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Insurance Brokers vs. Insurance Agents – What’s the Difference?

Are you looking to switch insurance companies to save money?

Maybe you've been using an insurance agent in the past and now consider using an insurance broker?

Perhaps you want to add a new type of insurance to your household and you aren’t sure where to start.

Regardless of the type of insurance you need, there are two main choices for narrowing down your options. Insurance brokers and insurance agents.

But what is the difference between the two?

Should you choose one over the other or does it even matter?

These are common questions and we’ll be sharing the answers (as well as many others) throughout this article.

The truth is that many people use the words “insurance agent” and “insurance broker” to describe the same professional. However, that isn’t entirely accurate.  It really has to do with who they represent - you or the insurance company.

Learn more about what each insurance worker can provide for you and which is the right choice for your needs.

The Key Differences Between Insurance Agents and Insurance Brokers

insurance brokers vs insurance agents

Before we jump into the difference between an agent and a broker, let’s talk about similarities.

Both types of professionals work in the insurance world and help insurance buyers get the insurance they need. These experts need to be licensed and follow laws and regulations specific to their location.

The biggest difference between the two is who they represent. Brokers are beholden to the insurance buyers who speak with them while agents have a loyalty to specific insurance companies.

However, other things that differentiate the two that can be important to know before you choose a broker vs. an agent.


Insurance broker vs agents

Differences to Be Aware Of

Below are a few of the ways these two professionals differ from each other:

  • An insurance agent represents a specific insurance provider while an insurance broker provides access to offerings from many insurance companies. The latter will have more options for an insurance buyer than the former.
  • An insurance agent is appointed by an insurance company. Insurance brokers are chosen by buyers from all of the brokers on the market.
  • An insurance broker will represent a variety of plans and policies from many insurance companies. An agent only represents a single company in most cases.
  • Insurance brokers have recommendations that favor buyers, while agents are biased in offering only plans from a single company.
  • Insurance brokers need to have the knowledge to recommend different policies for specific people and typically have a lot of experience. Agents may not have the expertise needed to provide the best policy from any company.
  • Brokers don’t receive money (in most cases) for helping buyers choose an insurance plan. The main exceptions apply only to high-risk or commercial insurance policies. Agents are in the business for profit and hope to sell the most expensive plans.
  • Agents do not need to disclose fees or commissions to customers. Brokers are required to do so if there is a commission or fee associated with the service.

Now that you know more about what differs between an insurance agent and an insurance broker, let’s look more deeply at what each of them can offer.


What Insurance Agents Are and What They Do

insurance brokers and agent

An insurance agent typically represents a single insurance company and focuses on selling its plans to buyers.

The agent is an intermediary who offers information about a company’s policies for buyers. An agent has a contract agreement with a company that designates which policies can be sold and what the compensation is for doing so.

An insurance agent will either be a “captive agent,” which means they represent a single insurance company, or an “independent agent,” who can sell policies for several companies.


Insurance agents of either type have no duty to customers. Instead, their loyalty lies with the insurance companies they work for.

While agents can provide information about plans that they represent or even offer other options, their main goal is to have buyers purchase the most expensive plans of the company they represent.

While an independent agent can offer more choices than a captive agent, they often focus on policies that bring in the biggest profits. This is something important to be aware of when choosing between insurance brokers and agents.


What an Insurance Broker Offers to Clients

Cost of insurance

Insurance Broker Definition

Rather than being tied to an insurance company, an insurance broker represents the buyer. A broker helps you find an insurance plan that meets specific needs from any insurance provider.

For example, a broker will speak with you about your needs and risks before recommending products that fit your requirements. Each broker has a duty to choose the insurance policies that best match the financial interests of a buyer.

One of the things that set a broker apart is that they have a wider range of insurance options to share. Rather than working with a single company, they use the market to compare and choose plans from all companies.

Because brokers have more options, they can often get better prices with insurance that fits a buyer’s needs.

Brokers need to have knowledge about a wide variety of insurance plans to serve you. Since they are working for buyers rather than companies, they should be able to help prepare applications and submit them to the companies.

There are two types of brokers, retail and wholesale.

A retail broker helps customers directly with obtaining insurance. Wholesale brokers offer specialized insurance policies to other brokers or agents.

