People often confuse insurance brokers with insurance agents, especially since the terms are sometimes used interchangeably. Both insurance agents and brokers can work as intermediaries between the insurance company and the policyholder. However, brokers typically represent the policyholder, while agents represent the insurance company.

Both insurance brokers and insurance agents can specialize in specific areas within the market, like commercial insurance or auto insurance. Although insurance agents can provide information about the different types of insurance and the policies available, their main duty is to bind the coverage once the customer chooses an insurance company and policy. Brokers, however, cannot bind coverage.

Insurance agents typically work under agency agreements where the insurance company that they are affiliated with stipulates the types of insurance that they can sell. There are two types of insurance agents: captive and independent. Captive insurance agents work for a single insurance company. Independent insurance agents, on the other hand, work for more than one insurer and act as a middleman. Both captive and independent insurance agents have the ability to execute insurance transactions from beginning to end, meaning an account will not need to be handed to a second person to finalize the policy.

Although they represent the insurance company throughout the process, insurance agents are still there to help their clients find the right insurance. A customer may choose to work with an insurance agent over a broker if they have an existing policy that they wish to bundle with other types of coverage. Agents are also a good choice if a customer has already done the research and is set on a particular insurance company.