Telling people I’m an insurance broker and that I own and operate a local agency gets one of two typical responses: One – they nod politely and search the room for the nearest escape route or Two – they ask questions about the insurance industry hoping for clarification on points they find confusing or practices that sound shady, even to my ears. I’m happy to separate the truth from myths and misconceptions.
Here a two related myths that surface repeatedly that I hear. Both involve buying insurance through a broker versus buying it though a bank.
The first myth is that brokers are expensive. Even though I am a broker by profession, I can unilaterally say, “Not so!” Just so that I don’t perpetuate any misunderstanding, let me tell you about the role of a broker.
A licensed, independent insurance broker works on your behalf to provide you with the right coverage at the right price so that you and your property are protected from damage and loss. A broker reviews your needs and offers scenarios for lowering your premium with deductibles, determining the right amount of insurance you need, and offering you other strategies for reducing or removing your exposure to potential losses.
Once we better understand your needs, independent brokers will shop around to find you the best price and the best coverage. Even after you’ve purchased insurance, your broker will continue to assist you with any questions about your coverages, offer to review your policies at any time for any gaps in coverage, and help you during the claims process if you have an accident or loss.
Remember, an independent insurance broker works for you – not the insurance companies they represent. Brokers receive a small commission from the sale of an insurance policy but the policy is paid by you, and your complete satisfaction is always the broker’s main goal.
Now, let’s get back to Buying Insurance through a Broker versus buying it through a Bank. How do brokers fair compared to buying insurance from a huge financial institution?
First, brokers’ rates are competitive with banks. Second, you have a wide choice of insurers to better fit your needs. Brokers also will fight on your behalf for coverage and cost since we represent you. Banks represent themselves.
You will also hear that mortgage insurance must be bought from the bank when and where you assume your mortgage. This is completely incorrect. False.
The fact is brokerages like mine have access to the best rates across the country, most often cheaper than a bank.
Finally, when buying insurance through a broker versus buying it through a bank, you are underwritten before you take a policy for approval. With banks, most policies are “post underwritten”, meaning you won’t know if your policy is approved until after it is needed.
My advice to you is to find an insurance broker who’s been in the business for a few years, who enjoys his or her work and who actually knows and likes their clientele. Ask around. Get a referral. That way, as your needs change – and they will since life changes – when you make a call to your insurer it’s likely to be the same person who answers the phone and sounds genuinely happy to hear from you. That’s not something I can say about the revolving door of representation you may receive from a financial institution.