Hydrants

There are some harmless redundancies in life. For instance, in baseball parlance why do we call the number of runners a hitter sends homeward “RBIs” when the acronym stands for the already-plural “runs batted in”? Why do we call someone “very unique” when “unique” by itself already means existing as the sole example? Or why woud two fire hydrants get installed within six inches of each other?

But there are also unhealthy and misleading redundancies in life. And one of those is paying brokers’ fees on car insurance policies.

Let's break it down:

Car insurance carriers plan their economy very tightly. They target a payout of 100% of the revenue they receive from consumers for policies, and make their profits on interests and investments during the interregnum. The 100% payout is generally split across 70/30 lines, with 70%, on average, paid out for claims and 30% earmarked for costs. Those costs include marketing expenses, rents on offices and... paying out commissions to the brokers who sell their policies

That’s right, “broker’s fees” are already baked in to the cost of your policy, and already set aside by the carrier. So there is really no reason to ever pay them. If an agent includes them in the cost of your policy, ask him or her to remove it -- or go ahead and find another agent.

This one of the things we find most exciting about the CoverHound comparison shopping engine -- increased transparency, and the elimination of life’s sneaky redundancies.

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