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Usually when you buy something direct, the advantage is that you cut out "the middleman".

In this day and age there are plenty of "direct writer" insurance companies out there. These companiess "cut out the middleman" by selling direct to you, rather than through an agent. However, while you may think you are saving money by going direct, that typically isn't the case.  Moreover, by dealing direct with an insurance company, a consumer takes on a level of risk that they may not realize even exists.

In the old days, 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 kind of system is still in place today in the form of independent agencies.

So what can an independent agent do for you?

Agents have at their disposal the ability to quickly check prices and coverages with several different insurance companies.  Since rates vary widely an independent agent can very likely get you a better deal than you can get for yourself. They can even get you insurance from a 'direct writer' like you could get for yourself.

Independent agents are a one-stop-shop for all of your insurance needs. An agent typically doesn't sell just auto insurance. They also sell homeowners, renters, health and life insurance, business insurance etc. This is definitely the case with Rankin & Rankin.

Insurance is a complicated subject. Its an agent's business to understand it, and communicate it to you so you understand it as well.  In almost all cases an ordinary consumer will benefit from having someone who deals with this subject for a living advise them on a 50+ page contract.  If there are any hidden surprises, a licensed agent is the one equipped to know where they are.  Even if you understand insurance thoroughly you can get tripped up:  The industry is regulated on a state-by-state basis.  Move from one state to another and you'll find that the coverages may look the same at first glance, but on closer examination things work a bit differently (very differently, in some states).

Coverages don't just vary from state to state ... they vary from company to company within the same state.  Many companies use what are known as 'manuscript' policy forms (form = contract in insurance jargon).  These forms don't necessarily use industry-standard wording and may contain altered provisions that materially affect you in some way... some unknown way if you don't have an expert advisor who is already familiar with a particular policy's quirks.

The problem with going direct...

When you go with a direct provider you have no licensed, regulated insured agent acting on your behalf.  You are now taking full responsibility for your coverage decisions, and for any mistakes you may make. No more safety net. There are certain services and protections you are going to get with an independent agent that a direct-writer insurance company simply cannot provide.
 

Posted 1:59 PM

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NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
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