Using an Online Insurance Company vs. Insurance Broker: Cost, Expertise and More
Buying Insurance (or anything really) Online
Buying insurance online has become more common in today’s world. However, how do online insurance companies compare with insurance brokers when it comes to cost and value?
The Geico Gecko first graced our televisions screens over 21 years ago. That’s right – if that bug-eyed, cockney lizard was given a birth certificate when he was first conceived, he’d be old enough to buy you a beer.
The rise of the internet over the final decade(s) of the last millennium and first decades of the current millennium has revolutionized many an industry, and insurance is no exception. At this point - in the early days of 2020 – many people’s first option when seeking to make a purchase is to search prices/information online, then make a decision and buy what they need without ever leaving their home, let alone consulting another human being about whatever it is that they’re purchasing.
This shopping practice is less of a habit or routine than it is a way of life for many people. And the advantages are clear, with convenience and pricing (comparisons) often at the top of the list.
In the case of insurance, however, whether personal insurance or business insurance (which is the focus of this article), there are a number of factors that should be taken into account before completing your transaction online without having consulted any other options or without considering potential downsides to online-only insurance coverage.
After all, shopping online is great in many ways for purchasing anything from toy cars to actual cars – but how about for buying car insurance? How about for buying insurance for an entire fleet of cars? Well, it depends on what kind of insurance coverage you need – and therein lies the rub.
What Are Some Potential Disadvantages to Buying Insurance Online?
As mentioned above, one of the primary advantages of purchasing insurance online is the convenience factor. While online insurance options can in many cases be procured quickly from a comfortable/familiar location and without the need to ever actually interact with another human being, there are of course some drawbacks that accompany these relative conveniences. Not having to interact with another person may be appealing at face value, but buying insurance is typically more complicated than buying a sweater, for example.
When purchasing insurance on the front-end, for example, there are a number of situations in which there can be a significant advantage to interacting with a trusted advisor who can help usher you through the process:
Even once you’ve purchased your insurance coverage, having a broker, agent, or trusted advisor can continue to reap benefits:
What Does This Clause Mean & When Will It Apply: Having a broker, agent, or advisor can be crucial when explaining how different provisions in the insurance contract will and won’t apply in various situations.
Industry Expertise & Policy Customization: Not only can a broker make sure you understand the scope of coverage you’re signing-up for, but they’ll ideally have experience in your specific industry, which will enable them to direct you toward coverage options that will best suit your needs and help you avoid unnecessary coverage thereby providing cost savings.
Policy/Cost Comparisons: Many online insurance quotes will only reference the online insurance provider itself, while brokers will typically deliver quotes from a number of potential providers, giving you a wider range of options in real terms. Further, brokers can help explain the difference between various prices you may be quoted, which can better help you determine policy value instead of simply policy cost.
What Does This Clause Mean & Does It Apply Now: Though you hope to have a very clear understanding of the finer details contained within your insurance policies at the time of purchase, sometimes unanticipated incidents can occur for which it’s not immediately clear whether or not you are covered. Not only can a broker help navigate these situations, but they can also be of great help in crafting a more thorough policy going forward in the event that the incident in question is not in fact covered by your policy.
Policy Adjustments: Possibly the biggest continuing advantage that comes with having an actual person managing your policy is that your broker is able to continue advocating on your behalf. With consistent attention and effort over time, brokers can minimize rate increases and negotiate with your provider on your behalf to manage any adjustments that are proposed or made to your policy.
Is Buying Insurance Online Cheaper than Working with a Broker?
To answer this question, we recommend that your best course of action is simply to utilize the convenience of the online insurance acquisition process and get a quote – though we don’t recommend signing-up without first comparing the quotes you receive with those supplied by a broker. We can only speak directly to personal experience, but the founder of Mployer Advisor actually got cheaper quotes by going through a broker than through any of the online options that were tested.
To find a broker with a proven track record in your industry and/or area in order to cross-check your online insurance provider quotes, search on Mployer Advisor and discover just how comparatively easy and convenient it can be to work with a broker, as well.
About Mployer Advisor
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.