People find insurance agents all sorts of ways. Many of us start by asking our investor friends, buddies working in the insurance industry, and even ordinary friends and family members. Many more simply approach the company managing their homestead or auto company, where options on policies are limited. But no matter how you find your agent, the important thing to know is whether this person is going to be the right individual to serve your needs.
The only way to do that is through some good old-fashioned due diligence and thorough vetting. Let’s get right into how to vet your insurance agent so you can know what to look for—or in some cases, run away from!
Who Your Agent Is Matters—This Is Why
When we’re evaluating insurance decisions in general, we must consider which factors affecting our insurance policies are within our control. I intend to write about all of them here on BiggerPockets over time, but we’ve talked about the importance of selecting the correct policy before. With the overwhelming majority of investors using the wrong policy for them, how many do you think are also using the wrong agent?
Agent selection can prove just as critical as policy selection. In instances where an investor ends up with a policy or agent that isn’t optimal, we don’t blame the investor. We can’t on most matters of insurance company-investor relations for the simple reason that there is very little information about how to do these things. That’s why I’m creating these guides for you, BiggerPockets friends. The “every investor” needs a manual.
Think for a moment about what you really want out of an agent. For most people, that’s someone who is smart, aware of the options available, and—above all—ethical. There’s no quick test for any of these qualities, so the next best thing you can do is ask questions.
Any professional who won’t answer some questions isn’t worth your time or money. While folks like realtors, insurance personnel, and especially attorneys have professional boundaries about giving personalized advice to non-clients, any of these experts should be able to answer basic questions about the services they provide. If you’re paying for their time, they should be able to answer questions in depth.
Watch Out for These Common Agent Problems
Let’s face it, there are people who suck at their jobs in every field. That’s fine; it’s just the way the world works. But you don’t need to be on the losing end. Here are some trends I’ve noticed in my years both working as an insurance agent and observing how others operate. There are several. And where possible, I’ll point out the a more ideal relationship.
Red Flag #1: You’re Getting the Sales Treatment From the Package Player
This person is also known as the jack of all trades, or the master of none. If you go into an agent’s office and it becomes clear that their goal is to up-sell you to high heaven, you might be dealing with a “package player.” The package player doesn’t just want to help you with that rental property you came in to talk about—they want to sell you the freakin’ works.
Maybe you need home, auto, motorcycle, or life insurance? Heck, they might even offer to insure your beloved parrot Bethany. If an agent glosses over the main thing you want to talk about and manages to turn it into a side issue, that’s a great sign they’re manipulating the conversation toward the up-sell.
This type of manipulation is one reason insurance agents get a bad rap. But none of us have to tolerate it. Nobody can drive you crazy if you don’t give them the keys. Keep ’em in your hand, and drive to a different agent’s office.
Red Flag #2: You Found a Dictator, Not an Advocate
Certain behaviors aren’t just annoying or pathological—they’re just not conducive to good business. The agent-turned-dictator is a prime example. You can recognize him or her in the wild by these trademark traits:
- Forces particular products on you with very little (or no) information about you. They may even have something picked out before you walk in the door. Always beware when someone has a little too much fidelity to a particular provider’s product or pushes it as a one-size-fits-all fix.
- Sees themselves as a shot-caller. Unfortunately, such a self-perception correlates with seeing you as nothing more than a dollar sign.
- At their core, fails to understand they work for you. This may be implied or stated. Even if they tick no other warning bells, this is serious.
If this were a friendship, we certainly wouldn’t call it healthy. Nothing about this type of relationship is OK. If you find yourself engaged with this personality type, keep looking.
There are so many of us in the industry who truly just want to help you and don’t use our jobs to satiate our egos. The healthy version of the relationship we want here looks more like the agent is a consultant, not a tyrant. We want something egalitarian, where you can trust and lean on that person’s expertise, but the agent’s ultimate goal is to get you what you need—not push the “product du jour.”
