Are Car Insurance Brokers Worth It?
A car insurance broker can help guide you through the process of finding and selecting the policy that best fits your coverage and financial needs. Brokers bring a level of expertise to the search process, knowing many of the ins and outs of the insurance world.
You often have to pay a flat fee to use an auto insurance broker, although the broker might instead receive a commission that is a certain percentage of the price of a policy. Ultimately, if you save more money than the fee you pay, it can be a worthwhile approach.
However, in the modern era of easy online quotes, you can also avoid using a middleman and just collect and compare quotes on your own for your specific situation.
What is an auto insurance broker?
A car insurance broker is a professional that can help guide you as you look for a policy. These licensed professionals bring a level of expertise about the field and work for you to help you get the best combination of good coverage for the cheapest rates.
Are auto insurance agents the same as a broker?
Brokers differ from car insurance agents because agents work for the insurance companies themselves. In contrast, brokers work nominally for their customers first. Auto insurance agents can also complete actual sales of policies, whereas many brokers have to work with an insurer or agent to finish the sale of a policy. Some brokers do have agency contracts and can finalize your policy.
In many ways, a broker will provide both knowledge and legwork in the process of selecting an insurance policy. They can take some of the work out of your hands and collect various options for you to choose from.
It's worth noting, insurance brokers are paid by either fee or commission for their work, which will impact your costs overall. Fees are generally not too high. In Florida, for example, fees are capped at $35. Commissions are often a percentage of the price of the policy you end up purchasing, so brokers can sometimes have incentives to direct you to more expensive options.
Three ways to buy car insurance
There are three primary routes you can take to buy auto insurance coverage. Changes in technology have allowed customers to get their own free online quotes, but some prefer the touch of a professional who works in the field.
- Buy through an agent: A more traditional model, this means speaking to an agent on the phone or in person, providing your information and letting the agent track possible discounts and options. It's important to note there are two sorts of agents: captive agents, who represent only one insurance company, and independent agents, who work with multiple insurers. Once you decide on a policy, an agent can run your information and make a binding offer.
- Buy through a broker: A broker will do the legwork of checking with multiple insurers to see which one can offer the best rates for the level of coverage you're looking for. Most brokers will ultimately work with an insurer or agent to offer a binding quote and complete the sale of a policy. Unlike an agent, a broker is not limited to certain or single insurers, although a broker might have relationships with certain insurance companies.
- Shop for and buy a policy yourself: The proliferation of online insurance quote systems has made it much easier for customers themselves to compare insurance options. Many large companies will provide a basic quote after a process that lasts under half an hour — sometimes mere minutes. In some cases, a driver will have to go through a local agent to complete a purchase that started online. Shopping yourself can often cost less because you can get a discount for paying online.
Find Cheap Auto Insurance Quotes in Your Area
Drivers who do their own shopping can potentially save the most because they will have access to the widest market without having to pay extra fees and will also have access to online discounts.
Advantages of using a car insurance broker
Brokers provide guidance that you might not have otherwise. With that, come certain perks.
- Knowledge you might not have: A broker is going to know more of the ins and outs of the insurance world. It's a space heavy on jargon, and there will be some dense legal language in your policy. A broker should have a better grasp of the particulars on that front.
- They can choose and customize your coverage: You might not have a great idea about how much coverage you might need or when to trade a slightly higher price for more coverage. A broker can look at your situation and analyze what you can afford. They can also serve as a sounding board of sorts as you assess the sort of risk level you will accept.
- They give you access to a wide market: Although online quotes have made the process much more streamlined, some insurers still operate only through agents or over the phone. Gathering quotes that way can be extremely time-consuming, and paying a professional to do it for you could have perks.
Disadvantages with a broker
In many cases, a broker might be unnecessary at best and more expensive overall at worst. Searching by yourself, aided by a wide variety of free information services, can often be a good approach.
- You might pay more: At the very least, the auto insurance broker will be getting some form of compensation, either a fee or a commission. If it's a fee, there is a decent chance you could have found a similar rate with your own research. If there is a commission, the broker might have an incentive to steer you to a more expensive policy, as commissions are often a percentage of the final rate. Fortunately, if you use a car insurance broker, they are required to disclose their fees and incentives.
- Your needs might not be all that complex: An insurance broker is often most useful in a situation where you have something unusual with your driving history or with the kind of coverage you want. If you have a relatively clean driving record and average or better credit, your insurance search might be relatively simple. Brokers can also be more useful in business settings, where the structure of the insurance is considerably more complicated.
- You might not need a broker at all: Streamlined quote systems, the ability to reach out to agents on your own and a wealth of public information about insurance mean a broker is not required in most cases. Add in the fact that you will have to pay for the service and shopping yourself is likely a better option on the financial side.
Are insurance brokers worth it?
An insurance broker can be worth it if they provide the customer support you want or help you deal with a complex set of insurance needs. However, if you factor in commissions or fees, there's a good chance you will pay more than if you just found rates yourself online.
Who should use an auto insurance broker: Those who need more help with the process should find a broker who comes highly recommended. Any extra costs are, in essence, paying for customer service, so you should expect to receive good customer service. Also, using a broker may be wise for those with more complex needs, including business needs, that prevent more basic policies from being an option.
Who should not use an auto insurance broker: Those who want to save more and feel they can navigate collecting quotes online or by phone should not need to use a broker. Also, electing not to use a broker may be wise for those looking for the lowest overall rates with relatively clean driving histories and more straightforward needs.
Frequently asked questions
What is an insurance broker?
An insurance broker is a licensed professional who can guide you through an insurance buying process and the search for the best rates. A broker works primarily for the customer, as compared to an agent, and gets either a flat fee or a commission that is a portion of the cost of a policy.
What does an insurance broker do?
An insurance broker will help guide you through your insurance buying process and do much of the legwork in collecting quotes to find the best rates. They also help assess your needs and can translate some of the more obscure insurance terms. In short, they should provide a high level of customer service as they work for you to find the best policy fit.
Is there an auto insurance broker near me?
If you live in a more urban area, there is a good chance there is a nearby insurance broker. There will likely be fewer if you live in a more remote place. An agent is not a broker, as an agent has a contract with one insurer or multiple insurance companies, while a broker's role is to work for the customer.
How do you become a car insurance broker?
To become a car insurance broker, you need to go through an education process and then get licensed in your state through your state commissioner's office. If you pass the tests, meet the qualifications and pass background checks, you can begin working with companies, which might have their own requirements.