Using a Broker to Buy Business Insurance
Should You Use a Broker When Buying Business Insurance?
Using a broker means that your insurance is sourced by a third-party. The broker will contact relevant insurers on your behalf to find you the best quote.
It is important to use a commercial/business broker (not a personal insurance broker), as they will have specific business experience that will bring you better results. It helps significantly if the broker has direct experience in helping insure businesses of your size and type, as they will already have a head start in finding you an effective policy.
“they will have specific
business experience”
Many brokers use online application/quote forms in the same way as insurers; although because the brokers do not sell the policy directly, the actual details and payment are almost always made over the phone or face to face.
There are several advantages to using a broker:
Advantages -
(i) Knowledge
Good brokers will have detailed knowledge of insurance and how to source the cheapest and most appropriate deals for their clients. They will be able to look at your business and recommend the level of cover you need in each appropriate area; and ensure that when you take out a policy it gives you the best (and most relevant) cover available for the cost.
They can advise you whether you need any additional, more specialist cover, such as Credit Insurance or Marine Insurance.
A broker can also provide you with invaluable advice and help in the event that you have to make a claim on the insurance, allowing you to achieve a satisfactory claim as quickly and trouble-free as possible.
(ii) Experience
As a good broker will be experienced with the fine details of insurance policies, they will be far better at looking through individual policy information and clauses (e.g. The amount of excess payable) to check f or any unwanted or missing areas. They can then deal with the insurance company and ensure you get a fair, effective insurance policy that covers everything your business needs.
(iii) Cost
As a broker deals with insurance companies on a regular basis, they are aware of the standard costs, and will know when a quote is overpriced. Not only that, but because a broker will purchase a large number of policies over a period of time, they are often able to get bulk discounts from the insurers.
“they are often able to get bulk discounts”
This means that even with the cost of the brokers charges (which are sometimes covered by their commission from the insurer), buying insurance through a broker is normally cheaper.
Disadvantages -
(i) Less Direct
With a broker, you or your business does not deal directly with the insurance company. This means that the broker needs to be made fully aware of all important information about your business and the insurance you require. Otherwise, it will be difficult for them to arrange an appropriate quote, and delays may occur while the broker gets the relevant information from you.
There may also be slight delays when it comes to renewing insurance or changing details, as the changes will have to go through the broker.
(ii) Risk of Bias
As brokers are usually paid commission by the insurance company, there is a risk that a broker will be biased and not actually provide you with the best quote or cover for your cost.
While the vast majority of brokers will genuinely search to get you a good and appropriate deal, there is a small minority that will only look for the best quote for them.
To combat this, The British Insurance Brokers Association (www.biba.org.uk) is a body that helps regulate brokers, keeping standards high and preventing dishonesty.
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- Business Insurance
- Should You Use a Broker ?
- Combined Insurance
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