THE THREE WAYS TO BUY INSURANCE
by Justin Husman
Let me preface this entire article
by telling you this; I know that
there is no one reading this
magazine who is buying insurance
for the first time. However, you are
never too old to learn – and today,
you’re going to learn. We’ll start with
the different ways to buy insurance.
There are three ways to buy insurance.
The first way is through a 1-800
number, like Geico, or Progressive,
or USAA. Yes, this is a way to buy
insurance, but I think it’s the worst
way. Geico and Progressive operators
are trained to sell quickly and to
a price point, not to get you covered
properly. USAA is a little different,
in that they can and will advise you,
but using a 1-800 number for insurance
doesn’t give you an agent to
work with. It’s good to have a third
party to advise and advocate on your
behalf, but you will never get the
same person twice when you call a
toll-free number. If you have a problem,
the only people you call work for
that company. Ultimately, they have
to toe the company line. You don’t
pay their salary, the company does.
The second way to buy insurance
is through a “captive” agent. Companies
like State Farm, Farmers, and
Allstate are “captive” companies.
Those agents only have one product
to sell; the one on the sign. You have
a local office, and a specific agent
(or their team) you deal with. This is
better than a 1-800 number, because
you do have a relationship, and that
agent will be able to understand your
insurance needs and be able to offer
you advice – but that advice will
naturally be “The only product I sell
is just right for you”. In addition, the
agent “owns” his own agency, but he’s
still essentially an employee of the
company. You can go to your agent
with a problem, but that company
signs his checks and actually owns
his book of business. How hard do
you think that agent will push back
against his employers if you are
unhappy with how a claim is going?
If the company can take away his
agency, which is more important –
one unhappy client or his livelihood?
The final (and in my opinion best
way) to buy insurance is through an
independent agency. I happen to own
an independent agency, so I may be a
little biased, but even if I didn’t I would
never shop for insurance any other
way. Independent insurance agencies
are appointed with multiple carriers,
and will find the best fit for you. Every
insurance company has a different
“appetite” – the people they give the
best rates to and the type of things
they will cover. Some companies give
the best rate to people with good
credit, some to people in a certain
ZIP code, some to a certain profile
(married, two cars, and a house for
example). Some companies will cover
unlimited car upgrades and special
usage cases, and some won’t – An
independent agent will shop all of the
companies, trying to see where you fit
best; best coverage at the best price.
When you have multiple options it’s
much easier to find that perfect fit.
Independent agents can approach
your insurance needs with your best
results in mind, rather than having to
force coverage or compromise your
needs. No one company pays his salary,
rather, he gets commissions for
placing the business. As an independent
agent, if I have a client who is
having trouble, I can call the company
up and let them know this isn’t what I
sell, and unless they take care of my
client, they can forget about me placing
any more business. That gives the
independent agent the most value to
the customer, because he can both
advise and advocate on your behalf.
Now that you have a better understanding
of the ways to buy
insurance, in the next issue, I will be
explaining the different choices you
have for covering your car. Whether
it’s your daily driver, a weekend
overlander, or a full on drive up the
side of a mountain machine, you need
to understand the options available.
Justin Husman is the
owner of The Phoenix
Insurance, insurance
advisor, and a proud
member and sponsor of
E3 Association Brands.
Feel free to call his office at 877-717-
4054, or reach out to his team on their
website www.thephoenixinsurance.com