The method of purchasing insurance usually determines the price a business or an individual pays an insurer for a certain insurance policy. It’s usually advisable to compare rates and insurance coverage online to get the best deal for these policies.
However, this is time-consuming and difficult to achieve without professional guidance from experienced insurance brokers. An independent agent (or broker) acts as an intermediary between you and the insurance carriers to get you the insurance policies you need at the best price. In other words, they help you compare and filter policies, plus adding discounts. Using an insurance broker saves money and time, it also reduces stress as you can contact them by phone or online!
But if that isn’t enough for you to conclude that going through insurance brokers is the cheapest way of buying insurance, then read ahead, there are different means of buying insurance from companies, and we look into each of them below.
Different Ways of Buying Insurance and How They Compare
It’s essential to start by stating that your preferred insurance buying process is your choice, and no principle stamps a particular means as the best method of buying insurance. However, there are different opinions expressed about the means to purchase a policy. Some means help save money and provide you with many insurance options, giving them an edge over others. After carefully understanding this section, you should have a preferred method to buy the policy you want and take care of your subsequent needs.
There are about (3) methods of buying insurance from insurance providers. Whether building multiple cars, or any other insurance needs, these methods can help you get the best coverage for your business, but at varying premiums. Below are the methods and how they compare:
Insurance Company
You can search online to get guarantee quotes for the policy you need. However, this method can be quite tasking and time-consuming if you consider having to compare numerous offers before settling for one. Your lack of in-depth experience may also sell you short when choosing the policy that offers your desired coverage. Direct policy purchase from companies saves the company costs and not you. You get to pay the same amount or less using a broker. There are also huge chances that your preferred company isn’t offering you the lowest price possible. You can use different companies’ free quote tool to get insurance quotes for your coverage choices. You can then compare quotes before deciding to purchase the business insurance types that suit your needs.
Insurance Brokers (Independent Agents)
Using a broker, also known as an independent insurance agent, to purchase policies from an insurer is one of the most effective means. Brokers represent multiple insurers. Hence, they care about your business and help clients like you find lowest premium rates. Some brokers are specialized in particular policy types, making them masters in that field. For example, for individuals or businesses looking to buy car insurance, working with experienced car insurance brokers helps get the best policy price. The auto insurance broker works with multiple insurance companies, and they compare offers to give you a satisfactory deal. They know the best company where you can buy the insurance that suits your needs.
Brokers make money through commissions from companies and broker fees from clients. Unlike agents, brokers may charge fees for their services. However, your total premium remains lesser than purchasing without an insurance broker. They work with insurance companies and can get you those that offer low rates, leaving you with a budget surplus. Some brokers only earn from the commission they get paid by carriers. This commission is usually around 2-8%, and it’s usually calculated within your premium. Only the insurer gets to save money for not paying an insurance broker if you didn’t come through any. Therefore, considering the time and stress of comparing multiple insurers, coupled with the professional guidance and advice you get from brokers, it’s more beneficial to go through them than buy insurance directly at the same or more premium.
Captive Insurance Agents
Purchasing home or car insurance is possible via an insurance company agent. Unlike brokers, this type of agent represents a company rather than clients. Every Insurance agent can bind a policy and offer temporary coverage on a company’s behalf before a policy is completed. They also get their commission from the insurers, and clients do not need to pay agent fees. A captive agent works with a specific company (i.e., one insurer) where they get paid a certain percentage as commission, with salary and other incentives.
Captive agents rarely have in-depth knowledge about coverage from other companies aside from the one company they work with. Hence, captive agents’ services are usually limited, and they only prioritize getting you to buy from their insurance company without considering any other company.
Compared to insurance brokers, this type of agent does not work for you.
This commission is always added to your pay to buy an insurance policy. Regarding pricing, some agents may want to prioritize companies that offer higher commissions over those that offer clients lower rates. This is an unprofessional act, and clients should be wary of such.
Conclusion
Certain circumstances and factors determine the best means to actualize and buy insurance plans. Comparison shopping can help you get a good insurance quote and low premiums, but it’s very time-consuming. The amount of coverage you need or a request for more coverage affects directly the price of your final insurance.
At FarmerBrown we want you to feel as though your liability insurance requirements are being met, providing attention to detail and always ready to take claims 24/7. As an insurance broker, we compare the rates from different insurers and offer you the best ones. We also make shopping for policies from multiple companies less stressful and time-consuming. Feel free to contact one of our agents and get a quote in just 5 minutes.
