Why Do Insurance Rates Increase Over Time?

As with anything else, insurance rates increase as time marches on. In fact, rates are often affected just as much by inflation as anything else you might buy.

Unfortunately, this means that the cost of premiums and policies will continue to rise. How much these rates increase depends on circumstances ranging from neighborhood growth to the world stage.

Replacement Cost Affects Insurance Rates

The first thing that you should consider is how replacement costs work. This is much different than the purchase price of your home or auto.

The replacement cost includes materials needed to “replace” the property, the cost of labor, and other elements to make it whole. If the cost of wood goes up, so will the replacement cost.

If your policy was frozen at the replacement costs from 20 years ago, it would be short. The end result is the costs coming out of your pocket.

As you can see, this kind of increase is good as it reduces how much you’ll have to pay in the event of an emergency, I recorded talking about replacement cost versus purchase or market value on your home, click here to watch the video.

Home and Auto Rates are Similar

Houses are not the only types of property that may have an increase. Insurance rates for automobiles go up as well.

In order for an auto to become “whole,” you’ll need the cost of materials and labor. Nowadays, this can also include a variety of technological advancements, such as rear cameras, sensors, and the wiring to make it all work.

In some cases, insurers will also consider things like the cost of medical bills when making adjustments. So, if the cost of medical care goes up, so do insurance rates.

Like ripples in a pond, anything affecting specific industries will take a toll on many. For example, the cost of computer chips will impact the cost of replacing the cameras I mentioned earlier.

What Can You Do to Lower Insurance Rates?

Depending on the type of property, there are quite a few methods at your disposal to reduce rates. The first thing you should do is ensure your policy is correct. If you’re paying for something you don’t need or have scheduled, it’s a waste of money.

A few other ways to decrease insurance rates include:

  • Preventative measures. Fire alarms, anti-theft devices, safety features, and other preventative add-ons often work to reduce home and auto insurance premiums.
  • Keeping claims to a minimum. The more often you have to file a claim, whether it’s for the home or auto, the more you’ll pay. This is because insurance providers will see you as a high-risk factor.
  • Shopping around. You can always look around for a lower-cost insurer. However, keep in mind that low cost doesn’t mean superior service.

Insurance Rates Are Part of the Cost of Living

Sure, insurance companies need to make money. Otherwise, they would be out of business. However, not all increases in insurance are the result of greedy CEOs or banks.

Sometimes, increases are simply the result of an increase in the cost of wood or other materials.

At Vargas & Vargas Insurance, we can help you find affordable rates and plans throughout our network. Contact us today to see how we can help you save money on home and auto coverage.

After all, we may help you keep more money in your pocket to cover the other cost-of-living expenses.

What is Inherent Diminished Value and How it Affects an Auto Accident?

It’s quite common for some pieces of personal property to diminish in value almost immediately. For example, a computer could lose a great deal of its replacement value within days because of the ever-changing nature of technology and its use. But how does Inherent Diminished Value work for a car?

This depends on the state in which you live. But in Massachusetts, IDV is an established precedent.

What is Inherent Diminished Value?

Inherent Diminished Value, or IDV, is when a vehicle loses value due to damages caused by a no-fault accident. This is when there is a collision through no fault of your own.

As some damage is prevalent even after repairs, courts have ruled that IDV claims can help the owner be “made whole.”

These are usually filed as third-party claims. That’s because you’ll contact the at-fault party’s insurance company.

An example of this is when an accident occurs through no fault of your own that causes structural damage to the vehicle’s framework. Although repairs can be made to allow the vehicle continued use on the road, the frame itself could be altered in a way that disrupts usage as intended.

If the vehicle has less than 20,000 miles on the odometer after suffering severe structural damage, this could result in an IDV claim of roughly 10% of the vehicle’s value.

Is There a Difference in Depreciation vs Inherent Diminished Value?

Depreciation is when the value of the vehicle decreases over time due to normal wear and tear. In fact, most pieces of property will depreciate over time except for housing.

