There are differences between a High Risk Insurance company and an Insurance Broker that you should know! They are not the same thing!
• Insurance Brokers are independent ( in most cases) from the Insurance Company
• Insurance Brokerages are the distribution channel for High Risk Auto Insurance Companies
• High Risk Auto Insurance Companies will not sell directly to the Public as they are not licensed
• Insurance companies administer and service claims, not Insurance Brokers (some exceptions apply where a company would allow the Brokerage to service some claims, but the Insurance company has the final decision)
Insurance Brokers are independent insurance professionals that represent your best interest. This compared to a companies like RBC, TD insurance who are considered “direct writers” and represent the interest of the company. This isn’t to say they don’t have a fiduciary duty, but in a time where a claim is submitted you have no recourse to an independent source, if something goes wrong, or simply disagree with a claim decision. An Insurance Broker will fight for you in that situation and among other things.
The relationship between an insurance brokerage and an insurance company is based on a business partnership (not in the legal sense). Think of an Insurance Broker almost like a Mortgage Broker, where they try and find the best rates from multiple lending companies for you. An insurance broker does the same but finds the best coverage and insurance costs from multiple high risk insurance companies.
High risk auto insurance companies do NOT sell directly to the consumer. Instead High risk insurance companies use high risk insurance brokers to market and sell their product. Also, Insurance Brokers are licensed to sell insurance to the public, whereas high risk insurance companies do not.
The complexity and nature of the risk requires the professionalism and experience of a High Risk Insurance Broker.
The High risk auto insurance market in Ontario, Canada is small and usually always tied to a Parent company that offers regular or standard auto insurance. This means that Insurance companies will start a subsidiary company to offer high risk auto insurance, so they can separate standard auto from high risk auto business. This is done for business, regulatory and accounting purposes. Also, it wouldn’t be fair for drivers who are not considered high risk to be lumped together with a higher risk profile driver, since the losses of the few are paid by all policyholders. This is simply not fair.
List of High Risk Insurance Companies:
1. Jevco Insurance: Jevco is a subsidiary of Intact Insurance.
2. Perth Insurance: Perth is a subsidiary of the Economical Insurance
3. Pafco Insurance: Pafco is a subsidiary of Allstate Insurance
4. Echelon Insurance: Echelon is a subsidiary of CAA Insurance
5. Coachman Insurance: Coachman is a subsidiary of SGI ( Saskatchewan General Insurance)
6. Facility Association: Facility is essentially a risk sharing pool for high risk drivers that are TOO high risk for ALL the High Risk Insurance Companies. Facility is often referred to the option of last resort.
As you can see there are only a handful of insurance companies that offer High Risk auto insurance. However, there are many Insurance Brokerages who offer and specialize in high risk auto, but not all Brokers are created equal in providing the cheapest high risk auto insurance to high risk drivers!
So, what makes one insurance Broker better at offering cheaper, high risk insurance compared to other insurance brokers? Also, how can one Broker offer cheaper, car insurance, if auto insurance rates in Ontario are ALL standardized and set by FSCO?
1. The number of high risk insurance companies the brokerage represent.
The insurance Brokerage may only deal with a set amount of high risk insurance companies, and might not be able to sell you the high risk insurance quote that is the cheapest or best.
• John Smith calls ABC Insurance Brokerage for a high risk auto insurance quote.
• ABC Insurance Broker have a distribution contract to sell auto policies from Jevco, Perth, Coachman Insurance, but can’t offer
Pafco because they do not have a contract to sell their product.
• Pafco is the cheapest out of all the high risk car insurance companies.
• John Smith would need to find a high risk insurance broker that deals with Pafco if John wanted the cheapest quote offered by the high risk market
• ABC is required by law to offer the lowest price quoted but not if they don’t do business with that company! Therefore, ABC insurance Brokerage may quote you the cheapest price that they can offer, but it doesn’t mean it’s the cheapest. That’s why it’s important to shop around and ask the right questions
Best High Risk Insurance Companies
Shopping for the best high risk car insurance company really depends on your insurance requirements. Every auto insurance company is slightly different and one company could be a better fit than others.
Things to consider when finding the best high risk insurance company for you:
1. Cost of High Risk Auto Insurance:
The cost of high risk insurance is probably the single most important factor when purchasing car insurance for high risk drivers. High risk auto insurance is not cheap and factoring the cost can easily supersede any other criteria you might have in making a purchasing decision. However, the cheapest high risk auto insurance may not be the best!
2. Auto Insurance Coverage:
Many high risk auto insurance companies will limit particular car insurance coverage compared to standard market companies. Liability coverage is a great example as some high risk car insurers will only offer one million in liability coverage.
3. Customer Service:
Customer service is an important consideration when buying high risk insurance. Picking a company that you know maybe better at handling claims may sway your decision towards one company over the other.
4. Other Drivers In Your Household:
Consideration to other drivers in the household is another reason why some drivers choose one insurance company over others. A perfect example is when an auto insurance company wants to exclude a member of the household from your auto policy, usually for not meeting eligibility criterion.
Some Insurers will waive this requirement if the high risk auto insurance company of the policy in question is insured through the high risk company’s parent company.