10 minute read.
Imagine if this was you.
Jane is a 35-year-old mother of two children living in Mineral Wells, Texas. Frequently, Jane travels into Fort Worth with her children in her minivan. Jane has never thought very much about her insurance, because she was able to chat to the nearest agent she found online, and after giving him her prior account information, he got a quote back to her in fifteen minutes and she had insurance later that day. It was simple, quick, and cheap.
Unfortunately, one day Jane accidentally runs a stop sign in downtown Fort Worth and gets T-boned by another car. Both her minivan and the other car — a new Tesla — are damaged. When she made a claim for the damage to her car, the other person’s car, and medical costs for an injury caused to the woman who owned the Tesla, she found out that her liability was only up to $30,000 for bodily injury to others and $25,000 for property damage to others— it didn’t even cover half of the costs involved in the accident!
When she talked to her agent, she realized she may not have enough coverage to pay for the damaged Tesla, and the medical costs incurred by the man who drove the Tesla. A month after the accident, Jane receives a letter from her insurance company stating, she has exhausted her insurance limits of $30,000 for bodily injury caused to others, and $25,000 for property damage caused to others. The letter from her company also states she may need to seek legal advice.
Three weeks after she received the letter from her company, she receives two letters, one from the man’s attorney who owned the Tesla, and another from his insurance company. Both letters state, a settlement amount for unpaid bodily injury and property damage. Jane has never been sued. She has always done the right thing her whole life. She feels violated and confused about why this has happened to her. Jane is forced to pay an attorney to negotiate a settlement with the man’s insurance company and his attorney. Jane feels her life has been turned upside down.
How do I make sure this doesn’t happen?
Insurance isn’t the most interesting field, we all know that. Most of us have insurance because we’re told we have to, and didn’t necessarily put the most effort into finding the perfect agent or perfect company. All insurance is the same, right?
Insurance is a pretty complicated industry, and there are more important things than having the lowest monthly premium. Having the right insurance company, and especially having the right insurance agent can make a massive difference. Jane was only concerned with getting a low monthly cost, and didn’t find an agent who truly cared about getting to know her and her situation.
So how can you make sure that what happened to Jane never happens to you? Here are a few tips from Brad Jones, owner and founder of Trophy Insurance Solutions, an independent insurance agency located in Mineral Wells.
Tip #1: Know what to look for in the quoting process!
Getting a quote is usually the starting point for any insurance interaction; and luckily, you can tell a lot about an agent the moment you request a comparison quote. Think back to the last time you requested a quote from a new agent or agency. Did it go like this?
- CUSTOMER: Hello, I am interested in receiving an insurance quote for my vehicle.
- AGENT: “Mr./Mrs._______, thank you for calling! Do you have a copy of your current declaration pages? What are you currently paying?
- CUSTOMER: “Yes I do have my declaration pages and I will forward them to you. We are paying $XXXX.”
- AGENT: “Great! I will use this information to get a quote for you at a better price, and have that back to you ”
This is typical in the industry. Your declaration pages do have pertinent information about you and your vehicle that helps the agent generate a quote, but knowing what you are paying currently is irrelevant to the quoting process! Many times, the agent is only concerned about price, so they remove coverages from your policy until they get to a quote that is lower than your current premium. Don’t get me wrong, we all want a great price — but in this aspect, insurance is just like everything else we purchase: you get what you pay for.
Do you know the value you’re getting?
Imagine you buy a new GMC Yukon. You are able to see that you have leather seats, navigation, an upgraded sound system, back-up camera, and more. You can see, touch, and feel what you are buying. Your new vehicle payment is $525.00 per month, but you can see and feel the value and know that you are paying a fair price for all the upgrades you are receiving.
Unfortunately, we can’t see, feel or touch our insurance policies, so it’s harder for us to feel like we are paying the fair price for the value we are receiving. This is how we fall into a trap of wanting lower and lower monthly costs — it’s because we don’t know what value we are or aren’t receiving.
