Several years ago, a young man in southwest Minnesota caused a serious auto accident in which his car went out of control on the ice and struck another vehicle. The court ruled that the accident was his fault and awarded an amount to the injured party that far exceeded the state required minimum liability limits he carried on his policy. The young man had thought he had obtained proper limits, because he was meeting the state law and he had almost no personal assets to lose. He had purchased his insurance online and received almost nothing in the way of advice.
What he didn’t take into consideration was his potential future earnings. He didn’t realize that for the rest of his life—or until he paid off the huge award—his financial world would be under a cloud.
When an accident occurs, bad things can happen. If your car stalled on a train track and you were fortunate enough to get out, but you caused several railroad cars to derail, imagine the potential property damage liability loss. Even a slow moving two-car accident could result in life-long injuries. Someone has to pay; independent insurance agents do whatever they can to make their customers aware of the need to carry high limits.
There are two types of insurance agents: captive and independent. A captive agent is an employee of a particular insurance company, like State Farm, Nationwide, or American Family. An independent agent is different. These individuals work for themselves or an independent agency. They are able to sell a variety of insurance products from many of the top national insurance companies.
Car insurance is a lot more complicated than picking out a box of cereal off a shelf. Each time an independent insurance agent provides advice about coverage requirements and options that their friends and neighbors can rely upon, they experience a strong sense of fulfillment.
According to ehow.com, there are several reasons why independent agents love their jobs:
1. Freedom: Independent agents are able to offer their clients a range of insurance products. They are not restricted to selling only a certain company’s insurance. This is great for you because you have a variety of options to choose from before buying insurance, and will likely save you money.
2. Flexibility: If you are having issues with your current insurance policy, an independent agent has the flexibility to offer you coverage from a different company.
3. Industry Knowledge: Since independent agents sell insurance products from a variety of companies, they are constantly learning about the latest in regulations changes, product offerings, and current events that have affected insurance policies in his region.
4. Resources: Being able to sell insurance from different companies also means that the independent agent likely has dozens of contacts within the insurance industry. The agent is probably familiar with insurance company representatives, underwriters, and researchers. This is great for you as their client because the independent agent will have multiple individuals they can contact to help resolve any issues.
5. Unbiased Opinions: Independent insurance agents receive the same commission from each policy they sell, no matter the company the policy falls under. That means that they have no motivation to sell you one product over another and will give you their unbiased opinion on the policy they think is best for you.
Independent agents are not tied to a particular company. If you file a claim, they will not have to follow a certain protocol. They will work closely with you to get the matter resolved.
Agents also have a profit motive. Insurance agents can’t make money unless they retain a large percentage of their clients. Some experts say that they need to retain more than 90% from year to year. They expect to lose nearly 10% a year due to people moving out of state, dying, or switching agencies. Even with just 10% attrition they need to find one new customer for every one who left before they can start to grow their business. They can’t afford to lose very many through dissatisfaction.
That’s a good system. It keeps your agents on their toes and opens the door for them to gain new clients through referrals, which is how they find most of their new customers.
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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.