents take the companies they work with very seriously, because it’s their butt and yours on the line if they turn out to be shady dealers. So your insurance agent should be glad to share information about a company’s reputation (some won’t work with a company whose rating is below a certain number). If the person you’re talking to seems like they are withholding information, or isn’t forthcoming about their credentials, move on to the next one.
APW: Are there any red flags we should be keeping an eye out for during this process?
Paul: Agencies that have been around for many years have a track record of building trust of customers and keeping it, so newer agencies may not have that track record. That said, what’s important is to get to know the agency, find someone you trust, and trust your instincts—you will need this person on your side in the event you have to file a claim, so you want someone you like and who will be your advocate. (It sounds so basic, but trust your gut. It’s really important that you like the person you’re working with.)
APW: What are signs that an insurance agent is trustworthy?
Paul: A good insurance agent should tell you the truth about coverage and price. This is key—you don’t want an agent that just wants to sell you something, you want one who will look out for you and your family or business. That means explaining what policies won’t do or won’t cover, particularly when you’re looking to make trade-offs in order to save money. You want to make sure you understand exactly what you’re getting because, let’s face it, most people don’t read the insurance contracts they are buying, even though they should. (Side note: You really, really, really should read your contract. And ask questions if something doesn’t make sense. That’s what the agent is there for.)
APW: How are independent insurance agents paid, and what does that mean? (I assume they’re paid a percentage of whatever policy I buy, so how can I have faith they’re not just going to try to sell me the store?)
Paul: Independent agencies are paid a commission on the policies they sell by the insurance company. While the commissions can vary a little from insurance company to insurance company, they are generally 10-12% of the premium or so. Not a lot if you consider the time they put in to communicating with new customers. They make money in the long run by having happy customers who renew their insurance with them for many years.
APW: What kinds of insurance might you need at different life stages? We have readers who are young and single and living in apartments in big cities, while others are just married and settling into (maybe bigger) apartments, while others have been married for a few years, might have kids, or are possibly buying homes for the first time. Do different life stages call for different kinds of insurance coverage?
Paul: Definitely. Let’s say you’re single and living in a major city. At this point in your life, you tend to have less stuff, but you want to protect what you do have with a renter’s policy. These are generally super inexpensive, like $10-$15 a month, and cover you if anything happens to your belongings, such as a fire in your building or a break-in. Renter’s insurance also covers you against lawsuits—if, for example, you accidentally hit someone in the head during a softball game and that person decides to sue, your policy can protect you. You would also need auto insurance (if relevant) and life insurance if anyone is financially dependent on you, or if you have debt that might be left behind if something were to happen to you, and you want to ensure that your loved ones are covered.
If you’re recently married and living in an apartment, you will want everything I mentioned above, but you might be looking at multiple cars, and now you have common ownership and common liability. The main thing here is that all of your policies need to cover you both. Life insurance also becomes more important, since you want to make sure your spouse is taken care of if something happens to you, and life insurance is cheapest when you’re young and healthy.
If you’re married, with a small child, and/or you own a home, you may want additional life insurance coverage since there are additional dependents and other considerations such as child care that might come in to play were something to happen to either partner. Homeowners insurance is generally not optional if you have a mortgage; it’s required by most lenders. Your home is your biggest asset, so you want to protect it. (Homeowners policies, like renters policies, also protect you against lawsuits.) At some point you may also want to consider an umbrella policy to cover liabilities on top of your standard policy (which can be as little as $120 per year for up to $500,000 of coverage), which covers you above and beyond the limits of your other policies. For example, if your car insurance covers up to $20,000 of liability, anything above that in a wreck would be covered by umbrella insurance rather than being out-of-pocket for you.
APW: A lot of our readers are small business owners. What information can you give me about business insurance? (Cost, coverage, who needs it?)
