Are Car Insurance Brokers Worth It?
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A car insurance broker is worth it for some drivers. They can help you find affordable insurance with the right amount of protection for you.
You may have to pay a small fee to use an auto insurance broker. However, some brokers are paid a commission from the insurance company based on the price of your policy instead.
Ultimately, working with an insurance broker can be worth it if you save more money than the fee you pay. But in the modern era of easy online quotes, you can also avoid using a broker and collect and compare quotes on your own.
What is an auto insurance broker?
A car insurance broker is a licensed insurance expert who can work for you to help you get the best combination of good coverage and cheap rates.
A broker can help you better understand your car insurance needs. They'll also take some of the work out of your hands by collecting multiple quotes for you to compare.
Insurance broker vs. agent
Brokers differ from car insurance agents because they work for their customers, while agents work for insurance companies.
Some agents only work for one company or a family of companies. These people are called captive agents. Independent agents can work with many companies, but they can only compare quotes from companies with which they have a contract.
Brokers can compare quotes from most companies by working directly with agents or a company. However, most brokers can only sell a policy with the help of an agent. That's because they typically don't have contracts with the insurance companies.
What does an insurance broker do?
Car insurance brokers use their industry knowledge to help you find the best auto insurance policy.
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They can introduce you to smaller companies you may not have heard of. Regional and local insurance companies tend to offer affordable rates and excellent customer service. But many people aren't familiar with these companies, so you could miss out on a great deal.
This is especially true if you have unique needs, like car insurance with an SR-22 filing or home insurance near the coast.
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They can help you choose and customize your coverage. You might not know how much coverage you need or when to pay more for extra coverage.
A broker can help you figure out which coverage types will be the most helpful and what you can afford.
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They can save you time. Although online quotes have made shopping for car insurance much easier, some companies only offer quotes through agents or over the phone. Gathering quotes can take a lot of time, so having a professional do it for you could be helpful.
Car insurance brokers also act as your contact point after buying a policy. That means you can call your broker directly if you have to file a claim after an accident or need to make policy changes.
Having a good broker typically means you'll have a much easier claims experience after an accident.
Instead of speaking with someone in a national call center, you can work with someone you know personally. Your broker may even recommend quality local repair shops or help you get a rental car.
A great broker will also compare quotes each year to ensure you still have the best rates. That means you won't have to remember to regularly shop around for insurance or spend your time gathering quotes again.
Disadvantages of insurance brokers
Working with an insurance broker can be more expensive than getting a policy alone.
This is especially true if you get a policy from a larger company that offers quotes online because you'll miss out on getting a discount for buying your policy online.
In addition, your auto insurance broker will be getting some form of compensation, either a fee or a commission.
- Broker fees aren't typically expensive. So, if your broker finds you a cheap rate from a company that doesn't offer online quotes, the extra cost could be worth it. But paying a fee for a policy from a big company where you could have easily gotten a quote online doesn't usually make sense.
- If there is a commission, the broker might recommend a more expensive policy than you need. That's because commissions are often a percentage of your rate.
Fortunately, if you use a car insurance broker, they must disclose their fees and incentives.
Though they're not disadvantages, there are a few other reasons why an insurance broker might not be the right choice for you.
How do insurance brokers make money?
There are two main ways that insurance brokers make money.
- Broker fees paid by you
- Commissions paid by the insurance company
Broker fees are generally reasonable. Most states require brokers to disclose fees; some even cap the amount a broker can charge.
Commissions don't affect the amount you pay for insurance. Instead, the car insurance company will make less money on your policy. However, commissions are often a percentage of the policy price. In addition, some brokers earn a commission and charge a broker fee.
It's important to find a trustworthy broker who won't advise you to get more coverage than you need so they make a higher commission.
Are insurance brokers worth it?
Some people will find working with an insurance broker worth it, while others won't benefit as much.
An insurance broker can be worth it if you have complex insurance needs or value a personal customer service experience. While a broker could also save you money, it's important to understand whether they charge any fees that will impact your savings.
Should I use an insurance broker?
An insurance broker may be worth it if:
You need help figuring out how much or what kind of coverage you need.
You don't have time to gather quotes from multiple companies.
You're having a hard time finding coverage from major insurance companies.
You would prefer to call someone local if you ever have an emergency.
You have unique needs. This could mean:
- You have multiple claims on your record.
- You drive a classic car.
- You have a home in an area with severe weather.
- You need extra liability coverage.
- You own your own business.
You may not need an insurance broker if:
You only need a basic insurance policy.
You've never filed a claim.
You don't mind spending the time to gather multiple quotes to compare rates.
You prefer to manage your policy online or using an app.
You want insurance from a big company that doesn't work with brokers, like State Farm or Geico.
If you choose not to work with a broker, you can get quotes online or work with an insurance agent.
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Frequently asked questions
What are the disadvantages of insurance brokers?
One of the main disadvantages of insurance brokers is that you may pay more for the same coverage. Brokers may charge a fee you'll have to pay in addition to your insurance bill. And you'll miss out on a discount for buying your policy online, which many major insurance companies offer.
What is an insurance broker?
An insurance broker is a licensed professional who can guide you through the buying process and search for the best rates on your behalf. In return, a broker gets either a flat fee or a commission that is a portion of the cost of a policy.
How do insurance brokers get paid?
There are two ways that insurance brokers get paid. First, they typically get paid a commission by the insurance company. Some also charge clients a brokerage fee. However, the fee is usually affordable, and in most states, brokers must tell you about the fee up front.
Is there an insurance brokerage 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.
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