Insurance: An easier way to comparison shop

I had procrastinated until I could procrastinate no longer.

I was in the middle of buying a house, and one of the many, many things on my ever-growing to-do list was to find a home insurance policy. My
It’s not easy to shop around
Every money expert says to shop around for your insurance policies every year. Just call three or four insurance companies, get quotes, and pat yourself on the back for saving hundreds on your insurance policy. Ta-da!

But how many of us actually do it?

I always intend to do it. I know it’s good advice. But by the time a policy is up for renewal, it’s just easier to renew and pay than it is to spend an afternoon calling several companies, repeating the same information again and again, and waiting in misery as they assault your ears with static-y, easy listening on-hold music. Shiver.

And then it’s still not over. You’ll probably have follow-up questions, so you have to call back. It’s also incredibly hard to compare some of these policies, since they’re written in (intentionally?) confusing language. And if you go with the cheapest, is the company really reputable? To find out, you’ll need to do a lot of additional research.

Why is it so difficult to comparison shop?

There are a few reasons it’s hard for consumers to shop around for insurance.

First, we have a limited amount of time. Sure, it is worth it to spend time on something important like this. But how many companies will you call? I called four. Maybe extra-diligent folks would call seven or eight? That’s still not that many companies, if you think about all of the insurance companies out there. It’d be great to shop them all, but no one has the time or the desire to do that.

Second, we’re not experts. Even if you know insurance pretty well, it can be hard to figure out if you’re sufficiently covered or if you’re over-insured.

Third, it’s difficult to compare quotes. For instance, “manuscript” policy forms that don’t use industry-standard wording can be difficult to understand and make it even harder to compare one policy to another. “A lot of companies write their own policy forms to exclude coverage that typically leads to a lot of claims,” says Jon Schildt, managing principal at Calculated Risk Advisors. “Like the definition of water damage. Is it when wind pushes water from the ocean into your house or when rain builds up and floods your home? How that’s worded can affect how much you get reimbursed.”

But just as I started to despair, the State Farm agent offered to introduce me to his wife.

An easier way to shop for insurance

It turns out that his wife, Nancy, was an independent insurance agent. Unlike “captive” insurance agents who only sell one brand of insurance, independent insurance agents shop from a long list of carriers.

Nancy took my information, and a couple of days later she called me back with a few options. The policy she recommended would be $700.

Shocked, I asked her to repeat that number. Then asked her to verify that it was for both home and auto insurance. Yes, $700. Yes, for both policies. No, it’s not some scammy fly-by-night company. And in fact, it was a very recognizable name.

Nancy emailed me the details for all three options, I reviewed them, and I went with the one she recommended, feeling relieved to have it done. I was also feeling pretty great about myself for not paying almost two times more, even though Nancy did all the work!

Why cut in the middle-woman?

It’s not as though I’d never heard of independent insurance agents. I’ve used a couple in the past, but honestly, I was never impressed.

For instance, one time I was working with an independent agent and I pointed out a way that we could save money on our renter’s insurance. “You know, I ran the numbers, and you’re right,” he said. “You do save more money that way!”

Yikes. I’m not an insurance expert by any stretch of the imagination, so that made me nervous about what else he might be missing.

And there are other natural concerns. For one thing, an agent is still a salesperson, and they work on commission. The more insurance you buy, the more it benefits them. That doesn’t necessarily mean that they’re out to scam you, it just means you have to really think about what you need and weigh that against their advice. “A good adviser won’t pressure-sale you, they’ll look at your budget and what your needs are,” says Michael Brunet, partner and director at Harry & Company in Ontario. Even so, keep that GRS tenet in mind: no one cares more about your money than you do!

