Price vs. service: why brokers can still come out tops

3rd April 2018

The internet gives consumers the ability to easily shop around, compare prices and get great insurance deals. Or at least that’s what they’re told in the mainstream media on countless occasions. However, a quick click and online submission can end in disaster and cost consumers more than what they bargained for.

This is what happened to one family who, while on vacation, had their house gutted by fire. Paul and Sophie Weldin now face having to pay hundreds of thousands of pounds to rebuild their home because their insurer Ageas allegedly declined to pay their claim after it was found that their home actually had seven rooms instead of the five rooms that they said they had and submitted on their claim form.

According to a report on MSN the insurer didn’t cover claims for homes of that size, so the cover was void. Now the Weldins have to find £460,000 to build their home and replace their contents.

While this is a very unfortunate incident it’s one that can be avoided through the use of a broker. In my view, a broker would have been able to ask the right questions to establish the size of the home and get the right cover for that family.

Brokers are undervalued and underused. And they can prevent horrible things from going wrong – by checking with the insurer and making sure, for example, that extra rooms in a house aren’t classified as ‘bedrooms’ or ‘attic rooms’, one of which could render the client uninsurable or having to pay more.
But this is not the only reason why claims can be rejected. Other reasons can include declaring the wrong type of lock or burglar alarm. Customers often also miscalculate the worth of their possessions and fall into the trap of underinsuring themselves. So in the event of a major disaster, like a fire or storm, they find that their items are way more expensive to replace.

It’s sad that the family made a mistake on the insurance form. This calls into question the price vs. service debate. While experts often recommend that consumers shop around for the best price by cutting out the middle man (i.e. broker) it’s not always the best course of action as claims can be rejected by simply not putting in the correct information. What may seem an insignificant detail in a customer’s view may be a major omission to an insurer – and brokers know what to look for and are familiar with these terms and conditions.

People buy on price all the time but there is no one checking that what they have is right and is what they need for the money they are paying. Brokers find it frustrating that they are undercut by online providers but what they tend to perhaps neglect to do is convey the full extent of the value they offer to the customer.

A broker would’ve asked more questions and could have prevented the scenario the Weldins currently find themselves in. But brokers need to be part of this equation to convince the consumer that it’s not always right to buy just on price. Products need to be suitable for the price people pay. And regulators need to convey this message too as there are mixed messages coming from them. It’s all mixed messages from regulators. If you want to buy something and you want responsibility and understanding those things most people buying the right insurance are not equipped.

People just think about how they will get it cheaper. But in reality they could pay a little bit more or engaging an expert in helping them choose the right insurance cover. Unfortunately, you don’t know it’s a rubbish product until you need to claim. Insurance is seen as a grudge purchase but we all need to send the message out that it’s vital and important to get an expert on board to ensure that the cover is right.   

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