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Tero Vesalainen

I’d been with the same insurance company (Allstate) since I started driving (my parents were with them and I just kept using them), and I’d like to switch. But I’m a little confused about the best way to buy insurance these days. Some friends are telling me I need to go with an insurance broker to get the best deal (I don’t really understand what brokers do), others say I should go online. Which way is best – and who will give me the best deal? – Percy, Ottawa

There are three different ways to buy car insurance in Canada – and usually, the insurance company has already chosen for you.

“There is a direct writer, there is a captive agent and there is an insurance broker,” said Anne Marie Thomas, senior manager of partner relationships for rate-comparison site Insurance Hotline.

First, a direct writer is an insurance company that sells directly to you. Typically, you can only buy insurance from them by going to their website or calling them.

“They get the name because you’re dealing directly with the insurance company – Desjardins and Sonnet would fall under there,” Thomas said.

Then, there are insurance companies that only sell through captive agents – agents who are only allowed to sell for that one insurance company and no others.

“That’s like Allstate or Co-operators,” Thomas said.

Finally, there are companies – including Intact and Aviva – that usually only sell through insurance brokers, Thomas said.

“So a broker is an independent business who has a contract with anywhere from three to ten companies,” Thomas said. “The broker gets paid a commission, the same as an agent in the captive model.”

And you might need to check with more than one broker.

“There may be 20 companies in a community that are actively taking on new clients, and that broker may only have contracts with five of them,” said Pete Karageorgos, director, consumer and industry relations with the Insurance Bureau of Canada (IBC).

So, which one is best?

Which type gets you the best rates? That’s a good question. It varies. And rates have been rising for all
companies – the national average premium rose $298 last year. And that’s why you have to shop around, Thomas said.

“If getting the lowest premium is your goal, you should check all of them,” Thomas said. “This will sound self-serving, but calling everyone is time-consuming and that’s why [rate comparison] sites are so successful.”

And if rates are close between, say, a company that only sells through brokers and another that only sells direct, which one is better?

“No one is better than the other all the time; that just makes it clear as mud, doesn’t it?” said Thomas. “It depends on how you prefer to do business.”

Some buyers don’t want to deal with a middleman and just want to quickly buy insurance online and get it over with. Others prefer a personal relationship with an agent or broker.

But a broker could, potentially, help you navigate a claim or tackle a problem with your insurance company, Thomas said.

“The direct writer and the agent both have skin in the game, but a broker doesn’t have an allegiance,” Thomas said. “They get commission, sure, but they get commission from all their companies.”

In J.D. Power’s 2019 insurance satisfaction study, a survey of more than 8,000 policyholders, the Co-operators, which sells through agents, ranked highest in Ontario and the Atlantic provinces.

In Alberta, it tied with AMA insurance, a direct writer. The Personal, also a direct writer, took the top spot in Quebec.

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