Paul: Independent agents write the vast majority of business insurance in the US today, so they’re a great choice when you’re looking for commercial coverage. Businesses have the same types of risks as people—losing their stuff, damage to their buildings, vulnerability to lawsuits. However, exposures to those risks are higher, more frequent, and more varied than for an individual. Three big categories within business insurance cover protecting property, protection from liability, and insurance needed as an employer (like Workers’ Comp). There is a long list of the types of insurance policies targeted to those categories, many specific only to certain industries, and some required by law. As you can see, it’s pretty complicated, so you definitely want to talk to your agent, explain your business to them, and let them help you.
APW: Are there any ballpark prices for different kinds of insurance coverage that you can share with readers?
Paul: Coverage can often be less than you think, partly due to your independent agent shopping around on your behalf. Prices, of course, can vary widely and have to do with the insurance companies’ preferences too—if they don’t want to cover a certain geographical area for homeowners policies, or they don’t like to write motorcycle insurance, they will charge more for those policies. Other companies have different preferences and will be cheaper, which is why it’s worth shopping around.
Homeowners policies can range from hundreds to thousands of dollars per year based on location, home price, home size, etc. The main factors for auto insurance premiums are who’s driving, the age of driver, their driving record, and the kind of car. Business insurance is probably the most varied, ranging from hundreds of dollars to millions of dollars a year based on what you do, business location, the size of company, etc. Obviously a wedding photography business will have vastly different coverage needs than a multinational corporation, so you really want an agent who is going to sit and talk with you about your specific circumstances, needs, and wants, and help you put together a plan that’s best for you and your budget.
APW: If you happen to qualify for insurance through a membership company like USAA that you’re happy with, should you work with an independent agent to take care of additional insurance needs?
Paul: There are some people that are very happy with their insurance, and they should always consider carefully what’s in their best interest in making a move. USAA for example is a quality organization known for their excellent customer service. They keep such a high percentage of their customers for a reason. Leaving USAA for an independent agency could jeopardize their member benefits with the organization, but considering a Trusted Choice agent for additional insurance needs is always a good option.
APW: If you could give readers any advice about buying insurance, what would it be?
Paul: Three things:
- Don’t buy your insurance like you’re still a college student. Which is to say, be mindful of your insurance. Yes, you can buy insurance, and automatically renew it, and never think about it again. But often life is changing rapidly during this time, and you may find that just a few years down the road, your circumstances (and assets) are wildly different than they were when you first took out your policy.
- Make your insurance agent understands your situation. If you are married, then you need to get your insurance to reflect the fact that you are both the owners of any property and are both protected by your policy. If you’re not married, you can still get covered, but it can be tricky. If you’re going to purchase insurance together, and you’re not married, it’s sometimes less forgiving. So be very deliberate in letting your agent know about your situation so that they can take good care of you.
- Finally, don’t put off life insurance if you can help it. It’s so much cheaper when you’re young and it’s better to be protected than not.
Extra Credit: For more information about specific types of insurance, who needs it, and when, check out the following:
- What’s the deal with independent insurance agents?
- Things to consider when you’re getting a pet.
- What’s the difference between whole life and term life insurance?
- The ABC’s of business insurance.
- What you need to know about renter’s insurance, condo insurance, or homeowners insurance.
APWers, if you have questions about insurance, leave them in the comments! We’ll do our best to get them answered by Trusted Choice, either in the comments or in a separate post!
This post was sponsored by Trusted Choice. Every Trusted Choice agent has signed the Trusted Choice Performance Pledge, which is based in the philosophy that you’re a person, not a policy. Trusted Choice independent agents can offer almost any kind of insurance you can think of—home, life, auto, hair salon, RV, motorcycle, valuable collectibles, helicopter, internet business, and the list goes on. Click here to get in touch with a Trusted Choice insurance agent today, and find the right policy for your needs! (Business owners, click here.)
The information provided in this post is intended by Trusted Choice and APW to serve as general advice and guidance for all readers. The advice herein does not constitute legal or financial advice, and Trusted Choice and quoted professionals do not take legal or financial responsibility for this information. This article does not take the place of a consultation with a legal or financial advisor.