Despite the possible cons, a I learned that a good agent provides a lot benefits, such as:

  • Better price. You’d think that because a broker takes a cut, you’d be paying higher prices. But when you shop direct, it’s typically the insurance company that’s saving money. “The independent agent doesn’t charge you anything, they get paid by the insurance company,” says Brunet. “You’re going to get help, they’re going to do the work, and you come out on top because you save money and time.” Independent brokers also shop more carriers than individuals typically shop, increasing your odds of getting the best possible deal.
  • Less hassle. Not only do they do the shopping for you, but a good agent will help you compare policies. “We take the insurance policy and break it down in spreadsheet format in terms of coverage and wording used,” says Schildt. “Things like price, definition of named insurer, limits, and sub-limits that each policy has. So we show clients that they have maybe three quotes, and the pricing might be similar, but here’s how the coverage differs. So maybe you decide to pay a little more because you see that you can get much better coverage.”
  • Long-term customer service. An independent agent wants to keep your business year after year. So when your policies are up for renewal, they can shop around for you again to make sure you’re still getting a good price on your policies. “We also know if a company is going to go up in premiums,” says Schildt. “So when that happens, we get on the phone with our clients who have policies with that company, tell them about the increase, and start shopping around for them.”
  • Peace of mind. I liked being able to ask Nancy how the companies and policies compared. In fact, according to findings, brokers are “largely far more efficient at cross checking policies than consumers, and also very good at educating their customers, explaining what types of coverage were available and answering queries.” Agents also have errors and omissions policies, meaning if they make a mistake, like selling you a policy that doesn’t cover your needs, they could be liable for malpractice, and you could recover damages you suffered as a result of their mistake. It’s not a pleasant situation, but it is extra protection.

I’ve tried a couple of not-so-great independent agents, a captive agent and I’ve shopped for insurance on my own. This recent experience with a good independent agent has been the best one yet.

But I’d love to hear about your experiences. How you shop around for insurance? What are the pros and cons you’ve experienced with each method?

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There are 34 comments to "Insurance: An easier way to comparison shop".

  1. Holly@ClubThrifty says 19 March 2013 at 04:37

    I have Allstate and was recently annoyed when my car insurance and homeowner’s insurance both went up around 10%. I called and they said I could save 10% by signing up for online billing and that they could give me another 8% off for agreeing to receive my policy information through email. =)
    One phone call later, and I am paying much less than I was a few years ago.

    • SLCCOM says 19 March 2013 at 22:18

      Allsnake is a really low-rated company. Check Consumer Reports for their evaluation of insurance companies. If you qualify for USAA, take it!

      • Holly@ClubThrifty says 20 March 2013 at 10:25

        I don’t disagree with you, but my dad was an Allstate agent for over thirty years and my new agent is a friend. I feel somewhat loyal to them. Also, I was rear ended in a car accident a few years ago and Allstate handled my underinsured motorist claim rather well. I don’t have any personal complaints about them, but I have heard horror stories!

  2. Elizabeth says 19 March 2013 at 05:32

    I’ve always used an insurance broker but did my own research on the side (often using online comparison tools.) By far, my broker was able to get a better deal. Anytime I have questions or I need something, I know exactly whom to call.

    One thing to watch out for is that insurance brokers often specialize in certain kinds of insurance and not others. For instance, the brokers I use specialize in home, auto and life insurance – they referred me to a trusted colleague when I was looking at disability and critical illness. It pays to look into the qualifications and background of anyone with whom you’re considering working.

  3. Babs says 19 March 2013 at 05:56

    The company I work for utilizes 2 independent brokers. One for commercial and property and another for health and disability. They are both good for the reasons listed. They are specialists! They understand that one size does not fit all and they have relationships with many different companies. We have used them for decades and I recommend them any chance I get. Their companies are built on their reputations and they take that seriously. Very good article.

  4. My Financial Independence Journey says 19 March 2013 at 06:11

    For some reason I had never considered getting an insurance broker. I usually just called a few places and asked about pricing. Since cutting back on car insurance payments is one of my objectives I might have to give brokers a try. Thanks for the tip.

  5. Valerie says 19 March 2013 at 06:54

    So, how do you find a reputable independent broker?

    • abby says 19 March 2013 at 10:02

      I’m wondering this myself! I’m in the midst of revamping my renter’s insurance, and my car insurance needs have changed drastically. I’d love to have a broker who could look into all the different options for me.

