An Insurance broker vs agent: which one is best for you or your business?
Better yet, is there even a difference?
You’ve probably heard the two used pretty interchangeably and you may be starting to believe that they are one in the same. However, the truth is that they’re very different and offer their own advantages, as well as their own disadvantages.
This article will help you decipher between the two and guide you to the one that will best address your insurance needs.
One could be captive or they can both be independent
An insurance agent usually falls under two different categories: an agent can be what is referred to as a “captive” or an “independent” insurance agent.
A captive insurance agent works for a singular insurance company and may be paid a salary or on commission by this specific provider.
However, an independent insurance agent and an insurance broker are not tied to a singular insurance provider and work with multiple insurance companies to get the best deals available for their clients, while doing so on commission.
One is closer to the insurance policies than the other
While both independent insurance agents and insurance brokers work with their clients to find what they feel are the best insurance plans for their clients across multiple providers, captive and independent insurance agents tend to be more educated on the policies they sell as there are fewer policies to become familiar with.
At the same time, insurance agents normally have access to more exclusive policies that are not available to brokers.
Because of this, insurance brokers normally have to work with a longer list of insurance companies and may not be as well versed, or as experienced, with all of the insurance plans at their disposal.
One charges a commission on top of the insurance rate
While working with an insurance broker ultimately gives you the flexibility to work with nearly any insurance provider that covers your area, they make their money a little differently from an insurance agent.
Many independent insurance agents are paid on a commission that is taken from the insurance provider’s quote.
As for an insurance broker, an additional commission is added on top of the insurance provider’s quote and is kept by the brokerage as the rest of the rate is passed on to the provider.
At this point, you’re paying more for an insurance policy from someone with nearly as much flexibility as an independent insurance agent, one who may also lack access to all of the policies available to an agent.
So if you’re looking for a knowledgeable, flexible, yet affordable insurance option for you or your business, you may find that an independent insurance agent may be the best fit to find you the right coverage for the right price.