You hear it all the time, “buy direct, cut out the middleman.” Or, “why do you need an insurance agent? They will be a thing of the past, kind of like travel agents.”
You see it all of the time on TV. This company saves its customers $400/year on auto insurance. Another company saves its customers $500/year on auto insurance.
So is it True?
4 Reasons why Buying Direct May Cost You More (MUCH MORE)
1. Simple Math. Direct writers like GEICO spend nearly $180/policy in advertising. Companies that use independent insurance agents spend about $125/policy on agent’s commissions. The math is simple.
2. The Niche. ALL auto insurance companies long to have a niche. GEICO, Progressive, and most other insurance companies are very competitive for a particular type of customer.
For instance, for Massachusetts auto insurance, Safety Insurance likes to write customers who own a home, have 6 years+ clean driving, have newer vehicles, don’t live close to the ocean, and have multiple cars on their auto insurance policy. Usually, these customers will receive very competitive prices from Safety Insurance.
Problem is, each company has a niche that only a small percentage of drivers fall into. So, you have two choices, go to every single insurance company available (this usually takes a long time) OR, go to an independent insurance agent who may represent 5 insurance companies or more, including Progressive and Travelers.
- Apples to Apples. It sounds more simple than it is. With so many bells and whistles such as accident forgiveness, disappearing deductible, and free road side assistance, it is often difficult or impossible to compare apples to apples.
Be Sure to Make Sure
a. Each individual coverage section (In Mass. Parts1-12) must be exactly the same.
b. Your driving record points must match.
c. Factor in fees you will incur for canceling mid-term.
d. If you pay monthly, compare the monthly rate. (annual rate will only apply if you pay in full)
e. Make sure you don’t put deductibles in places they should not be or do not currently exist.
- Independent agents know their stuff. Most good ones will be more concerned that you get the right coverage instead of the cheapest price. In the long run this will give you peace of mind and save you thousands should you have an accident. When you go to a direct writer, sometimes you may not get what you think you are buying. Unfortunately, you may learn this the hard way should you get into an accident.
So the moral of the story is: Just because a company writes direct, it does not mean they will save you money. The commercials are meant to make it seem this way, but, it’s just not the case. Here at Duffy Insurance we represent 7 companies that can write auto or motorcycle insurance in Mass., and in most cases we save our customers time and money.