Insurance Broker VS Agent: What’s The Difference Anyway?

There are over 800,000 insurance brokers throughout the U.S. and over 475,000 insurance agents. 

Have you ever wondered about the difference between an insurance broker vs agent? Do you have questions about which one you should hire to help with your insurance needs?

If you answered “yes” to either of these questions, keep reading. Everything you need to know about the different positions (as well as how to find the right one) is explained down below.

What is an Insurance Broker?

An insurance broker is someone who, in general, represents an insurance buyer.

They work on an independent basis and don’t have contracts with a specific insurance agency. They help their clients prepare insurance applications and find the right insurance policies for their specific needs.

Brokers can work on a retail basis, meaning they work with individual buyers. They can also work on a wholesale basis, meaning they work with specific industries or those in certain insurance situations.

What is an Insurance Agent?

Unlike an insurance broker, an insurance agent is a person who represents at least one insurance agency. They work on behalf of the insurance seller and present information about different policies to insurance buyers.

Insurance agents have to follow specific guidelines put in place by the insurance agencies for which they work. These guidelines tell them what they can offer and how they’ll be compensated if a customer follows through and purchases a policy through them.

Insurance agents fall into two main camps: those who are independent and those who are captive. Independent agents are able to work on behalf of multiple insurance agencies. Captive agencies must align themselves with only one agency.

Insurance Broker vs Agent: Which Should You Use?

There are benefits to working with both insurance brokers and insurance agents. Some pros of working with a broker include the following:

  • They make recommendations based on your best interests, rather than the interests of the insurance company
  • They make impartial recommendations
  • They can leverage partnerships to negotiate better premiums and terms
  • They can clarify certain aspects of different policies to help you ensure you’re choosing the right one

There are benefits that come with hiring an insurance agent, too, including the following:

  • In some cases, they can “bind” coverage and get you covered before the insurance company has finished processing your application
  • They sometimes have access to information insurance policies that brokers don’t
  • They’re highly motivated to help you choose the right plan, especially when they work on a commission basis

There’s not one option that works best for everyone. However, it’s important to consider the benefits both brokers and agents have to offer before you decide which type of insurance professional you want to hire.

Tips for Finding the Right Broker

When it comes to hiring insurance brokers, there are some key factors you ought to consider. Remember the following guidelines when looking at different brokers to help you find the right insurance policy:

Know What You Need

Start by doing your own research and getting a clear idea of the type of policy you need.

This will help you sort through your options when you begin working with a broker. It’ll also help you avoid getting a type of coverage that doesn’t match your personal or business requirements. 

Check References

Before you agree to work with a specific broker, always check their references. Contact the people they’ve listed and ask what their experience was like.

Ask About Their Experience

Speaking of experience, be sure to ask about the broker’s experience, too. What kind of clients do they usually work with? What kind of insurance policies do they usually advise on?

Consider Their “Bedside Manner”

Make sure you get along with your potential broker, too. It’s best if they have a good “bedside manner” and are easy to talk to.

If you’re afraid to ask them questions or feel that you don’t get helpful answers, you’re going to have a hard time trusting them to advise you on insurance-related matters.

Don’t Be Afraid to Get Personal

Don’t be afraid to ask your potential broker for their personal opinion. Finding out what they’d do if they were in your shoes can help you learn more about them and decide whether or not you trust them.

Tips for Finding the Right Agent

There are specific rules you should follow if you’re going the agent route, too. Here are some tips that will help you choose a good insurance agent, one who will work hard to help you find a good policy:

Check Their Credentials

Always check an insurance agent’s credentials before agreeing to work with them. What qualifies them for this role? What kind of training have they received?

Check References

As with an insurance broker, it’s a good idea to check their references, too. Find out what past clients have to say about them and whether they’d work with them again in the future.

Learn About the Agency They Represent

In addition to researching the agent, research their agency. Find out what that agency’s average customer service rating is and how satisfied people are, in general, with their policies.

Independent vs Captive?

Some people assume that an independent agent is a better option since they work for multiple agencies.

Keep in mind, though, that independent agents don’t always know about everything an agency has to offer. Captive agents, on the other and, will have more extensive knowledge of all of an agency’s policies. 

Don’t make your decision based solely on an agent’s status. There’s a lot more to the story than that.

Hire the Right Insurance Professional Today

Now that you know more about the difference between an insurance broker vs agent, do you know which one you need to hire to help with your insurance needs?

Whichever seems like a better fit for you, keep the tips listed above in mind. They’ll help you find the best person for the job.

Do you want to learn more about hiring an insurance professional or choosing an insurance plan? If so, we have lots of insurance-related content on our blog. Check out those articles today!

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