    • Elizabeth says 19 March 2013 at 10:10

      Ask around — nothing beats a referral! Let your friends, family and coworkers know you’re looking and see what response you get. Then you can look up the broker online and do a little research. (The ones I deal with have nice websites that outline their experience and specialties.)

      Once you have a broker, he/she can refer you to someone who has different specializations when needed.

  6. Brian says 19 March 2013 at 07:00

    Insurance costs are and will continue to increase due to bad weather, water claims, and fraud. Independent agents are the best way to check multiple companies to see the most competitive options without spending your entire day making calls.

    Disclaimer: I started as a “captive” agent out of college with a big name company but later joined an Independent agency and would never consider going back.

  7. Sam says 19 March 2013 at 07:12

    We recently changed our car insurance, we combined our policies, dramatically increased our coverage (necessary b/c we were obtaining umbrella insurance) and our total car insurance price came way down.

    I too was shocked and I was bummed that we had been paying so much for such poor coverage for 5 years plus.

    • Seed says 04 June 2015 at 08:37

      Which company did you get it from?

  8. Tina says 19 March 2013 at 07:29

    I work for a insurance brokers office. Before I started working here, I had no idea how much they can save you! They take the time to know what you need, and are good at what they do. Extensive training and continuous education courses keep them experts at what they do. I highly recommend using a brokers office– and not just because I work at one!! 🙂

  9. HKR says 19 March 2013 at 07:42

    For my homeowners insurance, the local Farm Bureau has the cheapest by far- the next best I’ve found is nearly $500 more. They’re higher than elsewhere on my car insurance though because they are ultra-conservative in their auto underwriting policies. It would be interesting to see how a broker compares.

  10. Mr.Bonner@bonnersbillions says 19 March 2013 at 07:47

    Ugghhh…this just reminded me that one of the recommendations of our financial planner (last summer) was to get an umbrella policy. The Mrs. and I have always had State Farm because that’s what we grew up with and they were excellent helping my brother when he got into a bad car accident many years ago. I wasn’t aware of independent brokers, so I’ll look into it. Thanks for the info!

    • Lea says 19 March 2013 at 10:18

      I have state farm too. I have never shopped around. I know they are not the cheapest but I have had such a good experience with them I would be hesitant to change. How do you know how insurance will treat you if you have no experience with the company?

  11. Jeffrey James says 19 March 2013 at 09:43

    I use AAA for car insurance and for renter’s insurance. Their prices have always been great, and the service has been amazing as well. I plan to stick with them for a long time!

  12. Tony@WeOnlyDoThisOnce says 19 March 2013 at 09:59

    Clear insight into comparing, April. Great post!

  13. Quinton Hamp says 19 March 2013 at 10:11

    I’ve always used an independent agent referred by my bank.

    However, after the Joplin, MO tornado, our home insurance rates went up (we live about 2 hours away).

    Even price shopping on my own, I was unable to get a better rate.

    However, about once a month I’d find a new comparison site, and enter my information.

    Finally, about 4 months after my rate was raised, I got a phone call from a State Farm agent. They worked out a rate that was much less than their site had offered me, and was $400/ year less than I was paying.

    My lesson? Persistance pays off

  14. stevesliva says 19 March 2013 at 11:29

    My employer offers for auto/home/renters/pet/life/flood insurance. Auto, at least, gets quotes from 4-5 insurers.

  15. @pfinMario says 19 March 2013 at 13:52

    To be honest, it sounds like paying someone a commission to do something unpleasant.

    I imagine the response is, “but isn’t this worth it if it could save hundreds of dollars?”

    Only if I’m incapable of making those calls myself… Which I’m not; I just find the task unpleasant

    • abby says 19 March 2013 at 14:24

      But if I understand it correctly, you’re not paying the commission, the insurance company is. So it doesn’t cost you a cent more and has the potential to save you money. How is that not worth it?

