FAQs
Answers to commonly asked questions that will help you make good decisions.
General Insurance
What are the differences among the major types of insurers in the United States?+
Insurers take a number of organizational forms. Stock insurers are owned by shareholders. Mutual insurers are owned by their policyholders. Reciprocal exchanges insure one another. Lloyd's associations put the manager's personal wealth at stake. Blue Cross/Blue Shield companies are typically community-oriented health insurers. HMOs provide comprehensive, prepaid care.
Should I care which type of insurer I purchase insurance from?+
Buy from the company that offers the product, service, and quality you want at the lowest cost — regardless of organizational form. Base your decision on factors like the financial strength of the firm.
What's the difference between an exclusive agent and an independent agent?+
Exclusive (or 'captive') agents are employees of a single insurance company. Independent agents represent multiple carriers, so they can shop your insurance and compare options. Independent agents also tend to provide more personal, customized claims service.
What do I give up by not using an agent?+
Many policies can be purchased online or by phone, but you lose access to personal, customized guidance from a trained local professional. Direct sellers spend heavily on advertising and often pass impersonal service back to the consumer.
Who rates the financial strength of insurance companies?+
Major rating agencies include A.M. Best, Standard & Poor's, Moody's, and others. Each has its own standards, so it's a good idea to check ratings from several sources before purchasing a policy.
Why do insurers ask so many questions on an application?+
Underwriters use your answers for two purposes: first, to decide whether to offer you coverage; second, to determine the rate you should be charged based on the risk profile you fit.