Understanding the Difference Between Insurance Brokers and Insurance Agents

If you’re searching for any type of insurance policy, you’re likely to come across at least a few industry professionals who are committed to helping you out. Among these experts are insurance brokers and insurance agents. Though they provide similar services (in helping you get the insurance you need), there are some fundamental differences between the job titles. Below, we’ll explain what insurance brokers and agents do, who they work for, what they offer, and how they get paid.

What Do Insurance Brokers and Insurance Agents Do?

Both insurance brokers and insurance agents connect clients to the insurance coverage that they need. The main difference here is who the professional is working for. An insurance agent (who may be referred to as a “captive agent”) typically works for one insurance company. Therefore, their responsibility is to sell you, the client, on the insurance policies offered by the company that’s hired them.

Insurance brokers, however, do not work within a single agency. They may be a part of a team of brokers or work independently, but they do not have loyalties to any particular insurance institution. Their role is to navigate the options available across numerous insurance companies to connect their client to the right insurance for their unique needs.

Basically, an agent works for an insurance company. An insurance broker works for you.

Agents Can Be Independent, but They’re Still Not Brokers

An independent insurance agent can work on their own volition and essentially work for the client rather than a dedicated insurance company. But they do not typically have the extent of information relating to various companies’ policies that brokers have available to them. For this reason, insurance agents working outside of a company cannot reasonably be referred to as insurance brokers.

Insurance brokers partner with many, many insurance companies. This gives them the most comprehensive array of policies that they can connect their clients to.

How Do Insurance Brokers and Insurance Agents Get Paid?

In both professions, the client is the one who pays for the service. Depending on the insurance company, your agent may charge a commission. But they might not. An insurance broker, on the other hand, will always charge a commission for their services. They are obligated to be upfront about their commission costs and will typically apply the cost to your insurance premiums.

Do You Want to Hire a Broker or an Agent?

If you know which insurance company you want to work with, an agent is certainly the easier way to go. If you have got existing policies with that company, that’s even better because you may be presented the option to bundle your policies. An insurance broker, on the other hand, is an exceptional resource when you’re not leaning toward any particular insurance company.