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Does your insurance agent matter?

Does your insurance agent matter?

You need auto, life or homeowners insurance. You know you need a strong policy that provides the coverage you need for you and your family. But does it matter which insurance agent you use to purchase that policy? 

It might. The right insurance agent can save you money while making sure that your policies aren't filled with gaps in coverage that could cost you later. 

Unfortunately, too many consumers spend too little time researching insurance agents. They'll often go with the first name they find online. Or they might simply work with a relative's neighbor, cousin or brother-in-law as a way to avoid researching and interviewing agents.

See also: Auto insurance rates rocket: What consumers can do

This, insurance professionals say, is a big mistake.

"Many people hate insurance because they don't think their plans cover anything or the price is too high," says Bryant Goodreau, an independent insurance agent with Michigan Insurance Source in Clinton Township, Michigan. "A good agent should ask people what their needs are and sell them a plan that fits."

Goodreau says that the right insurance agent will help consumers purchase the insurance policy that provides the amount of coverage they are seeking at the best possible price. Consumers just have to put in the effort to actually research insurance agents like they would new smartphones, TVs or laptops.

Does your insurance agent matter? Consider the two types of agents

When buying insurance, consumers can choose from two types of agents: captive and independent.

Captive agents work for and sell policies from only one company. If you choose an insurance agent with State Farm, for example, that agent will only sell you insurance policies from that company.

An independent agent sells policies from several insurance companies. An independent agent can sell you a policy from State Farm, Allstate, American Family Insurance or other big-name insurance providers. 

Both types of agents get paid on commission: When they sell you a policy, they get paid. 

There are advantages to working with both types of agents. Captive agents might know more about the policies they sell, and might be able to find discounts when you buy different types of insurance from them. Independent agents can search policies offered by major insurers to find you the one with the lowest price.

But whether you work with one who is captive or independent, you want to find the right insurance agent. As insurers say, that agent is the one who saves you money while finding you an insurance policy that provides you with the protection you need.

Finding the right combination of savings and coverage

Jason Owens, sales specialist with the Cole Thornton Agency of American Family Insurance in Independence, Kansas, says that the right insurance agent will ask key questions about what you are protecting, whether you are buying life, auto or homeowners insurance. 

Then, depending on the answers you give, that agent will create a customized insurance plan for you and your family, Owens says.

He points to a recent example: A customer came into Owens' office seeking renters insurance with $25,000 in coverage, with $11,000 of this amount needed to cover firearms that he owned. After applying the correct endorsement, the Cole Thornton Agency was able to save the customer more than $100 while providing all the coverage the customer needed for his firearms.

"Are you just another policy, or does the agent and his staff get to know about you, your family and your goals?" Owens asks. "If so, you have the kind of agent who will do his best to protect you and yours."

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Gladys Boutwell, an agent with PBP Insurance in Portland, Oregon, sums up the importance of the right insurance agent like this: "Rock stars, actors and artists all have agents. Why do they have agents? Without an agent, they would be lost."

Boutwell says that the right agent is there to not only help you find the right policy, but to answer any questions you have after taking on the policy. Say you add a master bedroom addition to your home. Your agent can help you determine the additional homeowners insurance you need. If you add a teen driver to your auto insurance policy, your agent can help you search for the discounts that might lessen the financial pain.

"Their purpose is to answer your questions, help you navigate through the oceans of information and guide you down the road that will help you get what you ultimately want, a streamlined process to picking your insurance," Boutwell says. 

An insurance agents No. 1 job: Filling the gaps

For Brent Cherniss, an insurance broker with San Diego's Fusco & Orsini Insurance Services, the most important service that an insurance agent can provide is to fill in the gaps in coverage that most consumers don't even know exist in their policies.

Cherniss says that many consumers are underinsured. Because of this, they might have to spend their own money to settle all or part of a future claim. For example, maybe you own several valuable electronics. If they are destroyed in a fire, your homeowners insurance policy might only provide cash value, meaning that you would only be reimbursed what those items are worth today, not what it would actually cost you to buy new versions of them. To get what is known as replacement cost coverage, you'll need to buy an endorsement.

The right insurance agent can help you find, and remedy, such holes in your coverage, Cherniss says.

"Most clients do not understand what coverages are on their policy," Cherniss says. "They believe they will be covered no matter what. However, this is almost never the case. The right insurance agents will identify potential gaps in coverage. They will be able to explain to their clients why they should consider adding or increasing a certain coverage."

You could buy insurance directly from a big company like Allstate or Nationwide without working with an individual agent. You can usually do this over the phone or online. 

But agents such as Cherniss advise against this. By skipping on the agent relationship, Cherniss says, you could leave yourself open to those costly gaps in coverage.

"The right agents will focus on making sure their clients' current policies do not have any weak spots," Cherniss says. "Once the individual agent deems the coverage to be sufficient, they can then focus on saving the client money."

See also: Secrets of life insurance: Know what insurers look for when you apply

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