A well-maintained home will actually appreciate over the years, which is why homeownership is a great investment.

So, a vehicle with 200,000 miles will depreciate quite a bit because it has been extensively used. Even after installing a new motor, the vehicle will never be at its original MSRP.

Inherent Diminished Value, on the other hand, happens immediately upon an accident. This is why the IDV claim is much more for a new vehicle vs an older one. It hasn’t had nearly as much wear and tear.

How to Calculate Inherent Diminished Value

Let’s take a look at the calculations to establish IDV. For this example, let’s say I have a 1990 Dodge Daytona ES with 82,399 miles.

1. Establish the Car’s Value

The first thing we’ll do is estimate the vehicle’s value. This gives us a base amount. A commonly used website for finding vehicle value is the National Automobile Dealers Association, or NADA.

In my example, the value of a 1990 Dodge Daytona ES is $11,000.

2. Calculate the Value’s Base Loss

In many instances, the insurance company will calculate the base loss at a maximum of 10%. This means my Daytona’s base loss is $1,100 (11,000 x .10)

3. Use the Multiplier for Damages

Use the multiplier from the numbers below:

  • 1.00 = Severe structural damage
  • 0.75 = Major damage to structure and panels
  • 0.50 = Moderate damage to structure and panels
  • 0.25 = Minor damage to structure and panels
  • 0.00 = No structural damage or replaced panels

Let’s say my car was in an accident that severely altered the frame of the vehicle. I would use the “1.00” multiplier. So, my IDV is still at $1,100 (1100 x 1.00).

4. Use the Multiplier for Mileage

Remember when I told you about the “depreciation” of an automobile? It’ll actually play a role in the Inherent Diminished Value of your car.

Use the mileage multipliers below:

  • 1.00 = 0 < 20,000 miles
  • 0.80 = 20,000 – 39,999 miles
  • 0.60 = 40,000 – 59,999 miles
  • 0.40 = 60,000 – 79,999 miles
  • 0.20 = 80,000 – 99,999 miles
  • 0.00 = 100,000+ miles

For example, let’s now say that my vehicle had only 82,399 miles on the odometer at the time of the accident. I would use the “0.20” multiplier. As a result, my IDV would decrease further to $220 because of the mileage (1100 x 0.20).

Any vehicle that has over 100,000 miles may not qualify for an IDV claim.

When Should You File a Diminished Value Claim?

For the most part, the Inherent Diminished Value triggers when you are involved in an accident through no fault of your own. This means you’re most likely to file a claim against the at-fault driver’s insurance company.

If you’re involved in a hit-and-run, or if the at-fault driver is uninsured, you may be able to file a claim against your own insurance company. This is because there is no other insurer involved.

File your IDV claim as soon as possible. Some areas may have a statute of limitations or your vehicle could further decrease in value as time marches on. In any case, make sure you have supporting documentation.

What Kind of Coverage Do You Have?

Although your insurance may cover a great deal of damage, you may also receive additional restitution due to Inherent Diminished Value.

At Vargas & Vargas Insurance, we help our clients get what they need and deserve. Contact us today to find out more about how we can help keep your automobile covered.

Not all repairs can completely restore a vehicle back to its original functionality. Can compensation help you in such a situation?

Does a Lapse in Car Insurance Affect Your Rates?

Among the best ways to save money on auto policies is to make sure you don’t have a lapse in car insurance coverage. This is when, for whatever reason, you stop payments on your policy for your automobile.

While it may save you a few dollars this month, it’ll come back to haunt you later on, especially in the event of an accident.

In reality, the only lapse in auto coverage you should ever have is when you have no vehicle to drive. You can’t really put insurance on something that doesn’t exist. Though, it’s probably a good idea to get non-owner car insurance if you plan on borrowing or driving someone else’s vehicle.

How a Lapse in Car Insurance Affects Your Rates

Typically, the effects on your rates depend on the amount of time that has lapsed. In many cases, there is an 8% increase if you haven’t had insurance within 30 days. Afterward, it could get much higher ranging up to 35% for a lapse of 31 days or more.

