Insurance Agent: What They Do and How They Help You

If you’re looking for insurance coverage, you may wonder if you should work with an insurance agent. After all, you can purchase insurance directly from insurance companies or online, so why should you involve a middleman? This article will explain what an insurance agent does and how they can help you make the best insurance decisions.

What is an Insurance Agent?

First, let’s define what an insurance agent is. According to the National Association of Insurance Commissioners (NAIC), an insurance agent is someone who sells insurance policies on behalf of one or more insurance companies. Insurance agents act as intermediaries between insurance companies and insurance buyers.

Insurance agents may work for one specific insurance company as a captive agent or represent multiple different insurance companies as an independent agent. Captive agents can only sell policies from their parent company, while independent agents can sell policies from various companies.

Advantages of Working with an Insurance Agent

There are several advantages to working with an insurance agent:

• Expertise: Insurance agents are knowledgeable about different types of insurance policies, coverage amounts, and the risks that individuals and businesses face. They can help you understand what kinds of policies are best for your needs.
• Personalized Service: An insurance agent can meet with you one-on-one to discuss your insurance needs and help you develop a customized insurance plan. They can also answer any questions you have about your policy and provide ongoing support.
• Efficiency: Working with an insurance agent can help you save time and effort. Instead of researching insurance policies and prices yourself, you can rely on your agent to do the legwork for you.
• Claims Assistance: If you need to file an insurance claim, your insurance agent can help you through the process. They can provide guidance, answer your questions, and advocate on your behalf with the insurance company.

Disadvantages of Working with an Insurance Agent

Of course, there are also some potential downsides to working with an insurance agent:

• Cost: Insurance agents typically earn commission on the policies they sell, so working with an agent may cost more than buying insurance directly from a company. However, this cost is often offset by the value an agent can provide.
• Limited Options: Captive agents can only offer policies from their parent company, which may limit your options. Independent agents can present policies from multiple insurance companies, but they may not have access to every insurer or policy.
• Biased Recommendations: Insurance agents may recommend a policy that isn’t the best for you, but rather the one that earns them the highest commission.

What Does an Insurance Agent Do?

Now that we’ve discussed what an insurance agent is and their advantages and disadvantages, let’s look in more detail at what they actually do.

Assess Your Needs

The first thing an insurance agent will do is assess your insurance needs. They’ll ask you questions about what types of assets you want to protect, what risks you face, and what kind of coverage you’re looking for. Based on your answers, they’ll suggest policies that provide adequate coverage.

Explain Insurance Options and Quotes

Insurance agents are knowledgeable about different types of policies and can explain the benefits and drawbacks of each. They can also provide you with quotes from multiple insurance companies so you can compare prices and coverage options.

Negotiate with Underwriters

Insurance agents can work on your behalf to negotiate with underwriters (the people at insurance companies who determine policy pricing and coverage). They can advocate for you and try to get you the best price and coverage possible.

Assist with Policy Changes and Claims

Once you’ve purchased an insurance policy, your agent can assist you with any policy changes you need to make, such as updating your coverage or adding a new asset. If you need to file a claim, they’ll help you through the process and advocate for you with the insurance company.

FAQs About Insurance Agents

How Do Insurance Agents Make Money?

Insurance agents earn commission on the policies they sell. The commission rate varies depending on the insurance company and the policy. Captive agents typically earn a higher commission rate than independent agents, but independent agents can sell policies from multiple companies.

How Do I Choose an Insurance Agent?

When choosing an insurance agent, look for someone who is knowledgeable, trustworthy, and responsive. You can ask for recommendations from friends and family, search online for agents in your area, or use an online referral service to find an agent who specializes in the type of insurance you need.

Can I Work with Multiple Insurance Agents?

Yes, you can work with multiple insurance agents if you choose. However, keep in mind that having multiple agents may lead to confusion or conflicting advice. It’s best to choose one agent who can provide all the coverage you need.

What Happens If My Insurance Agent Goes Out of Business?

If your insurance agent goes out of business, your insurance policy will still be in effect. However, you may need to switch to a new agent or contact the insurance company directly for assistance.

Do I Need to Pay for an Insurance Agent’s Services?

Insurance agents do not charge for their services. They earn commission on the policies they sell, but that commission is paid by the insurance company, not by the policyholder.

Conclusion

Working with an insurance agent can be a valuable way to get the coverage you need and ensure that you’re making informed insurance decisions. If you’re considering working with an insurance agent, take the time to research your options and choose an agent who can provide the expertise, personalized service, and claims assistance you need.