How to Buy Auto Insurance from a Broker

A representative for multiple auto insurance companies is known as an auto insurance broker. Some insurance agents follow the brokerage model when access to multiple insurance companies is more beneficial. Rural areas are ideal for the broker because of the wide variety of needs in the community.

An established broker will provide valuable guidance for the insurance shopper who needs to save on auto insurance rates.

Personal referrals are the primary source of new business for the insurance broker. Building trust with every client is essential for the continuous growth of the broker’s business. Existing policies yield lower broker commissions than new policies.

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Pros and Cons of Using an Auto Insurance Broker

Insurance shoppers will notice some distinct benefits from working with an insurance broker to find the best auto insurance coverage.

Pros

The brokerage insurance model provides important benefits to insurance shoppers who have less experience with insurance terms and processes.

• Valuable advice – Experienced insurance brokers offer important details about the process, policies and insurers that are under consideration. Unnecessary information will not be given to the potential policyholder.
• Rates from many insurers – Brokers represent many insurance companies that will provide insurance quotes for the insurance shopper. This activity closely resembles the automated process of an online insurance quote website.
• One application form – Every applicant will fill out one application form for the broker to use with the insurance companies.

Insurance shoppers with a great deal of experience in auto insurance might find the brokerage model restrictive.

Cons

Definite disadvantages accompany the brokerage insurance model.

• Broker fees – Insurance companies might pay the fees for the broker, but sometimes the policyholder pays the fees charged for broker services.
• Mediocre customer service – Busy brokerage offices receive hundreds of applications each week. An applicant with an immediate need for insurance might find the response time insufficient for the timeline.
• Slow response to inquiries – After the initial application is provided, the insurance shopper will find that additional requests for information are not answered in a timely manner.
• Favorite insurers – Brokers tend to favor a few insurance providers based on the potential policyholder’s insurance needs. This tendency will eliminate some viable insurers from the comparison process if the insurance shopper does not push for more choices.

Information Required by the Broker

All insurance companies require specific information about the drivers and vehicles that will be underwritten on the policy. Brokers will request this information on the initial application. The process will not proceed until these facts are provided by the insurance shopper.

Driver’s license number – The actual driving record of the applicant is used to determine the risk of loss. Accidents or moving violations within the past three years will increase the insurance rates charged to the policyholder.

Vehicle ID number – or VIN – Manufacturer safety features and anti-theft devices are noted in the VIN on every automobile sold in the United States. The make and model of the vehicle are rated according to the actual repair and replacement statistics tracked by the automobile insurance industry.

Social security number – Many people are very protective of their social security numbers. This information is used to run a credit history for the insurance shopper. Good credit is one of the popular discounts offered by insurance companies. Responsibility transcends many different parts of life, and good credit is directly related to safe driving habits.

Sufficient funds – Brokers will ask the new policyholder for a check that is equivalent to the first month’s premium and the amount of the broker’s fees, if applicable.

Know Personal Insurance Needs

Insurance shoppers can save a great deal of time by providing significant details on the application that is provided to the insurance broker.

• Lender requirements – An outstanding loan on the vehicle can carry requirements for certain insurance coverage amounts. The lender can call the loan if the insurance company provides information that reveals insufficient insurance coverage on the vehicle. Proof of insurance is given to the lender directly from the insurance company.
• Components requested – Some drivers decide to seek liability-only policies. The broker should be alerted to special coverage requests at the beginning of the process. Wasted effort will change the response level from the broker.
• Vehicle use profile – A vehicle that is rarely driven will yield discounts from the insurance company. Farm vehicles are insured under different terms. Business vehicles cannot be insured under a personal insurance policy. All of the specific uses must be listed on the application.

Steps for a Successful Broker Relationship

Insurance shoppers can save time and effort by following these recommendations when seeking the assistance of an auto insurance broker.

Provide accurate information – Every detail provided on the broker’s application must be complete and accurate. Insurance companies provide quotes based on details that are provided by the broker. Brokers can terminate the process if accurate information is not provided on the application.

Ask for insurance provider list – Certain insurance providers might be of interest to the insurance shopper. Direct questions about the companies that are represented by the broker will provide information about the insurers that are available.

Possible discounts – Insurance companies provide obscure discounts to various groups of people. Provide all possible details associated with clubs and professional groups on the application.

Deductible amounts – The insurance shopper can request a specific deductible amount. Amounts that are too high will cause a financial hardship for the policyholder if a loss occurs.

Multiple policies – Some insurance companies offer discounts for homeowners, auto and life insurance policies for the same policyholder. Lower administrative costs are passed on to the policyholder through substantial discounts on each policy.

Final Evaluation

Insurance brokers should guide the insurance shopper through the process.

A broker that requires the potential policyholder to ask all of the questions should be nudged to provide the correct level of assistance.

Sufficient insurance is essential for the peace of mind that it will provide. The best auto insurance companies should be found for the lowest annual premiums. Effective insurance brokers will go the extra mile to find unique discounts. Insurance shoppers will identify a helpful broker without undue research. Brokers make money by matching the shopper with the best insurance company for the personal situation.