Insurance is something that not many people think about.
Consider house and contents insurance. While you’re at work, you want to be sure that your insurance policy will cover the cost of rebuilding your home if it burns down. You can rest assured that your current insurance premiums will cover any replacement value (if they are not already) if you are burglarized while shopping at the supermarket.
These things and the details of your policy are not something you pay much attention to in normal circumstances. But, when something similar to these happens, you suddenly turn to your policy. The type of policy you have and the coverage it provides depended on how it was set up. You had two options: did you call an insurance company directly to ask them to start the coverage for you or did you consult a broker/consultant.
Directly contacting a company is fine. Most companies do a great job of placing policyholders in the right policy. Many people have found that speaking with a broker can help them get the best policy for their situation. It is also cheaper in premium terms, possibly up to 25%. Why?
THE INSURANCE COMPANY
Direct insurance is cheaper than buying from an intermediary. There are plenty of examples that show that insurance brokers can often create a better solution for a consumer’s needs at a lower price than an ‘off the shelf’ product offered by insurance companies. The reason is that insurance companies have a limited number of standard products to offer. You are directed to the product by them, which may not be appropriate for your individual circumstances. It is almost like buying clothes off the shelf.
THE BOKER
A broker can help you access more options. A broker can access a wide range of insurance companies, and will work on your behalf to get the best coverage at the lowest premium rate. The broker is there to help you get the best deal. The experienced broker will also know the business inside out and be able handle any claims to make sure that you get the best settlement.
Insurance brokers are intermediaries between insurance companies, insurance buyers. They advise potential policyholders on the best product for them, help manage and mitigate risks, and arrange to place cover.
Good brokers will act as an intermediary if you have a claim against your policy. Your insurance policy can often be the difference between you and a lifetime in debt if it is not sufficient or wrong. A broker can help you make sure that your policy covers all contingencies that may occur in your business or domestic life.
Short-term insurance is a perfect example of the old saying that “buying cheap in the short-term can be costly in the long term”. Don’t fall for the trap of lower premiums by removing the broker. It can be costly.
