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Nov 4, 201309:38 AMOpen Mic

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The two most important decisions you face when buying insurance

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With the holidays around the corner, I’ll be purchasing something I know very little about, and relying almost completely on someone else to help me make the right decision: jewelry for my wife.

Standing in front of the display case is my annual reminder of what people must feel like when they are buying insurance. While I can’t help you with buying jewelry, I can give you guidance for making the right decision when it comes to buying insurance.

Whether you are buying personal, business, or health insurance, you have two decisions to make: Which company will be my insurance agency and which will be my insurance carrier? Those decisions can have a dramatic impact on the performance of your insurance program. For instance, if you have an uncovered loss because your agent forgot to include the coverage, how important is it that you saved $1.97 on the premium?

In some cases, these decisions are tied together. For instance, if you’d like to work with your local American Family agent, the insurance carrier will be American Family, because these agents are captive, meaning they only represent one carrier.

Aside from these captive situations, insurance is typically purchased through the independent agent model, where you can decide separately on your agent and your carrier. If you don’t proactively decide on these choices, you may not end up with the optimal combination, as each carrier will only provide a quote to the first agent who requests a quote on your behalf.

Insurance agency

Your agency is responsible for advising on available coverage types, negotiating premium models with the insurance carrier for you, and providing day-to-day service after the insurance policy is purchased.

Depending on your industry, you may want to verify that your agent is well versed in the unique characteristics inherent in your business. Another consideration is the agent’s continuing education, which can be displayed through his or her professional credentials.

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