An insurance agent and a broker are both licensed professionals that assist individuals and businesses with purchasing an insurance policy. Although they both generally work towards the same goal, they have very different obligations.
In this article, we’ll discuss the key differences between an agent and a broker. This way if you ever find yourself choosing between the two you’ll know the benefits of each. Let’s get started.
Insurance Agent vs. Broker
When individuals and businesses set out to purchase insurance, they need to keep some things in mind. In other words, there are many things to consider when it comes to selecting the right coverage and insurance company. After all, you want to select someone who has your best interest at heart.
Insurance can become very complicated depending on your situation and coverage needs. For example, insuring a large business with several hundred employees in the office can be very overwhelming. You not only need adequate coverage but you also have to make sure you abide by federal and state regulations.
You could also be in a situation where you have multiple homes and other high-dollar items. As you can imagine, ensuring that these items are fully protected can be a bit overwhelming.
To make the process easier on yourself, you can seek assistance from an insurance agent or a broker. They’re both trained professionals that know the insurance industry inside and out.
Need help insuring your business? Here’s a list of their wide range of services:
- Business interruption insurance
- Business owners policy
- Commercial auto insurance
- Commercial property insurance
- Errors and omissions
- General liability insurance
- Workers compensation insurance
Are you shopping around for a personal insurance policy? An agent or broker can help with that. Here’s a list of their services:
- Whole life and term life insurance
- Collision and comprehensive coverage
- Dwelling coverage
- Umbrella insurance
To simply put it, an insurance agent is a professional that affiliates with an insurance company and sells their services to prospective customers. When they do this, they earn a commission which is a percentage of the sale of the policy. Along with the commission, they also receive a base pay.
Even though an agent can help with choosing the right coverage, they still represent a particular company. It’s important to note that they may represent one insurer or multiples.
An insurance broker is a professional that represents their client and helps them choose the right company and coverage. Unlike an agent, they don’t work for an insurance company. Instead, they conduct relevant research for the client to assist them in the decision making process.
Since a broker works solely for the client, they don’t limit them to certain insurance companies. So, this way there’s more options to explore. The benefit to this is you’re more likely to find an insurance policy that meets your exact needs.
The Difference between an Insurance Agent and a Broker
There are two primary differences between an insurance agent and a broker. First, an agent represents a specific company or companies, while on the other hand, a broker acts as a representative to their client. Secondly, an insurance agent is authorized to sell a policy while a broker cannot.
Moreover, agents have a contract with the insurance company stating what policies they can sell and at what rate. Therefore, agents have no control on the price.
Brokers will alternatively try and solicit deals from multiple insurers so they can get the best deal for their client. Once the client is ready to purchase a policy, the broker must get a binder involved from the insurance company.