Insurance Price Quotations

When shopping for home insurance, premium quotations are a useful tool for comparison of different companies’ products. When asking for price quotations, it is crucial that you provide the same information to each agent or company.

To give you an accurate quote, the agent or company will usually request the following information:

• Description of your house;
• Distance from the nearest fire department and fire hydrant;
• Square footage;
• Security devices, smoke alarms, window locks;
• A picture of your home;
• The coverages and limits you want.

You should understand that not all insurance companies use insurance agents to sell their product. Insurance companies generally use one of three methods to market their product:

1. direct marketing,
2. independent agents, or
3. exclusive agents.

The type of marketing method selected may vary according to the consumer’s need for services. Therefore, consumers should be aware of each of the three methods and may want to consider them in their purchase decision.

• Direct Marketing – Direct marketers sell insurance over the Internet, through the mail, and by telephone. In some cases, consumers can save money with direct marketers, because these companies do not have to pay insurance agents commissions to sell their policies. Companies can pass along some of these savings to the consumer. However, some consumers prefer to pay an additional premium for the opportunity to have a local agent available to them.
• Independent Agents – If you decide to call agents for quotations, ask them how many companies they represent. Independent agents represent several companies; therefore, you can get quotes for more than one company from one agent. This is considered an advantage by many consumers.
• Exclusive Agents – Some insurance companies sell coverage through agents that only represent their company. These companies call their agents an exclusive agency force. Exclusive agents offer you coverage from the company they represent; therefore, you can only get a quote from one company for each exclusive agent that you talk to.

Sometimes exclusive agents may work for a lower rate of commission than independent agents. This is because companies do not have to give the agent an incentive to write their product over another company’s product. The lower commission structure, especially on commissions for renewal business, can represent significant cost savings to the insurance company, and often a portion of that savings is passed along to the consumer in lower premiums.

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