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In my 20s, I thought life was complicated. A career, car repayments, relationships and, importantly, making sure I had a some bucks together for a few beers on the weekend.
Then I really grew up.
Soon, I was married, we had bought a home, and we owned two newer and more expensive cars. We’d even started investing and bought ourselves an investment property. Or two.
Some time later, the DebtKids arrived, a business was started and we had to upgrade the family home. Pretty standard stuff for a 40-somethings couple.
We had a lot of money invested in these assets. Clearly, they needed insurance. But the time each year to research all of the insurance options and pricing? I’d rather play basketball with my kids. Or get some work done on my business. Or, you know, just have a night off, occasionally!
“Hire a professional, Bruce,” spoke some ghost-like voice in my head. Or maybe it was my father-in-law. Whatever, I did.
Insurance brokers are professionals who know the ins and outs of their industry and the products used.
Brokers know which insurers are pricing to win business, which have the best claims payment records, and which ones will have conditions that will meet your needs. And they’ll do it far more efficiently than you can.
What else do I get from a broker?
At least once a year, I’ll get a letter from them telling me that the cost of one of my insurances has gone up dramatically. (Insurers occasionally re-rate their “risk books” and lift premiums.)
“We believe Insurer B is an equivalent or better insurer. Sign here and you’ll save $200 a year.”
Read letter, sign, lick and close envelope, save money. Without spending hours on research and filling out new forms. This I like. Very much.
Nobody wants to make insurance claims. It means you’ve been in a car accident, suffered storm damage, or have had your home broken into. Or suffered one of gazillions of other life events.
But as you accumulate more assets, your likelihood of claiming increases.
I’ve made a few. And here, brokers pay for themselves, by dealing with claims efficiently. (Bonus: you’ve already paid for this part of their service.)
Importantly, no-one has to use a broker. If you’re happy to do the research properly, and have the time to do so, great. Nowadays, it can largely be done online, without too many phone calls. And if getting cheap insurance is what’s most important to you, not using a broker might also save you some money.
This isn’t because brokers cost a lot of money – they are usually paid via commission from the insurance premium you pay. It’s actually because some low-cost insurers don’t offer their cover through the insurance broker channel to save on their own costs, and would rather deal with you directly.
But if you’ve got multiple assets to insure and review each year, or you’re time poor, consider taking my father-in-law’s advice. You can find out more on insurance brokers through the Understand Insurance website here.
Bruce Brammall is the author of six books including Debt Man Walking and Mortgages Made Easy, and is a licensed financial adviser and mortgage broker with Bruce Brammall Financial. E: bruce@brucebrammallfinancial.com.au.