DennisBeaverOctober 5, 2018 • By Dennis Beaver

Today we can buy almost anything online, never having to deal with a salesperson, and that includes insurance. While it’s important to consider the best value for our dollar, there is also the notion of false economy, when today’s money saving decision becomes tomorrow’s costly mistake.

That’s the theme of our story as we explore the value of an on-going, professional relationship with an insurance agent. Napa readers “Ben” and “Kaley” found out the hard way what not having such a relationship means.

“Right after we got married, I sold my car. Kaley had been insured with a traditional insurance company, but to save money, instead of renewing her policy and being sure that I was added, we purchased one online. I had a poor driving record with lots of tickets. Looking back, even though the policy language was clear – excluding drivers like me leaving only Kaley covered – we just didn’t take the time to read it.

“Mr. Beaver, as you guessed, driving her car I caused a really bad accident and we have just filed for bankruptcy. If we had met with an agent, I am certain that none of this would have happened. A story on this topic will help a lot of people.”

Who needs an actual insurance agent?

We ran our reader’s situation by Janet Ruiz, who is the West Coast representative of the New York-based Insurance Information Institute and asked, “When is it best to have your own insurance agent as opposed to buying online?”

“When your life – personally and financially – goes from simple to complex, that’s the time to establish a relationship with an insurance agent,” she replied, citing examples when buying online can be a reasonable choice:

• If you are renting an apartment, most renter’s insurance policies offer similar coverages at competitive rates, which can easily be purchased online.

• The same thing goes for your home and car, as homeowners and auto policies are fairly similar.

• If you are young and healthy, buying life insurance online can be a reasonable decision, and in the last five years we have seen a large increase of policies acquired that way.

“But when your life becomes more complex – getting married, acquiring greater assets, having children, living in an area subject to flood or wildfires – this is the time to establish an agent relationship.”

You can’t think of everything to ask shopping online

Over the many years of writing this column, we’ve learned that the world of insurance is confusing to most people. “Not knowing what to ask and not being able to have an open discussion about your insurance needs can be very costly,” Ruiz points out, adding, “Some online companies offer call-in numbers which are helpful. But you may need much more specific recommendations that go beyond what a customer service rep can provide.”

Wildfires across the United States have proven the importance of having a local agent, “And not only after disaster strikes, but before,” Ruiz underscores.

“When you live in a potential catastrophe area you may need higher limits of coverage than someone else. Also, are you living in an older home? If so, building code and upgrade coverage could save you a great deal of money in the event of a fire or other destructive event. Asking these questions and tailoring insurance to your needs is where agents truly help their clients.”

Life-changing events require meeting with your agent

One of the worst positions to be in is experiencing a loss which was not covered by insurance. One way of avoiding that is by a yearly meeting with your agent, or whenever there is a major life-changing event which calls for either new insurance, or a change to your existing policies. Ruiz lists the most common events:

• Are you getting married or having children? Then life insurance needs should be explored.

• Divorced? As a life insurance death benefit is paid to the person listed as beneficiary, it could be your ex unless changed.

• When you go from renting to buying a home.

• Starting a business – especially a home based business.

• Are you planning on becoming an Uber or Lyft driver?

• Thinking of renting out your home to Airbnb?

• Are you buying a condo? While condo insurance is similar to homeowners, there are some very significant differences. An agent will help you determine what the condominium association’s insurance will cover and your needs.

“At the end of the day, Ruiz concludes, “It’s a good idea to interview more than one agent from different companies. You need to feel comfortable, you want someone who is easy to engage with and fully answers all of your questions.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.