At last count, nearly 39 million people called California home, and if any of them want to hit the road, they’re required to buy car insurance. That’s why you see so many buying options out there!
But which way is the RIGHT way to buy car insurance? What type of professional should you buy it from, and who’s going to give you the best deal?
In order to answer those questions, you need to understand that there are four ways to buy auto insurance in California — directly from the carrier, through an agent, through an independent agent, and through a broker.
Here are the pros and cons of each of those options:
Like the name suggests, you can buy a policy directly from the insurance company itself, either over the phone, or more commonly these days, online.
- If you shop directly on the company’s website, you may get a quote faster than you would through an agent. However, many agents are taking advantage of new technology that allows them to provide instant quotes, too, so this pro isn’t restricted to just buying directly from the carrier.
- Your insurance company won’t have to pay an agent a commission, so they MAY pass those savings onto you. (There’s no guarantee they’ll actually do that, though!)
- If you have questions, you’ll have to rely on either a live web chat or a 1-800 customer service number.
- It’s harder to get a custom features added onto your policy when you buy directly from the company online or over the phone.
- You won’t have an agent to work as a middleman if you ever have difficulty filing a claim.
This is probably what you think of when you picture buying insurance — calling up your neighborhood agent and letting them guide you through the process of purchasing a policy.
- Insurance agents have to be licensed and are required by California to take 24 hours of continuing education every two years. As a result, you can rest easy knowing they’ll give you accurate, comprehensive answers to any questions you may have — including helping you make sense of all the fine print in your new policy.
- It’s easier to sit down and have a conversation with your neighborhood agent than a customer service rep on a live chat or in a call center.
- Working with an agent makes it easier to customize your claim to meet your exact wants and needs.
- A good agent can also guide you through the process if you ever have to file a claim.
- You don’t have to pay an agent; they get their money directly from the insurance company.
- Some agents work exclusively for one insurance company (these agents are known in the insurance world as “captive agents”), so they won’t shop around for you. As a result, you’ll have to do your own homework to make sure you’re really getting the best deal.
If you want to save yourself the time and effort of shopping around, an independent insurance agent is the ideal choice. Unlike their captive counterparts, these agents have agreements with several insurance companies — meaning that they can get you a policy from any of them.
- You’ll likely save money because you’ve got an expert doing your comparison shopping.
- You’ll get several quotes to choose from, and you’ll have a licensed expert to help you make a choice.
- You won’t have to worry about your agent favoring one particular company. Since they work with several of them, all they need to worry about is finding you the best deal — instead of steering you towards one particular carrier.
- The good independent agents work with the best names in the insurance industry, so you don’t have to worry about buying a policy from some fly-by-night company you’ve never heard of.
- Independent agents will vary in skill and specialization. Try to make sure you are dealing with a trustworthy and knowledgeable agent.
Oftentimes, people confuse independent agents with brokers because both work with a variety of insurance companies. However, there is a big difference between the two — brokers can charge you a fee for their services, and agents cannot.
According to California law, an independent agent has to have a Notice of Appointment with the insurance companies that he works with, and this document must be filed with the California Department of Insurance. Once that appointment is filed, an agent is prohibited from charging you anything. Since brokers do not file these appointments, they’re legally allowed to charge you money.
- Like agents, brokers are required to be licensed and undergo continuing education, so they’ll be able to provide solid answers to your questions.
- Brokers aren’t limited to a particular insurance company, so they can shop around for you like an independent agent can.
- You’ll wind up paying for a broker’s expertise. If you’re getting a personal policy, brokers are bound to the numbers in California’s Standard Broker Fee Agreement, and they’re required to give you that agreement to view and sign in advance. Working with an independent agent doesn’t come with this extra layer of red tape.
Bottom line — when it comes to buying something as important as car insurance, it’s crucial to have as many options as you can. Purchasing your policy through an independent agent will give you that variety, along with giving you access to a seasoned expert who can make you feel completely confident about your choice.
Latest posts by Raphael Locsin (see all)
- How Credit Affects Homeownership - August 1, 2016
- New Business Restrictions: Santa Clarita Fire - July 26, 2016
- 5 Things to Know Before Signing a Rental Agreement - July 16, 2016