When looking for car insurance you'll have noticed that there are different types of providers. You can get quotes and buy your cover from either an insurer, a broker or a comparison site.
Types of insurance providers
Essentially there are three company types that sell you insurance. They each have there own advantages and operate in slightly different ways. However, at the end of the day the car insurance product you get is the same.
1. Insurer
An insurer is a company that actually underwrites the policy i.e., they are the ones that take on the risk and they are the ones that pay your claim. For example, AXA, Zurich, Aviva and Direct Line are examples of insurers.
They make their money by hopefully paying out less in claims than they take in from selling policies.
You can usually get quotes directly from these insurers by either telephoning them or going to their specific website. Of course, they will only offer their own insurance products and their own rates.
2. Insurance Broker
A broker essentially acts as an intermediary or middle-man between you and the insurer.
A broker will have rates from a number of different insurers that they can offer you. They do the work of finding you the most appropriate quote from all these insurers and can help with advice on your particular circumstances and needs.
Often, brokers may be given special rates from an insurer in order for that insurer to attract more business from a certain segment.
Brokers can sometimes negotiate directly with insurers on specific risk types and costs. This is particularly helpful if your requirements are unique or don’t fit a specific product type.
Brokers make their money by taking a commission fee from a policy sale. Brokers do not underwrite the risk or pay out claims.
For example, a broker may sell you a policy that is insured (underwritten) by AXA. You pay the broker for the policy e.g., £500. The broker takes a percentage fee commission e.g., 15% (£75) and sends the remainder (£425) to the actual insurer, in this example AXA. If you have a claim then it will be AXA who pays out and not the broker.
3. Comparison Site
A comparison website essentially operates in the same way as a broker except they simply give you a list of prices in order of the least expensive via a website or app.
They are usually not geared up for offering detailed advice on particular risk types or individual needs. However, some comparison sites may offer online help or telephone support.
Comparison sites often have rates from numerous insurers that cover all risk types. This saves you time from having to visit each insurance website to get a quote. However, some providers such as Direct Line do not give out their rates to comparison sites and each comparison site may only have a select set of schemes from a particular insurer rather than the full product range.
Comparison sites make their money in the same way as brokers do i.e. they take a commission fee.
For most people a comparison site is often the easiest and most cost-effective way to buy car insurance as it gives you the cheapest price from a large part of the market in just seconds.
Which one should I use?
The answer is all of them.
In order to save the most money you should spend time visiting as many comparison sites as you can as each one can have different rates given to them by insurers.
You should also visit those insurers that do not give out rates to comparisons such as Direct Line.
You should also get quotes directly from each insurer such as the AXA website, Zurich Website and so on. Going direct to an insurer can sometimes mean you get a lower rate or a better suited product.
You could also call specific brokers to see if they can help get you the right product at a lower price. Brokers can also offer you specific advice for your individual needs that you may not get elsewhere. Remember, price is not always the most important factor. You should buy the insurance cover that will actually cover what you need most.
