Who's your agent? When buying insurance, you've got options - Buying Power

Black Enterprise, July, 2003 by Linda Lawson

Within a year, insurance for Umana and Dawn Essien's home, health, and car in Tomball, Texas, reached stratospheric proportions.

The couple's car insurance cost $400 per month. Umana's teachers' insurance premiums rose from $100 a month to $340. Even their mortgage increased because their homeowners' insurance was incorporated into their payments. "Everything was going up," Dawn says.

But instead of buckling under the pressure, Umana and Dawn found creative alternatives to standard insurers and procedures. And they saved money. For anyone looking for better insurance options, it's a matter of finding an option most compatible with your needs. That is, of course, after you've done all the necessary homework. Start by considering the following:

* Consider a licensed broker. Unlike large insurance companies, brokers scout for the best deals among a variety of insurers for policies that best fit your situation. "Brokers tend to represent the policyholders," says P.J. Crowley, vice president of public affairs at the Insurance Information Institute. Query several brokers before making a decision. How is their company rated? The best companies have an A rating. How many companies can they recommend? A good broker should provide you with at least four or five options, says Patrick Moore, president of Diversified Insurance Services, a Chicago brokerage firm. Query several brokers before making a decision, and be wary of brokers who offer deals that seem too good to be true. "All are offering the same product, but maybe from different companies," Moore says. "If the price is out of line or doesn't seem to be an average, I'd steer clear of it."

* Purchase direct insurance. Many companies cut costs by eliminating the middleman and the agent, selling the policy directly to you. Geico is the most widely known. In the Essiens' case, they saved more than $300 a month on their car insurance with Geico.

* Search the Web. While some companies tout themselves as Internet insurance firms, the term is a slight misnomer. "Even if it says it's an Internet company, most likely you are going through an agent or insurance company," Crowley says. What the Web can provide is access to reputable companies that may have less recognizable names but offer coverage and prices to suit your needs. The Internet also allows you to compare prices from a variety of companies.

* Umbrella your coverage. Many companies offer a discount if you package your coverage by purchasing, for example, home and auto insurance. Typical discounts can range from 10% to 15%.

Your specific needs and wishes will dictate what avenue is best for you. If having someone nearby to discuss your needs is important, an agent will suit your needs better than an Internet company.

"You have to do a little self-analysis and decide what's important to you," says Crowley. "Your personal needs should determine what works best for you."

Regardless of the option you choose, always obtain at least three quotes. If necessary, contact the Better Business Bureau and your state's department of insurance to determine if a company has sufficient financial backing. It's their job to make sure companies are not underwriting too many policies. Having a great deal of coverage won't matter if a catastrophe happens and you can't collect because the company went bankrupt.

It's crucial to decide what benefits are most important to you, then find the best option to give you the most services for your buck.

For any insurance inquiries, contact the consumer line of the Insurance Information Institute at 800-331-9146.