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Millions of people who own a car arrange the insurance of their car directly with the insurer. But there are many drivers who choose to use a car insurance broker. Why do they do that and what are the benefits and costs of acting this way?
Firstly a broker is an agent, a representative who looks after the interests of his or her clients. A broker is registered with the relevant authority and must operate within the rules and regulations set down for insurance agents. The agents earn their income by taking a percentage of the premium paid by the car driver. Insurance companies work in conjunction with brokers and are willing to pay them if they bring clients to their insurance company.
Brokers know the car insurance business and are better placed than most people to find the right cover with the best insurer at the most competitive price. They are able to give advice to their clients and follow up any queries their client may have. If the client needs to make a claim, the broker can assist with the preparation of the claim and be available to guide the client through the process. If there is a problem with the claim, the broker is the one who will contact the insurance company and seek to find a resolution.
Brokers are required to act in the best interests of the client. This means they are required to give the car owner the best possible range of policies from which to choose. In addition, and this is an important point, brokers are often able to negotiate a better deal because of their standing in the business and their relationship with various insurers. Both the insurance companies and the brokers depend on the writing of new business so both have an added incentive to get the best possible deal for the consumer.
Generally the agent is paid by the insurance company who give a percentage of their premium to the broker. It is possible that the broker may charge a consultancy fee for their services but if so, this must be explained in full before any arrangement with the car owner is made.
Many people choose a broker because they believe they are too busy to deal with the administrative matters or feel they need expert advice from someone who can represent them in any dealings with the insurer. Certainly some people feel that if an accident happens and it is necessary to make a claim, the paper work and dealings with the insurer are better handled by a third party, in this case an independent insurance broker.
But which broker?
If you decide to engage a car insurance broker, you may be in the same position as a car owner who goes it alone. The car owner dealing directly with insurers needs to find the best policy for their car. The car owner using a broker needs to choose the best broker for their car. Fortunately both goals can be achieved by taking some time to make a car insurance comparison yourself. You provide the details of what you require and are given a range of options. All the legwork is done for you.
Whether or not you use a broker, remember that there is a wide choice available. Make the comparison and do yourself a favour in finding the best cover at the most competitive price.