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Everything you need to know about how insurance brokers and brokerages operate in Canada.
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Insurance broker basics
Matt Hands, VP, Insurance and MoneySense
What is an insurance broker?
An insurance broker works at selling and negotiating life, home, car and various other insurance coverages on behalf of different insurance companies to the end consumer. They might work as an individual or part of a larger team of brokers at an insurance brokerage.
What is an insurance brokerage?
An insurance brokerage is a licensed team of insurance brokers providing independent, unbiased advice about life, home, and auto insurance from different insurance providers. Each insurance broker sells insurance from various providers on behalf of the brokerage.
What does an insurance broker do?
An insurance broker will sell different types of policies. They're responsible for promoting new products to new or current customers, finding the best insurance policy for their clients, and filling out all the necessary paperwork. They take the time to explain, in detail, each portion of the policy, they calculate payment plans and help you handle any insurance claims.
An insurance broker can also help you navigate risks for your unique situation. In life insurance, they'll explore your medical background to decide which company serves you best.
A home & car insurance broker will work with you to understand how you plan on using the car to ensure you have proper coverage. Also, they'll review your home insurance options and what extra endorsements might be valuable to protect your home from potential risks. Finally, they'll explore options such as bundling discounts, alumni discounts and recommended add-ons for better protection.
An insurance broker ensures your assets are protected based on your unique risk profile. They help you decide what you need and don't need, as they customize a plan that suits you. Whether that means paying extra to protect your classic car or not insuring your home for its full value to pay a lower premium. Below are some examples unique to what you might find with individual brokers.
How does an insurance broker make money?
An insurance broker earns a commission from the policies they sell that is paid out by the insurance company. An auto insurance broker commission will range from 10-12.5%. In contrast, a home insurance commission could be as high as 20-23%, according to the Globe & Mail. An insurance broker also makes a base salary, which, according to neuvoo.ca, average salary is $39,496.
Types of insurance brokers
Car insurance broker
Home insurance broker
Life insurance broker
High-risk insurance broker
Compare car insurance broker rates
Insurance broker vs. Insurance agent
Both insurance brokers and insurance agents work with customers and insurers to sell insurance products on behalf of the companies they represent. The difference between an insurance broker and an agent is the broker works with multiple providers, while an agent represents one insurance company. An agent will be unable to help you compare the market, but will have in-depth knowledge and expertise about the products they sell. An insurance broker conversely, will be able to provide unbiased advice to help you shop the market for the insurance policy that best suits your needs.
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Questions to ask a car insurance broker
What kind of coverage do I need?
In private insurance provinces (Ontario, Alberta, Atlantic Canada) there are 4 mandatory coverages: Liability if you injure someone or damage their car, accident benefits if you're injured, uninsured auto for when an insured driver hits you, and DCPD which means you only ever deal with your insurance company. Unless you add collision and comprehensive, your policy doesn't protect your car
Should I increase the basic personal amounts?
Third party liability minimum is $200,000, but that's not enough anymore for most claims. Accident benefits also pays for loss of income if you can't work, but the default is $400 per week. Want more? Ask how it affects your costs.
What coverage do you recommend adding?
Collision protects your car if you're in an accident where it's your fault. Comprehensive protects your car from flood, fire, theft. There are also endorsements you can add that gives you a rental car if yours is in the shop, another that covers you if you drive a car you don't own (rental car), and one that gives you full replacement value of your car if it's a write off.
How can I save on car insurance?
Group rates, alumni discounts are possible. Driving less will reduce your costs, as will not getting all the optional coverages. Winter tires can help you, too. The right car can yield better insurance rates. And, increasing your deductible certainly helps.
Should I Increase my deductible?
The deductible is what you pay of the claim, before your insurer pays the rest. Increasing your deductible means you won't make small claims and you're taking some of the responsibility on yourself.
What happens if I need to make a claim?
Do you call your broker? Or the insurance company? How soon should you call? What details do you need from the scene? How is fault determined?
Who else can drive my car?
Insurance follows the car (in most cases) so if your friend borrows it and gets into an accident, it's on you. But, if your friend borrows it a lot, should they be added as a secondary driver?
What happens if I miss a payment?
What happens if a cheque bounces or credit card payment doesn't go through? Does that impact my insurance record and my rates?
Should I consider usage-based insurance?
Usage-based insurance (UBI) is pay-as-you-drive or pay-how-you-drive car insurance that measures your habits on your smartphone and can yield cheaper rates.
Insurance brokerages and insurance brokers FAQ
How does a brokerage work?
Should you use an insurance broker?
Do I need an insurance broker?
Do you have to pay an insurance broker?
Is Ratehub.ca an insurance broker?
Who licenses insurance brokers in Canada?
Who licenses insurance brokers in Ontario?
Matt Hands, Business Director of Insurance
With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read more
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