What’s the Difference Between an Insurance Broker vs. Insurance Agent?

Both insurance agents and brokers are licensed professionals who sell insurance. But unless you are familiar with the insurance industry, you might think that the titles of broker and agent can be used interchangeably. In fact, these two types of insurance professionals are not the same and have some pretty significant differences between them.

In this article, we'll break down the differences between insurance agents and brokers and the role they can each play in helping you find the policies you need. From there, you'll be able to decide between an insurance broker vs. agent to help you with your personal insurance journey. 

You'll also be more familiar with how insurance agents vs. brokers operate and conduct business in different ways. While working with an independent insurance agent is right for many people, others may prefer working with other types of insurance agents or insurance brokers.

What Is an Insurance Agent?

Insurance agents are known for representing insurance companies and selling their coverage for commission. Insurance agents may represent just one carrier or several. Some of these agents work independently, while others work full-time for a specific agency's insurance sales department.

The role of an insurance agent is to help customers find the right coverage, but ultimately, while representing the insurance provider. Insurance agents have contracts known as agency agreements with each insurance company that outline which types of insurance policies they can sell and how much commission they earn from each kind of sale. 

There are two kinds of insurance agents, captive and independent, and it's important to understand the difference between them as you start looking into buying insurance for yourself.

Captive Agents

A captive insurance agent works for and represents just one insurance company. They may be a full-time employee of the carrier, or they may work as an independent contractor. Captive agents may receive leads and referrals for prospective clients and customers from the insurance company they work for.

A captive agent is an expert in the specific insurance policies sold by the provider they work for since that's what they specialize in and sell. So, you may choose to work with a captive insurance agent if you already know which insurance company you want to get coverage through, but you have further questions about the specific policy you need from them. 

A captive agent can likely answer all your questions about the products sold by the insurer they work for but would likely be unable to help you with questions about policies sold by other companies.

Independent Insurance Agents

Independent insurance agents work with multiple insurance companies and have the ability to provide information, quotes, etc., about products sold by any of these carriers. As a result, independent agents can help customers access a much broader network of coverage and help them compare pricing, coverage limits, and more between several companies.

Trusted Choice works exclusively with independent insurance agents to help make coverage as accessible as possible for customers. Since independent insurance agents are able to sell products from multiple carriers, a customer might choose to work with an independent agent if they're unsure of where they want to get their coverage from, who offers the best deal, or which provider sells policies with the specific type of coverage they need. 

Independent insurance agents are also beneficial for customers who would like help having a professional file claims directly for them, as well as be there throughout the life of their policy to update their coverage and search for additional discount opportunities as time goes on.

What Is an Insurance Broker? 

An insurance broker is known for representing the customer searching for insurance coverage. Brokers are licensed to sell insurance policies from several insurance companies in exchange for commission. A broker's primary duty is to the client, whereas insurance agents, both captive and independent, represent the insurance company.

Brokers have to let an insurer or an insurance agent complete an insurance sale since they're not able to bind coverage. Brokers earn a percentage of the commission on the insurance policies they sell, called broker fees. 

There are three types of insurance brokers to be aware of when you're ready to start shopping for your own coverage. These include retail brokers, wholesale brokers, and surplus lines brokers.

Retail Brokers

Retail brokers work closely with their clients. This type of broker finds insurance for customers to purchase either from wholesale brokers or directly through an insurance company. A retail broker often works with more general types of insurance that cover common risks.

You probably wouldn't work with a retail broker if you needed a complex insurance policy. Instead, you'd work with a retail broker if you were searching for a more general kind of insurance policy, such as homeowners insurance or car insurance. If you want to buy your insurance either directly through the insurance company or through a wholesale broker, a retail broker might also be an attractive choice for you.

Wholesale Brokers

Wholesale brokers can take the insurance-buying process a step further than retail brokers. They also sell more specialized insurance products. Wholesale brokers can sell insurance policies and products to insurance agents as well as retail brokers.

As previously mentioned, wholesale brokers can complete an insurance sale for retail brokers. Wholesale brokers also don't need to work as closely with clients and customers as retail brokers do. You might choose to work with a wholesale broker if you're looking for more specialized insurance that covers more complex risks, such as boat insurance or travel insurance.

Surplus Lines Brokers

Surplus lines, also called non-admitted insurers, offer coverage greater than what the standard or admitted insurance market offers coverage for. Such cases create the need for surplus lines brokers. These brokers can be either retail or wholesale and have licenses that allow them access to even more specialized insurance companies and products that cater to more nuanced risks.

You might need to work with a surplus lines broker if you're in need of very specialized coverage. This might include insurance for things such as mobile homes, high-value art collections, and very old homes. 

Also, if you run a business with a large claims history or high-risk operations, you might be denied coverage from traditional insurance companies and may need to work with a surplus lines broker to get specialized coverage. 

What Are the Differences Between Agents and Brokers?

There are several key differences between an insurance agent vs. broker. Here's an easy way to highlight the differences between an insurance broker vs. an agent for when you're ready to start shopping for insurance.

Cost Difference Between an Insurance Broker and an Agent

Technically, the cost should be the same to work with an insurance agent or a broker. However, a broker has the ability to set their own fees or tack on extra admin fees that can ultimately make your insurance more expensive. 

But in either situation, agents and brokers are both required by law to disclose all of this information, including any fees, to you before you agree to work with them and buy insurance. This way, you know what you’re signing up for from the start.

What to Look for in an Insurance Agent or Broker

Before choosing to work with an insurance broker vs. agent, there are a few key points to look for and consider. First, finding an agent or broker who is licensed and has experience working with the specific types of insurance you're searching for is critical. Working with an agent or broker who doesn't have expertise in the field of coverage you need wouldn't prove beneficial to you.

You'll also want to make sure your agent or broker is officially licensed so you can be sure they're legitimate and not a scam. When looking for an insurance agent vs. a broker, take some time to research them a bit before contacting them. 

Remember that you might have to look for a surplus lines broker if you're in need of highly specialized coverage or are perhaps in need of a type of complex business insurance that covers very risky operations.

Ready to Save On Insurance?

Our independent agents shop around to find you the best coverage.

Request a Quote

Should I Use an Insurance Broker or an Agent?

First, you'll need to evaluate your coverage needs when deciding to work with an insurance broker vs. an agent. Insurance brokers and agents alike can both help you find the coverage you're searching for. But your personal preferences and specific coverage needs may ultimately help you decide to work with an insurance agent vs. a broker or vice versa.

For business or commercial customers who have more complex insurance needs, working with a broker might be the better choice. Brokers offer professional services to help understand the current risk management processes at your company to help ensure it gets matched to a policy that bridges any current coverage gaps. Also, brokers typically have access to a larger network of specialized insurance companies.

If you're looking for a standard personal insurance policy or you're a business customer whose coverage needs aren't that complex, an insurance agent might work just fine. Insurance agents are also experts with a deep understanding of the insurance products they sell and can help shop and compare policies for you. Agents can also listen to and evaluate your specific needs and help ensure you get matched to the right policy for whatever you need to cover.

Where Can I Find a Broker or an Insurance Agent Near Me?

You can find an insurance broker or agent near you by first searching online. Be sure to look for any customer reviews if you choose to browse the internet for options. Many insurance customers also take referrals from friends, family, or coworkers. 

But you're already in the right place because Trusted Choice connects prospective insurance customers with the right independent insurance agents all day, every day. It starts with just a few simple questions to identify your coverage needs. From there, we’ll direct you to options that fit you best in a matter of minutes.

Whenever you’re ready to start your coverage journey, you can begin by connecting with an independent insurance agent.