Your auto insurance broker, when and how to use him

Brokers in all finance sectors, whether it might be home loans, car loans and of course insurance brokers often breed a feeling of distrust that many struggle to deal with. Many borrowers and investors view the broker as an unnecessary middle man that takes the cream off the profit of an operation by doing very little. They are also seen as predators preying on uninformed and naive borrowers or would be policy holders. On the other hand some view brokers as the only passage into the world of insurances and finance. Sometimes giving brokers a quasi priestly authority, listening and putting into practice every word and suggestion that comes from their collective mouth. Needless to say that neither of these views is either practical or true.

So how can we make sound decisions when dealing with brokers, when and how should we use them?

Firstly, it might be beneficial to detail what the work of a broker includes to better understand how they can help us. Brokers are facilitators, they are a kind of financial advisor, they are business promoters and salesmen. It doesn’t take much to realize that their roles are tainted slightly by conflict of interest. They are supposed to advise us and they are supposed to make a profit by selling us a product. Unless these jobs are balanced very carefully it is likely that brokers will advise us to buy the product they sell whether it is the best advice or not.

We are not for one second saying all brokers have these issues. Some brokers don’t make any pretensions of being independent advisors and simply sell their product. Other brokers work for other companies and their whole work load consists of managing and processing policies and contracts.

However in some cases brokers can represent a large variety of finance and insurance products from all of which he receives commissions. This allows the broker a kind of neutrality that might permit him to give you the best solution for your requirements.

Whichever kind of broker you deal with it is useful to understand what his position and point of view is before using his services. One thing is clear, although insurance brokers can facilitate your work when choosing a policy or loan they cannot completely replace good old personal research. You are ultimately responsible for your decisions you need to understand the market place and the risk inherent to some decisions.

A good way to use your broker is to find the product you need, probably after talking to an independent financial advisor, get some prices on this product and ask your broker to give you a better price. The key is to get your brokers to work for you and not only for their personal commissions.

Another bonus of insurance brokers is that they have insurance. If your insurance policy is a vital part of your business or lifestyle ask for a broker’s advice, keep a log of the insurance provided. This will provide you with extra insurance in case the policy you are advised to buy proves insufficient.