In this day and age there are plenty of "direct writer" insurance companies out there. These companiess "cut out the middle-man" by selling direct to you, rather than through an agent. However, while you may think you are saving money by going direct, that typically isn't the case. Moreover, by dealing direct with an insurance company, a consumer takes on a level of risk that they may not realize even exists.
Traditionally, insurance companies did not sell to the public. Instead their products were offered to consumers by "agents" who had to be professionally licensed to deal directly with the public. Consumers actually paid the agent nothing because it was the insurance company who paid the agent a commission, and this commission was not added to the retail price.
The agency system is still in place throughout the U.S. You can find dozens if not hundreds of local independent agents in your telephone book or internet guide. However, thanks to the internet you can also go directly to many insurance companies and get a quote. If you like the quote you can often buy a policy by filling out a few more forms, right on the spot.
Calling the retailer an agent is not an accident. The insurance agent is actually your legal representative - your agent - to the insurance company. The agent is licensed by your state and carries with them the fiduciary responsibility to be your advocate. They must put your interests first over and above their own, or the insurance company. Even though the agent is paid by the insurance company, they work for you.
The above is the good news with regard to what an agent can do for you. What about the bad news? Even the bad news has some good news inside of it for the consumer: If an agent makes a mistake (such as selling you an insurance policy that is supposed to meet your needs but doesn't), that agent may well be liable to you for malpractice; something known in the industry as Errors & Omissions. Your insurance agent has an Errors & Omissions insurance policy, just like a surgeon has a malpractice insurance policy. Your lawyer can file suit against the agent - and their malpractice insurance - to recover damages you suffer as a result of a failure to act properly in your interests. Its no fun to think about for the agent or the consumer, but as unpleasant as it is for all concerned, this is a layer of protection that a consumer enjoys when working with an agent.
Which brings us to another problem that you create when you go direct. You have no licensed, regulated insured agent acting on your behalf. You are now taking full responsibility for your coverage decisions, and for any mistakes you may make. No more safety net.
Don't get us wrong... There is nothing wrong with direct-writer insurance companies. However, if you deal with an agent, there are certain services and protections you are going to get that a direct-writer insurance company simply cannot provide.