Direct Car Insurance Providers Vs Agents

Are you about to purchase auto insurance? You can buy coverage directly from an auto insurance provider, but you also have the option to purchase a policy from a provider's third party, typically referred to as an agent, broker, or producer. Here are some of the pros and cons of each approach.

Agents vs. Providers: What's the Difference?

Insurance companies, also known as providers, perform the underwriting necessary for your policy to function. If you file a claim, a provider will send an adjuster to assess the damage, and then pay the settlement if your claim is valid. They also write the contracts that govern your policy and set your rates.

Insurance producers work on behalf of car insurance firms to sell their products to consumers. According to the Bureau of Labor Statistics, these professionals may operate with brokerages that offer policies from a range of different companies. Others work with specific providers or specific types of coverage, such as auto or life.

Most states maintain tight regulations on insurers and producers alike. For instance, Minnesota and Arizona have legislation requiring that producers have the appropriate license to do business legally. Arkansas even makes producers pass a written exam. Each state also has a board of insurance or insurance commissioner responsible for setting the ground rules insurance companies must follow to provide coverage.

Coverage from Auto Insurance Companies

Some consumers prefer talking to insurance companies without third parties. You know exactly what you're getting, and you can count on the company's longstanding reputation. Some people also enjoy negotiating with their car insurance provider directly when they renew or upgrade their policies. If you take this approach, just be certain that you fully understand your contract.

Coverage through Car Insurance Agents

Car insurance agents offer a range of distinct advantages. For instance, they can branch out to a variety of insurance types, so it may be possible to find comprehensive or umbrella coverage that includes perks like health and property insurance along with your vehicle policy. Talking to a multi-specialty broker could be an efficient way to get a price break on your auto insurance premiums.

Some business owners rely on insurance sellers to help them cover vehicle fleets and larger pools of assets. Although many insurance companies are already willing to offer volume discounts, entrepreneurs could potentially extend their range of viable options by going through brokers. For example, a broker who works with multiple insurers could help a business access more competitive deals that it might not have found with just one insurance provider.

After an Accident

Negotiating with a provider takes valuable time, but not just when you're trying to price a new policy. Brokers can help you with tasks like filing claims, gathering documentation, or clearing up billing problems. States like Indiana also recommend them as intermediaries you should contact before lodging a formal complaint with the state insurance department.

Building a relationship with a licensed broker or agent may make your life easier. Of course, some consumers do just fine by communicating with their providers directly. Exploring both options is the best way to obtain high-quality service with coverage that fits the bill.