LONGUEUIL, FEBRUARY 29, 2016 - As the buying season gets into full swing, a number of car owners will no doubt end up purchasing replacement insurance from auto dealerships. According to Quebec's financial regulator (Autorité des marchés financiers/AMF), many consumers are unaware of the fact that dealerships charge an average of 64% more than certified representatives for such coverage.
Who are certified representatives?
Certified representatives are insurance professionals whose qualifications are recognized by the AMF and who adhere to the AMF's regulations. Insurance agents are certified representatives who work for an insurer; they exclusively offer their employer's products. In contrast, insurance brokers work for brokerage firms and are well positioned to advise consumers on the advantages of a range of products offered by multiple insurers.
What is replacement insurance?
Replacement insurance is an optional form of coverage that is purchased as an add-on to the main insurance contract. Owners who hold replacement insurance will be financially compensated in the event of a claim regardless of their vehicle's level of depreciation.
"Replacement insurance coverage is more expensive if purchased from a dealership," noted the AMF's superintendent of solvency in an article published in the Journal de l'assurance in May 2014.
RCCAQ chair Patrick Bouchard confirms that he comes into daily contact with clients at his brokerage firm who overpaid for their replacement insurance at auto dealerships. He added: "We are in complete agreement with the advice provided by the AMF and by the team at Protégez-vous magazine. You should shop around for insurance because dealerships do not offer the best prices." Both the AMF and Protégez-vous have published excellent guides on this subject.
"The RCCAQ seeks to ensure that consumers are properly protected and that the coverage they purchase meets their needs. We encourage all consumers to discuss their insurance needs with an AMF-certified representative," concluded Mr. Bouchard.
