For example, do you need new motor vehicle liability insurance? Then your first step should be to an Insurance Broker. In the best-case scenario, these are independent professionals who can advise you on everything you need to know about insurance. Here we will show you exactly what an independent insurance broker does and how he or she differs from an insurance agent.
What exactly does an Insurance Broker do?
Insurance Brokers are indispensable as intermediaries between policyholders and insurance companies. You are responsible for determining sensible insurance policies and arranging suitable contracts. They also take care of the administration, support and updating of the insurance and are your first point of contact in the event of a claim. Also, of course, if you want to cancel your car insurance, for example, or if you want to have the difference between contents and property insurance explained.
In order to be able to pursue this task, insurance brokers must prove their expertise and reliability. They must also have proper financial circumstances and professional liability insurance. According to German commercial law, insurance brokers are classified as merchants. Your rights and obligations are regulated in the brokerage contract, which can be found in the Insurance Contract Act (VVG), among other things.
In their work, they must always be aware of the applicable laws and regulations in order to avoid insurance fraud, double insurance or insufficient insurance coverage.
For example, if you want to change or cancel your car insurance, you should contact a competent Insurance Broker.
Self-employed or employed: Who does a broker work for?
As independent experts, insurance brokers do not work on behalf of a specific insurance company. Normally they are not employed by an insurance company, but are self-employed as merchants. This is to guarantee their independence. Insurance brokers are obliged to represent the interests of their customers and to offer them the best possible insurance options. You must comply with the rules of the insurance regulator.
Insurance broker & insurance agent: What is the difference?
Determining the difference between brokers and agents is not that easy. Basically, an Insurance Broker Acts purely on behalf of the policyholder. This – in this case you – gives the order to mediate contracts with insurers. Insurance agents, in turn, are on the side of the insurer and mediate insurance contracts on their behalf.
The distinction also plays an important role in the conclusion of contracts. Because a broker only forwards applications to an insurance company. The representative, on the other hand, accepts such insurance contracts directly on behalf of the company and also conducts negotiations on behalf of the company.
The question of liability is also interesting. Because an Insurance Broker is personally liable for damage that has happened to one of the parties through their mediation. The insurance agent is not personally liable because there is a large company in the background that employs the agent.
In more detail, the differences look like this. Insurance broker: A person who commercially brokers or concludes insurance contracts. It is not commissioned by an insurance company to do this. The broker acts as the fiduciary administration of the customer. He or she is independent of insurance companies.
A brokerage contract is concluded between the Insurance Broker and the policyholder. It usually decides on the one-off procurement of insurance cover. In most cases, the contract also includes long-term care for the policyholder. The management of the insurance contracts and their adjustment can also be decided. As an insurance broker, you have to justify why a certain insurance company should be preferred.
The insurance broker must maintain the selection and maintenance of the best possible insurance cover for customers. Therefore, he or she must offer several insurance contracts and companies offered in the market when giving advice. However, it is also possible to limit the selection to a specific group of insurers.
The Insurance Broker Earns Money through commissions. Therefore, he or she does not have to arrange insurance with a direct insurer. Because they don't pay brokerage fees. Insurance agent: The insurance agent is commissioned by an insurance company (in individual cases also by other insurance agents). The job is to arrange or conclude commercial insurance contracts.
He or she will also support you in the administration and fulfillment of your insurance contracts. There are different types of insurance agents.
For example:
- Exclusive agents who normally work for only one insurance company and are tied to their offers.
- Multiple representatives work for several insurers. Not infrequently even for those who are in competition with each other. In terms of liability law, they are equivalent to an exclusive representative.
- Part-time insurance agents are equivalent to full-time insurance brokers in terms of representation and liability.
- Occasional representatives are only occasionally entrusted with brokering contracts by the insurer. The insurance company treats him or her like a permanent insurance agent.
- Employed insurance agents are usually deployed in the field. With regard to the representation of the insurance company and the liability of vicarious agents, the same rules apply to them as to all other insurance agents.
This is how you recognize a good insurance broker
Maybe you've talked to an insurance agent before. The question is: how did it make you feel?
Did you feel a little uncomfortable during the consultation or did you feel pressured? Were you unable to really understand the expert's suggestions and weren't there any more detailed explanations?
Then a change to another Insurance Broker could be announced. At the very least, you should get a second opinion, especially for long-term contracts and high premiums.
Then you might meet a really good insurance broker who has the following skills:
The suggestions and explanations are objectively justified with their advantages and disadvantages.
- You feel your questions are welcome.
- You get clear and detailed answers to questions that you understand.
- You will be fully informed about every aspect of the insurance.
- There is no pressure to sign a contract quickly or even immediately.
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