When searching for high risk auto insurance it’s important to know the difference between a high risk insurance company from a high risk insurance brokerage. Knowing the difference can help speed up the process and improve your chances of finding the cheapest high risk auto insurance.
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Insurance brokers or Agencies are similar to an insurance company, only in that, they are commercial businesses. However, many consumers group brokerages and insurance companies under the same umbrella. This causes confusion and the wrong expectations in consumers when searching for high risk auto insurance.
The most confusing aspect surrounding high risk auto insurance is how it’s priced. Many shoppers assume that the cost of high risk car insurance can vary from one “insurance company” to the other. This assumption is true, insofar as one can distinguish an insurance company from an insurance brokerage. The insurance carrier is the company that determines the price, not an insurance broker!
High risk insurance brokerages sell and administer high risk auto insurance on behalf of the auto insurance company. Brokers are the “middlemen” in the purchasing chain who service and sell insurance products directly with the consumer public and operate as a separate legal entity. They do not set the price of insurance or the rules of eligibility.
High risk insurance companies vary in price, but that price will always be the same for each insurer when comparing quotes from one insurance brokerage to another. That is to say, the quote you get from a specific high-risk insurer should be consistent throughout all brokerages in Ontario. Example: if you got a quote from ABC insurance broker for auto insurance through Jevco, you should be able to get the same priced quote from XZY insurance brokers. The price is regulated and standardized!
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 instead finds the best and most affordable auto insurance coverage from multiple high risk insurance companies. However, there is one caveat.
Insurance brokerages can only offer what they’re licensed to sell. Therefore, if an insurance broker only deals with only a few high-risk carriers, the lowest price they can quote you is from the companies they represent. Most people ask the quoting broker for the cheapest high risk auto quote. The broker will only offer you the “cheapest” quote they can sell and administer. Although most quoting systems show the quoted price for ALL the high risk companies, the broker isn’t obligated to tell you if a cheaper quote exists outside of the broker’s distribution channel. So depending on what insurance brokerage you choose to get a high risk auto quote from the “cheapest auto quote” can be different depending on the insurance brokerage.
A List of High Risk Insurance Companies
In Ontario, there are only a handful of high risk insurance companies. The following is a complete list of high risk insurance companies in Ontario:
- Jevco Insurance: Jevco is a subsidiary of Intact Insurance.
- Perth Insurance: Perth is a subsidiary of the Economical Insurance
- Pafco Insurance: Pafco is a subsidiary of Allstate Insurance
- Echelon Insurance: Echelon is a subsidiary of CAA Insurance
- Portage Mutual Insurance: headquartered in Portage La Prairie Manitoba
- Pembridge Insurance: a division of All State Insurance
- Intact Insurance: a well-known brand in personal lines insurance. Intact focuses on commercial high risk auto.
- Coachman Insurance: Coachman is a subsidiary of SGI ( Saskatchewan General Insurance)
- 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 as the option of last resort.
As you can see from the above list there aren’t many high risk auto insurance companies in Ontario. Conversely, many insurance brokerages offer high risk auto insurance. Knowing where to look and what to expect from each will help you determine the fastest way to find the most affordable high risk auto insurance, from the entire market.
So what is the takeaway?
- High risk insurance companies are not the same as high risk insurance brokerages
- High risk insurance brokers are licensed “middlemen” or intermediaries that help facilitate the binding of the auto insurance contract with the consumer.
- There are only a few high risk insurance companies but a lot of insurance brokerages who offer high risk auto
- Not all brokerages have distribution channels with ALL high risk insurance carriers
- High risk insurance companies determine pricing and the rules of eligibility
- The “cheapest” auto quote is relative to what a broker is licensed and authorized to sell.
In closing, when looking for high risk auto insurance, make sure you thoroughly shop around. A referral from a friend or family member might not be good enough to ensure you get the best auto insurance for the most affordable price. This applies to all auto insurance in Ontario, not just high risk auto.
Most importantly, make sure you’re quoted from ALL high risk insurance companies. The best bet is to find an Insurance brokerage that deals with ALL high risk insurers!