Insurance Agent vs. Broker

November 28, 2023
An insurance broker helps a customer learn about policy types.

When shopping insurance, it may be common to hear the terms "insurance agent" and "insurance broker." While these terms are sometimes used interchangeably, they actually have different meanings within the insurance market.


Read on to learn more about these two professions in the insurance industry and how agents and brokers can help insurance buyers and providers. This information can help explain when to use an insurance agent vs. broker.


The Need for Insurance Agents and Insurance Brokers


The insurance industry is an important component of modern society, helping provide individuals, businesses, and other organizations with financial protection from losses due to events such as accidents, theft, or other unpredictable occurrences. Insurance works by transferring some of the financial risk of an event from the insured to the insurer. In exchange for a premium, the insurer agrees to pay claims, typically up to a pre-determined limit, if a covered event occurs.


Insurance is an important sector of the economy as it helps individuals and businesses to manage financial risk more effectively. However, the process of purchasing insurance can be complicated on both ends.


For instance, an insurance buyer might need assistance:

  • understanding how deductibles (the amount a buyer pays before insurance coverage kicks in) work;
  • understanding coverage terms and conditions (what is and is not covered by the policy);
  • working through the claims process (filling out paperwork, providing documentation, working with claim representatives to satisfy other requirements);
  • understanding plan options for specific needs;
  • understanding insurance companies' policies and procedures.

Additionally, buyers may feel overwhelmed by the range of insurance options available and may need guidance on which policies will best suit their needs. Fortunately, both insurance agents and insurance brokers can help.


What Insurance Agents Do


An insurance agent specializes in selling insurance policies and represents the interests of insurance companies. Insurance agents can be independent, working with multiple insurance companies, or can be employed by a single insurance company, working as a company representative (sometimes called a “captive agent”), selling its insurance products to customers. Insurance agents typically have access to insurance companies' product portfolios and can help customers find the policy that best suits their needs.


While an insurance agent works for an insurance company (or companies), customers can still expect personalized advice and guidance. The insurance agent will typically take the time to get to know the customer and their individual needs before recommending a policy and should be available to answer any questions or concerns customers may have about the policy.


Insurance agents may also be responsible for processing the paperwork to secure the policy and can help the customer fill out necessary forms. They typically have the authority to complete the insurance sales transaction and bind coverage.


What Insurance Brokers Do


An insurance broker is an independent professional who helps finds the appropriate insurance policy for customers, representing the customer's interests. Insurance brokers are not employed by any particular insurance company but rather act as advisors, working with many different carriers to help find the right coverage for the customer's needs.


Insurance brokers typically work on a commission basis and are paid a fee for recommending and finding a policy that is ultimately purchased. Insurance brokers will typically take the time to get to know the customer and their individual needs in order to recommend a policy which is a good fit.


Unlike insurance agents, insurance brokers do not process the paperwork associated with securing the policy nor do they bind coverage. Instead, one of an insurance broker’s primary responsibilities is providing advice and guidance on the policy, but the customer will typically be responsible for completing the necessary paperwork for the insurance company or its agent to process and then ultimately bind coverage.


Insurance Agent vs. Insurance Broker: the Main Differences


Both insurance brokers and insurance agents can make buying insurance easier. Insurance agents generally represent insurance companies while insurance brokers represent buyers. An insurance agent is typically associated with one or more insurance companies and sells policies on behalf of those companies. Insurance agents have the ability to complete the insurance transaction and bind coverage. On the other hand, insurance brokers do not have the authority to bind coverage as they typically work with multiple insurance companies, helping clients explore a variety of policy options. Since insurance brokers typically do not have a contractual obligation to any one insurance company, they may have more flexibility in helping to find the best policy for their clients’ specific needs.


At Acrisure, we consider the needs of our customers, and our insurance expertise means we can help you find the right insurance solutions for your needs. Whether you're looking for an auto insurance or a homeowner’s insurance policy or want to request a quote for small business insurance, reach out to Acrisure. Contact us today.

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