For an annual policy, this could result in paying hundreds of dollars more than what you would have paid. This is why it’s important to get back onto an insurance policy as soon as your old plan expires.

And that’s if you’re not a high-risk driver. The amount you pay could be significantly higher.

Now, this is an estimation as every insurer will have its own policies and penalties. But you can bet that any lapse will result in some sort of higher premium.

What to Do if You Have a Lapse in Car Insurance

Not all lapses in coverage are on purpose. Sometimes people forget to pay their premiums. Or, maybe something else caused the insurer to drop your plan.

In any case, it’s a necessity to get coverage as soon as possible if you continue to drive.

A few things you can do include:

  • Have your local independent insurance agent ask your insurer for a reinstatement. In some cases, your agent may be able to work with you to reinstate your policy with minimal penalties if done quickly enough.
  • Have your insurance agent shop around to see how much of a penalty you’ll have to pay for coverage. Perhaps they can find an insurance comoany that is cheaper overall.
  • Refrain from driving until you’re properly covered. Even if you don’t get into an accident, you can still get a ticket or a potential court appearance should you get pulled over by an office for any other reason.

License, registration, and proof of insurance…

Don’t Forget to Seek Discounts

Some insurers will still allow you to qualify for certain discounts to offset penalties from a lapse of car insurance. This could include things like a good driver’s discount, low mileage use, combining policies such as including homeowner’s insurance, anti-theft devices, defensive driving courses, and more.

Ask your provider what discounts you qualify for even with the lapse in coverage. It could help reduce your monthly payments after a lapse.

It’s Best to ALWAYS Have the Auto Covered

A lapse in car insurance can happen for a myriad of reasons. And many of them might not even be your fault. However, you’ll still feel the brunt of a lapse if you take too long to rectify the situation.

At Vargas & Vargas Insurance, we work with many national insurance companies and may be able to help you find car insurance policies that are affordable even after an extended lapse. Contact us today to find out how we can help you get back on the road.

After all, the sooner your car is covered, the cheaper it’ll be in the long run.

Do Men Drivers Pay More for Insurance Premiums?

Most insurance companies have formulas for how much they will charge for premiums every month. One such calculation involves gender. That’s because men drivers are more likely to be involved in an automobile accident than women.

In 2020, 72% of men drivers were involved in fatal car accidents as drivers. For those who ride motorcycles, the death rate climbed sharply to 92% mortality.

Because men are nearly three times more likely to be in an accident, they are often classified as a “high risk.”

It’s this high-risk factor that gives a lot of insurers pause for concern. It’s similar to why someone who is frequently in car accidents pays more in premiums.

When a provider pays more from claims than is coming in, it’s not good business.

Ways Men Drivers Can Reduce Premiums

While men often pay more for auto insurance, there are plenty of ways drivers can keep the costs as low as possible. Some of them may seem more like second nature to you as a driver.

So, what can you do to reduce coverage costs?

  • Have a Good Driving Record: One of the easiest methods is to simply have a good record behind the wheel of your car. This discount can kick in between three and five years, depending on the insurer.
  • Take Defensive Driving Courses: Some providers will provide a discount if you complete intensive driving courses. Not only will it help you save money, but it can also keep you safer while on the road.
  • Choosing Safer Vehicles to Drive: I know, you’d probably love a sports car. However, they are usually far more expensive with full coverage than an economy car. In some instances, the difference could be in excess of $300 per year.
  • Increase the Deductible: By increasing deductibles, you’ll often decrease monthly premiums. This is because you’ll have to pay more out of pocket in the event of an accident.
  • Work on Your Credit Rating: Credit isn’t just used for buying a house or a new car. Your credit score can help you decrease monthly auto insurance rates.

It’s Not All Grim, Though

Luckily, safety measures have greatly made a difference over the last 40 years. Back in 1978, men drivers made up 22.6 deaths for every 100,000 people in the United States. This has decreased to 9.9 in 2020.

