You could shop on the Internet for insurance. There are numerous sites that have price quotes for auto, homeowners and life insurance policies. But what coverage is available under these policies? And how can you be sure that you’re buying enough coverage?
You could look in the telephone book and find dozens of companies that sell auto, homeowners and life insurance policies. You can call each of these companies and talk to one of their employees.
But does this person know your insurance needs? Can he or she assess how risk-averse you are based on a fairly short phone conversation? Does this person even have a license to sell insurance? And how can this person work for you when he or she is working for the company? Can you imagine a sales representative saying to you, “Frankly, I don’t think we have the kind of coverage you need?”
You could call an insurance agent who represents one insurance company. These companies -- State Farm, GEICO, USAA, Farmers, the Auto Club, etc. -- are fine, financially sound insurers, but what if they don’t have the coverage you need at the price you want to pay? The agent doesn’t have any options for you. He or she represents just that one company.
* Tip. Best Option: Select an independent agent who is not bound to just one, single company.
If you want the best in terms of coverage options and prices, you should call an independent insurance agent. Independent agents represent numerous companies, each of which has a broad range of product offerings. These agents do derive their income from their companies, but they are not employees of any insurer. Independent agents are just that.
Once they assess your insurance needs, they can then find the company they represent that has the coverage that best suits you, at the price you are willing to pay.
About price -- it’s not everything. Cheap doesn’t equate to good. Unless you have few assets to protect, the lowest-priced policy is rarely the best deal for you. This doesn’t mean you need to buy the highest-price policy, either. Think Value. How much are you getting for what you’re paying?
* Tip. Also, be aware that insurance companies are always hungry for policyholders who drive safely, have safe cars, live in new or refurbished homes, and are health-conscious. Insurers offer a variety of discounts.
Does your car have airbags, antilock brakes? Discount. Is your teenage son or daughter who drives your car(s) a good student? Discount. Does your home have an alarm system? Discount. Are you a nonsmoker? In good shape? Discounts for life insurance. Your agent can make sure you are getting all the discounts you are entitled to.
* Note. Your overall insurance program for you, your family, your home(s), your car(s), your assets, your career, even your life, will probably have several components. Most states require you to have auto insurance with at least minimum liability limits. Your mortgage lender will require a homeowners policy. Everything else is basically optional.
Ultimately, you will decide what to protect with insurance and what risks to assume yourself. In the next few chapters, we will examine the various personal insurance policies, including what they cover and what they don’t.