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Direct Insurance vs Insurance Broker

Friday, 21 August 2009 17:34

Many an insured opt for direct insurance to save themselves the cost of a broker while others value the cheaper premium and better cover the broker gets for them. Whether to go through the middle man or wade the dark waters of short-term insurance yourself, has plagued many a car and home owner. What are the pros and cons of each?

Direct Insurance
Most of the familiar short-term insurance names, those with the big budgets for advertising to the general public, are direct insurers. OUTsurance, Dial Direct and MiWay are all direct to the public, having taken out the insurance agent.

Direct insurers offer quick quoting and competitive insurance policies that can be applied for online or over the phone, making them a convenient option. Most of the call centre staff and operators that sign policies earn a commission and so will be more than willing to help you with any of your queries.

The nature of direct insurers though, means that very rarely can these call operators customise a policy to your needs and they evaluate your risk through with risk analysis software. Your policy is also agreed to before you have it in writing, leaving you unable to make amends to the agreement.

Insurance Brokers
The broker, however, will be able to sit down and analyse you as a financial risk and also customise your policy to meet your needs. This means you get the cover you want at the price you can afford - depending on the broker.

Brokers also assist with the claims process and should help you with any questions you may have about the insurance, policy or your insurer. They also offer expert advice and know the industry well enough to determine the right insurer and policy for you.

Brokers though, do cost extra. It could be extra that you save in terms of a better premium but not likely. There is also the danger of signing up with an insurance agent that, instead of looking out for your interests, wants to make a sale and earn his commission from a specific insurance company. In this case you get both a bad policy and an expensive broker.

Weighing the pros and cons of insurance brokers vs direct insurers is well worth the time involved. Whichever way you do decide to go, do your research on the insurer and broker. Their reputations should be easy to research online or by asking around. You might not be able to see the dotted line before you sign, but you can learn a lot about the second party before agreeing to anything.

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