Automobile safety legislation, improved protective devices such as airbags, defensive driving courses, and much more have made a massive impact in curbing auto fatalities.

In fact, when you compare the population of 1978 to that of 2020 and the decline in deaths, there is a stark improvement in safety behind the wheel.

However, this only reflects the death rate. Accidents will still happen, and this is why insurance coverage is so vital.

Always Make Sure You Have Coverage

You can’t argue with certain traffic statistics. And while some people might think it’s unfair, it’s not an anomaly. Men are simply more prone to accidents overall than women drivers.

At Vargas & Vargas Insurance, we work to help you save as much as you can while making sure you have adequate coverage should something happen. Contact us today and find out what we can do to keep your insurance needs from breaking the bank.

7 Easy Tips to Lower Auto Insurance Premiums Each Month

With the kids returning to school, the holidays on the horizon, and the talk about and worry about recession and inflation, many of us look at lowering our bills each month. Today, let’s review a few ways to help lower your auto insurance premiums to keep more cash in your pocket.

1. Compare Rates Among Insurers

One of the quickest ways to find the best rates is to shop around. And we can help with shopping around, as Vargas & Vargas Insurance represents many of the region’s top insurance companies, and we do this regularly for our insureds. Some insurers may have lower prices depending on your needs. However, low rates don’t always guarantee quality service.

While the cost may be an attractive feature, you also want an insurance provider you can trust.

2. Higher Deductibles for Lower Monthly Rates

In many cases, you can opt to increase deductibles to reduce your monthly rates. This means you pay less every month but will have to pay more out of pocket in the event of an accident.

Many people choose this type of plan simply because it’s cheaper to maintain. And if you don’t need to file a claim, the higher deductible is rarely a consideration.

3. Bundle Home and Auto Insurance Together

Bundling home and auto insurance together can greatly impact how much you pay for each one. This is an exceptionally common practice and helps you keep all of your insurance needs under one roof, so to speak.

In other words, it’s convenient to have all of your insurance needs through one company while providing monthly discounts.

4. Lower Auto Insurance with Good Credit

Some insurers will provide a discount if you have good credit. This is because good credit often signifies financial responsibility, which puts just about any company at ease.

Don’t get me wrong, you can still get affordable premiums without an 800 credit rating. However, improving your score can help lower the auto insurance premiums from certain providers.

5. Ask About Low-Mileage Discounts

When talking with an agent, ask them if there is a possible “low-mileage” discount. In some instances, the amount of driving you actually do throughout a month can impact how much you pay for insurance.

An example of this is how someone who drives less than 20 miles per month will pay less than someone who drives 2,000. Fewer miles means there is less of a chance of an accident.

6. Group Policies Can Lower Auto Insurance Premiums

Home and auto isn’t the only thing you can bundle with some insurers. You may also qualify for group policies. These are exceptionally useful for families as everyone has coverage while reducing the per-person rate.

However, buyer beware here; many group plans may become more expensive over time than if you were not part of a group. So, review your group policies regularly with a local independent insurance agent to make sure that you are still receiving the best rates for your insurance.

This is why a lot of parents will add children to insurance plans as it affects the rate a child would have to pay by him or herself.

7. Ask About Good Driver Discounts

Having a spotless driving record can have a lot of benefits, especially when it comes to a lower auto insurance premium. If you can demonstrate near perfection behind the wheel, it could reduce your rates.

In fact, some insurers will offer a discount if you take defensive driving courses. That’s because these courses can result in dramatically reducing the chances you’ll be in an accident.

Reduce Your Monthly Spending in These Trying Times

You shouldn’t have to put yourself or your family at risk to simply cut costs. Today, every penny counts, and what you can save by lowering your auto insurance might help you afford other necessities.

At Vargas & Vargas Insurance, we work to help you afford coverage for your automobile without breaking the bank. Contact us today and find out how we can help you keep your vehicles covered in this uncertain world.