Red Flag #3: Your Agent Owes Their Soul to the Company Store
Hyper-fidelity to a particular company or product usually means the agent is locked into a relationship with that company. In my view, agents who only promote a single company’s products are compromised from the very beginning. When you walk in the door, you want to know you’re going to get to see all of your options. If you can only see a single company’s offerings, you’re not getting the full story—and this exact situation leads many to buy the wrong policy.
If your agent is honest that they work for X company and only serve X products, congratulations—at least they’re ethical. But they’re likely not the best option for a real estate investor who may need specialized products. Consider a second option, ideally without this red flag present.
Here’s the cold, hard truth about insurance companies that my colleagues may not want me to tell you: There is no company on earth that can provide the right policy for every investor at a fair, affordable price. Not one. Get the idea that one might exist somewhere out of your head, and you’re already ahead of the average insurance shopper.
Red Flag #4: Getting a Quote is Like Pulling Teeth
Professional insurance agents tend to have their stuff together. The quote process should be straightforward, streamlined, and easy. If you find you’re having to navigate a maze of web tools while craning your neck onto your shoulder to talk to some company’s help desk, hoping to be put out of your misery, you’ve encountered this red flag in a painful way.
But that’s not this red flag’s only iteration. You might also be asked for reams of paperwork complete with details that are absolutely irrelevant to your quote. Frankly, any difficult or cumbersome quote process is a sign that the insurance company is failing at one of their most basic tasks. You need someone competent, with the intelligence to hire a strong team and offer you the tools you need. Pass on anyone who turns getting a quote into an insane, paperwork-laden scavenger hunt.
Red Flag #5: Company Personnel Find Mysterious “Problems” With the Property
This red flag is one to turn tail and run if you encounter. It’s also not 100 percent on the agent and may have to do with other folks at the insurance company. You can also encounter this red flag once you’re already doing business with a company, so it’s good to be mindful of. If your insurance company’s inspectors and underwriters are always finding problems with properties—particularly if you have seen the properties yourself or know them to be in good condition—it’s a bad sign.
The concern here is dishonesty. Finding “problems” is an easy way to pump up your costs. Finding nonexistent problems, however, is an unethical practice that will hopefully die once enough of us get smart and don’t contribute to the financial success of dishonest operations.
Bottom Line: Trust Your Gut & Hold Out for the Right Agent
Bad agents of the kind we’ve discussed here can cost you big money in the short- and long-run. Humans have instincts for a reason. It’s not rude to cancel an appointment, seek a second opinion, or look for a better fit. If your gut is telling you this relationship with your new agent isn’t starting on a promising foot, listen to it. You won’t be harmed by continuing to look for someone more suitable.
What you do want is someone with whom you feel comfortable asking questions and sharing information. Even if you can’t put your finger on what’s turning you off about a particular candidate, pay attention to your intuition.
What else can you do? Well, a few things. I really recommend that you keep an open mind when you’re looking for an agent. For many investors, that might look like simply being open to speaking to some specialty companies or smaller companies that deal with investors. Many of these companies can get you better deals on rental real estate than, say, home and auto providers with names you know and jingles you can hum.
Finally, a qualified insurance agent who has experience serving real estate investors will generally have more experience for you to learn from than a newer agent. Yet, there’s nothing wrong with using someone new to the game. What you want is a brain you can pick—that consultant and advocate, who will guide you through the often confusing world of insurance.
Not all agents are bad. But I hope that by calling out some of the bad behavior I’ve observed, those in the investing industry can avoid problems. I don’t take pleasure in dragging down other agents, particularly those who are hard-working and ethical. Such agents do exist! I’d like to believe I’m one of them, but I’m also certain I know quite a few. And if you were to ask any of those good agents, they’d agree that the empowered investor is a wonderful client to have for any professional.
Do you have any other traits to add to the good/bad agent columns? Or any tips to share for investors looking for the perfect agent and/or policy?
Write your thoughts in the comment section below.