Agency bill vs Direct Bill

The next time you are looking for commercial truck insurance there is another important question to ask your agent when comparing quotes, “Is this policy agency bill or direct bill?”  I will take the time to explain the difference over the next couple of paragraphs.

Although most commercial insurance customers don’t take the time to ask many questions about their policy, this is a question that every consumer should educate themselves about.   Agency bill means that there is another party that gets involved to finance your policy for you.  If you cannot pay for your policy upfront your insurance agent/producer will usually offer you a payment plan, this payment plan is not offered by the insurance company in this case.  It is offered by a small lending institution that is in business to make money, just like the rest of us.  They will often charge you upwards of 20% APR to finance smaller premiums.  This means more money out of your pocket. The actual cost of the financing is usually only displayed to the consumer discreetly. 

There a couple of options that you have first, you can put the premium on a credit card.  Compare your interest rate with that being offered by the finance company.  Second, ask your agent for a better interest rate.  I have only had a few clients ever complain about interest rates, in every case I lowered their APR by 2-5% just because they asked.   All it takes is for your agent to make one call and request a lower rate.  Insurance agencies get rewarded by the finance companies for volume, they make money on the financing as well.  If your agent is diligent about getting you a good rate you should be able to find APR’s between 8-15% depending on the amount financed.  The other reason your insurance agent wants to use an agency bill account is because they make the commission on the sale at the time of the sale.  Much faster than the other alternative, direct bill. 

The best option is to find a Direct Bill insurance policy.  That means to find a policy no matter what type, whether it be boat insurance, RV insurance, commercial auto insurance, commercial trucking insurance that will finance the policy for you.  These companies are usually the big name companies such as Progressive Insurance, Wilshire Insurance, Nationwide etc  they will usually offer you a down payment and let you give them monthly installments with no APR.  Some companies will charge you a small five dollar installment fee, but the direct bill option will keep more money in your pocket. 

When it comes to cancelling your policy you will wish you had a direct bill policy as well.  Direct bill will usually take 5-10 days to get your refund with no additional fees in most cases, whereas agency bill with take much, much longer.  I have seen refunds on an agency bill account take two months to receive a refund.   For more information about this topic please feel free to contact me.  Brent Thunstrom or read more on my website, just Google “covermybigrig.”