How many times in your life will you take out an insurance policy? If you own your own car, home or business, then it will likely be a lot. And it’s not a one-time only task; most policies must be renewed every year.
Knowing your policy is due for renewal can often cause a groan as you make a note to put aside a few hours of your time to sort out a new policy. If you don’t want to trawl through comparison sites, submitting the same details again and again in a bid to find the cheapest price, not to mention the companies that aren’t listed on comparison sites, you may be weighing up the advantages and disadvantages of using an insurance broker.
You may think that having someone arrange all of your yearly insurance policies will be too expensive. You might be wary of not getting the proper coverage. Or you may not even know what an insurance broker does!
In this article we will cover what insurance brokers do, and the advantages and disadvantages of using insurance brokers.
What are the advantages and disadvantages of using insurance brokers?
There are many advantages of using insurance brokers. With access to a wide range of products in the market they can often find deals that would not be available to you via insurance companies or through comparison sites. Insurance brokers are very knowledgeable, using their expertise and assessment of risk to find a product that provides cover for exactly what you need. And by not charging a fee (brokers take commission from insurance companies when you take out a policy), you can potentially save a lot of time and money, especially if you have multiple policies.
The disadvantages of using insurance brokers are similar to using any service: you want to deal with an expert who you can trust and has your best interests at heart. Good insurance brokers should be impartial, work for you, and only recommend products and policies that benefit you. They should not feel like a salesperson.
We will dive into more detail about the advantages of using an insurance broker, as well as the disadvantages, but first let’s take a quick look at what exactly insurance brokers do.
What does an insurance broker do?
An insurance broker acts as an intermediary between you and the insurance provider, helping you to find a policy that best suits your needs. Unlike an insurance provider, insurance brokers are not affiliated with a particular company and have access to multiple products in the market. They don’t charge to use their service, instead they make a commission when a customer takes out a policy with a provider. This arrangement means it is in the broker’s interest to provide you with the best policy within your budget.
Now that we’ve covered what a broker does, let’s take a more detailed look at the advantages and disadvantages of using one.
Advantages of using an insurance broker
If you think that using an insurance broker will be too expensive, will take too much time, or they won’t be knowledgeable enough to help with the niche product you require, then think again. Often the simplest and most cost-effective approach to taking out a policy can be to use an insurance broker. They have access to a wide range of products, don’t charge you any fees, and are highly knowledgeable about the various insurance markets. Let’s take a closer look at the benefits.
Saves you time
Over the course of a year the average person may need to take out car insurance, home insurance, travel insurance, health insurance and life insurance. If you manage your own company then you can add business insurance and public liability insurance to the list too. The short of it: managing insurance policies takes up valuable time. If you are sourcing all of these policies directly via insurance providers then you are potentially having to complete multiple quotes and carry out research and price comparisons for lots of different policies.
The beauty of using an insurance broker is that they can search a range of providers for each of your insurance policies, providing the right coverage at the best price. You won’t be bogged down by lots of choices as they will only show the best products that apply to your circumstances. Even better, an insurance broker will also ensure your policies are up to date and stay on top of any legislation changes.
Access to more products
If you go directly to an insurance provider you will only be able to choose from the range of policies they sell, which can often be limited. Insurance brokers, by not being tied to any single provider, have access to a wide variety of products and policies across the market – which is particularly beneficial if you need specialist insurance that is only covered by a few select companies.
Brokers are also likely to find more options than you would from searching comparison sites. This means they can usually find products that are better tailored to your requirements and at a cheaper price.
Focused on your needs
Insurance brokers work for you, not for insurance companies. Their job is to find the most suitable policy for you within the budget you can afford. Unlike comparison sites, you can sit down in person with your broker to set out what you need and discuss any concerns. Your insurance broker will listen to what cover you need, provide independent and impartial advice, and recommend a product that best suits your requirements.
Knowledge and expertise
Insurance policies can often be quite confusing, particularly if you need specialist coverage for a niche product. You may be worried about covering yourself for additional damages or liability and end up taking out extras, or even a whole policy, that you don’t need. A good insurance broker will take the time to understand all your needs before recommending a product which fits you best. It is not in their interest to sell you something you don’t need.
If you do have questions at any stage of the process, or you have a change in circumstances after you’ve taken out a policy, your insurance broker is expertly trained to offer impartial guidance and advice.
Personal service does not cost you more
You might think that using an insurance broker is a premium service you can’t afford but that’s not the case! Insurance brokers do not charge any fees but instead receive a commission from the insurance provider if you take out a policy. Their business model relies on repeat customers so it isn’t in their interest to recommend a policy that does not provide the right coverage for you.
Often people use comparison sites to find the cheapest deal but in most cases, the cheapest deals are those available to brokers. Insurance brokers are in regular contact with insurance companies and can often secure better priced policies than would be available to the customer directly. Also, by only recommending policies that provide the best coverage, the customer is more likely to be insured for the right amount. This means the provider can charge less, saving you money.
Take care of claims
In the unfortunate event that you do need to make a claim on your policy, your broker may be able to handle the bulk of the work, speaking to loss adjusters and insurance claims departments on your behalf. Making an insurance claim can sometimes be a lengthy process, so knowing that your broker is on hand to help can be very reassuring.
Most people dread renewing their annual insurance policies. Spending hours scouring comparison sites to find the best deal can be a pain, especially if you have two or three different policies that renew at different times throughout the year.
One major advantage of using an insurance broker is that once you’ve used their services, they have all of your details on file and know when your policy is due for renewal. They can do all of the legwork for you, find the best deals available, and save you time and effort. What’s more, if there are any changes to your circumstances, or you need to amend your policy, then they can take care of it.
Disadvantages of using an insurance broker
As well as the advantages, there are a few disadvantages of using an insurance brokers. Let’s take a look at some of them.
Concerns about dealing with a salesperson
Insurance brokers should be impartial and independent, working to meet your needs and requirements. If you feel like they are trying to sell you a policy that you haven’t asked for or don’t need, then you need to question your involvement with that broker. A good insurance broker should work with your budget to find the best policy available for you.
May lack knowledge of specific products
Having access to lots of providers means brokers cover a lot of insurance industries. If you need insurance for a very specific policy such as marine insurance, you may worry that a broker won’t have the same level of expertise as a company who only deals with those types of policies.
In answer to that, a good insurance broker will already be familiar with many of the policies on the market and will be able to carry out thorough research on any products a customer is interested in.
Having covered the advantages and disadvantages of using insurance brokers, we hope you have found this a useful read. Everyone is likely to take out an insurance policy at some point during their lifetime, and for most people this will include multiple policies every year. Knowing the best options and services available to you can save you time, money and stress. Overall, engaging with a great insurance broker means you have more time and money to spend on the things that matter, letting someone else take care of the paperwork.