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Generally speaking, when you buy direct you cut out “the middleman” – a retailer who buys wholesale from amanufacturer. They mark up the product’s price and sell it to you.
By dealing direct with an insurance company, a consumer takes on a level of risk that they may not realize even exists.
That Was Then…
Traditionally, insurance companies did not sell to the public. Instead their products were offered to consumers by “agents” who had to be professionally licensed to deal directly with the public. Consumers actually paid the agent nothing because it was the insurance company who paid the agent a commission, and this commission was not added to the retail price.
This Is Now…
The agency system is still in place throughout the U.S. You can find dozens if not hundreds of local independent agents in your telephone book or internet guide. However, thanks to the internet you can also go directly to many insurance companies and get a quote. If you like the quote you can often buy a policy by filling out a few more forms, right on the spot.
An independent agent can do important things for you:
- Agents have at their disposal the ability to quickly check prices and coverages with dozens – if not hundreds – of different insurance companies.
- Independent agents are a one-stop-shop for all of your insurance needs. An agent typically doesn’t sell just auto insurance.
- Insurance is a complicated subject. Its an agent’s business to understand it, and communicate it to you so you understand it as well.
- Coverages don’t just vary from state to state … they vary from company to company within the same state.
The above is the good news with regard to what an agent can do for you. What about the bad news?
Which brings us to another problem that you create when you go direct. You have no licensed, regulated insuredagent acting on your behalf.
Don’t get us wrong… There is nothing wrong with direct-writer insurance companies. However, if you deal with an agent, there are certain services and protections you are going to get that a direct-writer insurance company simply cannot provide.
by Matt Robertson
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