Comparison of Insurance Purchasing Options

Published Date: 10/27/2023

Choosing the Right Path: Understanding How to Purchase Insurance Wisely

Buying insurance may seem like a straightforward task — go online, get a quote, pay the premium, and you’re covered. But as Insurance Hour host Karl Susman reminded listeners in his episode “Comparison of Insurance Purchasing Options,” the way you buy insurance can matter just as much as what you buy.

With over 30 years of industry experience, Susman walked through the three primary ways consumers can purchase coverage: directly from the insurance company, through a captive agent, or through an independent broker. Each path offers advantages — and hidden pitfalls — that can affect how well you’re protected when it matters most.

This breakdown takes Susman’s real-world insights and translates them into a practical guide for anyone navigating today’s increasingly complex insurance landscape.

1. Buying Directly from the Insurance Company

Susman began with the most straightforward option: purchasing insurance directly from the carrier.

In the past, this meant mailing in paper forms with a check enclosed — a process that now sounds quaint in the digital age. Today, buying direct usually involves calling the company’s sales center or using its website.

✅ The Advantages

• Fewer middlemen. You deal directly with the insurance company — no agents, no intermediaries.
• Immediate access. You can often get quotes, bind coverage, and make payments online 24/7.
• Transparency. There’s no concern about an agent’s bias or commission-driven recommendations.

⚠️ The Drawbacks

But Susman cautioned that simplicity can come at a price: you lose your advocate.

“You don’t have anybody that’s there to look out for you,” he explained. “If there’s a claim and you’re not happy with how it’s being handled, it’s just you and the insurance company — one on one.”

That lack of representation becomes critical when disputes arise over coverage or claim handling. Without an agent or broker, consumers must navigate complex policy language and claims departments on their own.

Susman also debunked a common misconception — that buying direct automatically saves money.

“Ninety-nine point nine percent of the time,” he said, “you’re paying the same rate, whether you go directly to the company or through a broker.”

Insurers file standard rates with regulators, meaning that price differences between distribution channels are rare.

In short: buying direct gives you speed and simplicity, but not guidance or advocacy.

2. Working with a Captive Agent

The next option is to purchase coverage through a captive agent — someone who works exclusively for one insurance company (or occasionally two).

Susman described captive agents as experts on their specific carrier’s products. They know the underwriting guidelines, claims processes, and pricing structures inside and out.

“If you go to a captive agent,” Susman said, “they should be an absolute expert on everything to do with that one insurance company.”

✅ The Advantages

• Deep expertise. Captive agents live and breathe one company’s products.
• Consistency. You get a single, cohesive experience across your policy, claims, and renewals.
• Brand reliability. Many large carriers with captive networks — like State Farm or Farmers — are well-established with strong claims histories.

⚠️ The Limitations

However, this one-company model also means limited options.

“If you call one of these captive agents and give them your information, they’re going to go to their list of companies — which, again, is one or maybe two — and try to make you fit,” Susman explained.

That “one-size-fits-all” problem is not about dishonesty, he clarified, but about structural limitations. Captive agents simply don’t have access to multiple carriers.

This can lead to mismatches between a consumer’s risk profile and the company’s underwriting appetite — particularly in today’s volatile California market, where wildfire exposure, coastal risk, or aging infrastructure can drastically affect eligibility.

“You might be a perfect fit, you might not,” Susman said. “But you’re unlikely to hear that from the captive agent directly.”

Captive agents work well for clients who fit neatly into their carrier’s risk profile — but not for those who need customization or flexibility.

3. Working with an Independent Broker

Finally, Susman turned to his area of expertise: independent insurance brokers.

Unlike captive agents, independent brokers are not tied to a single company. They can shop multiple insurers, compare options, and tailor coverage to fit unique client needs.

“A broker might have the option to write with ten, twenty, or thirty companies,” Susman explained. “Through relationships, they might even have access to hundreds.”

✅ The Advantages

• Choice. Brokers can compare multiple carriers to find the right balance of price and coverage.
• Customization. They can mix and match endorsements or specialized carriers to cover complex risks.
• Representation. Brokers legally represent the insured, not the insurer — making them advocates for their clients.

In California’s shifting insurance market, that last point is crucial. When claims arise or policies are non-renewed, brokers can help their clients file complaints, request reconsiderations, or find replacement coverage.

⚠️ The Drawbacks

Of course, there are tradeoffs.

Brokers can charge broker fees — additional service charges to cover their time and expertise. These are typically modest (often $50–$100 per year) and negotiable, but consumers should always ask upfront.

“They represent you to the insurance company,” Susman said. “In essence, they’re charging a fee to be your manager.”

Brokers also lack binding authority, meaning they must obtain formal approval from the insurance company before coverage takes effect. This can add a short delay to the process, especially for complex or high-value risks.

Still, for many consumers — especially those seeking personalized service or hard-to-place coverage — the advantages of working with a broker far outweigh the disadvantages.

4. The Bigger Picture: One Size Does Not Fit All

At the end of the segment, Susman refused to declare one purchasing method “best.”

“If you were looking for me to answer the question and tell you which is actually the best way to go, I’m not going to do that,” he said. “Because one size does not fit all.”

Each approach has its audience:

• Direct buyers may prefer convenience and digital control.
• Captive clients may value brand loyalty and simplicity.
• Brokered clients may prioritize choice, advocacy, and expertise.

The key, Susman stressed, is knowing what kind of buyer you are — and what kind of service you expect when something goes wrong.

5. The Case for Expertise

Susman closed with a simple truth: most people don’t study insurance. They buy it, file it away, and hope it works when they need it. But in today’s climate, hope isn’t enough.

“Unless you go to school, unless you’re an insurance expert, unless you have the background and the expertise,” he said, “it probably makes the most sense for you to find someone who does.”

That might mean working with a seasoned captive agent or a trusted broker — but the common denominator is professional guidance.

Because while online portals and quote generators can compare prices, they can’t interpret coverage language, negotiate claims, or advocate for policyholders.

And as California continues to face wildfire threats, flood risk, and tightening underwriting, having someone who understands both the contract and the climate may be the most valuable insurance of all.

Final Thoughts

Karl Susman’s lesson in “Comparison of Insurance Purchasing Options” was more than a how-to — it was a reminder that insurance is both a product and a process.

The way you buy it influences not just your premium, but also your peace of mind when disaster strikes.

Whether you go direct, captive, or independent, the smartest policy is the one you truly understand — and the one that has an expert standing beside you when you need help the most.