This article has been updated from a previous version.
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, an insurance agent represents a single insurance company while an insurance broker represents you as the buyer and will seek quotes from more than one insurance provider. Both are licensed to sell insurance products while following provincial and federal regulations.
You can use either to buy home insurance or car insurance. Both have their advantages.
What does an insurance agent do?
Agents sell insurance from only a single company and 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.
Insurance companies and the agents who work for them are also known as direct writers because they issue insurance policies directly from the company to the consumer through their employees (agents).
Even if you want to take the time to 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 to get a quote over the phone or online, which can speed up 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 a lower premium.
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 the claims process take?
- Will a person handle my claims or are they handled online?
- Will the same agent always manage my policy?
- 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 that they can provide you with more choice than an agent can.
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. A broker’s job is 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.
Your broker may receive a commission for providing their service that is reflected in your premium.
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 your qualifications?
- How long have you worked in the insurance industry?
- Will you work with me all the time, or will it be another staff member?
- How often will you be in touch?
- What is the process for making a claim? How long will it take?
- What carriers do you represent?
- Do you offer customized insurance products?
Choosing between an agent or a broker involves weighing pros and cons while understanding your specific insurance needs. It makes sense to shop around to find a balance between a fair rate and appropriate coverage.