Insurance broker or agent: which one is right for you?

Brokers and insurance agents offer similar services with different purposes. Know how to pick the right one for your needs.

When it comes to choosing the right insurance, whether it’s for yourself, your home or your business, you can turn to an insurance broker or an insurance agent for help. If you know exactly what type of coverage you need, it is often best to deal directly with the insurance company. If, however, you are unsure of what coverage you need or have questions, an agent or broker is probably your best option. There is often some confusion about the difference between an agent and a broker. This should help clarify who specializes in what and how to pick the one that’s right for your needs.

Insurance agents are contracted by an insurance company or, in some cases, multiple insurance companies to sell insurance for them. They are not direct employees of the company they’re representing, but rather contractors working on their behalf. An agent’s role is more to execute on the processing of forms, premiums, and paperwork. They are not responsible for looking at your situation and helping you determine the amount or type of coverage you need. That is where a broker comes in.

An insurance broker is more of an adviser. They are not affiliated with any insurance company, but rather represent their client. That means they can look out for your best interests and offer unbiased advice.

Once a broker has helped you decide on the type of coverage you need, they then solicit quotes from numerous insurance companies to find the best insurance at the best price for their clients. Brokers cannot write or bind insurance policies. Once a decision has been made, the forms, premiums and paperwork must be processed by an insurance agent or directly through the chosen insurance company.

Another thing that differentiates brokers from agents is their expertise. Brokers are required to have a broker’s license, which typically means they will have more education or experience than an agent. This expertise can come at a price though, as brokers typically charge an administrative fee or add on a fee or commission to the insurance premium.