Regardless of whether you’ve never purchased an insurance policy before or you’ve worked with many insurance companies over the years, insurance can be challenging to navigate. However, insurance can play a crucial role in helping to safeguard health, vehicles, homes, businesses, and more. There are many types of insurance policies available that may work for different needs, including, for example, homeowners insurance, renters insurance, life insurance, auto insurance, small business insurance, and health insurance.
Finding the right policy goes beyond identifying the type of insurance needed. An insurance company’s reputation, premium rates, deductible amounts, and savings incentives are all important factors to consider when selecting the right insurance. Depending upon your specific needs and circumstances, it may be a good idea to reach out to an insurance broker for help.
What Is an Insurance Broker?
Insurance brokers can offer policy options from several different insurance companies instead of being limited to one specific insurance company. Instead of working for insurance companies, a broker works for customers and clients, using their expertise to help find the right insurance coverage options and rates. Since brokers are not tied to a specific insurance company, they can typically provide multiple recommendations based on real experience.
When looking for coverage, but still determining which type of insurance is appropriate for a specific need or needs, an insurance broker can help by researching and explaining the different options available, ultimately helping to save the customer time, and offering peace of mind.
What Does an Insurance Broker Do?
Insurance brokers are responsible for helping customers and clients find the right insurance coverage for their specific circumstances. They do this by examining the needs of each individual client and searching through policies offered by different insurance companies to find the right policies and the right prices. Brokers represent the interests of their clients and recommend coverage based on their expertise. This can mean providing a list of policy and rate options to compare, but also can include searching for ways to save customers money by combining insurance types into packages with lower rates.
Once the insurance broker and client settle on the appropriate insurance solution, the account is turned over to the insurance company or its agent to complete the transaction. Insurance brokers typically charge a fee to the customer for their services. This fee can vary depending on the broker and the services provided. Some brokers may charge a flat fee, while others may charge a percentage of the insurance premium.
What Is the Difference Between an Insurance Agent and an Insurance Broker?
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.
What Is the Benefit of Using an Insurance Broker?
So, what are the benefits of working with an insurance broker instead of directly with an insurance agent? Insurance brokers generally have access to information and details about coverage and rates from a wider marketplace and can use that information to find the best options and attractive prices. Insurance brokers are tasked with doing the research for clients in order to help them choose a policy.
The Bottom Line
One of the main differences between insurance agents and insurance brokers is who they represent: agents represent insurers, and brokers represent buyers. Since brokers work with a variety of carriers, they can be a good fit if you are looking for competitive rate options or to change your current insurance company. In some circumstances, brokers may also be able to offer discounts since some insurance companies offer special discounts for brokers.
Acrisure understands trends in the market and can help you navigate available insurance policy options. Contact Acrisure today to learn more.