What do car insurance brokers do?

Shopping for auto insurance is a hassle, especially if you are determined to get the best coverage at the most affordable rates. While it makes the most financial sense to shop around until you find that coverage, the process can be complex, confusing, and time-consuming. Fortunately, car insurance brokers exist.

Insurance brokers bring a level of expertise to the search process that many everyday citizens do not have. A broker can seamlessly guide you through the shopping process and present you with the coverage options that best fit your needs and budget.

In most cases, you have to pay insurance brokers. Many charge a flat rate, while some receive a commission from the companies for which they sell. The commission is typically a percentage of the price of the policy. Regardless of the cost, using a broker’s services can help you save money in the long run.

What is a car insurance broker and what do they do?

A car insurance broker helps individuals find the best policy for their needs and budget. They essentially take over the shopping and comparison processes for you and present you with options that offer the best combination of coverage and affordability.

Most brokers sell policies from several insurance companies so as not to pigeonhole customers into one or a handful of coverage packages. They differ from agents who have ongoing relationships with certain companies. These brokers, otherwise known as “captive insurance agents,” sell policies from one company and work for that company.

All car insurance brokers must meet the licensure requirements for the state or states in which they sell policies. The companies they partner with must enforce these requirements and ensure their brokers meet all other qualifying criteria to protect consumers’ interests.

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Car Insurance Broker vs. Insurance Agent

Brokers differ from insurance agents in three distinct ways. The first is that they do not work exclusively for car insurance companies. Rather, brokers work on behalf of people like you to find the best insurance policies from the best auto insurance companies in the industry.

The second distinction is that agents can complete insurance sales — or “bind coverage” — whereas brokers cannot. Many brokers do not have the agency to sell policies. Instead, they must work with insurance agents, who are employees of insurance companies, to finalize sales. Some brokers, however, do have the qualifications and authority to complete sales.

Finally, agents receive appointments from one or more companies. This means they enter into contracts with insurance companies that outline which products they have the authority to sell and at what rates.

On the other hand, brokers merely solicit quotes from the best car insurance companies. The best brokers can obtain cheap monthly rates by identifying and negotiating for discounts as well. When consumers are ready to purchase a policy, the broker works with the insurance company or an agent to obtain a binder.

Car Insurance Quotes With the Help of an Independent Broker

There are several advantages of using a broker rather than shopping for and comparing policies on your own. Below are a few ways a broker can help streamline the process for you.

They Shop on Your Behalf

Perhaps one of the best reasons to use a car insurance broker is that they can do the work on your behalf. Once you give your broker a solid idea of your needs and budget, they can take over the shopping and comparison processes and narrow down the options.

They Possess Knowledge You May Not Have

Insurance is confusing, with many policies full of complex jargon and dense legal language. Brokers are intimately familiar with the ins and outs of the industry and policy lingo. They can help you cut through the jargon and truly understand what you are paying for.

They Help You Access a Broader Market

Though many insurers have switched to systems that allow for online quotes, several still require interested parties to contact agents via phone. Gathering quotes over the phone can be extremely time-consuming, especially when many agents try to sell to you over the phone while they have you. This deters many individuals from seeking phone quotes and, therefore, narrows their market.

When you pay a professional to shop for quotes for you, time becomes a non-issue. The brokers contact car insurance companies on your behalf to ensure you get the best coverage at the lowest rates from the widest market possible.

They Save You Time

Whether you look for quotes online or via phone, shopping for quotes and comparing them can be time-consuming. When an insurance broker takes over the task for you, you get your time back.

They Can Identify the Best Coverage

Most vehicle owners are unaware of how much and what type of coverage they actually need. Moreover, many vehicle owners are not familiar with state laws, which makes shopping for coverage all the more difficult. Car insurance brokers, on the other hand, can assess your situation and find coverage that not only meets your needs but also fits your budget. If you have concerns about a policy, or if you are hesitant to choose a pricier policy, your broker can help you assess the risks of each option and ensure you are confident in your purchase decision.

They Can Help Adjust Your Coverage as Your Needs Change

Finally, a broker’s job does not end once you purchase a policy. The best professionals stick with you over the years and identify ways you can adjust your policy to align with your current lifestyle.

What are the cons of using an insurance broker?

Working with a car insurance broker does come with a few pitfalls, as follows.

You Must Pay for Their Services

Brokers charge a fee for their services, either upfront or via a commission. Either way, you may end up paying more than you save. If you pay an upfront fee, chances are you could have found a similar rate on your own. If you pay commission, there is no guaranteeing that the broker won’t point you toward the most expensive policy for their own financial gain. If you choose to hire a broker, make sure you have a clear understanding of their fees and incentives ahead of time.

You May Just as Easily Shop for Yourself

If your needs are simple — such as if you are single, have a clean driving record, and maintain a stellar credit score — you may be able to score the best rates on your own. However, if you have unique driving concerns, such as a commercial driver’s license or horse trailers, it would make more sense to use a broker’s services.

With the availability of online quotes and car insurance guides, it is easier than ever to shop for policies on your own from the best car insurance companies across the nation. Many people can do the job of a broker in mere minutes without ever having to pay a fee, thanks to online quote services.

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How To Select a Great Car Insurance Provider by Working With a Quality Broker

A broker has a duty to operate with your best interests in mind. However, that does not mean you should remain completely passive throughout the entire process. When your broker presents you with policy options, you can minimize your risk by doing the following:

• Compare several policies
• Choose a policy that is easy to read and understand and avoids complex jargon
• Go through each section of each policy to compare how different companies handle different scenarios
• Keep an eye out for “arbitration,” “alternative dispute resolution,” and “legal action against the insurer”
• Familiarize yourself with the customer’s obligations of each policy

Finally, check reviews to learn what a website or broker may omit about an insurer.

The Different Types of Car Insurance Coverage You Can Get With a Good Broker

The best car insurance brokers strive to secure a policy that includes minimum coverage and add-ons for little to no extra cost. Examples of add-ons that you may never have considered on your own include road debris coverage, windshield replacement, collision coverage, and GAP insurance.

Working With a Car Insurance Broker

Working with a car insurance broker has its benefits, especially if you do your homework. However, you can also do a lot yourself without having to pay a fee by using an online car insurance comparison service. 

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