Traditionally, car insurance was sold through insurance agents or brokers. These people would be knowledgeable about car insurance and would have access to a wide number of policies or different companies. They would use these resources to find the best policies available for customers. Once a policy was written, the insurance agent would be the primary contact between the customer and the insurance company.

Times began to change once the Internet made it easy for insurance companies to offer their products directly to consumers. Beginning in the ’90s, insurance companies started focusing heavily on advertising campaigns, interactive websites and toll-free numbers. Now it’s easier than ever to purchase an auto policy without ever leaving your home, but is it better to have an agent or purchase a policy directly?

Can Agents Find Better Insurance Deals?

There are two main types of insurance agents. One will be an independent agent that sells policies from multiple different insurance companies. They may receive a commission from each insurance company that they sell a policy for, but they ultimately sell policies from all companies indiscriminately. The other type of agent works for a single specific insurer. These agents will be paid directly by the insurance company they are associated with.

When purchasing auto insurance from an independent agency, you will have access to policies from whatever insurance companies that agent chooses to work with. That may depend on commission rates, the number of connections they have within the industry or other factors. If you work with a single-company agent, you will only get a policy for that company.

Either way, agents are trained to be knowledgeable about insurance laws and are well-informed of discounts. They will be able to help you minimize the cost of your auto insurance by finding the best coverages and discounts to suit your specific needs. On the other hand, they will be limited by the insurance companies that they have available, so you may not receive the best possible rates.

Does Having an Agent Cost More?

A study from ConsumerFed.org suggests that insurance rates are higher for companies that pay agents high commissions. These high commissions do not necessarily correlate with better customer service, and many of the most expensive car insurance companies have some of the worst customer service according to customer surveys.

Insurance companies that focus on direct sales almost always have lower rates than those that rely on agencies. Although they spend much more money on advertising, they still do not need to pay salaries or commissions to agents across the country. All of the money they save can be used to reduce the cost of premiums.

According to the ConsumerFed study, customers who had access to all of the information available to an agency could research for one hour and find a cheaper policy than the agent was offering. In some cases, customers were saving several hundred dollars by comparison shopping for their own policy from among the options available to agents.

Is Getting an Agent Worth It?

Although policies from agencies are often more expensive than those purchased directly over the phone or from a website, agents are not always a bad idea. Some customers prefer having a single point of contact with their insurance companies. Having a professional relationship with an agent who can answer questions, help you file claims, locate discounts and otherwise provide customer service tasks can be very valuable for some people.

Seniors, busy professionals and other people who prefer having someone else write their policies for them prefer to work with agents, regardless of the cost, and some insurance companies are cutting funds in other places to maintain low rates while offering insurance through agencies. Even as major insurers are moving toward more direct sales, others like Geico or Progressive that have traditionally sold directly are now establishing agencies.

Ultimately, the decision of whether or not to have an insurance agent will depend on whether you can find a good agent with whom you can establish a relationship. If you find an agent that you trust and enjoy working with, it may well be worth a few extra dollars a month to maintain that relationship. On the other hand, if you would prefer to do your own research and handle all aspects of your policy yourself, purchasing a policy directly from the insurance company may be the best bet.

Whether you choose to get an insurance agent or purchase a policy yourself, it’s a good idea to do some preliminary research and decide what will suit your needs. You can comparison shop between insurance companies online before deciding on a policy or interview several agents before agreeing to use one. By making an informed choice, you can save money and select the option that works for you.