The first thing you need to know is that how insurance agents get paid can directly impact how much you pay for the insurance.
Most insurance agents they’re paid off a commission. They’re paid a percentage of the amount that you pay for your insurance.
As an example, if you pay $1000 for your homeowner’s insurance the agency that helps you with that is likely going to get paid anywhere from 8% to 20% as compensation. What that means is that if there’s a really bad insurance agent out there, they may be trying to plug you into taking an insurance premium higher than maybe the lower offering that they have available.
Why?
Well, if you pay more, they too can make more.
Second thing that you’ve got to understand about how insurance is being paid. Many of them can get a bonus for how profitable the insurance company is.
One of the things that impacts profit the most are claims. So, you may have small claim or a medium sized claim and insurance agent might try to talk you out of filing that insurance claim because if you don’t file that claim that means that the insurance company is going to be more profitable.
The bottom line is how much you pay for your insurance directly impacts how much the agent gets paid in Commission and the amount of insurance claims that you filed can impact the bonus that the insurance agency may get paid.
Look, I’m not saying all insurance agents are bad. As proof that there are awesome insurance agents out there, comment below the name of the insurance agent you use. Again, they are really great people doing awesome things.
So how can this knowledge help you make sure you’re getting the best deal possible and getting the right insurance out there.
Here are three things that I think you should do to make sure you find an awesome insurance agent to make sure you have the right insurance and I say the right insurance because a lot of people think that the right insurance or the best insurance is a one with the best price. Although price is very important, you really want to make sure you’re getting the tech what. What’s the point of paying $5 for insurance that doesn’t cover your needs rather than paying $20 for it to really cover the stuff you need coverage for.
The best insurance agents out there they independent insurance agents. Companies like Allstate State, Farm, GEICO, they’re great companies but the downside is they’re called captive insurance companies for a reason. They are only able to offer you their insurance products. You want to work with the independent insurance agency who has all kinds of different options. They can choose from companies like Progressive, Travelers, and Safeco. They can look at numbers and different policies that are out there to see what really is best for you.
Sure, they’ll compare which is the best price but they’re also going to compare which carrier is going to fit your needs the best.
After you’ve chosen your independent insurance agent you really have to make sure that you’re working with an independent agent who’s willing to show you more than one option.
Again, some of these insurance agents out there they want to put you with a carrier that’s going to make sure that they get the best bonuses or they get the best commission. An insurance agent that is doing the best for you is going to show you multiple options.
When you were with this independent insurance agent you can either ask to see multiple options, or a good one proactively present multiple options to make sure you get what’s best.
The third thing you’ve got to have is a proactive agent. Meaning they’re going to proactively ask to discover all of your risk and insurance needs. They’re going to proactively show you all the options they have so you can compare the needs and compare the cost as well.
A proactive insurance agent is also going to make sure they’re looking at things for your insurance needs. Not just at the time of purchase but at the time of every single renewal.
So yes, insurance agents are financially incentivized to sell new insurance at a higher cost and they’re financially incentivized talk you out of filing a claim so they can get a bonus.
It doesn’t mean insurance agent are bad.
Knowing this information and being armed with this knowledge can help you find an awesome insurance agent rather than being stuck working with someone who’s not looking out for your needs