Insurance broker or buy direct? Business liability insurance in Australia compared
How brokers, direct insurers, online platforms and underwriting agencies sell business liability cover in Australia, what they are paid, what to check and how to choose.
Buying business liability insurance direct from an insurer or through an online platform is usually quicker and can be cheaper for simple, low-risk businesses. Using a licensed insurance broker usually makes more sense when your activities are unusual, you need higher limits or extensions for contracts, you have a claims history, or you want help at claim time. Either way, compare the total payable including any broker fee, check who the insurer actually is, and read the wording. A broker's commission is normally built into the premium, while a broker fee is charged on top.
This guide is part of the business insurance quote checklist. Figures are illustrative. If the broker also offers to arrange instalments, read premium funding and monthly instalments first.
The main ways to buy
| Channel | How it works | Good for | Watch out for |
|---|---|---|---|
| Direct from an insurer | You deal with the insurer by phone or online | Simple risks, standard occupations | You assess your own needs; limited choice of wordings |
| Online quoting platforms | A platform, often an authorised representative or broker, offers quotes from one or more insurers | Fast quotes for common trades and small turnovers | Check which insurer issues the policy and how claims are handled |
| Insurance broker | A licensed intermediary who acts for you, approaches several insurers and arranges cover | Complex or higher-risk businesses, contract requirements, claims support | Broker fees and commission; ask what markets they approached |
| Underwriting agency | A specialist that writes policies on behalf of an insurer under a binding authority | Niche occupations, specialist liability | Usually accessed through brokers; claims may be handled by the agency |
| Industry association scheme | A broker or insurer arranges a group policy or tailored product for members | Trades with association membership | Compare like for like; scheme wording may be tailored but not always cheapest |
How brokers are licensed and paid
Insurance brokers must hold an Australian financial services licence (AFSL) issued by ASIC or act as an authorised representative of a licensee. You can check a licence on ASIC's professional registers. Many brokers also subscribe to the Insurance Brokers Code of Practice, administered by the National Insurance Brokers Association (NIBA).
Before providing services, a broker must give you a Financial Services Guide explaining what they do, how they are paid and how to complain. Brokers usually earn:
- commission from the insurer, calculated as a percentage of the base premium and included in the price you pay; and/or
- a broker fee charged to you, shown on the invoice and subject to GST.
Illustrative arithmetic: a base premium of $1,500 with 20% commission includes $300 paid to the broker by the insurer. A broker fee of $150 plus $15 GST is added on top. The direct insurer might charge a different base premium altogether, so compare totals, not commissions.
When a broker adds value
- Placing a hard-to-insure risk. Demolition, scaffolding, security, events or imports to the USA may be declined by direct insurers.
- Meeting contract requirements. Brokers can negotiate principal's indemnity, interested party notations and higher limits.
- Reading wordings. A broker can point out exclusions that matter for your trade.
- Claims advocacy. A broker can help you notify and present a claim and challenge a decision.
- Bundling. Coordinating liability, PI, management liability, cyber, workers compensation and property across renewal dates.
When buying direct works well
- A low-risk, standard occupation such as a consultant working from home.
- Low limits and few contract conditions.
- No claims history.
- You are confident reading the policy wording and schedule yourself.
Worked example: total cost through each channel
An illustrative handyman business in Hobart wants $20 million public liability.
| Direct online | Broker | |
|---|---|---|
| Base premium | $860 | $820 |
| GST | $86.00 | $82.00 |
| Stamp duty (10% of premium + GST) | $94.60 | $90.20 |
| Broker fee incl. GST | – | $110.00 |
| Total | $1,040.60 | $1,102.20 |
| Height limit | 3 m | 6 m |
| Property being worked on | $10,000 sub-limit | $50,000 sub-limit |
The direct quote is $61.60 cheaper. The broker's policy allows work up to 6 metres and a higher sub-limit for property being worked on. If the handyman cleans gutters on two-storey houses, the direct policy's 3 metre height limit could leave that work uninsured. Test both with the liability quote comparison tool, and see the worked quote comparison for a full example.
Check who the insurer is
Whichever channel you use, the schedule should name the insurer that carries the risk. Check that it is:
- an APRA-authorised general insurer (listed on APRA's register), or
- a Lloyd's syndicate, which can write Australian business through the Lloyd's arrangements, or
- if it is an unauthorised foreign insurer, the broker must give you specific warnings, and you should understand that APRA does not supervise that insurer and that claims and disputes may be harder.
Questions to ask a broker
- Which insurers did you approach, and why did you recommend this one?
- How are you paid on this policy: commission, fee or both, and how much?
- Do you have a binding authority from this insurer?
- Which exclusions could affect my business?
- Will you help with claims, and is there any extra charge?
- What is your internal complaints process, and are you an AFCA member?
Frequently asked questions
Is a broker more expensive?
Not necessarily. A broker may access lower base premiums or better terms, but fees can make the total higher. Compare totals for the same cover.
Does the broker act for me or the insurer?
A broker usually acts for you. When a broker uses a binding authority to issue a policy on the insurer's behalf, it acts for the insurer for that purpose. The Financial Services Guide should explain this.
Can I complain about a broker?
Yes. Use the broker's internal dispute resolution process first, then take it to AFCA if it is not resolved. See AFCA complaints.
Do I get a product disclosure statement?
Most business liability policies are not "retail" products, so a product disclosure statement may not be required. Ask for the full policy wording before you buy.
Sources
- ASIC — professional registers for AFSL holders and authorised representatives
- APRA — register of authorised general insurers
- National Insurance Brokers Association — Insurance Brokers Code of Practice
- AFCA — complaints about insurers and brokers
