Both! Odd I know, im just spoiling everything!!!
insurance.domain.com/cars
insurance.domain.com/home
insurance.domain.com/fridge-freezers (dont ask)
is better than;
www.domain.com/insurance/cars
www.domain.com/insurance/home
www.domain.com/insurance/fridge-freezers
Why?
Sure they are all about the same subject but the links between them as subdomains are classed as external links meaning oyu get a better weight on the link than if it where a subfolder.