A recent cover story in the business section of the New York Times suggests that Internet purchasing has come crashing down on yet another industry: auto insurance. The article points out that other types of consumer policies, namely those purchased by homeowners and small-business entrepreneurs, are likewise undergoing a switch to online. The news comes as no surprise to longtime Tempe insurance agent Mary Contreras, who has been affiliated with State Farm Insurance Co. for more than 20 years. “The environment is changing,” she acknowledges. “We all realize that the Internet is becoming part of our industry.” But with the reality of change comes Contreras’ concerns that online insurance policies don’t necessarily ensure a desired outcome when it’s time to file a claim. First, she points out, recommendations made by bricksand- mortar agents are backed by their company’s errors-and-omissions coverage. Decisions made by clients who deal with live agents are thus “doubly insured.” Contreras also notes that dealing with a conventional insurance agent offers the added advantage of having someone who can help navigate the complexities of addressing each client’s needs rather than a one-size-fits-all policy that might be purchased online with no individualized guidance from a trained agent who is familiar with the local environment. “The local agent has a better chance of knowing each client’s situation and having that person’s bottom line in mind instead of the merely transactional nature of an Internet purchase,” she said. Contreras cites the case of a policy owner she knows who purchased coverage online for a 40-year-old home without realizing that sewer and drain failure should be added. When a water line broke, the online policy didn’t have that coverage and the policy owner had to pay for the repairs out of pocket. “These are parts of a policy that aren’t included automatically when a client buys online,” Contreras says. “An agent would have been much more likely to have told her that.”