      • Bethany says 19 March 2013 at 22:09

        Exactly; you get the same plan at the same rate as if you had applied directly to the company. The company pays the broker’s commission out of the profits they’ll make on your policy.

        • abby says 21 March 2013 at 13:01

          I guess I’m looking at it like I probably wouldn’t have found the discount/cheaper policy on my own, so I’m happy if my broker could get a commission that doesn’t cost me a red cent.

  16. Bethany says 19 March 2013 at 22:06

    The last three times I needed to switch our private health insurance around, I did my hunting online, my comparisons in Excel, and then went to an independent broker mostly just to make sure I hadn’t overlooked anything. I chose my first agent based on their agency’s online website and liked her a lot. The second time I needed help I had heard a friend raving about their agent so I tried him – but didn’t like him at all. I was in a rather complicated situation and he proposed a rather risky plan (it might’ve left me pregnant without maternity coverage) that wouldn’t have actually saved me much money. Then, when I called back to firmly insist on a safer option, he said he thought it wouldn’t work and I should go with his original recommendation – even though he himself had suggested the plan B! After I reminded him of that, and rubbed it in by saying that I had already called the company and confirmed that safe-plan would in fact work, then suddenly he remembered again. Yeeeaah really not impressed. So the third time I confidently and relievedly went back to my original broker.

  17. Jon @ MoneySmartGuides says 20 March 2013 at 04:03

    It’s hard to get an apples-to-apples quote on insurance when you try to do it yourself over the internet. I’ve found many times that I can’t get the exact same coverage options. It’s not that the new insurance company doesn’t offer them, they just aren’t an option on the free quote. Therefore, I have no idea whether or not the price quoted is a deal or not. As a result, I’ve started to use an insurance broker myself. I give her my policy and she does her magic!

  18. BJ McCauley says 20 March 2013 at 08:13

    Here in Colorado Springs with the Waldo Canyon fires last June, State Farm insurance owners are furious at how long it is taking in getting their claims settled. I think the rule of thumb is — the more a company advertises on TV the less reliable it is. Don’t know if that is true or not — but my take on it is — yes it is true.

  19. Ted says 25 March 2013 at 10:57

    I only found one homeowners insurance company (AAA) in California that would write Guaranteed Replacement coverage, so for now we’re stuck with them. I’d certainly be willing to shop around each year, but with Guaranteed Replacement harder and harder to find, shopping around doesn’t get you much.

  20. Josh says 08 July 2013 at 07:12

    This is a great article and I think April hit the nail on the head. Comparison shopping is rather difficult and very time consuming. Especially so if you aren’t used to insurance and finance terminology. I’m actually working with a website now that is bringing to the US what the UK/ EU has been doing for years now. They’re called and they’re essentially the online version of an independent agent. It’s a more involved process since there are a few more questions asked of you, but from what I’ve seen you definitely get the apples to apples comparison. Other sites are springing up in the US as well. I know sites like Leaky and Insurance Zebra are up-and-comers. I think in the next year or so we’re going to see consumers getting greater access to real insurance comparison.

  21. The Insurance Guy says 07 October 2013 at 22:27

    You should always do a price comparison before purchasing an insurance policy. The price difference between one company to another can be as much as a few hundred dollars per year. You will be overpaying by a lot if you just go with the first company.

  22. Matt says 18 December 2013 at 21:22

    Something I realized is a lot of the bigger named insurance companies who spend a lot of money in advertising and say they give competitive rates really don’t. Try shopping with a independent agency and compare quotes.

  23. Matt says 03 January 2014 at 08:18

    Great read! A good agent will give you all your options.

  24. typegiwoqac says 07 January 2014 at 21:02

    do u have any recommendations for the best site to comparison shop?

    i tried rate kick and they were kinda expensive

    the cheapest i found was from 4autoinsurancequote (29/month), but that sounds too good to be true. are they legit?

    any other good places to try?

  25. Chintan Grover says 14 June 2016 at 06:19

    If, I have to compare some insurance plans then where I can get full information?

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