Using an Insurance Broker

Have you ever used an insurance broker? I have. I used to buy my homeowner's policy and my car insurance through an insurance broker. Then, I realized I was not getting the best deal through my broker. How? I was talking to a friend, and they said they had a great deal through a certain insurance company. I called my broker and asked if I could get the same deal. He said he didn't deal with that insurer. At that point, I did some research.

You might think that your insurance broker deals with all available insurers. However, each broker will work with only a select number of insurance companies -- and may actually restrict which companies based on who pays the best commissions! So, when your insurance broker says that they have found you a great deal, it may not be the "best" deal. It's only the best deal from among the companies that your broker works with.

So, if you want to get the best deal while working with a broker, what do you do?

Well, you can work with more than one broker, as long as you haven't signed any exclusive contract with any of them. Each broker should have some unique companies that they are working with, and it gives you a better chance of getting a wider range of companies.

For that matter, you can also ask each broker which companies he or she is working with. That way, you can be sure that you know what the "playing field" is, and you can also be sure that you are getting a wider variety of companies. After all, if each broker is working with the same companies, then you are simply going to be offered the same options.

The advantage of getting your policy through a broker is that you will have someone to hep you with the claims process. Brokers can often be advocates for their clients when something goes wrong.

The other advantage of a broker is the chance to have someone else do the legwork for you, in researching what kinds of policies you could get and at what price, and then giving you the results. If you aren't happy with the results, you can always go and check out companies that your broker didn't.

My most recent car and auto policy is one from a company that my broker didn't work with.

MLA
7 comments
Posted by editor@insuranceguide101.com on January 3,2007 at 2:51 PM
I don't see how using a broker guarantees you coverage. I know people who have had their policy cancelled out from underneath them, because of claims or the purchase of a dog (that the insurer didn't like) and there was no concern regarding the length of the "relationship", nor did a broker manage to get the coverage reinstated. While I can see that there can be benefits to using a broker, a guarantee of insurance wouldn't seem to be one of them in my opinion.

However, I absolutely agree that you must shop for service. It's more important to see how an insurer treats people who make a claim (and what happens to their coverage after they make a claim) than it is to get the lowest price.
Posted by Chris Clark on January 3,2007 at 12:26 PM
Loyalty to a broker and an insurance company can make a huge difference in the event of a problem. If an agent to company views a client or perspective client as a "shopper" one who goes the market place each year does not get the unwritten benefits one would after being with agent or company for many years.
It is the job of a brokers to find you the best coverage and best price for the LONG TERM. I would be willing to pay the $100+ per year for that security.
I really don't believe higher commission is an issue. Say it varies 3% from one company to the next on a $1000 auto policy. That is $30. Is a reputable agent going to sacrifice his integrity for $30 per year?
Regarding online shopping. . .buyer be educated. I can't imagine how many folks purchase insurance online and state they saved $400. Guaranteed coverage is not the same. Brokers and agent need to be licensed and go to continuing ed classed each year to stay up to date and on all the changes in coverage and policy language that take place. An internet insurance company can not do this.
The extra $$ you MAY be spending is for the service you are receiving. If anything "shop" for service.
Posted by editor@insuranceguide101.com on November 1,2006 at 7:01 AM
Getting a recommendation of a good broker is a great way to find someone who will really work for you, and tell you the straight goods. It's a great strategy. However, if you really want someone who is doing "right" by you, it should be someone who will be honest about whether *they* think they got you the best deal, or if you should be looking around further. I suspect there aren't too many people working as brokers who could really bring themselves to do that.
Posted by Michael on November 1,2006 at 6:57 AM
I agree! What the heck would you use a broker for if you can't depend on the fact that they got you a good deal? I use a broker that was recommended to me -- I trust her and she's never let me down.
Posted by Mark on October 31,2006 at 4:35 PM
My problem is I don't have the time to both chase down a good broker AND do a lot of research and shopping around myself. In fact, the former should be doing the latter for me. The only thing worse than paying for something you could do yourself is paying for something that you ARE doing yourself. For me, the broker's raison d'etre is to a) save me money and b) make my life more convenient. If my broker told me he couldn't get a deal that I knew a friend was getting, I'd drop him like a bad habit.
Posted by editor@insuranceguide101.com on October 31,2006 at 7:37 AM
That's the thing... You can't assume that your broker has done all the work for you. It's important to get educated about what's available by getting quotes and talking to a variety of people, so that you know when you are getting a good deal.
Posted by Juston Garland on October 31,2006 at 1:57 AM
Shopping through an auto insurance broker can save you money and provide you with some useful information when needed. I think it is a good idea to find a good broker, call local agents, and shop online for auto insurance quotes. Insurance rates vary by up to $600 per company, therefore it is a good idea to get as many quotes as you can before deciding on a company. You may also want to check out the insurance company ratings and consumer reports from the BBB as well to prevent fraud.
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