You’re in the market for new insurance, but you want a professional to help with the process. Should you work with an Insurance Agent or Insurance Broker? What’s the difference between the two and which is best for you?
If you’re in the market to buy insurance, whether it’s for the first time or if you need to move on to a different policy, it can be an overwhelming process and a lot of work. When you or your company are in the market, you might hear the titles “insurance broker” and “insurance agent” thrown around quite a bit. How do you know which one is the perfect fit for you? Is there even a difference between the two? In one of our most recent blogs, we talked about what it takes to become a successful insurance broker. In this blog, we are going to be discussing the similarities and differences between an insurance broker and an insurance agent.
It’s true, an agent and broker will have a lot of similar qualities since they work within the same world and have similar goals. Some of their other similarities include;
Both an agent and a broker much be properly licensed to do their job within the state they’re working out of.
Both must follow and adhere to specific insurance laws within their state.
They both act as middlemen between the insurance companies and those looking to buy policies.
It is the legal duty of both to help you find and choose the best insurance policy and coverage at a reasonable price.
They can both work on commission or salary. Make sure you know which your agent or broker is working under. This can come as quite a surprise at the end of your partnership if you’re unaware.
They both could have accreditations in their titles. There are so many out there for the insurance industry, that it can be a little overwhelming. Don’t hesitate to ask what they are and how it helped them advance their career.
THE DIFFERENCE: Agents
Insurance agents work for insurance companies. They don’t always have the customer’s priorities at the top of their list. They might not always know or be able to offer the best plans that their client needs. Insurance agents represent the insurance company directly, and those interested in buying a policy from a specific insurance company will connect with an agent, not the company itself. Every agent has something called an “appointment” with the insurance company they are representing and working with, according to Business Benefits Group. These appointments are agreements between the agent and the insurance company controlling what policies they are allowed to offer their clients and how much they will be paid for doing so. When an agent only works for one company, they are called a “captive agent”. While an agent that works with many insurance companies is called an “independent agent”. When it comes to comparing policies, it might get a little tricky. A captive agent can only offer you the best policy for your needs from the one company they represent, and nothing more. When it comes to independent agents, they can compare different plans between the different companies they represent. Which, as good as it sounds, they might not be able to or even have access to the best possible plans that their company has. They might only have access to limited plans. An insurance agent may or may not have the power to create or sign a policy with a client, or “bind” the client to the policy. They might only have certain permission to “bind” certain coverage. Even though an independent agent can show you multiple kinds of insurance policies, they do tend to sell you options that will benefit them the most, when it comes to profit, according to Business Benefits Group.
THE DIFFERENCE: Brokers
An insurance broker works specifically for the customer, and not the insurance company. They are independent workers and don’t have any specific contracts or agreements with any insurance company. They meet with the clients, discuss what their needs are, what they’re looking for, and then they begin filling out applications on behalf of their clients with different insurance companies. They compare the best deals, gather this information, give it back to their client, and advise them on the best policy and company to choose. To have the ability to know what’s best for you or your company, a broker needs to have extensive knowledge of many different companies, policies, and products within the industry to handle any situation that could happen to their client. A broker, unlike an agent, does not have the power to bind for any policy to their clients. To be able to submit applications for any policy on behalf of their clients, they must receive a binder, signed by an underwriter at the insurance company they wish to work with. These binders are temporary policies that last between 30 and 60 days. After this period, the binders are either replaced with a permanent policy or they’re canceled altogether. Brokers deliver very personalized and quality support to their clients. They are very honest and knowledgable about the information they’re giving and the advice on how to choose the correct policy for you. Be aware, policy hunters! Having this vast experience and knowledge while giving such incredible hands-on support and guidance can be very expensive, it takes time and dedication to accrue this information and to be good at your job. Brokers might come with a larger price tag, but you are paying for what you get.
There you have it! The difference between a broker and an agent! Choosing between one or the other is a personal preference. Make sure you do your research on what kind of professional you want to work with, and how either option can benefit you or your company the best. The end goal is to have the best experience and end up with the best policy. We hope this blog cleared up some of your questions and confusion. Good luck with searching for your new policy. Please continue to stay safe, and never hesitate to reach out and communicate with us. We are looking forward to hearing from you soon.