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Insurance Agents

Insurance agents represent one or more insurance companies and sell a variety of products including life, homeowners, auto and long-term care insurance.

What does an insurance agent do?

Insurance agencies sell products that provide methods for managing risk. Policyholders pay insurance companies fees, or premiums, to cover potential losses or costs in certain situations, including death, disability and long-term care.

Insurance agents can provide information to help you determine the kind of insurance you might need, and the amount of coverage to consider. Specific coverage details and costs depend on the risks involved, and factors such as age and health condition. Different types of insurance include:

Homeowners insurance covers both damage to property and liability for any injuries and property damage policyholders or their family cause to other people (including damage caused by pets). Standard homeowners policies don't cover flooding, earthquakes, or damage due to poor maintenance/upkeep of a household system.

Automobile insurance protects you from financial loss should you have an accident. It can provide property, liability and medical coverage. There are different degrees of car insurance policies available, so finding one that's right for you is key. Some states require drivers to maintain a liability policy at minimum.

Health insurance is a type of insurance coverage that covers the cost of a policyholder's medical and surgical expenses. Depending on the type of health insurance coverage, either the policyholder pays costs out-of-pocket and is then reimbursed, or the policyholder makes payments directly to the provider.

Life insurance is intended to provide funds to your family or other chosen beneficiaries after you die. Policies often offer the option of having proceeds paid to designated persons in an annuity or as a lump-sum payment.

Disability insurance is intended to help you maintain your current standard of living if you develop a disability. Similarly, critical illness insurance is intended to cover costs while you recuperate from a serious illness.

Long-term care insurance, considered one of the more complex insurance products, is intended to cover costs associated with long-term care at home, in a nursing home or assisted living facility. There are a number of options available, and it's important to review them all when deciding what's best for you.

To help with future care and avoid rate increases, some people choose hybrid policies that combine long-term care and life insurance. Hybrid alternatives offer a payout in the form of a death benefit or long-term care coverage.

How to find an insurance agent

State insurance departments regulate their own insurance companies. Insurance laws, what insurance is required and how much it costs can vary from state to state. Consider these tips for finding the right insurance agent for you:

• Check local consumer reviews on Angie’s List.

• Visit the National Association of Insurance Commissioners website to find an agent who is licensed in your state. You can also conduct a company-by-company search for complaints in your state.

• Ask any agent you're considering about his or her experience in handling claims. An experienced agent should be able to tell you what to expect if you file a claim.

• Have the agent explain how they'll go about determining the coverage that's right for you. Oftentimes policyholders will shop on a price comparison basis, but you'll want to make sure you have adequate coverage regardless of the cost.

• To check the overall health of a particular insurance company, review their ratings on A.M. Best Co., and make sure they have a rating of A, A+ or A++.

• If you receive a notice of nonrenewal, start shopping right away. Consider switching low-risk policies like auto insurance to your new insurer for multiple-policy discounts.

• Check with your state’s Department of Insurance on the statute of limitations for filing a claim, which can vary from 1 to 2 years.

• If you experience a sizable loss, consider hiring a public insurance adjuster who will submit claims on your behalf to get the best settlement possible and receive a percentage of your settlement as compensation.

• Don't rely on an adjuster's proof-of-loss statement. Use at least three independent contractor estimates as your starting point. Many insurance companies use one-size-fits-all price lists to estimate repairs. These lists often don't factor in higher material costs or higher-end installations.

• Don't assume the insurance adjuster necessarily represents your insurance company or your interests. After disasters, many companies use adjusters from third-party firms to handle the spike in claims.

Is an insurance agent necessary?

Should you work with an agent, who's an intermediary, or directly with an insurance company? There are pros and cons to either choice.

Insurance companies sell their policies two different ways: through a direct writer or through an independent agent. When you do business with a direct writer, you're doing business with that one particular insurance company and they can only offer you the products they sell at the prices they've set with the department of insurance. Because a direct writer only needs to know the products of one company, it can make it easy to keep policyholders abreast of policy changes.

An independent agent who represents multiple insurance companies can compare the coverage and the cost of several policies. In doing so, an independent agent can match his or her client to the insurance company that best suits the client's needs in terms of coverage, pricing and service. Some people prefer to work with an agent, finding him or her easier to contact and less intimidating, especially if the agent is local to your community.

Both direct writers and independent agents typically work for commissions earned on the sales they make. A direct writer working for one company can enjoy the stability that comes from having one compensation plan. An independent agent who works with a number of insurance companies can experience differences in income, depending on which company's products he or she sells. Take note: independent agents have the flexibility to write policies through the companies that offer the highest commission rates, assuming they provide the products that meet their clients' needs.

Saving money on insurance

There are ways to save money when buying insurance. Some companies will offer a discount if you pay your annual premium all at once, instead of in monthly installments. Other companies might offer a discount if you make your payments electronically. If you're looking for a discount on your insurance, talk these options over with your agent:

Compare premiums. Save money on insurance costs by comparing the premium costs of different companies' policies. While premium rates vary depending on age, health and place of residence, there are differences between companies. Gather quotes to effectively compare rates.

Check into bundling. You can bundle low-risk policies for sizable discounts as well. Make sure in advance that the agency of interest offers this option. Companies offer discounts as a way to make sure you buy all of your insurance products from one place rather than shopping around when you need a different product.

Increase your deductible. If you take on a part of the risk by increasing your deductible, you can lower your premiums. And then you can always save the monetary difference in case you need it to help cover the cost of any damage or destruction in the future.

Be proactive. There are a number of things you can do yourself to help lower your insurance premiums. You can protect your home by installing a security system, which often warrants an insurance discount. If you drive less or haven't had a recent claim, you might be eligible for a discount on auto insurance. For parents covering their teenagers insurance, some insurance companies offer a "good student" discount for exceptional grades. Take the time to check-in with your insurance agent or insurance company at least once a year to see what discounts are available to you.