Why Use an Insurance Broker?

Table of Contents
Table of Contents
Table of Contents

There are many ways that you can buy protection in the form of insurance.

We often hear things like:

  • “Why use an insurance broker?”
  • “What does an insurance broker do?”
  • “Why pay more for insurance with broker fees?”

Today we’re going to answer these burning questions so you can decide if a broker is right for you.

Here are the top 3 reasons that people use an insurance broker:

1. Better protection for what matters to you

The job of a broker is to get the highest value insurance, at the best possible price, for you.

Brokers have relationships with insurance companies and in-depth knowledge of how policies work.

They also understand what they do (and don’t!) include.

This means they can get you insurance with more protection, better benefits, and at a better price you could find yourself.

So how do brokers do it?

Brokers are members of groups that have arranged with insurance companies for better policy wordings.

“Policy wordings” are the terms, conditions and definitions in the policy.

Broker wordings are better value and more specific with their definitions.

When buying direct, policies which are often vague, confusing, and full of exclusions.

In short, they have access to more coverage than insurers offer to the public, and that’s why direct is so cheap.

Less cover = less risk = lower prices.

The job of a broker is to get the highest value insurance, at the best possible price, for you.

2. Brokers work for you, not insurance companies

Brokers “market” your needs to lots of different insurers, getting them to compete for your business.

This puts pressure on insurers to offer more cover at better prices, as they know the broker will offer you the best options.

If you called an insurer to get cover yourself, they’re only licensed to give general advice.

You can tell them your needs, but under regulation, they can’t help you determine if their policy is the best fit for your goals, financial needs, and other factors.

You’d have to research, interpret, and compare their products to other companies’ yourself.

On average, business owners waste 11 hours trying to make sense of Product Disclosure Statements.

With a broker, they take the time to research, compare and customise policies on your behalf — saving you time.

If you called an insurance provider directly to get cover yourself, they’re only licensed to give general advice.

You can tell them your needs, but under regulation, they can’t help you determine if their policy is the best fit for you.

3. Know exactly what you are and aren’t covered for

Insurance policy wordings are complex.

Think of it like a language, where different insurers all speak the same language, but their policies are in different dialects.

They’re all speaking the same language (for example, Chinese), but one may speak Mandarin and another Cantonese.

The words might be similar, but the meanings can be very different. That makes it very hard for you to understand the true scope of your cover without a “translator”.

Most brokers in Australia & NZ are part of the Steadfast Group — a body representing lots of insurance brokers.

They’ve worked with insurers to reduce differences between policies, so your cover is more clear.

Good brokers have a strong understanding of contract terms and the insurance providers.

Their job is to help you understand your obligations under the policy, as well as when you are and aren’t covered.

4. Understand your risks – and how to reduce them

Many brokers also offer risk analysis and advice, based on real statistics and claims history.

This means they can help you protect against risks you didn’t even know you were vulnerable to.

Insurance is meant to protect you against risks, so it’s key to understand your unique risks before finding the right protection.

Not doing this is why so many businesses are dangerously underinsured, meaning if something went wrong, they wouldn’t be fully compensated for the cost to recover.

Reducing your risk can also help you prevent problems instead of only paying to protect from them.

Installing security equipment or reducing dangerous business activities can save you massive liability — and money — in the long run.

Brokers will also help you keep your insurance up-to-date so you’re always covered to the fullest extent.

Insurance is meant to protect you against risks, so it’s key to understand your unique risks before finding the right protection. A broker can help you with valuable risk analysis.

5. They’ll advocate for you if you claim

Another service you get with brokers is claims management, and if you’ve ever had to make a claim, you know how big of a headache it can be…

  • Being questioned for hours on the phone
  • Getting the 3rd party to cooperate
  • Chasing up photos, documents, other evidence

It’s possible your claim was even denied because of something small you said when giving information to the company.

Insurers heavily investigate claims, to ensure there hasn’t been a breach of your policy terms.

If there has been, the insurer has the right to reduce or even entirely deny your claim.

With a broker, this painful process is much faster and more effective.

Once you’ve notified your broker’s claims manager, they’ll lodge the claim on your behalf and follow up with the insurer regularly to ensure a quick result.

They’ll also let you know what evidence might be required to get the best outcome, so you’re not left guessing what you need to provide.

To summarise, insurance brokers:

  • Work on your behalf to secure you better protection through their negotiating power
  • Help you understand your risks and empower you to make better life / business decisions
  • Ensure insurers are held accountable to their promise to protect what you value during claims
  • Save you time and money by taking care of comparing and customising policies for your needs

If any of the above resonates with you… having a broker take care of your insurance so you can focus on life and business is exactly what you need.

get tips, news & tools
Delivered to your Inbox