If you’re one of those people that have used the terms insurance broker and agent interchangeably, you probably didn’t realize that they are two different things. While their functions are similar, they’re not identical.
The Difference Between Broker and Agent
As mentioned, brokers and agents have their similarities; both are licensed to distribute insurance, adhering to the regulations enforced by regulations. Therefore, they both have a legal duty to help you buy an insurance policy at a reasonable rate. As licensed professionals, they serve as intermediaries between you and the insurance companies.
The primary distinction between the two is the insurance policy providers they represent. Both captive and independent agents work for a single insurer. A broker, on the other hand, represents multiple insurers yet works independently. Here are three reasons why insurance brokers are better than agents:
- Multiple Insurers to Compare
Shopping for insurance can be intimidating enough mainly if you don’t understand the industry terms and jargon. When you choose to deal with agents, you find yourself speaking with multiple agents, each representing their insurance company. The best they can offer you is which of their coverage plans comes closest to your needs.
However, when you work with a broker, they will do all the research and policy comparison, relieving you of the legwork. They compare products across many providers, finding you the perfect match – not whatever meets only your minimum requirements.
- Match Best Financial Product to Fit Your Needs
As brokers have access to various policy providers, they compare them to find the one that meets your criteria for adequate coverage and protection. An agent, on the other hand, would only present you with the options from the company they represent.
Once the broker has assessed your specific requirements, they do the shopping for you, finding you the right priced coverage that fits your budget. Your interests come first.
- They Work for You; Not the Insurance Company
Because an insurance agent works for a single employer, they will put the needs of the insurance provider first. A broker works independently and therefore, works for you. They focus on customer needs, ensuring your business and property are protected.
With brokers, there’s less concern about who you buy from; their primary care is matching you with the right product. Their commissions are the same regardless of which company you choose. It is important because when the time arises that you need to make a claim, your broker can speak on your behalf and act as your advocate. Because brokers don’t work directly for any policy provider you ultimately choose, they feel no pressure or bias against your claims. An agent, on the other hand, knows that every claim impacts their company which may cloud their judgment and influence to what extent they assist you.
In the battle between broker and agent, it’s clear which one can provide you with most options and deliver the right one. An insurance broker not only puts your needs before the company first but at times when you make a claim, they are your most reliable advocate to ensure you receive what is fair.