What the gecko didn’t tell you about insurance

The GEICO gecko paints an attractive picture of a friendly and understanding insurance company that gives you excellent service — and saves you money on your auto insurance.

GEICO is not alone; there are other well-advertised insurance brands endlessly wooing consumers, each one trying to out-spend the other on captivating advertising.

Amid all the excitement, it’s easy to forget that an insurance policy is a legal contract that most consumers never bother to read. Anyway, it’s written in what might as well be a foreign language that’s tough, if not impossible, to understand, unless you happen to be a lawyer. But don’t dismiss that as nonsense. Every word is carefully chosen — every word counts.

When it comes to something as highly technical as insurance, consumers need an advocate, someone who can answer their questions simply and candidly so they can make informed decisions, and not just keep their fingers crossed and hope for the best.

Who is on the consumers’ side when they have an accident, and the insurance provides an 800 number to report it? Are the people answering the phones at the insurance company objective? About now, you may think the gecko is playing a game of gotcha.

Yes, insurance companies pay agents a commission when they sell insurance policies. If that’s true, how can an insurance agent be an advocate for their customers when they’re getting paid to sell you a policy?

That’s a good question and here’s the answer. While the insurance agency system isn’t perfect, what makes it work so well for customers is the fact that agents are close to them. They answer to both their customers and to the insurance company. If they don’t meet the requirements of the company, they can lose their contract; if they fail to meet the expectations of their customers, they will lose them.

Now, you might think that you would pay less if you bought insurance online rather than from agent who receives a commission. That’s not the way it works. You pay the same price for insurance whether you buy it online or from an independent agent. State insurance commissioners set the rates.

One more thing. Many independent agents represent several insurance companies so they can place their clients with the one that’s the best fit, offers outstanding service, and a competitive price. How can agents do all that if they have only one insurance company?

These are just some of the things the gecko may have forgotten to tell you.

Joseph E. Rueter, CIC, CPIA is President of Rueter Insurance Agency, Inc. of Philadelphia. A Temple University graduate, he has risk management expertise and specializes in construction, food wholesaling, restaurants, nonprofits, and transportation. You can contact him at joerueter@rueterinsurance.com, 215-637-8223.