What's the Difference Between an Insurance Broker and a Direct Writer?
You can get home and auto insurance in Alberta from 2 places:
- An insurance broker
- Directly from the insurance company - referred to as a direct writer
Is one better than the other? Is it always cheaper to deal directly with the insurance company?
It depends on your situation. If your situation is very simple and easy, then a direct writer may be cheaper. If it's more complex, then dealing with a good broker may save you money.
Direct Writers
When you have to call an insurance company directly, you are dealing with a direct writer. They tend to do a lot of advertising and run large call centers. Some direct writers in Alberta include:
- TD Insurance
- Sonnet
- Belair Direct
- Johnson Insurance
- AMA
- Although they have local representatives, Co-operators, State Farm and Allstate are also direct writers
Naturally, direct writers will only sell you their own insurance product. If you're looking for 3 quote options, you'll be calling 3 direct writers.
Brokers
Although there are some very large brokers in Alberta, the majority are independently owned offices. When you work with an insurance broker, they'll deal with several companies on your behalf. You talk to your broker - and then your broker talks to the insurance companies.
Brokers deal with carriers like:
- Intact
- Aviva
- Portage Mutual
- Economical
- Wawanesa
- Peace Hills
When it comes to insurance, there is no single best solution. Below are advantages and disadvantages of dealing with a direct writer or a broker. Even though we're brokers, we think this list will help you decide what's best for your needs.
Direct Writers: Advantages
Extended call hours
Most direct writers take calls between 8AM and 8PM on the weekdays and 9AM to 5PM on Saturdays. Some are even available on Sundays!
Fast quotes
Direct writers let you get a quote on your smart phone in a few minutes, which is handy when you're shopping around.
Low premiums
Typically, direct writers have competitive rates - when your situation is simple.
Direct Writers: Disadvantages
You get a different agent every time
You're calling a call center. That means you don't get an assigned account manager. You'll be explaining your situation every time you call. If you want to be on a first-name basis with your broker, don't call a direct writer!
They usually don't deal with complex situations
Did you just move to Alberta from another province or country? Did the direct writer take the time to explain how to get credit for your driving history? You can click here to read the blog post on that topic.
They typically insure "easy" stuff
Generally, direct writers won't insure standalone rented dwellings, which are rental properties without your home insurance attached. They also tend to stay away from out-of-province rentals, multiple rented dwellings, vacant dwellings or rentals with several tenants, which are considered rooming houses.
Nothing is confidential
Did you have some damage to your home and not sure if you should put in a claim? If you ask a direct writer, they note your file - even if you don't start a claim!
In life, there are trade offs. You might save some money dealing directly with an insurance company, but you also don't have anyone looking out for your best interests. From personal experience, there is a chance something gets missed or you won't be given any solutions.
Insurance Brokers: Advantages
We work for you, not the insurance company
Insurance companies pay brokers a commission each year on the premium you pay. The commission is the same rate from each company, so we are not paid more to place you with one company over another. Our priority is to keep you as a client, rather than keeping you with a certain company.
Access to several insurance companies
Did one company say 'no' to you? No problem! We simply go to another company. Did your renewal premiums go up? No problem! We shop our other carriers to try and find you a lower rate. Different insurance companies are better for your needs. Depending on your situation, one company may be more competitive than the others.
Conversations are confidential
If you backed your car into your tree, you may not want to put in a claim - you might be better off paying for those repairs yourself. As a broker, we can offer advice on when it makes sense to put in a claim - and when it doesn't. Although we are looking out for your best interests, we do need to disclose important information to the insurance company that affects rates. If you have speeding tickets or suspensions, we must disclose that information.
We're not on a timer
When you call us with questions or need help, we take as long as you need. If we have a 27-minute conversation, nobody is telling us to get off the call. We make sure to ask all of the questions and cover everything that needs to be covered! Many times an insurance broker can get you a lower price when they get better information from you.
We deal with insurance companies all day long
If your situation is tricky or complex, we know how to present it to the insurance company. It's our business to know what they look for. We form a good relationship with our carriers and we know what they will do - and won't do. They get to know us and we establish ourselves as competent, responsible brokers.
Deal with the same person
Once you find a broker you like, you can always deal with them! You get to know them - and they get to know you. If you like the idea of dealing with the same person all the time, then an insurance broker is right for you.
You can see us face-to-face
Although we do most of our work over the phone and by email, clients stop in to see us all the time! Some people still value that face-to-face interaction.
Insurance Brokers: Disadvantages
No contact at renewal
Each year, your policy renews and premiums usually go up. Sometimes, the increase is only a few bucks and other times, it's pretty substantial. If you don't hear from your broker, you start to wonder, "Am I getting the best price possible?" Each year, we remarket your policy. That means we compare your renewal to our other carriers for the best price. That doesn't mean we'll switch you every year - but we want you to know that we're looking out for you!
Are they selling me coverage I don't need?
We tell you what's available and let you decide if you need it or not. You might think that coverage for Identity Theft or Flood is a great idea or a rip-off. We'll make suggestions on what's beneficial for you (like Accident Forgiveness) and what's open to debate (like glass coverage)
Limited extended hours
Do you like to deal with your insurance on Sunday at 7PM? We try to keep office hours from Monday to Friday and we're available over the lunch hour.
What's Best for You?
We're very busy helping clients and we're getting a lot of new business. A lot of people still choose to deal with a broker! We see firsthand that the "super cheap" direct writers can't always solve your problem. Whether you value that personal service or you have a lot of moving parts, we'd be happy to provide a quote anytime and offer some friendly advice.