When the rubber hits the road, and a situation occurs where you need your insurance coverage, nothing is more disheartening and frustrating than having your claim denied or being underinsured. It’s easy to blame the carrier, but you can have the best carrier in the industry and have your claim denied. In most cases, this isn’t the fault of the carrier, but rather your agent never talked you through all of the coverages and endorsements that you might need to ensure that you’re truly covered. So even though you may want the lowest monthly cost, make sure you are not sacrificing protection to save a few dollars a month.
Tip #2: Work with an Independent Agent
Have you ever had your rates suddenly increase, when nothing that you’ve done would have caused them to increase? Did you go to your agent, and hear him tell you that he can’t do anything about it, or even worse, recommend lowering coverage, or raise your deductibles? This is a very common complaint with insurance. Insurance companies continuously adjust their rates both up and down, often because of factors that the client cannot see. But remember: If your rates increase to a cost that you’re not willing to pay, you can change companies while keeping your agent and high level of service. If you want to ensure that you’re always getting the best value, it is a good idea to look at your insurance coverage and premiums periodically and compare them to other carriers in the area. An independent agent has multiple options with access to dozens of the nation’s top carriers.
So what can a captive agent do?
This is where a captive agent cannot really assist you. A captive agent is an agent who sells one carrier’s product because he is contractually obligated. Captive insurance carriers understand the statistics shared in our last blog. Nearly 40% of people never take the time to get a comparison quote. They depend on their agents to convince you that there is nothing better than their company. These carriers spend hundreds of millions of dollars hiring celebrities to reinforce this point. Who pays for this? You do, if you have been with a captive carrier for years.
Captive agents are also many times held to quotas. The captive insurance carrier pushes the agent to sell products that are most profitable for the company. Knowing the agent has no other alternatives, the agent is sometimes forced to sell their clients products they may or may not need.
Captive agents are also forced to sell products that are most profitable to the carrier they represent. If you have a captive agent, I am sure you have been hounded to purchase life insurance nearly every time you meet with your agent. This is because life insurance is the most profitable product sold for the carrier. There are many other products that you may or may not need that the agent continues to push. To keep their position with the captive carrier, and maintain their income level, the agent is forced into placing a square peg in a round hole. Even if they don’t actually have the best policy for you, they are still forced to work within their company’s products.
Independent agents can help evaluate your coverage, and shop around for the perfect policy to actually fit YOUR needs, not the company’s needs!
How are independent agents different?
An independent agent or agency is completely different. Independent agents are not held to a contract with one company; rather, they are able to write insurance policies with many different carriers. When you go to an independent agent, you can be sure they’re not trying to sell you a specific company’s products or meet quotas. They can shop around with many carriers to make sure that your insurance policy fits you, your needs, and your assets. YOU are unique, so your insurance policy should never be a one-size-fits-all.
Let’s go back to the original quoting conversation between an agent and a client, but this time the agent is reliable..
- CUSTOMER: Hello, I am interested in receiving an insurance quote for my home and auto.
- AGENT: Great, Mr./Mrs. , before we get started, do you have a couple of minutes to help me better understand what is important to you, and a few details regarding the assets you have to protect?
- CUSTOMER: Sure… I have a copy of my current coverage if you would like to review my declaration pages?
- AGENT: Thank you! I can review those to see where we might be able to improve or adjust your protection.
Immediately, this is a better reaction from the agent because he wants to get to know you, your assets, and the things that you value. This agent is focused on providing you with good insurance and forming a relationship, not just giving you whatever policy his company wants to sell more of.
Tip #3: Find an agent who educates, not just sells
A big reason why many people don’t care for salesmen is that if you don’t understand the topic as well as they do, you can get taken advantage of. When it comes to insurance, almost all of us only understand the basics. How do we know that we’re not getting taken advantage of when we get a policy? How do we know that what we’re paying for is good quality?
