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Everyone loves a bit of DIY here in Australia.
Why pay someone to do something that you can do yourself?
This is very true when it comes to small business insurance, where keeping a lid on costs can make the difference between survival and failure.
The big question is though, does it actually cost you any more to get a professional to sort out your business insurance?
In many cases the answer is no. Using a qualified insurance will often cost you no extra, and in many cases will actually cost less!
How do insurance brokers make money then?
It’s a fair question. If using a broker costs no more than going direct to an insurance company, how do they make any money?
Brokers are paid in two different ways. They receive a commission from the insurance company and in almost all cases they also charge a broker fee on each policy.
But this still doesn’t mean that you pay more to use a broker.
When an insurance company sells an insurance policy via a broker they haven’t had to account for any advertising or marketing costs, or the cost of time in dealing with you, the client.
Therefore they can afford to pay part of the normal premium to the broker as a commission.
If you went direct to the insurance company without using a broker, they would have to account for all of those costs, so you could still end up paying roughly the same.
It is most certainly not the case that by taking out a policy direct from an insurance company you avoid commissions and fees, as to some extent they built into the premium anyway.
A broker can actually save you money!
Not only will using an insurance broker not necessarily cost you any extra, but it could even save you some money.
A good insurance broker will know your business type and will be able to find you the best premiums available.
The broker will be able to get a better understanding of your business and may identify areas where you can make further savings on your insurance.
That’s not to mention the possible savings they could make for you at claim time by ensuring your cover is appropriate for your business.
Can I save money by the broker taking less commission?
Technically the answer to this question is yes.
If the insurance broker feels that it’s appropriate, he or she can reduce the commission and/or broker fee which will then impact on the amount you pay.
Whether or not they do this is entirely up to the broker, and there are a couple of factors which may affect their decision.
For example if you are taking out a number of different policies with the one broker, they may be willing to reduce the commission or fees on some of the policies.
If you are already with a broker but are considering leaving at renewal time, they may be willing to reduce the fees in order to keep you as a client.
Should I use a broker or not?
In a perfect world all small business owners would outsource their insurance needs to a great broker.
This way the business owner would know that their insurance needs are being looked after by a professional, who works each year to ensure the premiums are the best they can be.
But it’s not quite a perfect world, so ultimately the decision is up to you.
Given that a broker can help to save you time, and in many cases money, it certainly seems to make sense to use one.