One of the most frequently asked questions in the insurance industry is: What is the difference between an insurance agent and an insurance broker? This isn’t a question that is difficult to answer as there are notable differences between the two.
However, when looking at these differences you will discover that there are significant advantages and disadvantages to both. Building a long term relationship with the right professional can seriously affect how you develop your business’ insurance plan.
Here we’ll describe the main differences between the two groups to support your search for the perfect insurance coverage.
What Is An Insurance Agent?
An insurance agent is classed as an insurance professional that serves as an intermediary between the insurance company and the insured party.
Technically, the agent’s responsibility to the insured customer is administrative. This means that they are only responsible for the insured’s forms, premiums and paperwork being processed timely and accurately. They have no responsibility to ensure you have done, or to conduct themselves, a thorough examination of your organization to determine that you have the most appropriate coverage.
Instead, the responsibility for this rests on the insured. This means that sometimes you can get insurance coverage you don’t need or be missing features that could affect your business financially if a claim is made against it.
There are two types of insurance agents you can speak to. The first of these is a captive agent. These are insurance agents who work for one company and will only sell policies provided by that insurer.
The other type of agent is an independent insurance agent. These agents work for numerous insurers and can provide policies from each insurer they work for to offer you a comparison of the different policies on offer.
If you are looking for an independent view of the insurance policies on offer, an independent insurance agent is your best call. However, they will still not advise you of what coverage you need or perform a thorough review of your needs. But they can sometimes get you good rates on your insurance because they are dealing directly with the insurers.
What Is An Insurance Broker?
An insurance broker works in much the same way as an independent agent. They are connected with numerous insurance agents and can provide you various options depending on what you request. A broker is required by law to have a broker’s license; therefore they have more education and experience than the typical insurance agent.
Insurance brokers also are required to have a higher duty of care to their clients. They need to have performed a thorough analysis of your business to ascertain your needs and secure correct and adequate coverage for your business.
While this means that you can have more peace of mind when dealing with an insurance broker and you can be sure that any eventuality will be covered by your insurance – there is a price to pay.
Brokers can charge their clients an administrative fee for their services or premium payments are sometimes higher to cover buying the insurance. Yet when your business could face thousands of pounds in court costs if you aren’t covered because the agent hasn’t realized your need for a certain product, the price is often worth it.
There is a stark difference between an insurance agent and insurance broker. Both will try to get you the best deals but in different ways. The insurance agent will look at what you have requested and get you a lower premium; while the broker will look at your needs and determine what policies will best cover you.
Do you use an insurance agent or insurance broker? What are your experiences?
Let us know in the comments.