The key is having an agent who educates you, not just sells to you. A good insurance agent is not just focused on making money, or keeping their seat with the carrier, but wants to provide you with the tools and knowledge to make an educated decision about your policy. Let’s go back to the conversation we’ve shown between a reliable agent and a customer. After reviewing the policy, the agent may tell you this:
AGENT: “The reason I ask is your automobile liability limits are very important with regard to protecting your assets. You currently have $50,000 for any one person you may injure if you or anyone in your household were to cause an auto accident. $50,000 may sound like an adequate amount of insurance, and for some it may be. However, you have a really nice home, four automobiles, and a rental property, so your situation is different. If an injury accident were to be caused, and you or your family were deemed at fault, you may be exposed to a liability suit. Your insurance carrier will protect and defend you up to your liability limits. In this case an ambulance ride to the hospital, CAT scan, MRI, X-RAY’s, a cast, loss time from work, pain/suffering and mental anguish will eat up your $50,000 quickly. After your limits are exhausted the injured parties underinsured motorist will kick in and pay up to their limits to cover their medical costs. After this has been paid, the injured parties insurance carrier will more than likely subrogate against you to regain their losses. You will recieve a letter from your carrier advising you to seek legal advice. Many times, these cases will settle outside of court and other times they drag on for years as your attorney’s net worth increases. Mr./Mrs ___________________, I am not an insurance attorney, nor am I offering you legal advice. What I am doing is helping you paint a picture to better understand the reasons why the right insurance coverage is important.”
In this scenario, the agent has helped explain what liability limits are, and why this client’s situation specifically may need increased limits. Instead of the agent just telling the client that they need higher limits (or worse, simply reducing the limits just to get them a lower monthly cost!) he has educated the client about why their limits may be too low.
As the owner of an independent agency, I have had many clients come into our office for quotes worth tens of millions of dollars with low liability limits. It always shocks me that their agent never took the time to provide sound advice and education. A great insurance agent is not in the business of peddling policies for commissions or selling the products that make their company the most money. They are truly passionate about making a difference in people’s lives. A great agent has the customer’s best interest front and center. These agents sleep very well at night knowing when the unexpected happens to their clients they will be in a much better position than before joining the agency.
There are many great agents like this. There are policy peddlers too.
So how do I know that I have good insurance?
My advice would be to get a second opinion regarding your protection. It never hurts to get a second opinion, and you can take the recommendations and discuss them with your agent. However, if you have been with an agency that only offers one company’s product for some time, you will more than likely be shocked at the savings you could receive if you shopped elsewhere.
While shopping for a new agent, be sure to run away from any agent who attempts to lower vital coverage to win you over on price. This is a dead giveaway that you are dealing with a policy peddler. Ask the agent about the carrier’s financial strength, whether they are admitted or non-admitted, and if the agent would insure their personal assets with the carrier as well.
If in your review of your policy, you realize that you do not have the kind of coverage that you thought, take a deep breath and thank God nothing has happened — but also, use that moment to find a new agent who gets to know you and your situation. No agent has the ability to read their client’s mind. If an agent does not take the time to learn what is important to you, reconsider their proposal. Does the agent know if you would like coverage in the event your ice maker line begins to slowly drip and it ruins your kitchen floor? Does the agent know that you live in the suburbs, but work in the city? Does the agent know that you’re in the middle of housing renovation? Without the proper conversations, an agent is shooting in the dark and you may be the one catching the bullet.
In summary, insurance doesn’t always have to be a frustrating affair. Working with the right agent or agency, and knowing how to find that agency, can give you peace of mind, and likely save you money, while providing real protection.
Trophy Insurance Solutions in Mineral Wells, TX has built a customer-centered culture. We do not need to know what you are paying; we do not need to know what your current coverages are, we do not need to know which carrier you are currently with. What we need to know is who you are, what you have to protect, what is important to you and the expectations you have for us. With this information, we will be able to tailor a unique policy to fit your individual need. The most shocking part of this is we are still able to save our clients hundreds and many times thousands of dollars. You can have your new loaded Yukon and pay much less for it. All you need to do is let us know that you would like to know more about The Trophy Difference and we will get to work for you.