First, both insurance brokers and insurance agents act as intermediaries between insurance buyers – like you – and insurance sellers – like your insurance company.
Both brokers and agents are also required to have appropriate licenses to distribute the insurance they’re selling. Because of licensing requirements, they must adhere to specific laws or regulations enforced by state insurance departments.
There’s one big difference between insurance brokers and agents: who they represent.
An insurance broker represents the insurance buyer – you. The broker helps a buyer like you find the best possible car insurance policy.
An insurance agent, meanwhile, represents one or more insurance companies. The insurance agent wants to sell you insurance from his or her company.
What Does an Insurance Broker Do?
An insurance broker works for you – not the insurance company. Using his or her knowledge and expertise, the insurance broker will assess your insurance needs, then find an insurance policy that matches those needs.
Some car insurance buyers use a broker to find the cheapest possible deal on car insurance. Others have complex insurance needs – like home, car, and property insurance requirements – and want a broker to help.
Brokers may find insurance options you never knew existed. They may recommend combining multiple insurance products to save money, for example.
Because brokers don’t work for an insurance company, their recommendations are unbiased. They simply want to recommend the best insurance product for your needs.
Insurance brokers can also assist you when making a claim. After buying insurance from a broker and getting into an accident, for example, the insurance broker may be able to help manage your claim, organize your documents, and handle the insurance company.
What Does an Insurance Agent Do?
An insurance agent typically represents a single insurance company. The agent is a representative of the insurance company, serving as the link between insurance buyers and the insurer.
Some insurance companies exclusively use insurance agents to sell policies. They don’t have online application forms or similar tools. Their entire business model is based on insurance agents and building a personal connection with clients.
Insurance agents may blur the line between agents and brokers. Some may compare policies for you. They might claim to help you find the best deal, for example, or compare plans for you. Some agents do have your best interests in mind, while other agents just want to recommend the product that makes the most money for the insurance company (or pays the highest commissions).
Should You Work With an Insurance Broker?
An insurance broker can help you shop around for insurance, recommending the best policies and products for your unique needs. But should you really use an insurance broker? Or are you better off searching for insurance on your own?
Generally, brokers work for smaller companies that represent larger insurance companies. Customers usually enjoy more personalized customer service and better support.
If you like the idea of having a personal connection with your insurance company, or someone you can talk to when making changes to your policy, then a broker may be the right choice for you.
Advantages of Working With an Insurance Broker
Other benefits of working with an insurance broker include:
Honesty: Brokers provide full disclosure on commission rates, insurance policy terms, and other items. In fact, brokers are required to disclose this information by law.
Better Insurance Rates: Insurance brokers are often able to access cheaper insurance premiums than ordinary customers would be able to access. You might save 10% to 15% just by working with an insurance broker, for example.
Avoid Complex Insurance Comparisons: If you take a few minutes to compare insurance plans online, it’s easy to get overwhelmed. All car insurance companies advertise similar benefits. Policies might differ widely in price and coverage options. An insurance broker uses his or her experience to help you sort through the noise and pick the best plan. You can avoid a complex, stressful shopping experience.
Commission is Included in Insurance Premiums: Insurance brokers don’t work for free. However, the rates aren’t as high as you might expect. Generally, broker fees are bundled with your premium payments. At the end of the day, you might pay the same amount of money for car insurance premiums because your broker got a discount on the actual premiums.
Objective and Neutral: Insurance brokers are objective and neutral. They should not be biased towards any specific insurance company. Their goal is to find the best insurance products for your unique needs. Maybe you want the cheapest insurance policy. Perhaps you want massive umbrella protection for peace of mind. An insurance broker can customize your policy objectively and neutrally.
Both insurance agents and insurance brokers play a crucial role in the insurance industry. Insurance agents represent companies and want to sell you the best car insurance from a specific company. Insurance brokers, meanwhile, represent policyholders like you and want to help you find the best coverage for your unique needs.