What are car insurance brokers?
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 car insurance claim. They can negotiate on your behalf and hopefully make the whole process more straightforward.
How are car insurance 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 car insurance broker and a car insurance 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 car insurance 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, such as convicted driver or classic car 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 car insurance 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 could 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 brokers for car insurance?
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’s stolen.
If a driver is aware the policy is fake, they could face penalties for driving without insurance. These can include 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 – and be careful of brokers using only mobile phones or emails as a way of contact. 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.
FAQs
What qualifications should a broker have?
There aren’t any specific qualifications needed to become a broker, although many enter the profession with a relevant degree in areas such as economics, finance or business.
Many of the larger broker companies also offer internal apprenticeships or graduate training schemes. There’s also a Society of Insurance Broking level 2 Award in Motor Insurance for those working in customer-facing roles.
However, to advise on, arrange or sell insurance products in the UK, a broker must be authorised by the FCA.
When might I need to use a car insurance broker?
You might need to call on the services of a broker if you need specialist car insurance that may be difficult to find through a mainstream provider. For example:
Should I use a car insurance broker?
If you want bespoke car insurance cover that’s specifically tailored to your personal needs, then it might be worth going through a broker. However, when looking for car insurance, it’s always worth comparing your options to ensure you’re getting the right cover at a price that suits you.
Use Compare the Market’s comparison tool to compare a list of quotes from a range of providers in a matter of minutes. It’s then up to you if you want to go with a suitable quote or opt for the services of a broker instead.
Julie is passionate about delivering a great customer experience and rewarding people for saving on their insurance through our loyalty and rewards programme. She’s spoken to the media, including outlets like Sky News, about car and home insurance, as well as our Meerkat rewards scheme.
As an award-winning journalist, author and broadcast commentator, Kate has been writing about personal finance for more than 20 years. She’s the former Money Editor for The Independent.
Her work has appeared across the UK broadsheets as well as a number of international titles. Kate brings her financial expertise to inform her readers on ways to save money.
She’s also written a book. ‘Going Zero: One Family’s Journey to Zero Waste and a Greener Lifestyle’ is available now.
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