Does Inflation Cause Insurance Rates to Go Up?

Inflation will affect a wide scope of products and services. Unfortunately, this also includes home and auto insurance. The reason for this is that insurers examine several factors when determining rates. One of these factors is the cost to repair or replace.

How Inflation Can Affect Insurance Rates

If the cost of raw materials goes up, this will have an impact on how much an insurer will need to cover predetermined expenses.

For example, a lot of automobiles require microchips in order to function properly. Thanks to the global chip shortage, the costs to replace them are much higher than they were five years ago.

This means insurers must pass on the more expensive auto repairs to clients.

Some expenses for home repair recently increased in 2020 and 2021. However, lumber prices have come down as inventories continue to pile up due to things like mortgage rates increasing, which decreases demand for new home sales.

However, shortages can come in a variety of forms for housing. For example, a current lack of labor and certain electrical equipment can ultimately affect new construction and repairs.

This all culminates in how an insurer adjusts your premiums. In other words, it’s common for inflation to directly affect how much you’ll pay for home and auto insurance.

It all comes down to the cost of repairs should something happen.

Ways to Lower Your Monthly Premiums

Although inflation will directly impact insurance rates, there are several things you can do to reduce the costs on your end.

A few ways you can lower monthly insurance premiums include:

  • Bundling auto and home insurance packages – many insurers will offer discounts by combining policies.
  • Pay for a year in advance – depending on your insurer, you may be offered a discount if you pay for a year or more ahead of time.
  • Increase your deductibles – Although this means you’ll need to have more money out-of-pocket before insurance kicks in, a higher deductible often results in lower monthly premiums.
  • Check your insurer for any home and auto insurance discount programs – for instance, many auto insurers will have “good driver” discounts for those who have never filed a claim.
  • Demonstrate being a safe homeowner – it’s possible that you may qualify for discounts if you show a history of not filing insurance claims or have equipment installed to prevent damage to the home.
  • Make home improvements – it doesn’t take a massive investment to improve the home. Something as simple as improved lighting, CO2 sensors, or installing a doorbell camera may help reduce insurance premiums.

Of course, this also depends greatly on your insurance agent. But for the most part, insurers have a variety of discounts available if you ask for them.

Let Us Help You Weather Inflation Issues

At Vargas & Vargas Insurance, we’ll help you customize your plan to help you adjust during times of inflation. We are here to offer you solutions that will fit your budget. Contact us today and find out how we can help you.

From auto insurance to home protection, don’t let rising costs scare you away from protecting your property.

How to Handle Insurance When the Kids Go or Come Back from College?

College is an exciting time for any youth. It’s their first step into the real world while getting an education to help improve their lives. Given the costs of education, the last thing anyone wants to worry about is extra expenses. So, how should you handle your insurance policy when your child is off to further his or her education?

When to Remove Your Child from the Policy

A common rule of thumb is that you should drop your child from your insurance if they are attending a school that is more than 100 miles away. This is because a lot of insurers believe anything closer may prompt the child to come home often and drive.

It may also be a good idea to consider dropping the child if he or she is living on campus. This is because the likelihood of driving decreases, depending on the situation. Also, if your child isn’t planning on taking a vehicle to college, there’s really no reason to insure them.

When Should You Keep Your Child On Your Policy?

Perhaps the obvious reason to keep a child on a policy is if he or she is planning to live at home while attending college. But let’s go a bit further than that.

What if your student travels home frequently? What if it’s a common thing for your child to come home on the weekends? This is why it’s common to keep a child on a policy if the school is within a 100-mile radius.

Lastly, a lot of parents will pay some of the child’s bills to help with college expenses, which often includes insurance. It’s just one less thing the child has to worry about besides school work.

What About Returning Home for Extended Periods, Such as Spring Break?

If your child is planning on coming home for extended periods of time, such as breaks or vacations throughout the year, it’s probably a good idea to add them to your policy again.

Usually, the costs for doing so are nominal. For most insurers, it’s not a difficult process for a short-term policy change during those time-off periods.

