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Pros and Cons of Buying Car Insurance from An Insurance Broker

Consumers today can buy car insurance either directly from the insurance company through its website, through an insurance agent, or through an insurance broker.  Each option has its benefits and drawbacks. If you want to conveniently find a policy that fits your needs and compare rates from several different insurance companies, you may want to consider a car insurance broker.

What is a Car Insurance Broker?

A car insurance broker is an independent car insurance agent who works with a number of different car insurance companies to find you the premium you want as close to the rate you want as possible. Furthermore, car insurance brokers know what coverage you need to minimize your liability and can advise you of that.  These agents obtain quotes from several different insurance companies on your behalf and present them to you. You then choose the policy that you like the best.

Car insurance brokers know how to find discounts and negotiate with the insurance company to get you the lowest rate that the company is willing to offer for the coverage you want.  A commission fee is then added to the rate so that the broker gets paid and the insurance company gets paid a rate that they are willing to accept. Brokers are paid a percentage based on the policy rate that you choose.  Thus, these rates may be higher that they would be if you obtained the policy without the help of the broker. However, for people who do not know a great deal about car insurance, using a broker could be worth it.

However, a car insurance broker works with a limited number of car insurance and they can only present quotes from these companies. For example, a broker might work with Erie, Travelers, Liberty Mutual, and Progressive. If you want to compare car insurance quotes of Geico, Erie, Progressive, and Sate Farm, this broker can’t help you since he can’t have quotes from Geico and State Farm.

>>MORE: Car Insurance Broker Review: AnswerFinancial Review; Gabi Review; CoverHound Review;

What is an Independent Car Insurance Agent?

An independent agent is another term for an insurance broker.  These agents are called independent agents because they do not work for a specific car insurance company.  Car insurance brokers and independent car insurance agents offer the same service, these terms are often used interchangeably.

What is a Captive Car Insurance Agent?

A captive agent is a car insurance agent who works for a specific car insurance company.  Car insurance agents who are employed by State Farm, Allstate, Nationwide, Farmers, Liberty Mutual or specifically for any other car insurance company are captive agents.  They can typically only offer you a policy from the car insurance company for which they are employed.

The main way that captive auto insurance agents differ for independent auto insurance agents is that they do not shop around with different insurance companies to find you the best rate. Independent agents allow you to compare rates from different companies in order to choose which company is right for you. Captive agents only offer to sell you the insurance that is right for you within their company.

>>MORE: How to Buy Car Insurance: Online or Through an Agent?

Pros and Cons of Buying Car Insurance from Agents Versus Online?

If you are not very knowledgeable about auto insurance, it is much better for you to purchase auto insurance through an agent.  An agent can tell you what type of coverage you need and what coverage limits are best for you. Furthermore, an agent will know about all the discounts that the company offers as well as which ones you qualify for.

A drawback to buying car insurance from an agent is that the rate that the agent offers you will include his commission.  Any rate that is offered by an agent is marked up slightly from the rate that you should be able to get it you do not purchase through an agent.  Thus, purchasing car insurance online is cheaper so long as you know enough about auto insurance to make wise coverage decisions.

>>MORE: Where to Get Free Auto Insurance Quotes Online?

Pros and Cons of Buying Car Insurance from a Broker Versus A Captive Agent?

There are several benefits to using a broker versus a captive agent.  The primary benefit of using a broker is that the he will check the rates for the insurance that you want with a number of reputable insurance companies in order to secure you the best rate available.   You may be presented with quotes from several different insurance companies and you will have the option to pick the best one for your needs. A broker, however, works solely on commission. Therefore, the mark up for their commission is higher than a captive agent who is paid commission plus a salary.

A captive agent is in a better position to know exactly what insurance options the specific insurance company for which he or she works offers.  A broker may be likely to miss one or two discounts that a client may be eligible for due to not knowing all there is to know about the company.  This situation should not occur with a captive agent. In addition, a broker may be determined to make a sale with at least one of the insurance companies that he presents whereas an agent may give you time to think over the quote; thus, putting less pressure on you as a client.

Final Thoughts

There are some advantages to purchasing car insurance from a broker.   One of the primary advantages is that you can compare quotes from different insurance companies to get the best rate on the coverage that you want.  Additionally, the broker possesses a certain amount of knowledge about car insurance that can get you discounts and find you other ways to save. There are also some disadvantages to brokers as well.  Brokers work on commission. Therefore, brokers may put more pressure on you to make a purchase than the typical car insurance agent. Furthermore, a broker may have limited knowledge of specific car insurance companies which may cause him to miss some discounts.

>>MORE: Who has the Cheapest Car Insurance?

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