Direct car insurance versus using a broker

Should I cut to the core and lose the middleman when buying car insurance?

I've been requested to be objective here and, OK, I'll set out the pros and cons of insuring your car directly or opting to use a broker, but I must say that unless you really know about insurance and have loads of time to run around comparing insurers and doing research, I'd go for the broker option.

For a small commission, a broker does all the dirty work. He or she is a phone call away; because this is a personal service and your broker will probably give you their cell phone number, you won't ever have to listen to irritating call centre music while you wait for your call to be put through to a human.

Using a broker doesn't mean you hand over your financial affairs to a complete stranger. You need to research your options before, during and after discussing your needs with your broker. The easiest way to do this is via internet comparative insurance portals, web sites that provide comparative information about different insurance companies and policies as well as useful information and explanations about insurance concepts, pitfalls and scams.

After you've made your decision, you put your feet up and wait for your broker to arrive with the completed documentation for you to sign. But don't feel bad; you've done your homework too.

Not that the majority is always right, but more people looking for short-term car insurance opt for brokers (the figure is around 80%) because it is simpler. Rather than taking on the might of an insurance giant when things go wrong and you need to settle a disputed claim, set your broker on it. At least he knows what he is talking about. Not to put too fine a point on it, a broker has experience, (hopefully) good long-terms relationships with the insurance companies he regularly deals with and needs to please you in order to pay his own bills.

Insurance is often referred to as a grudge purchase - a purchase made to ensure peace of mind - what cost then is peace of mind to you? The cost of your friendly broker's commission?

Now let's take a look at just some of the pros and cons of direct car insurance versus using a broker.

Why you should choose a broker

Your broker will be legally bound to provide you with a copy of the policy, fully explain the (myriad) terms and conditions associated with your policy including those that apply when an incident occurs and you need to claim, inform you if and when changes to your policy take place, tell you if it has been cancelled and give you a clear explanation of the fees involved. Your broker is morally obliged to assist you when you need assistance and offer you good service.

Your broker is a human.

• Call me naïve, but brokers aren't just in their job for their money; generally they are people persons who need the personal satisfaction they receive from helping others.
• Which of us can resist imparting our superior knowledge? Bleed his brain cells dry.
• Broker service is personal service. If you're lucky, your broker will even hand over his or her home contact details.
• Brokers have experience - they are walking, talking internet insurance portals on legs. Instead of logging onto Google and paging through 1000 hits, pick up the phone to your broker and question him.
• Brokers offer alternatives; they are not bound to one insurance company.
• The insurance industry being what it is, they have extensive claims experience and can mediate on your behalf.
• You, not the insurance company, are the source of a broker's income.

Why you should consider a direct insurer

• Experts in the industry and dedicated to quick turnaround, insurance call centers are geared to getting you insured quickly and easily. Once you've phoned them, there is in reality very little hard selling. Soft-sell advertising does the job for them behind the scenes. Direct insurance operators are efficient and calls are monitored and recorded.
• Direct insurers are legally bound to provide you with a copy of the policy, fully explain the (myriad) terms and conditions associated with your policy including those that apply when an incident occurs and you need to claim, inform you if and when changes to your policy take place, tell you if it has been cancelled, and give you a clear explanation of the fees involved
• You can insure over the phone and be covered immediately.
• If you ask nicely, a direct insurance representative will call you back. You can also fill in a form on the internet, requesting a consultant contact you.
• Direct insurers have informative web sites that offer a range of online services you can access 24/7.
• Competition between the big boys means insurance companies offer special deals, promotions and prizes for their clients which are a bit like the mints you get after your meal when you go out to dinner.
• While insurance companies answer to their shareholders, no product is of any value if it doesn't have a buyer and you're the buyer.
• You can often get better deals because you're dealing with an insurer directly; it's a bit like buying wholesale instead of retail.
• Direct insurance consultants usually receive a salary as well as a commission so are less likely to try to bamboozle you as their rents are covered whether you take the bait or not.