How to work with insurance agents for best coverage, prices

Homeowners insurance, required in Texas for anyone who has a mortgage, is issued through a company but facilitated by an agent. These agents are liaisons for the insurance company who have the ability to make changes to a policy, which in turn affects coverage and premiums.

Here's what consumers need to know about working with insurance agents to help get the best rates and coverage.

Insurance varies significantly in premiums and coverage

Ware Wendell is the executive director of Texas Watch, a nonprofit organization that advocates for insurance policy holders at the Texas Capitol.

Insurance has become more complex in the last 20 years, Wendell said, because insurance companies vary so drastically.

"It's extremely difficult and complex to shop this insurance market," Wendell said. "It's really hard to compare apples to apples, because it's apples to oranges, pineapples, cherries -- you name it."

Compounding the issue, he noted, is the significant losses companies have incurred as a result of the increase in severe storms in the area, including hurricanes, floods and tornadoes. Many companies are offsetting their losses by charging higher rates while reducing coverage.

With such drastic variations across the industry, understanding the purpose and accountability of an insurance agent is more important than ever.

Insurance agents don't work for the consumer

An insurance agent is an intermediary between the insurance company and the consumer, Wendell noted, but they work for the insurance company.

"They work with you, but they don't work for you," he explained. "They work for the insurance company and ultimately that's whom they're representing."

An insurance agent should be able to explain the policy

While insurance agents don't serve the policy holder, they should be able to answer any questions the consumer has.

Texas Watch encourages all consumers to ask their agent questions until the consumer understands their policy completely. The organization also recommends consumers send a follow up email to confirm the issues that were discussed to make sure the consumer has the correct understanding.

"There's a lot riding on these insurance policies for your home, which is the largest purchase that we make as consumers," Wendell said. "It's our shelter against the elements. It's where we raise our families. Keep asking questions until you understand exactly where you stand as it relates to that company and the policy that they've sold you."

Homeowners have very little bargaining power in insurance

It's up to consumers, Wendell said, to monitor their policies and understand their coverage, especially because homeowners insurance is required for anyone with a mortgage.

"This is not a free market. We have to purchase this product to be in compliance, and so that tilts the playing field away from the consumer towards the insurance company," Wendell said. "That's why it's important for consumers to slow down, take some time to really investigate companies and agents and shop the market very carefully."

Texas Watch encourages consumers to shop multiple companies and get several quotes before committing to an agent.

Homeowners need to work closely with their agent

Whichever agent or company a consumer chooses, they'll need to work closely with that agent to make sure they're getting the coverage they need and the discounts for which they qualify.

Agents will rarely, if ever, initiate conversations about how to save their clients money.

"Ask the insurance company for all the different discounts that they offer, and see if you qualify for them to help to bring the price down," Wendell advised. "You're also going to want to pay attention to the coverage, and remember, these policies are covering less and less through the years."