Do I Need an Insurance Agent or Can I DIY

Deciding whether to work with an insurance agent or go it alone can be a daunting task. One key consideration is the complexity of your insurance needs. If you have multiple policies, such as home, auto, and life insurance, an agent can help you navigate the process and ensure everything is properly coordinated.

On the other hand, if you only need a single policy, such as renters insurance, you might be able to handle it on your own. However, even with simple policies, an agent can still provide valuable guidance and help you make informed decisions.

An insurance agent represents one or more insurance companies and sells their policies for a commission. They can work for an agency or as independent contractors.

Insurance agents have an agency agreement, or contract, with the insurer that stipulates the different types of insurance they can sell and the commission rates for each policy. This agreement is crucial in determining the agent's scope of work.

Captive agents typically represent only one specific insurance company, whereas independent insurance agents represent more than one insurer. This difference is significant, as it affects the range of options available to customers.

An independent insurance agent, in particular, has access to dozens of different insurance carriers, not just two or three. This means they can offer a wider range of options to customers, including policies from companies that only work with agents.

Here are the key differences between captive and independent insurance agents:

You can pick an independent agent or a captive (or direct) agent when selecting an insurance agent. An independent agent may sell policies from many different companies, while a captive agent sells insurance for only one company.

To ensure you're working with a licensed agent, check the National Association of Insurance Commissioners (NAIC) Consumer Information Source (CIS) or call your state insurance department. This will confirm the agent and insurance company are licensed in your state.

When evaluating your options, consider the agent's credentials, such as designations or credentials earned from various insurance groups or associations. Ask them what these letters mean and what they had to accomplish to earn the credential.

Choosing the right agent can be a daunting task, but with the right information, you can make an informed decision. You should consider the type of agent you need: independent, captive, or broker.

An independent agent may sell policies from many different companies, while a captive agent sells insurance for only one company. A broker represents your business by searching the local insurance market to find the right coverage for the best price.

When evaluating your options, make sure the agent and insurance company are licensed in your state. You can check company licensing information through the NAIC's Consumer Information Source (CIS) or by calling your state insurance department.

Check the agent's credentials, such as designations or credentials they have earned from various insurance groups or associations. Ask them what these letters mean and what they had to accomplish to earn the credential.

It's also a good idea to check if the agent and the company have had complaints filed against them. For the company, you can check the NAIC's CIS, call your state insurance department or contact the Better Business Bureau.

Here are some key things to look for in an agent:

You should also expect honesty from your agent, and not feel pressured to choose an agent, an insurance company or a quote. If an offer seems too good to be true, it probably is.

Some people don't use insurance agents because they think online insurance is easier or more convenient.

Millennials are more than twice as likely as other generations to buy their insurance online, making them a significant part of the online insurance market.

Younger consumers, including Millennials, don't mind shopping for insurance online.

If you Google "car insurance", you're likely to see advertisements from big insurance companies listed above organic results for local agents.

You're probably working with a "direct writer" or a "captive agent" if you contact one of the big insurance companies, rather than an independent agent.

You should call your insurance agent when things change in your life, such as gaining a new driver in your household or building an addition onto your home.

A new driver in the household is a big deal, and your agent can help you adjust your coverage to account for the added risk.

You should also call your agent if you get married or adopt a dog, as these changes can affect your coverage needs.

Getting married often means merging your assets and liabilities, and your agent can help you navigate the insurance implications.

Adopting a dog may not seem like a big deal, but it can increase your liability in case your furry friend gets into an accident or causes damage to someone else's property.

Retirement can also be a good time to review your insurance coverage, as your needs may change when you're no longer working.

Starting a home-based business is another reason to call your agent, as you'll need to ensure you have adequate coverage for your business and its assets.

An independent insurance agency represents you in the process of shopping for the best coverage at the most competitive rates. They have access to different insurance carriers and can request quotes from multiple carriers to present to you.

Independent agents are contractors who represent different insurance companies and search the market for the best coverage based on a client's insurance needs. They must be appointed by each insurance company they represent before placing coverage with that company.

You can find an independent agent by using an Agent Language Locator, calling the company directly, or checking the company website or social networking sites for agent information.

A broker is an insurance professional who represents consumers in their search for coverage. They can sell policies from several different insurance companies for a commission.

Brokers don't represent insurance companies, so they can't bind coverage on behalf of an insurer. This means they must hand over the account to an insurer or insurance agent to complete the transaction.

A broker's primary duty is to the client, not the insurance company. They examine a client's needs and search from several providers to find the right policy at the right price.

Brokers make their money through broker fees, which are a percentage commission on the policies being sold. They must post a $10,000 bond before acting as a broker.

Here are some key characteristics of an insurance broker:

A captive agent is a type of insurance agent who represents a single insurer, or single fleet of insurers, and is obligated to submit business only to that company.

They might have an office in your neighborhood, where you can sit down and discuss your insurance needs, but you'll only have access to that one company's products.

For example, a captive agent might only be able to offer policies from State Farm, AllState, or Farmers.

You'll have to buy your policy from the one option they have, because they're, well... captive.

And now, so are you - tied to that one company's products and services.

A direct writer is similar to a captive agent, representing just one insurance company, but you might not deal with the same person again if you buy insurance from them.

You might reach a direct writer online, via a 1-800 number, or possibly through an app, but you won't have a dedicated agent to turn to if you have questions or need help.

This can be a problem if you have complex insurance needs, like questions about Massachusetts state laws and requirements.

You might have to do a lot of proactivity to find someone who can help you, and you might not even know to ask the right questions in the first place.

Additionally, you won't get much help with Massachusetts RMV services, which can be a hassle, especially during times of crisis like the recent pandemic.

Many people prefer the independent agent model because it avoids this potential conflict of interest, where the agent's loyalty lies with the one big company that pays them, not with you and your best interests.