5 Characteristics of a Good Auto Insurance Broker

When you purchase auto insurance, you have several options. You can buy directly through some companies online or by phone, buy through an agent, or purchase a policy through an auto insurance broker.

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There is a difference between an insurance agent and a broker. Do you know what it is? Moreover, what are the things to look for in a good auto insurance broker? Keep reading to find out.

Agent vs. Broker

While these terms can mean slightly different things in other countries, in the United States, there is a slight difference between an agent and a broker in the insurance industry. Both these people help connect clients with the insurance companies, but they do so in slightly different ways. They also have different responsibilities.

An agent acts as a go-between for the customer and the insurance company. However, he works for the insurance company and earns a commission off the policies he sells, according to the American Association of Managing General Agents. An agent will help a client fill out all the paperwork, ensure everything looks correct, and submits the application to the insurance company.

There are two kinds of insurance agents. A captive agent only sells policies from one insurance company. He may sell health, auto, homeowner’s, and life insurance, but he only represents the company that hires him.

Several companies appoint an independent agent to sell their policies. Again, she may sell more than one kind of insurance, like auto and home, but she has more options than the captive agent does since she can access different companies. She can help you compare policies and rates from the companies she represents.

While an agent works for the insurance company, an insurance broker works for the consumer.

A broker can find policies from any company in the state. In fact, before she can go into business, she must pass a rigorous course and pass a state licensing test.

Not only will a broker find you a policy, but also she receives special training to help assess your risks and determine whether you have enough coverage. She also acts as a representative for you throughout the policy’s lifetime, assisting with claims or any other needs you have. She usually earns a broker’s fee or a percentage of the premium.

A good broker can be invaluable, especially if you have complex insurance needs. Here are some qualities to look for in a good auto insurance broker.

Communication Skills

One of the most important things a good broker needs to do is communicate well. You need a broker to listen to you and connect with you. This means he has to be able to listen and understand what you need.

Your auto insurance broker also needs to be able to explain things to you in a clear and patient way.

Auto insurance can be confusing. It is helpful to have someone who can explain the ins and outs.

For instance, just figuring out the amount of insurance you have to have can be a little confusing. Each state has a different regulation regarding what kinds of coverage are required to drive legally in that state.

Every state requires that you pay for any damage you cause with your vehicle. Most states legislate that you do this by purchasing auto insurance. However, a couple of states, like New Hampshire, allow you to handle it differently.

In New Hampshire, if you have the financial means to pay for damage without insurance, the state does not require you to buy it. However, if you are in an accident and cannot pay for the damage, you will have your license revoked.

A few other states allow you to buy a bond that acts as insurance for your cars. This is especially true if you own business vehicles. Many states allow you to self-insure your business vehicles.

Analytical Skills

One of the most vital functions a broker can perform is analyzing your situation and determining how much insurance you need to protect your assets and whether your current policies are doing the job. To do this, a good broker must be intelligent, with the ability to organize a great deal of information and glean the important points from it.

Many people just want to buy enough auto coverage to ensure that they will not get a ticket.

However, even more important than keeping you out of trouble with the law, insurance is an important tool to protect your financial assets: your savings accounts, retirement accounts and home, to name a few.

You see, if you only carry the minimal amount of insurance, you could be opening yourself up to a lawsuit that could hurt you financially.

For example, if you live in Arizona and, as a law-abiding citizen, purchase the required amount of car insurance, this is 15/30/10.

However, if you are in a car accident that the police determine is your fault, you will be required to pay for all the medical bills the driver and his passengers incur as well as for repairing his car.

If you hit a family car with two adults and a couple of children, all of whom go to the hospital due to their injuries, you will have some hefty hospital bills to pay. If the most severely injured has surgery and physical therapy for a few weeks, the expenses may seem never-ending.

With only $15,000/$30,000 liability, your insurance will only pay the first $15,000 of each person’s bills. Not only that, but they will only pay $30,000 per accident. Therefore, even if this family racked up $75,000 in medical bills, your insurance company will only pay $30,000.

Then there is the vehicle. If it costs $30,000 to replace, your policy will still only pay $10,000. This leaves a total of $20,000 you will have to pay out of your own funds, plus the $45,000 for the medical bills. If you had the proper levels of coverage, you would not be facing debt like this.

This is why a broker can be so helpful, as experts suggest carrying at least 100/300/50 insurance or enough to cover your assets. If you have quite a few assets, you may need some help determining how much coverage accounts for asset protection.

A good broker will risk a sale by pointing out that the cheapest quote is not always the best.

Honesty and Integrity

In any service where the provider earns payment via percentage, there might be a temptation to base recommendations based on what will bring him the most income. Therefore, a good broker will not recommend a particular policy or company because of the larger percentage he can make. This is particularly helpful when brokers must advise high-risk clients on the best companies for non-standard rates.

Instead, a good auto insurance broker will truly serve the client’s best interests first. Low-cost coverage really does exist, and many people know this, so working in the client’s best interest and showing them their best options can work in the broker’s favor.

Doing this usually results in higher client loyalty rates and more recommendations. Thus, eventually, the broker will get even more business than he would otherwise.

With this is mind, get recommendations from friends, co-workers, or neighbors when looking for an auto insurance broker. If you do not know anyone who has used one, look for reviews or recommendations online.

Organized

While this may seem like an odd characteristic to list, it is an important one. Insurance brokers can deal with several clients, multiple insurance agencies, and many scenarios each week. Some level of organization is necessary.

Otherwise, your broker may not return your phone calls on time or may lose important paperwork. It is also essential that he keep the details of your particular situation and needs straight to ensure that your paperwork is filled out correctly. For instance, leaving off a driver could be a costly mistake.

Hand in hand with this is the necessity to be computer literate. Most insurance companies are putting their business on software or the Internet. Brokers must understand how this software works and be able to deal with them competently.

Hard Working

Being an insurance broker requires a lot of hard work. It also requires a person to be self-motivated, as there typically is not someone telling you what to do or how to find what the clients need.

However, it can be very rewarding work. Not only are you helping people buy the protection they need for the best price, but you can make a good living as well.

In most states, you do not even have to have a college degree, though it can certainly help to have at least an associate degree. You can increase your earnings, especially in the beginning, with some level of higher education.

According to the United States Department of Labor, the median salary for insurance agents and brokers is almost $47,000. The good news, for those seeking this line of work, is that there is a projected growth of 22% over the next several years.

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