Insurance broker vs. agent: What's the difference?

After selecting the best rate using Ratehub.ca’s insurance tool, you have two options to bind or confirm the coverage is in place. Depending on the best quote available, we’ll connect you to either an insurance agent or an insurance broker. But what are the differences between the two? And what can each one offer? While the two terms might be seemingly interchangeable in everyday parlance, there are significant differences of which to be aware.

What is an insurance agent?

An insurance agent is licensed by the province to sell policies for one specific company.  For instance, if you call your bank and ask to speak to someone to get a home or auto insurance quote, you’ll be connected to an insurance agent who will assist you.

Agents are highly knowledgeable about the services and policies offered by their company.  The agent is a salaried employee and can sell you the provider’s full range of products. The agent might also provide you with special “bundling” discounts, for instance, if you choose to have both your car and house insurance supplied by the same company. 

Being exclusive to one company limits the possibility of “shopping around” to find the best insurance rate or package possible. Do a bit of homework in advance to ensure that the quoted price is competitive. Ask about what coverages the company offers, modifying your policy, and handling a general claim process. Oh, and don’t forget to ask about potential discounts from union membership or other group affiliation.

Things to consider when searching for an insurance agent

One advantage of going direct with an insurance agent is that you’re cutting out the middleman. Because you won’t be going through an extensive comparison of policies, you can get your quote quickly over the phone or online, saving you time. Still, you may not get the best price when compared to other providers.  If you’re insured with your bank, it’s possible to see all your financial products in one place, even if they have different contact details.

Because the agent works for their company, not for you, don’t expect too much advice on saving money. If you call to inquire if making a claim is worth it, they’ll likely side with their company.

Hopefully, you’ll only be dealing with your insurance company occasionally. Still, it pays to find out as much information about your policy in advance.  Some things to consider are:

• What is the process of making a claim (online, over the phone?) and how long does the process take?
• When a claim is filed, will I be dealing with one agent, or can any agent manage my request?
• What common claims do they deal with?
• How can you avoid being denied a claim?
• Am I over-insured or underinsured? Do I need collision insurance on my old car?

What is an Insurance Broker?

Unlike an insurance agent, who works directly for an individual company, an insurance broker works independently of any specific insurer. Simply put: they work for you.

Insurance brokers are connected to various insurance companies. With their comprehensive knowledge of the current market, they can find the policy that best suits your individual needs.

Insurance brokers generally have a higher degree of knowledge regarding multiple company offerings than agents. Like agents, they are licensed and subject to governance and regulation, so you can remain confident that the service you are receiving meets a certain standard. Since they know the ins-and-outs of the insurance market, they can modify your policy with any insurer.

Unlike agents, insurance brokers work on commission. But, the insurance company pays their commission.  When you need to file a claim, your broker will fight to ensure you receive proper compensation, leaving no stone unturned.

When speaking to a broker, you’ll want to ask them the same questions that you would of an agent, but you might also want to consider the following:

• How long have they worked in the insurance industry?
• Will you deal with the broker directly or a team-member?
• How can you contact the broker if required? Phone? Email? Online?
• What are common endorsements worth adding to your policy?
• How many insurance providers do they work with?

Insurance Broker vs. Agent: Which is right for you?

When looking for a new insurance policy, you have many options and several considerations.  Suppose you want all your finances under one roof. In that case, regardless of the price differences, you can go directly to your bank and buy insurance. If you’d rather compare insurance quotes to find the best deal for your specific needs, start a quote with Ratehub.ca – and we’ll connect you with an agent or a broker. We make that decision easy.

Before you shop, take time to outline what exactly it is you’re looking for in your insurance policy. Will you want to add-on to the policy in the future? Do you have specific needs, like home renovations, that you might not in a couple of months? How accessible do you need your insurance provider to be? As you ask yourself these questions, it’s beneficial to do a basic risk-assessment: do you anticipate having to make a claim in the near future? If so, how do you want your claim to be handled?

The bottom line

As you consider your options, take advantage of the free online insurance tools available to you. Starting your search with Ratehub gives you access to the best rates possible from multiple providers, allowing you to choose better. When you’ve found what you’re looking for, we’ll connect you to the broker or agent that fits your insurance needs.

ALSO READ

• The benefits of using an insurance broker
• The disadvantages of an insurance broker
• The best car insurance companies in Ontario