Can a car insurance broker save me money?

A car insurance broker is an agent who acts on your behalf to arrange and assist with purchasing car insurance.

Most car insurance brokers are independent and do not work for any insurance company. Instead, they use their knowledge to shop around for car insurance deals and negotiate with insurers on your behalf.

A car insurance broker usually provides services such as:

• Advising you on the policy that suits your circumstances
• Explaining the details such as cover, premiums, limitations and exclusions
• Reviewing car insurance policies with you annually and offering advice on the latest products and add-ons available
• Assisting with any claims by representing you in dealings with the insurance company

Is there a difference between brokers and agents?

There is a big difference between insurance brokers and insurance agents – and if you plan to get the possible car insurance deal out there, it’s important to understand what you’re likely to get depending on who you ask.

• An Insurance broker is an independent broker who helps customers out with a broad range of insurance issues, and compare car insurance options from all available providers. They usually get paid directly by their customers for services rendered, but may also earn commissions for signing customers up. They will often have a portfolio, or list, of all the different insurance companies they work with and look at options from. They should remain impartial and committed to the best outcome. Under operating rules from the British Insurance Brokers Association’s (BIBA), UK car insurance brokers are obliged to prioritise your needs ahead of others including the insurance company or themselves, and disclose any conflicts of interests they may have.

• An Insurance agent works for a particular insurance company. Their services are sometimes free, but they will only find you deals and offer assistance for that one particular insurance company. The agent works as a representative of the insurance company – rather than for you as the customer.

Despite their major difference noted above, there are some benefits that both insurance brokers or insurance agents should provide to you as the customer.

• They use extensive knowledge of the marketplace to find deals and savings
• They do all the legwork for you in comparing policies
• They warn you of insurance traps, pitfalls and legal requirements
• They can expertly represent you when dealing with insurers
• They often have access to policies that the average person does not know about
• They are often able to negotiate better deals than you could alone. Due to a broker’s position in the industry, many companies extend them special offers to pass onto their customers
• They know and can advise you of any discounts or exemptions you may be entitled to

How much does a car insurance broker cost?

The cost of using an insurance broker depends on which kind of broker you use, and how expensive your insurance policy is. It might cost you nothing, or it might run into hundreds of pounds.

• The bulk of a car insurance broker’s income will typically come from commissions paid by insurers. It does not directly cost you anything, as this sum is paid by the insurance company, but it might mean your broker has an incentive to direct you to more expensive policies or certain insurers that pay bigger commissions.
• Some brokers may directly charge you a fee of a certain proportion of your premium. For example, they might charge you 10% of premiums paid, so if you are paying £500 annually in car insurance premiums then the broker is costing you £50 per year.
• You may have to pay additional flat fees when you sign up for a new insurance policy, an hourly rate or flat fee for time they have spent working on your behalf such as when making a claim, an annual management fee if you are maintaining policies through them and more. They can charge fees at their own discretion, but are required to be clear and up-front about them.

As such, a broker with more fees but no commission may be more motivated to find you a good deal in the hope that you decide the fees are worth it, while a broker with no fees but higher commission might cost you a lot less or nothing at all directly, but might steer you towards unnecessarily expensive policies.

Car insurance brokers must provide you with their fees. In other words, you have the freedom to pay as much or as little for a car insurance broker as you want, but should be aware of the pros and cons of each. If you already have an insurance broker, and are unsure what their fee is, contact them directly.

When assessing the cost of a car insurance broker, you need to decide whether the time and money they will save you is worth the fee for their services. Just like comparing insurance policies, getting value for money rather than finding the lowest possible price should be your main goal. If you are using a broker to organise and manage all of your policies, including car insurance, then paying for their time could be money well spent.

How do I choose a broker?

A good car insurance broker should be:

• Transparent. They should disclose all fees upfront and any affiliations or conflicts of interest they might have. They are required to inform you of these when asked, but should do so unprompted.
• Proactive. They should be in touch with you regularly and actively working on your behalf to secure and manage your policies.
• Empathetic. They should be open to your concerns or queries, patient while you consider your options and should never try to force a policy on you that you don’t want or aren’t sure about.
• Knowledgeable. They should have extensive knowledge and industry experience, and have a wide range of insurers in their portfolio.

All brokers must be:

• Authorised. All insurance brokers in the UK must be authorised and regulated by the Financial Conduct Authority (FCA). Without this FCA authorisation, brokers are not allowed to advise on, sell or promote any insurance products.

Should I use a car insurance broker?

As with everything, there are both pros and cons to using a broker.

How are brokers regulated?

Because car insurance brokers are providing financial advice, they are subject to regulations that govern the conduct of all financial services and must therefore be authorised by the Financial Conduct Authority (FCA). The FCA is an independent public body funded by the firms it regulates through fees, and accountable to the Treasury.

Brokers must also abide by the FCA’s principles for businesses, which require them to:

• Conduct business with integrity
• Treat people fairly and pay due regard to the interests of the customer.
• Conduct business with due skill, care and diligence
• Manage conflicts of interest fairly

In the event of a dispute with a customer, brokers must abide by the decisions of the Financial Ombudsman Service (FOS), specifically set up by Parliament to settle complaints between financial businesses and their customers.

In the unlikely event that a conflict should arise between the insurance broker and yourself, you will always have somewhere to turn.

How do I find a good broker?

• Word of mouth: Recommendations (or otherwise) from people you know who have had experience with a car insurance broker can provide a good insight into how they operate. If you want to hear from a broker’s former customers, the broker may be happy to offer references.
• Online: Some brokers advertise online, and visiting their website or social media page can give you an indication of their experience, professionalism and level of customer service. There are also online car insurance broker comparison sites where you can compare the options side by side.
• The Financial Services Register: This public record is available on the FCA website and shows details about whether a particular firm, individual or other body is authorised to operate as a broker or not.

FAQs

• What do car insurance brokers do?

  They work with their clients to help them understand their risks and how to protect their assets. They use their knowledge of the market and extensive contacts to find and negotiate the most suitable car insurance within their portfolio. They typically work with businesses to insure fleets, delivery vehicles, limousines and other special assets, but are also popular for everyday car insurance.

• Why should I use a car insurance broker?

  They can save you a lot of time, money and stress, especially if there may be a dispute over a particular claim. Depending on your specific needs, some brokers might also work in specialist insurance areas, such as insuring classic cars, and find you deals that you might not necessarily have found through mainstream insurers.

• Does it cost more to use a car insurance broker?

  Not necessarily. It can cost you less if a broker is able to locate and negotiate a better deal on your behalf, but might also cost you more. Remember that you’re also paying for their experience and information, so take full advantage by asking plenty of questions. Before deciding whether to proceed or not, ask the broker how much they charge for their services.

• What questions should I ask my car insurance broker?

  To verify the quality of your broker, ask about their qualifications, their range of services, their experience with your type of insurance needs, how they bill for their services, what their fees are and whether they have references they can show you from satisfied clients. Ask for more information on any insurance details you’re not sure about.

• Will a broker help me to make a claim?

  Yes. A broker can help you with the claim process and negotiate a suitable settlement with the insurer on your behalf.