Auto Insurance Broker vs. Do It Yourself

What is an insurance broker?

A professional that can offer you more choices than an agent

• captive agents and
• independent agents

Pros of using an auto insurance broker

• Sift through lots of products and choices. Brokers have access to a plethora of insurance companies. When you work with a car insurance broker, they’ll submit the amount of coverage you want, plus all your basic personal info, to the car insurance companies they work with. By doing this, they’re able to get a range of car insurance quotes at one time, rather than you submitting that information again and again to each insurance company individually, one at a time.
• Decipher information. Auto insurance policies can be confusing, so it’s nice to have a broker explain each one to you. They are familiar with the terms and common types of auto insurance coverage and are often used to explaining this in ways that are easy to understand. In addition, they often know the market. They can discern the best products from the merely adequate. They know the law and are versed in the state and federal regulations that can expose your family to serious liabilities, and they know the industry. They have satisfied licensing requirements, which require them to keep up-to-date on the insurance market.
• Decide what fits your particular needs. Alex Lauderdale, a senior transportation analyst and editor at EducatedDriver.org, says a good broker will listen to you and help you fulfill your particular needs. “Your needs don’t always mean ‘less expensive’; sometimes your needs circle around ‘less risk’ (i.e., more coverage). Either way, if you aren’t sure about what you need, a good broker is the way to go.” Similar to what an insurance agent would do, an expert broker can ask questions to learn more about your situation and help you decide what coverage is right for you.
• Avoid buying what you don’t need. Sometimes, it’s difficult to know not only what you do need but also what you don’t need. You have to know what type of insurance coverage you should avoid so that you don’t pay more than necessary. A good auto insurance broker can help you figure this out, says Lauderdale, “thereby saving you money.”

Cons of using an auto insurance broker

• Insurance brokers work on commission. This means that a dishonest insurance broker could choose a car insurance policy that earns them more money rather than the one most beneficial to you and your family. Brokers earn a basic commission for their services and sometimes charge extra fees as well. Commissions are typically based on a percentage of the annual premium and are included in the premium you pay. In other words, a broker’s basic commission is built into the insurer’s rates, so everyone pays them whether they use a broker or not. Fees, on the other hand, may be charged for additional services. You’ll need to make sure you know what, if any, fees will be charged when working with a broker. Extra fees are generally paid directly to the broker.
• They might talk you into more auto insurance than you need. Lauderdale says, “Understandably, brokers are interested in the commission they will gain from a sale. One can easily find themselves purchasing more than their needs require if a broker is less than honest with their advice. The more you buy, the more they earn.”

Pros of shopping for car insurance online

• Compare insurance companies. Comparison shopping is the key benefit of using an online search engine to shop for auto insurance. When you work with insurance brokers, they will compare plans for you, and you have to trust that you’re being presented with the best deals. However, doing your own research allows you to easily compare rates and reviews and make your own decision about what’s best.
• Skip the middleman. Similar to an auto insurance agent, brokers act as the intermediary between you and the car insurance company, which is why they earn a commission. If you figure it all out by yourself before buying insurance, you can skip that part and potentially save money.
• Shop anywhere, anytime. Maybe you’re sick but still want to get things on your to-do list done without having to leave your house. Technology in this day and age is built specifically for that reason — to be extremely productive in the laziest way possible! Shopping for auto insurance is no exception. Open your computer, smartphone, or tablet to shop for car insurance without ever leaving your bed. You can beat a level of Candy Crush and compare insurance rates all at the same time!
• No waiting time for documents. Once you purchase a policy online, you can immediately receive the insurance card, print it out, and pop it in your car.

Cons of shopping for car insurance online

• Need online access. Though most of us have multiple methods of accessing the internet, not everyone has that luxury. If you’re one of these people, buying insurance online will most likely be the more difficult option.
• Must be somewhat computer savvy. You don’t need to be a programmer to purchase auto insurance online, but you will need to have a basic amount of ease on the computer. If you’re not a digital native or don’t feel comfortable shopping online, then this route isn’t for you.
• No personal touch. If you want to speak to an actual human being, you won’t feel satisfied shopping online for insurance. You may be able to call someone using an 800 number, but it will be a bit of a pain and not the same as having a dedicated agent or broker on your side.
• Limited knowledge of underlying factors. Several factors go into an auto insurance rate, including your zip code, marital status, annual mileage, driving history, vehicle make, year, and model. In most states, your gender and credit score could also be used to determine rates. Each insurance company evaluates personal factors in its own way, and each keeps its methods a secret. So you won’t be able to tell which company puts a high value on your occupation or emphasizes a clean driving history without talking to a knowledgeable broker for more information about the things that their companies value the most.

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