An insurance broker
is a specialist in the insurance market who has the job of surveying all the insurance options for a client. In many domestic areas insurance brokers are losing out to direct sellers of insurance, such as large insurance companies
and banks. It is quite common to see a car insurance broker
having ordinary quotes
being beaten by directly provided insurance
that is sold over the internet or by the phone.
Many smaller insurance companies will still only sell insurance policies through an insurance brokerage, This is especially the case for the providers of non standard insurance. It is often the case when a quote is out of the ordinary, such as with motorcycle insurance
brokers, or even in some cases an auto insurance broker or home insurance
broker, that the broker will beat the direct insurance companies.
The way that an insurance broker works is that they will take the needs of the client and then go to the market and see what options are available. The broker will then get a fee, either an upfront fee from the client or a commission from the insurance company. The broker should notify the client of any commission they receive from the insurance company. Usually if a fee is paid upfront then the broker will direct any commissions towards the client.
There are many reasons to use an insurance broker for domestic insurance cases, particularly non standard cases. Firstly they have a wider share of the market, as many insurance companies will only sell to brokers. They will also have a better idea of what policies are available as they have already researched the areas and will already have a business relationship with many of the insurance providers.
Brokers will also have a good idea of exclusions that tend to be buried in the terms and conditions of an insurance policy
, so a health insurance
broker or life insurance
broker could advise on pre-existing conditions and how they would affect a policy. Finally they will know what questions they need to ask to ensure that the right policy is provided, so house insurance brokers will tend to ask about building construction and home business requirements. As an experienced and neutral source they can advise on the service levels and claims handling abilities of the various insurance companies.
Outside the domestic insurance market it is still best practice to use a broker unless the company is big enough to have a specialist department, who in effect operate as in house insurance brokers. Commercial insurance brokers and business insurance
brokers will deal with various company insurance needs such as public liability insurance
and employee insurance needs. Small companies may also need to insure a car fleet, in which case an auto insurance broker can be particularly useful. If the small company wishes to provide for employee health cover, then they should be looking for an insurance brokerage that also acts as a health insurance broker. Finally a building insurance broker will be able to help with the insurance of commercial premises which often need specialist advice.
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