Buying Car Insurance: Broker or Company?

If you are a Canadian driver, you are legally required to have car insurance. The question often raised, however, is where do you purchase car insurance from?

If you live in Ontario, Nova Scotia, Prince Edward Island, Newfoundland, Labrador, New Brunswick, Alberta, the Northwest Territories, or the Yukon, you can purchase all of your car insurance from private insurers, such as Allstate, State Farm, Bel Air, Aviva, and others.

However, if you live in Manitoba, Saskatchewan, or British Columbia, you must purchase basic liability coverage from one of the public insurance systems run by the government, and any optional coverage, such as vehicle damage or theft coverage, can be purchased from a private insurance company or your province’s public insurance system.

If you live in Quebec, you must purchase basic injury coverage from Société de l’assurance automobile du Québec, another government-owned insurance system. Private insurance companies can provide you with coverage for auto property damage and injury claims arising outside of Quebec.

Regardless of the province you live in, you will likely need to purchase at least some car insurance coverage from a private insurer, but how do you know whether or not you should purchase directly from a company or use the services of an insurance broker? Each option offers advantages not provided by the other, so let’s take a look at both options to better understand whether a broker is necessary in today’s Internet world.

Purchasing Car Insurance Directly from an Insurance Provider

Before the Internet, buying car insurance directly from an insurance provider wasn’t a practical option. Prior to the Internet, drivers always had to go through an independent broker. Now, insurance companies like GEICO operate convenient websites, allowing drivers to perform research, receive quotes, purchase coverage, and submit claims directly from the company’s website. Since insurance companies don’t have to pay sales commissions to brokers, they are able to provide drivers with lower rates. However, customers do not have the personal service of a broker should they be involved in an accident or have a problem with their coverage.

Purchasing Car Insurance from an Insurance Broker

Many people claim that purchasing car insurance directly from the company is less expensive than utilizing the services of an insurance broker. Although insurance brokers don’t control the cost of insurance for their customers, because insurance rates are determined by a person’s driving history and a multitude of economic factors outside of their control, many argue that the commission structure raises rates for drivers who use a broker.

Since insurance brokers are paid a certain commission from insurance companies for every new policy that they generate, insurance companies often pass this extra cost along to drivers. However, the commission rates received by brokers are publicly listed, making it easier for Canadian drivers to see how much using a broker might really be costing them.

Although people may pay more for using a broker, they offer a helpful and convenient service. Essentially, car insurance brokers match a person’s personal driving history with their policy needs and provide industry rates for policies from numerous companies that meet their needs. When you use a broker, he or she also becomes your trusted insurance advisor, offering unbiased advice and news about the latest reforms and trends occurring in the insurance industry.

Contrary to popular belief, insurance brokers work for their clients and not the insurance companies. So, if you are in an accident, you can call your broker and receive advice about what steps to take next. Conversely, if you didn’t use a broker and bought your car insurance directly from an insurance provider, everything that you tell the company’s claims agent will go on record.

After Choosing a Broker or Insurance Company

Car insurance companies may be similar, but many of the differences between them are often hidden in the policy details. Before signing a policy, you should ensure that you have read and understand every detail. If any questions or concerns arise, you should get them resolved before signing on the dotted line. It’s also important to note that whether you buy your car insurance directly from a company or use a broker, claims are always taken care of by the insurance company, not the broker who may have sold you the policy.

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