A guide to car insurance brokers

Finding the right car insurance can sometimes be a hassle, particularly if you need a specialist policy or have non-standard requirements.

That’s when the services of an expert broker could be useful. Here’s what you need to know about using a car insurance broker.

Finding the right car insurance can sometimes be a hassle, particularly if you need a specialist policy or have non-standard requirements.

That’s when the services of an expert broker could be useful. Here’s what you need to know about using a car insurance broker.

Alex Hasty
Insurance and finance expert
4
minute read
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Last Updated 4 MARCH 2022

What is a car insurance broker?

A car insurance broker acts as a ‘middle man’ between you and prospective insurance providers to find a car insurance policy based on your needs and requirements.

Brokers work independently. They aren’t tied to any particular insurance provider, which means they should be impartial and always put your interests first.

If you buy your policy through a broker, they’ll also be able to help you in the event of a claim. They can negotiate on your behalf and hopefully make the whole process more straightforward.

How are brokers regulated?

As car insurance brokers provide financial services, they must be authorised by the UK Financial Conduct Authority (FCA) and listed on the Financial Services Register.

They’re also governed by the British Insurance Brokers’ Association (BIBA). Regulated brokers are expected to follow the BIBA Code of Conduct, which says that they should always act:

  • With integrity and honesty.
  • In the best interests of each client.
  • With skill, care and diligence.

What’s the difference between a broker and an agent?

There’s an important difference between a car insurance broker and a car insurance agent.

Brokers are independent and will compare a wide range of insurance providers to get their clients the best deal they can find for their requirements.

An agent works for an insurance provider. As they represent the company they work for, they’ll only search for deals provided by that insurance provider.

Some agents don’t charge a fee for their services. But brokers will charge a commission, which is usually added to the cost of your premium.

What are the advantages of using a broker?

There are some advantages to buying your car insurance through a broker:

  • They have access to a wide range of policies and insurance providers.
  • In trying to find a good deal, they’ll do all the hard work for you.
  • They have experience, expertise and in-depth knowledge of the insurance industry.
  • They can help you with specialist insurance that might be harder to find on your own.
  • If you have to claim, they’ll negotiate for you and put your interests first.

What are the disadvantages of using a broker?

These are some of the disadvantages of using a broker:

  • You’ll most likely be charged a service fee and commission, which could end up costing you more than you save.
  • It can be tricky to work out how expensive or cheap car insurance brokers are, since their commission is often included in your premium.
  • Some brokers may work from a limited list of insurance providers, which could mean you’re losing out on a better deal elsewhere.

Is it cheaper to use a car insurance broker?

Not necessarily. Brokers charge commission for their services. And because it’s usually added to your monthly or annual premium it can be difficult to see whether using a broker is cheaper than finding your own insurance. So it’s important to compare your options and do the sums.

What is a ghost broker?

Ghost brokers are fraudsters who pretend to be brokers to trick people out of money. Ghost broking scams take several forms:

  • Legitimate policies are bought from insurance providers using false details, then sold on to customers.
  • Fake policy documents are sold to customers.
  • Policies are cancelled once the customer has paid up, leaving them without insurance.

In all these cases, the driver won’t have valid cover and won’t be able to make a claim if they have an accident or their car is stolen. If they’re aware the policy is fake, they could face penalties for driving without insurance including fines and penalty points, as well as being liable for the costs of any claim.

Unfortunately, ghost broking scams are on the rise. These fraudsters, who often operate through social media, particularly target young drivers who face high premiums for their car insurance.

How can I check that a car insurance broker is legitimate?

Check for authorised brokers at the British Insurance Brokers’ Association or the FCA’s Financial Services Register.

If you’re concerned and want to check that your car is legitimately insured, you can do so using the Motor Insurance Database

How can I avoid ghost broking scams?

Beware of brokers who contact you directly by phone or via social media. Also be wary of those advertising on university notice boards or in pubs, clubs, newsagents and garages. And as with any scam, if it seems too good to be true, it probably is.

What should I do if I’ve been a victim of ghost broking?

Report it on the Action Fraud website, or call Action Fraud on 0300 123 2040. You can also report it on the Insurance Fraud Bureau website or call their Cheatline on 0800 422 0421.

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