Direct Insurance VS Insurance Broker

There has been an increasing trend of people taking up what is called direct insurance (i.e. pre-packaged insurance available online or via phone through companies).  As someone who’s been in the insurance industry for over 40 years, this concerns me, as people are buying insurance thinking they are getting full coverage, when on many occasions they are not.


The sad thing is by the time they find out that they don’t have adequate cover, it’s too late.  More often than not  something has happened and they need to lodge a claim urgently.


I had an acquaintance only the other day tell me about their less than pleasant experience when the power went off at their house when they were away on holidays.  When they got home they found close to $1,000 worth of red meat and seafood in their deep freezer had spoiled and when they rung their insurance company to lodge a claim, they were told “sorry you aren’t covered for fusion.”  This particular person had only recently changed their insurance policy over for their home and contents to one of the direct insurance companies after receiving a cheaper deal.  What they didn’t realise was the direct insurance company didn’t cover many of the items that were in their original insurance policy. 


It was a very big lesson for this particular family as they then had to go out and refill their freezer out of their own pocket, while also paying their insurance premium that didn’t cover them for what they thought it did.  A bitter pill to swallow.


It pays to read the fine print so you are comparing apples with apples when you are shopping around for your insurance.  Or take the hassle out of it and see an insurance broker as they do all of that for you at no extra cost.


It’s essential that people realise that these direct insurance products are often just the basic cover and the person on the other end of the phone is not able to give objective advice to you.  All they want to do is sell you their insurance product and they don’t necessarily take into account all aspects of your personal needs in the short interaction they have with you.


I always tell people it’s a cost vs coverage scenario - what you pay vs what you get for that payment.  And from all my years in the industry I can honestly say, if something appears too good to be true, it usually is.


An insurance broker is able to give you the personalised advice that you need to ensure you receive value for money while also guaranteeing you have the right cover.  This will enable you to make the best choice for you and your family/business.

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