N.J. Regulator Offers Tips on Shopping for Insurance Coverage

April 2, 2014

New Jersey Department of Banking and Insurance Commissioner Ken Kobylowski this week provided advice to consumers when shopping for insurance coverage.

Whether buying and insuring a new car, starting a small business or moving into the state, insurance shoppers should understand who they are dealing with and know that there are three main ways to secure an insurance policy in New Jersey, Commissioner Kobylowski said.

“Consumers can buy insurance through different pipelines,” said Commissioner Kobylowski. “Whether purchasing a policy directly from a company, through an agent employed exclusively by one carrier, also known as a captive agent, or an independent agent or commercial broker, insurance shoppers in New Jersey can be confident that they are getting the best coverage if they understand basic issues and their market choices.”

Researching Insurance Options

The commissioner said expanding insurance knowledge is the first step in making informed decisions about coverage offered. Understanding terms and standard policy conditions used in various lines such as auto, homeowner’s and business insurance is a key step toward selecting the best protection.

• Direct Writers: These carriers offer coverage directly by phone or through online purchasing. They may also employ licensed agents who operate local offices. When buying directly from an insurer without an agent, consumers need to verify that the carrier is licensed by the State, Kobylowski advised. Consumers can visit the New Jersey Department of Banking and Insurance website to verify online that a carrier is licensed in New Jersey.

Agent Types

When shopping for coverage, it is important to understand the types of agents in the marketplace, Kobylowski said.

• Independent Agent: Some agents have contracts with several different insurance carriers. These agents can assist consumers in comparing coverage options offered by multiple companies on the same risk.

• Captive Agent: Other agents write exclusively with one insurance company. Consumers who are certain of the carrier they want to use may want to utilize these agents.

• Insurance Broker: Brokers typically write commercial coverage and life and health insurance for businesses. Business insurance coverage tends to be a more complicated transaction. Owners may want to utilize a broker who specializes in finding insurance for business risks to maximize coverage for the best possible cost.

“There is no set formula for finding the best coverage to fit your needs,” said Kobylowski. “However, word of mouth may be the most popular and reliable indicator that you have found the right coverage source.”

Commissioner Kobylowski provided the following suggestions if consumers decide to search for an independent or captive agent rather than buy insurance directly from a company:

  • Referrals from family, friends, neighbors, and colleagues: A recent National Association of Insurance Commissioners survey found that 79 percent of consumers asked said they received insurance advice from family and friends. Also, 65 percent said they asked colleagues and social acquaintances. Consumers should ask about and find out why they like the agent. Customer service, friendly, and knowledgeable are all valid reasons for preferring an agent. Another important factor is the quality of claims handling by the carrier the agent represents. Insurance rate stability and a thorough annual review by the agent to assure the best coverage at the best price are all issues that should play a role in selecting an agent, Kobylowski advised
  • Internet: When searching for coverage online, keep in mind that the largest carriers writing that line typically emerge as the first listings found. Many carriers direct online searchers to local agents. An initial search may generate preferred agents, but consumers may want to extend their search further to find the best agent and carrier online, the commissioner said.
  • Trade groups or other business owners: Small business owners can talk with local trade associations or other similar business owners, which might have related insurance needs.

Whether picking an agent for the first time or switching agents or companies, it is a good idea to have several to choose from, the commissioner said. The commissioner advised consumers to consider the following factors when evaluating options:

  • Licensing: Consumers can check the Department of Banking and Insurance’s licensee search page online to make sure the agent writing the policy is licensed by the State of New Jersey.
  • Personality: Talk to prospective agents, discuss coverage needs and ask for a quote. Securing a quote does not mean a commitment is required. This is a chance to test the agent’s operation and potential insurance relationship comfort level.
  • Credentials: Agents and brokers often have acronyms behind their names, such as CLU (Chartered Life Underwriter) and CPCU (Chartered Property Casualty Underwriter) on letterheads and business cards. These represent earned designations provided by insurance groups or associations. Ask what the letters mean and what requirements were met to receive the designations, the commissioner recommended.
  • References: A successful agent should be able to provide references from satisfied customers. Consumer should not be afraid to ask for them, the commissioner said.
  • Always Ask Questions: Do not leave any question unanswered. Provide a candidate with a particularly interesting insurance experience and find out how he or she would address it.

Choices About Coverage, Carriers

The Department of Banking and Insurance also offered the following advice:

  • If using an independent agent, there will be choices about coverage and carriers. Evaluate options and make certain the company and the policy are best suited to the coverage situation.
  • Ask the agent to provide information about the recommended carrier and coverage quoted, including why that company and policy best fit the insured risk.
  • Do not respond to pressure. An agent or carrier should not pressure an insurance shopper. If an offer seems too good to be true, it probably is.
  • Verify the legitimacy of the insurance company or agent before providing social security numbers or bank information over the phone.
  • Ask for copies of all paperwork signed and keep a record of policy payment for the initial premium sent to the agent.
  • Call the insurance company if a copy of the insurance policy describing coverage is not received within 30 days of the purchase.

  • “The best way consumers can protect themselves is to research the agent and company under consideration,” said Commissioner Kobylowski. “Always: Stop before writing a check or signing the contract; Call this Department; and Confirm both the agent and carrier are licensed to write insurance in New Jersey.”

    Source: New Jersey Department of Banking and Insurance

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