Who sells auto insurance?
You can buy car insurance in different ways, from a variety of sources, depending on the insurance company. Does it make a difference how or where you buy? It might. Let's take a look.
There are essentially four ways to purchase auto insurance. They are:
From an agent (employed representative) of an insurance company
From an independent agent
From an online broker
Directly from an insurance company
Some insurance companies use only one of these methods of selling to customers, others may use a combination of methods. Let's look at the advantages and disadvantages of each.
From an insurance company agent
Some national or regional auto insurance companies employ agents who are commissioned sales and support people, and who work directly for the insurance company from small offices located around the country. Allstate, State Farm, and Farmers are examples of companies who work this way. Some people feel that there are benefits to being able to talk to a familiar voice regarding policy questions, billing concerns, renewals, and claim advice. Good agents will even call customers about new discounts or program options that offer cost savings. Just be aware that agents don't administer claims.
From an independent agent
This type of agent is an independent business person or company, often called a broker or agency, that represents a number of different insurance companies. This is most common way that auto insurance, and other types of insurance, are sold in the United States. Many insurance providers only sell through independent agencies or insurance brokers, and don't have exclusive agents working for them. The benefit of using an independent agency or broker is that they can do your shopping for you and find you the best insurance that meets your needs. There are thousands of local insurance brokers around the country. Check your telephone yellow pages for listings.
From an online broker
With the coming of the Internet, many existing local brokers took their services online. New and larger national brokers also set up shop and began to offer insurance comparison shopping and other services online. NetQuote.com and InsureMe.com are the companies we recommend. NetQuote is the largest and oldest of such companies and work with over 100 different insurers.
These companies all offer coverage from major insurers such as Hartford, GMAC, Travelers, Progressive, Allstate, and many others — and allow you to get free quotes and compare rates from different companies all at the same time. Rates are low because the companies are competing for your business. You couldn't get rates that low on your own.
Directly from insurance provider
Buying directly from an insurance company wasn't very practical until the Internet came along. Before, you always had to go through an exclusive agent of the company, or an independent agent. Now, direct-sales companies such as GEICO provide convenient web sites that allow customers to do research, get quotes, buy coverage, and even submit claims right from the web site. This is one of the most significant advances in the insurance industry in a long time. Since the company has no sales offices, it pays no sales commissions, which means low rates for consumers.
After you choose a company
Many of the differences between car insurance companies are hidden in the details of their policies. Before you sign, make sure you read and understand these details. If you have questions or concerns, get it resolved before you sign. Later may be too late.
Also understand that, regardless of where or how you buy your insurance, claims are always handled directly by the insurance company, not the agent or broker from whom you may have purchased.
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