Can You Drop the Child to an Occasional Driver?

Some insurance policies give you the option to drop someone to an “occasional” driver. This is usually someone who accounts for less than 25% of the vehicle’s annual mileage.

Now, not all insurers have such options available. Those who do also may have their own definitions about what qualifies as an occasional driver.

In any case, it could decrease how much you pay in premiums depending on your policy. How much it decreases is also dependent on the insurer.

Does Your Child Qualify for a “Good Student” Discount?

Something else you could consider is whether your child can qualify for a “good student” discount. In many instances, this depends on a couple of factors:

  • Is your child under the age of 25?
  • Can your child maintain a B average or better?

The better your child does in school, the cheaper the rates. This means you or your child can save money regardless of who pays for the insurance.

However, not all insurers have a “good student” policy available. It’ll be in your best interest to find out if something like this exists. Anything to decrease the monthly bills is going to be a benefit for all involved.

Find the Best Rates for Your College Students

College is a formative point in a child’s life. You want to make sure you or your student doesn’t have to stress too much about auto insurance. Contact us today at Vargas & Vargas Insurance to get a quote that works for you and your family.

We’re happy to further answer any questions you might have about your college student and his or her driving habits.

What Happens if Two People Involved in an Accident Have the Same Insurer?

When an accident occurs, it is often customary to contact an insurance agent. But what happens when two people in an accident have the same insurance company? Well, it’s often handled the same but with a few minor adjustments.

In the end, it usually falls under who is to blame to pay for damages regardless of his or her insurance company. Having the same insurer doesn’t change the bottom line. However, the insurer may take steps to avoid issues among clients.

No Bias in Decisions

In many cases, the insurance company will assign two different adjusters to the separate claims. They may also make adjustments to the claims to avoid a conflict of interest.

It comes down to legally being required to handle claims in an efficient manner regardless of whether both parties have the same insurer or not. This also means that you can expect claims to take roughly the same amount of time.

In some cases, the insurance company can waive any deductibles should both parties use the same vendor. But that is often on a case-by-case basis and greatly depends on the insurer.

In every case, though, the process should be relatively the same. Simply contact your agent and process the claim as you normally would.

Who is Cited for Blame?

To ensure one party is at fault over another, a police report can be filed. In most cases, the officer will attest to which driver is to blame, which can ultimately change how the claims are processed.

While not every accident may require the assistance of a police officer, it can help things move along smoothly. Otherwise, it could be a painstaking process should neither party admit to being at fault.

In the event of both parties agreeing to be at fault, the insurance company may assign percentages of claims to both parties depending on the damages suffered. This will be up to the insurer and usually based on the total damages of both vehicles.

An example of this is in the event of one driver tailgating another. This is when a driver is following a vehicle much too closely. If the front driver immediately slams on his or her breaks, it could cause a rear-end collision. After an investigation and the officer deems both parties as negligent, then both could be at fault.

Of course, in this scenario, it really depends on why the front driver had to slam on the breaks in the first place.

Not Much Really Changes

In the grand scheme of things, not many changes if both parties have the same insurer. Though, a few minor things may change to avoid a conflict of interest or prevent the feeling of “favoritism.” For instance, what if the same agent handles both clients prior to an accident? That’s when a newly assigned adjuster would assist one of the parties.

But generally speaking, the claims are handled in the same fashion as if two different insurance companies were involved.

At Vargas & Vargas Insurance, you can rest easy knowing that we take a fair stance with all of our clients in the event of an accident. If you need auto insurance, contact us today and let us help protect you and your family.

Spring Maintenance for Your Car (To Help Avoid Auto Insurance Claims!)

Keeping up with your car’s maintenance can be a hassle…but we’ve got exciting news for you! By prioritizing the maintenance schedule for your car you can avoid some potential insurance claims!

Does keeping up with my car’s maintenance really make a difference?

