Who You Deal With is Half The Fun

I have been told that I should deal with a broker verses an agent. 
What's the difference?
Which is better? 


The difference is simple. 

An agent deals almost exclusively with one company.  An agent may be employed by a specific insurance company, or he may have a contract with that company in which he agrees to sell only that companies insurance products.  The Cooperators or State Farm is a good example of an agent style relationship.    

An insurance broker generally has a number of insurance companies to choose from.  He is free to sell any one of his contracted company's insurance products at any given time.  The more companies he has direct contracts with the less shopping you have to do.

Which one is better is really dependent on the outcome.   Generally, every insurance company has its strengths and weaknesses.  One insurance company may offer an amazing deal on home insurance while it's auto insurance stinks.   Insurance companies routinely change their appetite for certain types of clients and what was once a great deal is now not so good.

Dealing With Agents
If you are dealing with an agent or a broker who has a very limited number of companies that he can deal with there are some things that you may want to consider.  Recognize that the individual you are dealing with only has one product and if it is not the best choice for you he may not tell you.  Recognize that you may be dropped by the company suddenly.  This may be as a result of your situation changing and they can't insure you now, or the company decides they no longer wish to insure a certain class or risk (credit scores come to mind). Recognize that you really don't know how the policy compares to others on the market.  Recognize that the person you deal with may be barred from giving claims advise to you directly through company policy.

Dealing on Line or By Phone
Many of the on-line insurance companies that you may deal with are more like an agent than a broker.  Determine which they are so you know.  More often than not, you will have the added concern of hardly ever being able to deal with the same person.  It can be like phoning your telephone provider, you have to enter in your phone number three times in order to get to the right department.  The person you talk to is the one that happens to pick up.  It can be very frustrating if it is an ongoing issue that you are trying to deal with.   Determine if this is going to be the case for you and decide if it is worth it.

The Real Issues
1.  Do I prefer to deal with the same person or can I cope with getting someone different all of the time?  The size of the agency and the ownership of agency will largely determine this.  Whether you deal with an agent, broker, or on-line call center the actual structure of the organization is what determines if you will have the same contact to deal with, or if that will change regularly. Ask direct questions as to what to expect.
2.  Am I being sold or helped?  Are you being provided the opportunity to decide or are you being talked into something you really don't want to do?  You want to be provided the right information so you can make the right decision.  If you ask a question you should be able to think about it.  If you want more information you should be able to have it in your email in a few minutes so you can have time to decide.
3.  Is the emphasis on getting things right?  Do you get follow up confirmation when you make a change so you know things are being taken care of.  Is there an effort by the person I deal with to stay in touch (not just the company news letter on occasion)?  Was your application filled out with care and did you get a copy of it?  Did your home insurance calculator get filled out accurately and did you get a copy of it?   These are strong indicators of how things are going to be in the future when you really need service or when you have questions.
4.  Will I be encouraged to talk to my advisor when I have a claim?  There is nothing that beats the feeling of having someone looking out for you when you really need them.   If you have ever had a claim you understand.   In the back of your mind you are thinking "I hope this goes okay" and until the adjuster shows up and assures you that you have coverage you really don't think it is going to be okay.  It is at this time that it is nice to have your advisor explain what is about to happen and what you are entitled to under you policy. When the adjuster shows up you can be ready and get this thing dealt with quickly.

The word advisor is an important distinction.   Every licensed insurance representative is to follow a code of ethics.  He belongs to an organization that has rules of conduct.   Not unlike any other profession, there are good insurance representatives and not so good insurance representatives.  You can find a good one in every environment.

I have been in the insurance business of  30 years and I have always been a broker.  There are reasons for that.  The number one reason is that I have far more freedom to do things the way I feel they should be done.  I know many representatives who are not brokers and they don't have that freedom.  They have to work within the framework that is provided.  It does not often let them work to their true potential.