Is Auto Insurance Cheaper Through an Agent?

Last Updated on May 5, 2021

There are many choices when it comes to auto insurance companies, but there are also choices when it comes to how you buy your insurance.

You can buy insurance through an insurance agent, of which there are two different kinds, or you can buy it directly online. Are any of the options cheaper? Is it better to buy from an agent?

auto insurance cheaper through agent

3 Ways to Buy Insurance

There are 3 ways you can buy auto insurance: through a captive insurance agent, through an independent insurance agent, or directly online.

Captive Insurance Agent

Captive agents are people who sell insurance from one company only. These are companies such as State Farm, Allstate, Farmers, Farm Bureau, American Family, and historically, Nationwide.

If you walk into a State Farm office, the agent represents State Farm and no other insurance company. Captive agents tend to know the insurance companies’ policies inside and out and can offer personalized service and advice based on the location and circumstances of the customer.

Captive agents are known for developing excellent professional relationships with their clients, and also provide excellent claims service when their clients have an accident.

Independent Insurance Agent

Independent agents are similar to captive agents, but they represent multiple insurance companies. In fact, many insurance companies only operate through independent agents, meaning the only way you can buy a policy from them is through an independent agent.

Some of these insurance companies include Auto-Owners, Erie, Safeco, and Cincinnati.

Independent agents also offer personalized service and claims support, but they also have access to a wider range of companies and insurance products.

Independent agents also have the ability to write with companies that also sell online, such as Progressive or Liberty Mutual.

Directly Online

Having the ability to purchase insurance directly from an insurance company is a relatively recent phenomenon. There actually aren’t that many companies that offer this capability, but the ones that do are some of the biggest companies in the country. They include companies such as GEICO, Progressive, Esurance, and Liberty Mutual.

Some companies, such as Farmers and Allstate, allow you to do almost everything online, but will then put you in contact with one of their agents to finalize the sale.

People normally associate online insurance as being the cheapest, but this isn’t necessarily true.

Benefits of Having an Agent

There are a number of benefits of having an insurance agent, whether it’s through a captive agent like State Farm, or through an independent agent.

Insurance is Complicated

Many advertisements show insurance to be cheap and easy to buy. While it may be faster to buy your insurance online, rather than giving your relevant information to an agent, insurance is more complicated than what many people realize.

It’s important to understand how insurance works, how liability works, what the ramifications are for having different coverage levels, and how all of this fits into your exact circumstances. Not many people have the time to get properly educated in insurance, so it can really pay to have an expert handle this for you.

Personalized Service

Just as it’s helpful to have an expert who knows the ins and outs of a policy handle your insurance, it’s also helpful to have someone understand your unique life circumstances and how best to protect it with insurance.

An agent can provide trustworthy advice and ask relevant questions that you might not consider if you were buying insurance directly online.

Claims Service

For many people buying insurance online, it’s all about finding the lowest possible price. However, insurance is also about getting paid when you have an accident.

It can be very frustrating to deal with a claims person on an 800 number who doesn’t understand or seem to care about what really happened.

An agent will be much more likely to care about your specific claim and can be an important middle person between you and the company. They are more likely to fight for your interests if the insurance company is playing hardball, and that can result in a higher claims check for you.

Is it Cheaper to Buy Online or Through an Agent?

There usually isn’t as big of a difference as people think between buying your insurance online or going through an agent.

There are only a handful of companies that you can buy directly online from, and some of those (like Progressive), also are available through an agent. There are many more insurance companies that are available through an agent, giving you a greater chance of finding a lower rate.

It’s common to think that if you’re buying insurance directly from a company, that you’re saving money by cutting out the agent’s commission.

This might be true in some situations, but insurance rates are much more complex than that. For example, companies such as GEICO and Progressive tend to have a lot higher number of younger drivers and operate nationwide, meaning they are likely paying out a higher overall dollar amount in claims. This results in having frequent rate increases to offset their higher number of claims.

If you compare their rates with a smaller, regional insurance company that only sells through an independent agent, you’ll likely be surprised to find that the smaller insurance company is a lot more competitive than the online company.

The only way to truly know if you’re getting the lowest rate is to take the time to compare companies. Get a quote from a few captive agents, from an independent agent, and then take those quotes and see how they stack against the online insurance companies (making sure the coverages are the same).

Andrew Flueckiger
Andrew Flueckiger Andrew Flueckiger is an experienced insurance agent with experience in sales, management, leadership, and marketing. A graduate of Indiana University, Andrew is a licensed insurance agent specializing in personal and commercial insurance. Andrew not only holds a wealth of insurance industry knowledge and expertise, in 2016, he also obtained the Certified Insurance Counselor designation.
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