We know, it’s draining to try to stay up to date on car maintenance. It seems like there’s always something to fix! Unfortunately, a lot of people avoid taking care of their cars until it is too late. According to research from the National Highway Traffic Safety Administration reported by Fox13, the average amount of car accidents due to poor maintenance tallies in at a whopping 45,000. You definitely don’t want to be a part of that statistic. Read on for some helpful tips to avoid insurance claims and enjoy safe travels!

What should be on my maintenance checklist?

One item you’ll definitely want to include on your checklist is to inspect your tires! Make sure they still have good traction and check to be sure the tire pressure has an ideal PSI. This is something you’ll want to do routinely – not only during springtime!

Other items to include on your auto maintenance checklist:

A few other important things to stay on top of:

  1. Schedule an oil filter change. Oil reduces the friction between moving parts in a running engine. If you don’t have your oil changed you could do serious damage to your engine.
  2. Replace windshield wipers. You don’t want to be caught in rain (or snow) with inadequate wipers! You won’t be able to see what’s in front of you which could result in an accident.
  3. Check your battery. Be proactive about checking your car’s battery! Even if it seems to be working fine, it is always a good idea to have the battery inspected to prevent an unexpected failure.
  4. Check your lights. Even in normal driving conditions, using your headlights anytime you’re driving has been proven to reduce accidents by 5-10%. Why not take it a step further and make sure every light on your car is in good, working condition?

Don’t forget the finishing touch!

As part of your spring auto maintenance schedule, consider having your car detailed. Chances are high that your car looks a little worse for the wear after all of the snow and dirt from this winter. Give your car a spring cleaning that will leave you feeling refreshed and confident in your car. We recommend Neponset Circle Car Wash for all your detailing needs!

Stay up to date and stay safe!

All of the preparation in the world can’t prevent every accident, so make sure your auto coverage is sufficient by referencing this guide.  Now, no matter where you’re headed, you can travel confidently and safely knowing that you’ve stayed up to date on your maintenance! 

Vargas & Vargas Insurance, we can help you customize your auto insurance so that it works best for you. We are one of the premier local independent insurance agencies, and we truly work for our clients, not ourselves. Our team of friendly experts would be happy to answer all of your insurance questions. Contact us today.

Captive Versus Independent Insurance Agents For Your Automobile and Home Insurance; An Honest Comparison

When you’re shopping for insurance, knowing the different types of insurance agents is important as part of understanding whom you should work with.
 
There are two kinds of insurance agents — captive (who represents one insurance company) and independent (also known as an insurance broker).
 
Many online insurance companies, like State Farm, Allstate, and Liberty Mutual depend exclusively on captive agents, but some like GEICO and Progressive rely on a mixture of captives and independents.
 
Both types of agents can provide the kind of quality expertise you need to make one of life’s important financial decisions. But there are some big differences between the two.
 
Captive agents
 
Captive agents work directly for a single insurance provider and are limited to the products of that company. For example, if you call a captive agent who works for State Farm, he or she will market and try to sell you only State Farm products. How they get paid is set by their insurance company, and they are paid by that one company.
 
On the plus side, these agents are experts in what their insurance companies have to offer. But they cannot help a client who doesn’t need or qualify for their company’s products. And captive agents usually have quotas to hit to keep their job and earn bonuses. Although that’s not terribly different from independent agents, you might feel a bit more pressure to buy car insurance from a captive agent when all you really want is term life.
 
Independent agents 
 
Independent agents, meanwhile, work for themselves and not any one insurance company. They sell policies from a variety of insurance companies, not just one, there is no increase in the premium to work with an independent insurance agent, and make most of their money through sales commissions and bonuses from the carriers.
 
Independent agents can save you some time by getting insurance quotes from a few different insurers, we have 11 insurance carriers that we can provide you with an insurance quote.
 
Which is best?
 
The type of insurance coverage you choose depends on your needs and your budget.
 
If you’re looking for multiple quotes from different companies, an independent insurance agent probably is the way to go. Vargas & Vargas Insurance can save you time and money, reach our agents at 617-298-0655.