The terms “insurance agent” and “insurance broker” are frequently used interchangeably, but don’t make the mistake of thinking they’re the same thing. There are differences between the two that matter.
Most importantly, as a consumer seeking home and auto insurance, is an agent represents a single insurance company while a broker represents you as the buyer. Both are licensed to sell insurance products while following provincial and federal regulations.
You can use either to buy home or auto insurance. Both have their advantages.
What Does an Insurance Agent Do?
Agents are only selling insurance from a single company, generally, as a salaried employee.
Insurance agents often take the form of salespeople at call centres with a set price for products and services, including home and auto insurance. As the consumer, you have no way of knowing if the price on offer is the best one for the coverage you’re getting. It’s up to you to do your homework and shop around to compare rates.
Even if you want to take the time compare packages for any given type of insurance, you also must consider the nuances in the fine print for each one. With that said, buying insurance directly from an agent does have its advantages. It’s easy today to get a quote over the phone or online, which can speed up the comparison shopping. Not only does it save you time, but it saves the insurance company money, so theoretically some of those savings get passed on to you in the form of lower premiums.
Questions to Ask an Insurance Agent
Regardless of the type of insurance you’re looking to buy, there are several things you want to know when buying it directly through an insurance agent:
- What is the process for making a claim?
- How long does a claim process take?
- Will a person handle any claims or is it handled online?
- Will the same agent always manage my policy? Can I meet them?
- Are you able to tailor existing insurance products to my specific requirements?
- How are you compensated?
What Does an Insurance Broker Do?
The advantage of working with a broker is they work for you, the consumer, not an insurance company.
A good broker is out to get the best insurance product for you based on your needs and has access to different providers selling a variety of property or casualty insurance. Long-term relationships with customers and reputation are keys to the success of an insurance broker. Depending on where you live, provincial organizations such as the Registered Insurance Brokers of Ontario and the Insurance Brokers Association of Alberta, among others, provide governance and education for independent brokers.
Brokers are often independent businesses with in-depth knowledge of the evolving insurance landscape and available services; that is their competitive advantage. Unlike the consumer, it’s their job to quickly and accurately compare property or casualty insurance options from a variety of carriers on your behalf.
Brokers are licensed to sell multiple products, allowing you to get a package deal — home, auto, and life insurance all at once, for example. A broker is also better equipped to help consumers who need something more customized than a standard policy.
Unlike an agent on the other end of the phone working directly for an insurance provider in a call centre, a broker will go to bat for you when it comes time to make a claim. They are more motivated to get money for policyholders because they work for you, not the insurance company.
There are some drawbacks to consider before going the broker route, however. Although brokers are more likely to fight for you when you make a claim, some may not. Also, your broker is an independent business, so they need to generate revenue. They receive a commission that is included in your premium because they provide an extra level of service you do not get when buying direct.
Questions to Ask an Insurance Broker
Just as there are questions you should ask an agent, there are questions to ask when selecting an insurance broker:
- What are their qualifications?
- How long have they worked in the insurance industry?
- Will they work with you all the time, or will it be another staff member? Can you meet them?
- How often will they be in touch?
- What is the process for making a claim? How long will it take?
- What carriers do they represent?
- Do they offer customized insurance products?
Choosing between an agent or a broker involves weighing a lot of pros and cons while understanding your specific needs for home and auto insurance. It makes sense to shop around to find a balance between a fair rate and appropriate coverage.
You can kickstart the process by visiting Rates.ca to get real-time quotes on home, auto, and travel insurance products for free.