When choosing an insurance provider for car or home insurance one question is commonly asked, "Should I pick an agent or a broker?" The answer can be found first by understanding the differences between the two as each has its own unique advantages and seeing which fits you better.
The Insurance Agent
These people work for the company they represent. Whether it is Sunlife, Allstate or Co-operators, their entire income is paid from the coffers of that organization. Since an agent is actually part of the company, they can change an operator on a car insurance policy or add updated information to your home insurance in real time on the system. This means that they can see the impact instantaneously on your policy premiums and advise you of what the damage is. However, there is a downside. Generally these companies have stringent underwriting guidelines. This means that if you ever have anything "uncommon" regarding your insurance portfolio they most likely will not be able to accommodate you and will give you the boot. This means for your car insurance if you ever get into two at fault accidents within six years, get more than 4 speeding tickets in 3 years, buy a car older than 15 years old, or have young children who want to be primary drivers on a vehicle, they won't be able to do it. If they can, it will most likely be insanely expensive because they don't want that type of business. On home insurance, if you have had two claims in the last 5 years, a dog that is a high risk breed, (German Shepherd, Pitbull, Doberman), or run any kind of business out of the house you may suffer a similar fate.
The Insurance Broker
These people have contracts with multiple insurance companies. They are paid commissions depending on which company they place the insurance with, but most companies in the same market, (low risk or high risk), pay out the exact same rates. Unlike an insurance agent, whenever you need to make changes to a policy, they cannot directly do it on the company's system. They will fill out the required forms and submit it to the company to have them change it. The upside to a broker is that a good one will be able to pretty much insure anything for you and have it at a competitive rate. As well, the advantage of having someone who carries multiple companies is you don't have to spend your time shopping around for better rates as they will already be doing it for you.
The Bottom Line
If you value your time and don't want to shop your rate yourself every year I would choose to work with a broker. If you have a very simple insurance profile and don't mind calling around for rates every year an agent is a better choice.
The Insurance Agent
These people work for the company they represent. Whether it is Sunlife, Allstate or Co-operators, their entire income is paid from the coffers of that organization. Since an agent is actually part of the company, they can change an operator on a car insurance policy or add updated information to your home insurance in real time on the system. This means that they can see the impact instantaneously on your policy premiums and advise you of what the damage is. However, there is a downside. Generally these companies have stringent underwriting guidelines. This means that if you ever have anything "uncommon" regarding your insurance portfolio they most likely will not be able to accommodate you and will give you the boot. This means for your car insurance if you ever get into two at fault accidents within six years, get more than 4 speeding tickets in 3 years, buy a car older than 15 years old, or have young children who want to be primary drivers on a vehicle, they won't be able to do it. If they can, it will most likely be insanely expensive because they don't want that type of business. On home insurance, if you have had two claims in the last 5 years, a dog that is a high risk breed, (German Shepherd, Pitbull, Doberman), or run any kind of business out of the house you may suffer a similar fate.
The Insurance Broker
These people have contracts with multiple insurance companies. They are paid commissions depending on which company they place the insurance with, but most companies in the same market, (low risk or high risk), pay out the exact same rates. Unlike an insurance agent, whenever you need to make changes to a policy, they cannot directly do it on the company's system. They will fill out the required forms and submit it to the company to have them change it. The upside to a broker is that a good one will be able to pretty much insure anything for you and have it at a competitive rate. As well, the advantage of having someone who carries multiple companies is you don't have to spend your time shopping around for better rates as they will already be doing it for you.
The Bottom Line
If you value your time and don't want to shop your rate yourself every year I would choose to work with a broker. If you have a very simple insurance profile and don't mind calling around for rates every year an agent is a better choice.
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