Buying Insurance Direct vs. Indirect: Which is Better?
There are a handful of avenues to choose from when deciding to buy insurance. You may choose to work with insurance agents or purchase an insurance policy directly from the insurance company. The option you choose solely depends on your individual needs. Ultimately, it boils down to the kind of service you prefer, your knowledge of insurance policies and your budget.
Consider the pros and cons of each method to make the most informed decision for your home or business.
Advantages of Buying Insurance Through an Agent
Are you new to buying insurance? Consider working with a hardworking agent to help along the way. Insurance agents guide you through the process, helping you in the right direction based on their industry expertise and experience and your individual needs.
Insurance agents will:
- Help you meet your needs: Agents ensure you’re purchasing the right amount of insurance coverage to meet your individual, family or business needs.
- Explain your options: Your agent will thoroughly explain your insurance options to help you understand the variety of insurance terms and policies available to you.
- Offer local insight: Many agents are local to you and will know the unique needs and requirements of where you live or where your business is located.
- Be there when you need them: Whether you have a last-minute question or need some extra insight, they’ll be there to provide the help you need when you need it.
- Cut through red tape: Agents can provide the help you need to move through red tape if you are trying to get coverage during a crisis, such as car insurance for a car crash. They’ll fight for you to help you get the money you need from an insurance company.
In general, insurance can be complicated to understand. In some cases, people try to claim their insurance only to get denied because of their circumstances. A knowledgeable insurance agent can help break down the terms so you know what you’re getting yourself into, helping you take the deals that fit you best.
Additionally, some agents have expertise in specific niches. For instance, some will be well-versed in auto insurance, life insurance or home insurance. If you have a specific insurance type in mind, looking for an agent with an aligned expertise can be helpful.
Things to Consider When Buying Insurance Through an Agent
When you buy insurance through an agent, you know you’re receiving all of the knowledge and insight you need to make an informed decision about your insurance policy options.
That said, there are a few things you need to keep in mind:
- Communication takes time: Since you’ll communicate with the insurance company through your insurance agent, some processes may take a little longer than they would if buying directly from the provider.
- You’re limited to your agent’s companies: Agents work with a specific set of companies, so you will only receive insurance quotes from those companies your agent has a working relationship with.
- There are different types of agents: If you do decide to work with an agent, you need to carefully consider the type of agent you choose. This decision can significantly affect whether you go for direct vs. indirect insurance.
Captive Agents vs. Independent Agents
Both captive and independent agents can offer the perk of a personalized relationship, but there are differences that can make you choose one over the other:
- Captive agents: Captive agents sell insurance for one specific company. Because of this, these agents will have deep insights into the insurance products they offer and may have access to exclusive promotions. That said, you may encounter instances of upsells where you’re sold insurance you don’t really need.
- Independent agents: Independent agents work for an agency that sells insurance from multiple companies. They have more flexibility than captive agents and may be able to offer better deals as they help you analyze a series of options. This also means it’s easier for them to offer what you truly need since they’re not limited to products from a single company.
Advantages of Buying Insurance Directly From the Company
If you choose not to purchase insurance with the help of an insurance agent, then you’ll be purchasing the insurance policy directly from the company. This is typically the quickest way to obtain coverage since you don’t have to wait for responses and quotes to come back from your insurance agent.
Benefits of buying insurance directly from a company include:
- Processing speed: Working directly with a company is usually a fast and efficient way to obtain the coverage you need when you need it.
- Convenient features: Many insurance companies let you browse, compare and purchase insurance policies online or through convenient contact portals.
- You make the decisions: Working directly with a company means you have the power to choose which providers you want to consider and are not limited to your agent’s roster or expertise.
If you choose to purchase insurance directly, it could streamline the process because all communication and quotes will come straight from the company to you.
Things to Consider When Buying Insurance Directly From the Company
Although purchasing insurance directly may be a faster option, be aware of the following:
- It’s not as personal: Working without an agent means you don’t get the same personalized experience, which is often the best way to accommodate all your needs and budget constraints.
- Help can be challenging to receive: If you need assistance during the quoting and buying process or have questions about your policy after the purchase, you will have to reach out to the company’s customer service office for support, which could take time and may not always offer the best results.
- Opportunities may be limited: Some companies choose to sell certain policies or coverage options through agents only. By skipping the agent, you may miss out on a great deal.
- You won’t get personalized service: If you need a custom plan, you may have to rely on a customer service representative to help you. These representatives are not always qualified to provide you with the unique help and expertise you need, especially if you operate a local business. You may end up with an insurance policy that does not have sufficient coverage or is not the best fit for your needs.
Purchasing insurance without an agent can be risky unless you’re already knowledgeable about insurance. Agents are licensed professionals, so you can trust and rely on them with this financial commitment. If you live in Pennsylvania, you can even check their license number online so you’re more certain about the agent you’re working with.
When you forgo an insurance agent, you are missing out on the expertise that can personalize your buying experience and ensure you walk away with the best coverage at the right price. Without an agent, you won’t have a specific person to turn to with your insurance-related questions. If you’re shopping for a policy from a company website, you may also miss out on the quality offers that smaller insurance companies have, such as the personalized policies from Strock Insurance.
Is It More Affordable to Buy Direct?
Because commissions are common, it may be easy to think that buying direct — rather than paying for a separate agent — is more affordable. However, this isn’t always the case, as agents can offer policies competitively. And not all agents earn through commission.
For instance, captive agents can earn salaries as full-time employees and they may or may not receive commissions. Some insurance agencies earn through profit-sharing. Choosing a salaried agent with no commissions can mean that they are more inclined to offer what’s best for your needs, as they won’t care about which policy offers the highest commission rate.
In these cases, buying indirect insurance can make sense, especially if you’re offered exclusive policies that are competitive with those directly offered by an insurance company.
Note that captive agents will have commissions set for them, if any, while independent agents are likely more open to negotiation.
Insurance Agent vs. Direct — Which Method Is Right for Me?
Purchasing insurance directly or through an agent can both be great options — it all depends on your needs and priorities. When deciding whether to go directly with an insurance company vs. an agency, here are some questions to ask yourself:
- Do you prefer a more personalized service?
- Do you prefer doing your own research on your available options?
- Do you prefer the most convenient method?
- Do you have a preferred insurance company and do you have access to them?
- Do you have a limited budget?
- Is the price difference of buying direct vs. indirect significant?
- Are you confident in your knowledge of the policies you’re looking for?
- Are you in a rush to get insurance?
If you are looking for a quick turnaround and don’t mind going through customer service representatives for help, you may find success buying insurance directly. If you want personalized, informed and attentive service, an insurance agent is the best option for you since they offer custom insights based on your needs, budget and location.
Request a Quote From Strock Insurance Today
Strock Insurance is a locally owned and operated insurance company serving Camp Hill, Harrisburg, Lebanon and nearby areas in Pennsylvania. If you need an insurance agent, we offer personalized services, outstanding customer service and competitive pricing for your personal and business insurance needs. Request a quote today to learn more!