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Advantages and disadvantages of using an insurance broker

Like most in life, there’s no perfect solution to anything. The same rule applies to your insurance: There are different ways to get insurance but no perfect route to take. You can either work directly with an insurance provider or work with a broker. You may be curious about the differences, so let’s take a look at the pros and cons of using an insurance broker.

Advantages of using an insurance broker

  • They’re free to work with.

A good insurance broker is in the consumer’s corner – they have their clients’ best interests in mind because they want to earn a repeat customer. They work for you and not for the insurer.

Not sure what sort of insurance you might need when purchasing your first home? Curious if you should make an auto insurance claim? Insurance brokers can answer those questions for you – and help you get the insurance you need.

Not only that, when you choose to work with insurance brokers, you don’t have to pay them a fee. That’s because they receive compensation from the insurance providers.  

  • Access to various insurance providers

Because brokers operate independently, they have access to more than one insurer’s products (unlike insurance agents, who are employed by individual insurers and, therefore, can only sell their employer’s products). That means your broker can get you the best insurance for your needs – even if it means having to purchase insurance from different providers for each of your insurance policies. 

Think of them as personal shoppers: Instead of you visiting one clothing store for your next outfit, a broker visits all of them and offers the choices they think you might like best. 

  • Access to additional insurance products

Not all insurers offer products for all your insurance needs. For example, my longtime insurer stopped offering motorcycle insurance, so I had to shop around for another option. I chose to go the broker route – and my broker has done a great job finding me the best rates each year at renewal. 

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Disadvantages of using an insurance broker

  • Having to form new relationships

If you already have insurance through an insurance provider, chances are you have an existing relationship with one of its insurance agents. You might be happy with that relationship and have apprehensions about forming new ones. That’s a fair concern. But, it doesn’t hurt to call around to some brokers to see if you get along particularly well with one. 

  • They could be sales-driven

As previously mentioned, insurance brokers are compensated by the insurers they work with. They may receive bonuses for sending a certain amount of clients to a particular insurer, which may lead some unscrupulous brokers to favour one particular provider over another. However, this is likely a rarity: Brokers know the key to a successful, long-term relationships – and repeat customers – is to put their clients’ needs above all else. 

And, after all, the same thing could be said for the insurance agents who work for individual insurers. 

  • May lack deeper knowledge of insurer-specific products

Because insurance brokers work with so many insurers, they may not have the same deep, expert knowledge that each insurance provider’s insurance agents may have. That said, a good broker will always do their due diligence to research a particular product their client might be interested in. 

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The bottom line

There’s no getting around insurance requirements: You need it for your home, your vehicles, some of your belongings, and even your life. There are dozens of great insurers in Canada and hundreds of great brokers. Is a broker right for you? That depends. We’ve listed the pros and the cons to help you get started thinking about which route to go. After getting a home or car insurance quote from us, we’ll connect you with the best insurance broker to suit your needs.