Insurance Tip #1: Your agent does not have to act in your best interest

This post is part of a series where personal finance expert Dan Solin provides 10 insurance tips no one else will tell you. See all 10, plus one bonus tip!

Whose interests does your insurance agent represent?

You might think the answer is obvious: Yours, of course.

Not so.

The issue is whether or not your agent has a "fiduciary" obligation to you. If so, she accepts the highest duty of loyalty and care. She cannot have any interests that conflict with yours.

In most states, however, insurance agents are not fiduciaries. They have no obligation to place your interests above their own or above those of the insurance companies they represent.

In those states that impose a fiduciary obligation on insurance producers, the industry has strongly resisted being held to this higher standard. The California Department of Insurance issued a legal opinion imposing a fiduciary duty on insurance brokers. The industry strongly criticized the opinion, calling it "erroneous."

The insurance industry spends mega advertising dollars to convince you to "trust" its agents. Most consumers believe that their agents are acting solely in their best interest -- and I am sure that many are.