Insurance Broker License

Insurance Brokers and insurance agents carry the same license.  It's called a producer license.  In the years past an insurance broker had more requirements that were required.  Today the agent license has been brought up to the same standards as an insurance broker license.

insurance broker companies

Insurance brokers are considered independent and have the ability to work with as many companies as that will appoint them to sell that companies insurance products.  

Some insurance brokers may only represent personal insurance companies, while others will have both personal and commercial companies available. 


Why Select a Broker or Agent Instead of Doing the Work Yourself

insurance brokers near me

Even knowing that agents and brokers exist, some people believe that finding the right policy is something they should do on their own.

Perhaps that’s true for some people, but most buyers will find having a broker or agent removes a lot of the stress from the process of purchasing an insurance policy.

Truthfully, insurance is complex and can be difficult to understand. While insurance is important to protect vehicles, health, and homes, the actual details can be confusing.

A broker or an agent can simplify things through their breadth of knowledge and years of experience. This individual can help you find, compare, and purchase insurance by breaking down the terms and conditions into a form for the average person.

In addition, brokers pride themselves on offering the best value in insurance policies. This combined with knowledge and experience gives you the best chance of getting an insurance policy that you are happy with for years to come.


Choosing Between an Insurance Broker or an Insurance Agent

So you know what makes insurance brokers and agents different. You’re aware of what each of these professionals can do.

Your next question might be “Should I choose an insurance agent or broker?”

Everyone is going to have different needs but as someone buying insurance, a broker is typically the best option. Consider your options but keep in mind that brokers are more focused on customers than insurance agents are.

Wondering why?

Because an insurance broker is working for the good of a client rather than focusing on making the highest profits for an insurance company or two.

This expert is dedicated to helping you, regardless of which insurance company’s products meet the mark.

Most people aren’t interested in learning everything about different insurance policies on the market. It takes a lot of time and energy when all you want to do is find the right plan for your needs.

A broker has the specialized knowledge and expertise needed to recommend insurance companies that provide the best coverage for a person’s specific risk factors.

For example, a broker is going to have the needed data and experience to know which insurance company has the best liability insurance for a good price.

On the other hand, an insurance agent sells policies for a single company or a few of them. They’re going to have a better knowledge of that company’s policies, but not others on the market.

An insurance agent is also not tasked with helping you determine risk to ensure you choose the best insurance policies on the market. However, they can give you extra information about a policy that you are already interested in.

An agent also may have the ability to provide exclusive policies from the companies they work with. This can be an advantage but most people will find that a broker is still the best option.

Brokers typically cost nothing to customers and can save a ton of time. Rather than researching your options for hours before speaking to an agent of a company you like, brokers can handle all of that for you.


Work With the Top Insurance Brokers in the Country

local insurance agents and brokers

Ready to find the right insurance broker for your auto insurance? No matter what your insurance needs are, there’s a policy that’s sure to work for you.

At InsuranceBrokers.com, we offer the flexibility to shop for lower rates each time you need a policy renewal. We have a huge number of options for various insurance lines including commercial, auto, life, home, and toys.

All you need to do is visit our website and press on the button that reads “Quotes Now.” You can also get in touch with a professional by calling 314-569-1010.

You deserve the best insurance at the lowest prices. That’s precisely what we offer so get in touch soon!

Frequently Asked Questions About Insurance Brokers

How to Find Insurance Brokers Near Me

Great question.  Insurance Brokers are located in every state, the same as insurance agents.  There are basically two choices let us help with your insurance quotes at InsuranceBrokers.com or we can refer you to a local insurance broker in your area.  Click HERE to check Rates in my area now online 24/7 or call our offices 314-569-1010 M-F 8:30 am to 5:00 pm CST

 

What Is An Independent Insurance Agent

An Insurance Broker is also known as an independent insurance agent.  The keyword is "independent" agent.  They work on behalf of their customer and not as an employee of any insurance company.  This allows them to freely offer advice on the best insurance options

 

Types Of Insurance Brokers

There are general insurance brokers that represent all line of insurance and there are insurance brokers that are very focused or specialized with certain type of insurance.  An example might be a commercial insurance broker or high-risk insurance broker.  They have spent many years specializing in those areas of insurance.  Additionally you might find insurance brokers for personal insurance, workers compensation, aviation, construction, government, churches, etc. 

 


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