You might not own any insurance, but since you’ve found your way to this page, you’re probably at least beginning the search for a policy.
Insurance is a great way to protect your financial interests in the event of a health emergency or damage to your assets. Whatever your insurance needs, you might have heard that using an insurance broker is the way to go. However, you might also be wondering if you have to pay a fee to have an insurance broker?
There are a few reasons to use an insurance broker over the DIY route. First, insurance brokers are like personal shoppers. You visit a broker, and they collect your information and find insurance products that meet your needs and your budget. For example, if you’re looking to bundle two insurance policies for a discount, but your existing insurer doesn’t offer one, you can bring your insurance documents to an insurance broker and have them search for a company that will.
Second, if you ever need to file a claim, your insurance broker can act as a liaison or representative for you. This can range from basic assistance like providing the necessary information for you to file a claim, to figurative hand-holding.
Best of all, both of these benefits are offered at no cost to you.
Insurance brokers don’t work for free – no one does – but they don’t make their money from their clients. Instead, brokers are paid by insurance companies.
This might make you nervous – if the insurance broker is making a commission, does that mean they’ll try to push you into buying something more expensive than you need? Absolutely not!
Insurance brokers are bound by fiduciary duty to act in the best interests of their clients. This means acting in a way that an outsider would consider fair, and acting as a representative of the insurance buyer, even though the buyer isn’t the one paying the commission.
Even without the broker being a salesperson for insurance companies, the system offers insurers benefits of their own. For starters, the companies can save on employment and marketing costs by not having to solicit business themselves. By working with insurance brokers, the clients come to them.
Second, when clients file a claim, the insurance companies can discuss matters directly with an insurance broker who understands the language of the insurance industry. By outsourcing this work to insurance brokers who then “translate” everything into laymen’s terms for the client, insurance companies can focus on their main business – and save money.
Insurance brokers are a great resource for both customers looking to purchase insurance and for insurance companies looking to save money. The benefit to you, the insurance buyer, is tremendous. You get to access a wealth of industry knowledge, get someone to walk you through the claims process (if needed) and get access to a range of different policy options without needing to pay a fee. What’s more, when the insurance company saves on labour costs, they need less money to operate, meaning those savings can be passed onto you in the form of lower premiums.