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Choosing an Insurance Provider

Shopping for auto or homeowners insurance is not something the average person anticipates in the same way they might the purchase of a new car, clothing or electronics. However, prices and customer service can vary significantly between insurance companies, and choosing the right carrier to suit your personal needs can make a significant difference down the road should you ever have to file a claim. Following the four simple steps below will help to ensure that you select the right policy and insurance company at the right price for you.


1.     Start by assessing your own personal or household insurance needs. Many insurers offer significant discounts for customers who purchase multiple policies often called bundled services. Popular insurance choices include:

a.       Vehicle insurance (cars, motorcycles, boats, RVs, etc.)

b.       Property insurance (home, apartment)

c.       Coverage for valuable possessions (jewelry, artwork, or business equipment)

d.       Catastrophic coverage not normally covered under the traditional home owner's policy (earthquake, flood, etc.)


2.     For each type of insurance, it is important to understand the amount of coverage you need. For example, when purchasing homeowners insurance, you should purchase sufficient coverage to insure the cost to rebuild your home in the event it is destroyed. A common misperception is to insure the home for its market value or the balance remaining on your mortgage. Unless it is covered for the replacement cost you run the risk of finding yourself underinsured.


3.     Armed with a complete understanding of your personal insurance needs, you should next consider how you would prefer to interact with an insurance company. Three primary service choices exist today, all of which present unique advantages to the prospective buyer:

a.       Local exclusive agency: A number of insurers have established a network of exclusive insurance agencies located throughout their service areas; much like a bank has local branches in the community. These agencies offer customers face-to-face access to a licensed agent exclusively representing their products. Many of the companies with an exclusive agency force encourage their customers to contact their agent not only to buy insurance, but also for any ongoing service needs down the road.

b.       Independent insurance agent: These agencies also offer face-to-face sales and customer service, but sell insurance for multiple insurers and can shop around on your behalf to provide multiple options.

c.       Direct from insurance company: The third choice is to buy direct, through a 1-800 call center or the Internet. While you give up having a local agent available to assist you, direct insurance companies offer around the clock call centers to service your needs.


4.     While there are hundreds of insurance companies in most states, knowing what you want and how you would prefer to deal with the company will help to narrow the list of choices. With so much competition for your business, obtaining at least three competitive quotes from different sources should give you a good sense of what you can expect to pay for your insurance needs. When comparing multiple quotes, be careful to compare the terms of each policy to make sure they offer equivalent levels of coverage.


5.     Check the financial strength of carriers at reporting agencies such as Standard and Poor's.   Finally, once you have made your selection, be sure to ask the agent or company representative what you can expect in terms of the billing and payment process, policy renewal, and the claim-filing process.


Rachael Kotar

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