Using an Insurance Company Or a Consultant or Broker?

Not too many people spend very much time in their day thinking about insurance, which is as it should be – if you have got it sorted out, that is.

Take house and contents insurance for example; while you are at work you surely want to know that if your house burns down your insurance policy will do the job of building you another. If you are burgled whilst at the supermarket your peace of mind is in the knowledge that, apart from the trauma of knowing that some strange criminal has had eyes and hands on your personal possessions, your up-to-date insurance premiums will cover the replacement values (if not the items).

You do not give these things, or the details of your policy very much attention under normal circumstances but, when something akin to the examples here occurs, suddenly you turn to your policy. What type of policy and the cover it affords you originally depended on how you set it up. Did you go direct to an insurance company and ask them to initiate the cover for you, or did you speak to a broker/consultant?

If you went to a company direct that is fine because most companies do a good job placing their policyholders into a suitable policy with appropriate cover. However, many peoples’ experience is that to speak first with a broker could well put them into a better type of policy for their circumstances. It has also been shown to be cheaper in premium terms – possibly to the tune of 25%; why is this?


Is it necessarily cheaper to buy from a direct insurer? There is plenty of evidence to demonstrate that insurance brokers are often able to put together a superior solution for the needs of a particular consumer at a lower premium than the ‘off-the-shelf’ product purveyed by insurance companies. This is generally because an insurance company has a limited range of standard ‘products’ to offer. They direct you to their product, which may not necessarily be suitable for your personal circumstances; it is a little like buying clothes ‘off the shelf’.


On the other hand by approaching an insurance broker you are giving yourself a wider scope of opportunity. A broker has access to a variety of insurance companies and works on your behalf to obtain the best cover at the most competitive premium rate. He/she is working for you to make sure that he/she obtains the best deal for you. In addition, the experienced insurance broker knows the business inside and out and will be able to handle any claims to ensure that the best settlement is achieved.

Insurance brokers act as intermediaries between insurance companies and insurance buyers, advising prospective policyholders on the most suitable product for their needs, helping to manage and mitigate potential risks and arranging to put cover in place.

A good broker will also act as intermediary when a claim is made against you (your policy). Remember, your insurance policy can very often stand between you and a lifetime of debt due to having either the wrong or insufficient cover. A broker will see to it that you have the right policy to indemnify (cover) the contingencies (unforeseen events or emergencies) that might arise in the course of your daily domestic or business routine.

The old saying, ‘ buying cheap in the short term can be expensive in the long run’ is particularly true in short-term insurance. Do not be misled by the lure of cheaper premiums by cutting out the broker, it can cost you dearly.

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