Understanding Insurance Claims

Buying An Auto Insurance Policy: Common Myths About Using A Broker

When purchasing an auto insurance policy, you will have the choice of purchasing this policy directly through the insurance company or with the help of an insurance broker. If you are like many people, you may choose to forego the help of a broker because you believe that these services will prove to be costly and may result in you being sold more insurance than you actually need. However, you may be surprised to learn that many of the so-called facts that people think they know about working with an insurance broker are actually nothing more than widespread myths. 

Myth: Insurance Brokers Work For The Insurance Company

Perhaps the most common myth when it comes to insurance brokers is that they work directly with a specific insurance company and therefore do not represent your best interest when securing an auto insurance policy. This myth is typically based on the idea that the terms insurance agent and insurance broker are interchangeable. This is not the case. While an insurance agent will work solely with one insurance company, insurance brokers are independent contractors who work for the individual who is looking to purchase an auto insurance plan. 

Myth: You Will Pay More For Your Insurance If You Go Through A Broker

People often believe that they will pay more for their auto insurance policy if they go through a broker because in addition to the cost of the policy they will also need to pay brokerage fees. The truth however is that there are no extra fees associated with using brokerage services. While it is true that brokers must be compensated for their services like any other member of the workforce, this compensation comes in the way of a commission that is paid to them through the insurance company when you purchase a policy.

Myth: A Broker Will Try To Sell You More Coverage Than You Need

Like most contract workers and businesses, insurance brokers rely heavily on repeat customers in order to keep them in business. Someone who is not happy with the auto insurance policy a broker helps them secure is not likely to return to them when that policy needs to be renewed. This is why brokers work so hard to determine exactly how much coverage each individual needs when helping them to secure an auto insurance policy. Recommending a policy that is more coverage than a policyholder needs will likely result in high monthly payments and an unhappy customer. On the other hand, recommending a policy with too little coverage could leave the policyholder with inadequate coverage in the event of the accident. Neither of these situations is in the best interest of the insured or the broker. 

Talk to an insurance agent or broker to learn more about auto insurance policies