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Lower premiums not always the best option

Online search might lead to lower insurance rates, but…

It used to be that checking around for the best insurance rates required spending a good bit of time on the telephone or at an insurance office. But now consumers are just a few mouse clicks away from nationwide rate comparisons.

In some cases, you might find online rates that are significantly lower than what you are paying to the insurance agent who has a local office. But consumers need to make sure they carefully compare policies before making a switch. Lower rates may be possible by cutting out the agent’s commission.

“Possibly you could get lower rates without an agent, but there are things an agent does to help consumers such as assisting with claims and the understanding of the policy they have purchased,” said Mississippi insurance commissioner George Dale. “Yes, cutting out the agent’s commission could result in saving a few dollars on insurance. But you give up service for cost. And if you buy automobile insurance and exclude the agent, make sure the company is licensed in the State of Mississippi.”

Dale advocates shopping around for the best rates, and making sure the insurance company is kept current with your driving habits. For example, the policy needs to upgraded when a child reaches driving age or a policyholder starts driving long distances back and forth to work.

“All that needs to be discussed with the agent on a routine basis,” Dale said. “And definitely shop around. We encourage people to do that. We’re seeing automobile insurance costs begin to level out. We think that people will begin to see better bargains for automobile insurance in the days ahead.”

Craig Upton, an agent for Alfa Insurance, Jackson, said he believes most people prefer having an agent they can go to if there are problems.

“Here you have an agent, and you know who you are dealing with,” Upton said. “When you are shopping on the Internet, you don’t know who you are dealing with.”

With many customers, low price wins, says Leslie Kolleda, spokesperson for Progressive Auto Insurance. She said typically one of its customers can save $500 over a six-month period.

“There is a huge spread of rates among insurance companies,” Kolleda said. “If you aren’t shopping around, you are not going to realize the savings.”

While Progressive can be purchased online, it can also be purchased by independent insurance agents across the country. However, you get a better rate online. There is different cost structure buying from an independent agent.

Are claims harder to get paid when dealing with policies purchased online? Kolleda says that isn’t the case with Progressive.

“When you have an accident, you get assigned to the closest office, and a claims rep will contact you immediately,” she said. “We have 430 claims branches in the country.”

Kolleda said Progressive was the first insurance company in the country to offer online purchase of auto insurance, as well as the first company to offer comparison ratings.

“What we have seen over time is that we used to think phone customers and those who bought over the Internet were two distinctly different groups of customers,” she said. “What we have found is that isn’t true. Lots of folks like to shop online, but talk to someone on the telephone to actually buy the policy. They prefer to shop at their leisure, even if that is at 2 a.m. in the morning. They compare rates online, find the price that is right, and then call to buy. I think that works best for people with busy schedules.”

Progressive is launching a new online functionality called “push to talk.” You can click and, if you have the right computer hardware, start talking to an insurance company representative through the computer speakers. If you don’t have speakers that work online, you can leave a number to be called at a time that is convenient.

“We also find some people call the 800 number first, and then go online to buy the policy,” Kolleda said. “We always knew people wanted choices of ways to buy a policy, but we had no idea this kind of cross pollination was going on.”

Some companies give significant discounts if you carry both auto and home insurance with them, or even two auto policies. Kolleda said people need to look at policies individually because they may not always get the best deal when they come bundled together.

“Check it out,” Kolleda said. “And if it makes sense, buy them separate.”

Jim Jenkins, executive vice president at Mississippi Farm Bureau Mutual Insurance Company, said when getting an online quote, sometimes people forget they were in an accident a year ago or filed bankruptcy three years ago. Or, they may forget to tell the insurance company that the vehicle is used in business.

“Those things can impact whether or not we write the business and, if so, at what rate,” Jenkins said. “Sometimes when you go to buy after getting an online quote, it is different. That online quote is just not as accurate as reality. Most companies check out prospective customers. Do you have previous claims? A bunch of car wrecks? They check the Highway Patrol for DUIs and speeding tickets. I want to know that information before I tell you how much it costs. It is going to be lot more expensive if you have had DUIs, which is logical.”

Jenkins said many of the company’s customers prefer the old-fashioned way of buying insurance, talking face-to-face with an insurance agent.

“There are questions that need to be answered both ways,” Jenkins said. “If I were a consumer, I’d be careful about buying online because I wouldn’t know who might be handling my claim. Do they have an adjuster in my city? Or in my state? If I have a problem, do I have to get online? I want someone I can see and talk to because insurance can be complicated.”

Insurance companies are increasingly working to accommodate both customers who prefer face-to-face interactions, and those who like shopping online.

“Allstate is certainly experiencing phenomenal growth in the number of consumers and customers logging on to Allstate.com for quotes and a number of other online services,” said Allstate spokeswoman April Eaton Robinson. “Through the years, we have enhanced our Web site with changes that make Allstate.com more convenient and easier to use. Our online customers can manage their Allstate accounts by viewing and requesting policy changes, pay premiums, report a claim and monitor its progress through claim settlement. There’s a feature called ‘Frequently Asked Questions,’ to give consumers a quick way of finding the information they need. Customers can even link to their Allstate agent’s personal Web page to e-mail the agent directly from the Allstate.com site.”

Whether customers come to them online, by calling a toll-free number or visiting a local office, Allstate is experiencing growth. Robinson said one million drivers switched to Allstate.

Before deciding which company to use, consumers should first decide what coverage options are right for them. Robinson said with auto insurance, for example, would they need underinsured/uninsured motorist coverage? Are they interested in saving some money through insurance discounts for multiple policies?

“Once you determine your insurance needs, you should look at the company as a whole,” she said. “Does the company respond when you really need assistance? Does it have a large network of offices, claims centers, agencies and helpful employees to serve you? Are the agents committed and knowledgeable when it comes to helping you make decisions about insurance? Is the company stable? Will it be there in the future? One way to determine financial stability of a company is to do your research. Both A.M. Best and Standard & Poor’s offer financial ratings for insurance companies.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

About Becky Gillette

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