As more and more millennials purchase their starter houses, direct homeowners insurance is becoming increasingly popular. Direct insurance is purchased from the carrier, without an insurance agent. These transactions are typically done online and offer consumers the ability to chat with licensed insurance agents. Younger folks tend to be more comfortable with purchasing goods and services on the Internet, which is why direct insurance is a growing market. Some carriers have offered discounts for seniors and military members in the hopes of expanding direct insurance into other demographics.
What Is Direct Homeowners Insurance?
It is a policy that you purchase from the company directly rather than through an insurance agent. This insurance protects you and your home from losses due to accidents and property damage. A standard direct home insurance policy covers losses due to:
- Personal injury
- Extreme weather such as hail, wind and lightning
- Damage to the home, its contents and most other structures on the property
Most basic direct home insurance excludes losses from earthquakes and floods, but you can purchase separate endorsements to cover those events. You can also add riders to your direct homeowners insurance policy to cover valuable personal property such as firearms, jewelry and art collections, which are most often excluded or capped with a traditional policy.
How to Buy Direct
Finding direct home insurance quotes online is simple, as long as you have enough information to plug into the carrier's website for calculation of an accurate estimate. Common information requested for these online quotes includes:
- Location of the home.
- The year in which is was built.
- Other members of the household.
- Lifestyle choices (such as whether anyone smokes in the home).
- Materials used to build the home.
- If the home has things like pets, trampolines, fireplaces and other liability risks.
- How old the roof, furnace, electrical system, etc. may be.
- Whether the home has a garage.
This information will affect the quote you receive from a direct home insurance carrier. This is the same information that will be requested by an insurance agent when determining the premiums a client would pay under a specific homeowners insurance policy.
Direct homeowners insurance allows customers to buy, access and change policies online, cutting out the middleman -- the insurance agent.
Some websites even allow users to compare direct homeowners insurance quotes from several different carriers. Many younger people are internet-savvy and are able to navigate these websites with ease, making it a popular way to purchase homeowners insurance among this demographic.
Most insurance carriers that offer direct home policies allow consumers to access licensed insurance agents through live chats online, by email or by phone. This is important when the potential customer has questions not answered by the online templates and explanations.
Disadvantages of Buying Direct Home Insurance
Although gaining in popularity, direct homeowners insurance still has a smaller share of the market compared to policies purchased through insurance brokers.
Many consumers like working with a middleman. Having a knowledgeable expert to rely on who can offer homeowners insurance options and look over any insurance policy for gaps in coverage gives these clients peace of mind.
Buying a homeowners insurance policy direct also requires owners to conduct their own research, compare several quotes from a number of different carriers and try to understand the often-complex language of the insurance industry. Many people would rather find an agent they can trust to do that time-consuming legwork for them. Those who purchase direct homeowners insurance may believe the online process is faster than speaking with an agent, but if they ever have a question about their policy or options, the speed benefit tends to turn into a negative.
A homeowner may not know the difference between the options of insuring their dwelling using actual cash value or replacement cost. They can read the definitions online (actual cash value pays a benefit at what the item is estimated to be worth, while replacement cost pays a benefit at the amount it takes to replace the old, ruined item with a brand new one with similar features). But what does that mean for the consumer as an individual? Does one option make more sense than the other under certain circumstances? Most people still rely on the expertise offered by an experienced insurance agent to help them choose the right homeowners insurance policy for them.
Direct home insurance can be even more confusing for the uninitiated if they are looking to insure a mobile home, condo or townhouse. These policies often have more exclusions than traditional homeowners coverage, and residents may not need all of the coverage options offered in a basic homeowners policy.
Finally, many homeowners prefer to develop relationships with their insurance agents so that when the time comes to file a claim, they don't feel like just another number on an internet form. While direct insurance companies do offer the possibility of communicating with insurance agents, it will never be the same person. When your agent knows you by name and is familiar with your unique situation, it is possible that you will feel it is less likely that your claim will be denied.
Buying Direct vs. Using an Independent Agent
There are several differences between buying direct home insurance and working with an independent insurance agent, including:
- Choice: An independent agent can offer you several quotes from a number of different insurance companies, giving you easy access to your various choices. When you opt for direct homeowners insurance, you must often spend time filling out five or six different online quote applications. And once you have given them your information, you will receive -- perhaps unwanted -- solicitations from the companies you didn't choose for some time to come.
- Expertise: Having a licensed expert look over documents that you must sign is never a bad thing. Experienced insurance agents are up-to-date on any regulations regarding your homeowners insurance policy and can share their knowledge with you. Buying a direct home insurance policy leaves you on your own.
- Advocates: An independent agent works for you, not the insurance company. They are more interested in finding you the best policy at the most affordable price, rather than looking out for the insurance company's bottom line. They can also be a fierce advocate for you if the time comes to file a claim; you will have an expert in your corner. When you buy a direct homeowners insurance policy and must file a claim, you are stuck with who answers the phone -- and they work for the company, not you.
- Access: If you need to make changes to your insurance policy, an independent agent can help you assess your options. They will help you conduct yearly reviews on your home insurance policy to ensure any life events such as marriage, having children, or adding teens to your policy, will be reflected in the coverage you have so you aren't exposed to new liabilities.
Is Direct Homeowners Insurance Right for You?
Choosing whether to purchase a homeowners insurance policy direct from the carrier or through a licensed agent is a personal decision based on your preferences. If you do choose to work with an agent, knowledgeable, independent insurance agents with Trusted Choice® are always available to help you navigate the various homeowners insurance coverage options and assist you in finding the right policy for you and your home.