What’s the difference between an Insurance Company and an Insurance Broker?
Many people don’t realise there’s a difference between an insurance company and an insurance broker when buying cover which can lead to confusion about claims and why insurance prices can change.
When you buy insurance, you’re purchasing protection against an unexpected financial loss. Insurance policies can vary greatly and can cover a vast number of things – things as simple as covering the risk of your motorbike getting stolen to the risk of a footballer breaking his legs. Anything can be insured really. Some insurance is obligatory by law to do certain things, like ride or drive on the roads in the UK for example. This is so should the worst happen, and an accident occurs, the insurance is there as protection to pay for any related costs, be that repair, injury or otherwise. Without the insurance, the responsibility for related costs goes to you if you’re at fault – and finding those sorts of sums at the drop of a hat, for most, would be very difficult.
So, what’s the difference between the broker and the insurance company? The insurance company handles the actual policy and insurance – they are the ones who enter the contract with you which promises to pay out when the loss or damage happens, subject of course to the terms of said contract. They are the ones that set the insurance rates (how much you pay based on your risk details), determine the cover (what the terms are) and they are responsible for any claims you make.
The insurance broker is an independent intermediary between you and the insurance company. Generally, a broker will work with several different insurance companies so they can provide you with the best policy for your risk details. They work for you to continually ensure you have the best policy, whilst keeping you up to date and informed about your cover and its benefits. They manage things like mid-term adjustments, policy admin and can support through the claims process – they also offer add-ons and benefits.
Needless to say, a broker and insurance company work hand in hand to provide the best experience and product for customers. The broker does most of the service side, keeping the customer’s needs at the forefront and the insurer covers the risks and deals with the claims.
