These days, car insurance comparison websites are the norm when it comes to searching for auto coverage and comparing quotes online. These websites work to help you compare car insurance quotes and select the best policy; however, trying to understand just how they do that can be confusing.
So, let’s take a closer look at common operations and business models. Car Insurance Marketplaces vs. Brokers
In general, there are two types of auto insurance comparison websites: marketplaces and brokers.
Car Insurance Marketplaces
Car insurance marketplaces function as third parties connecting consumers and car insurance companies. Their goals are to:
- Be useful to you (the consumer) to the extent that they can.
- Maximize their profits.
When you visit an auto insurance marketplace website, you’ll find lots of useful content to help you understand the ins and outs of car insurance (well, the really good ones provide this!) as well as a quick quote “application” of sorts. Once you provide your details, the website will do one of two things:
Marketplaces that provide you with estimated car insurance quotes.
Note that these are just estimated quotes. No car insurance marketplaces or comparison websites can provide you with the final quotes no matter what they promise and advertise. You’ll have to continue on with the actual insurance provider to get the final quote and purchase the policy.
Marketplaces that do not provide you with estimated car insurance quotes.
Rather, they match you with insurance providers who can offer policies that best line up with your needs.
In most cases, you have to either click to go to the insurance companies to get quotes, one by one, or you might have to wait for an agent from one of the providers to contact you before you can get a quote and purchase a policy. An agent might be able to provide with you multiple quotes of companies that they represent.
Read more about the best comparison sites here.
Car Insurance Brokers
On the other hand, car insurance brokers are the websites of licensed insurance agents who represent multiple insurance companies.
In the old days, large car insurance brokers had many offices in different cities to service consumers. Nowadays, they can service thousands or even millions of consumers with just a good website.
Insurance brokers provide you with quotes and help you compare quotes, but only of companies that they represent. Typically, car insurance brokers can service a policy you purchase from them, meaning they can handle tasks like insurance claims and changing information on your policy.
Insurance Marketplaces and Brokers Goals
Whether the website is a marketplace or broker, the overall goals are the same:
- Help you.
- Make money.
It’s how they do those things that’s different.
How Insurance Marketplaces Make Money
Despite the claims some of them make, most marketplaces that actually provide quotes provide only estimated quotes, and you get the final quote from the actual insurance companies. Some marketplaces don’t provide any kind of quote; rather, they analyze your details and refer you to a number of car insurance providers that best match your needs.
Marketplaces make money on the connections they make. Some get paid for each successful referral; others charge insurance agents for “lead generation.” Either way, they’ll want to make as many successful connections as possible.
How Insurance Brokers Make Money
Brokers make their money from the policies they sell, so it only makes sense they want to find you the best quote and the best coverage. However, understand the potential problem here is that they can only provide you with quotes and policies from providers they work with, and your cheapest insurance quote might not be with one of those insurance companies.
Learn more about the pros and cons of buying coverage with brokers.
Regardless of how you choose to shop online whether you go on a car insurance marketplace, through on online insurance broker, or directly to the car insurance provider’s website, remember that the key to getting the best rate for you is to shop for multiple quotes.