Independent Insurance Agents vs. Insurance Brokers: What's the Difference?

When shopping for insurance coverage for yourself, your vehicle, your business, or anything else, having a professional to represent you can be greatly beneficial. As a consumer, you need a trusted advisor who can guide you through the process of finding ideal insurance plans to cover you against many different risks. The insurance industry can be a confusing field to navigate for many people who aren't familiar with the technical terms used, including captive agent, brokerage, retail broker, or wholesale broker. 

Both agents and brokers act as intermediaries between insurance customers and insurance companies. However, you might be unsure whether to hire an independent insurance agent or an insurance broker. This is understandable, as the differences in these insurance professionals aren't immediately obvious to many customers. That's why we've created this guide to the differences between independent insurance agents and insurance brokers to help you find the right representative for you.

Insurance Agents vs. Brokers

Insurance agents tend to specialize in certain types of insurance coverage, while brokers often have a broader knowledge of many types of coverage. While brokers cannot actually write insurance policies for you, insurance agents can. 

Insurance agents also have contracts with certain insurance companies. Brokers don't have contracts with insurance companies, so they're able to find coverage for their clients from any carrier. 

Next, we'll explore a further breakdown of insurance agents vs. brokers and some key differences between these insurance professionals.

What Is an Insurance Agent?

An insurance agent acts somewhat like a personal shopper for you when it comes to insurance. Whether you're looking for car insurance, home insurance, or business insurance, an insurance agent can help you get matched to the appropriate policy for the job. However, it's helpful to understand the difference between captive agents and independent insurance agents first.

• Independent agents: These agents aren't bound to one insurance company and can represent multiple carriers. They can shop and compare policies and quotes for their customers to help them find the best deal.
• Captive agents: These agents work for and represent a single insurance company as either employees or independent contractors.

Insurance agents may receive compensation in the form of a salary or commission from the insurance company they represent. These professionals help clients select the right coverage for them. They are a one-stop shop for finding the best carrier to bind and underwrite policies for a buyer.

Independent insurance agents can offer you multiple coverage choices from a list of carriers to help find what works best for you. This works especially well if you need many different insurance policies at once since independent insurance agents can streamline the entire process and save you a considerable amount of time and money.

What Is an Insurance Broker?

Insurance brokers sell and sometimes negotiate many different types of insurance products to individuals and corporations. Brokers are similar to agents in that they can both discuss the customer’s needs and then shop around and provide multiple insurance options. 

Some insurance brokers are knowledgeable about many different types of insurance coverage, so they can help a wide range of customers, while others specialize in certain areas like professional liability insurance or inland marine insurance. Further, there are two types of insurance brokers:

• Retail brokers: These brokers work the closest with insurance customers and deal with more common, broad types of insurance.
• Wholesale brokers: These brokers don't typically work closely with insurance customers and deal with more specialized types of insurance. Retail brokers often work with wholesale brokers to find special niche types of coverage.

A broker might charge a fee to the customer or offer their services for free. But while a broker can help a customer through the process of buying an insurance policy, an insurance agent or carrier needs to actually complete the sale.

What Are the Differences Between Insurance Agents and Brokers?

While insurance agents and brokers may sound very similar, they're not quite the same. There are a few key differences between the two:

• Insurance agents can write insurance policies, but brokers can’t: Insurance agents can make the process of buying coverage easier and faster since brokers can only gather your information and submit applications on your behalf. During this period, the brokers acquire a “binder” (or temporary policy) that will become a full-grown policy after 30 or 60 days.
• Insurance agents have contracts, but brokers don’t: Insurance agents have trusted fiduciary connections they’ve built with multiple insurers, making them able to give their customers a great deal of insight into each company’s background. On the other hand, brokers can search for options at any insurance company. Because of this, they may lack the extra insight to tell you about each company’s specialties in detail.
• Brokers specialize in everything, while agents focus on niches: Both insurance agents and brokers are licensed, highly educated professionals who specialize in providing their customers with the insurance that fits them best. However, because brokers can work with any carrier in the industry, they are often utilized in situations where finding coverage might be tricky, such as for huge international companies that deal with hazardous waste.
• Insurance agents represent the carrier, while brokers represent their clients: Insurance agents work for the insurance company they represent or with multiple carriers they have contracts with. In contrast, brokers represent the insurance customer, which allows them to browse options from any company they or the customer wants. 
• Insurance agents work on salary and/or commission, while brokers work on commission: Insurance agents may be salaried employees, or they may be paid by commission only, or both. On the other hand, brokers work entirely from commission from the insurance company.
• Insurance agents often work for free, while brokers may charge you a fee: Insurance agents typically work for their customers for free. Brokers, on the other hand, might charge customers broker fees in exchange for their services.

Since insurance agents specialize in niches, they're trusted experts for policyholders who need very specific types of coverage from a top-rated carrier. Interestingly, some states don’t actually have broker’s licensing, which means independent insurance agents sometimes fill the role of brokers.

What's the Difference Between an Insurance Representative and a Broker?

Insurance agents are also sometimes referred to as insurance representatives or insurance reps. Thus, the differences between an insurance representative and a broker are the same as those between agents and brokers. Insurance representatives work for the insurance company or multiple carriers that they represent, while brokers represent the insurance customer.

Insurance Brokers vs. Independent Insurance Agents: Which Is Cheaper?

Technically, the cost should be the same whether hiring an agent or a broker. However, a broker does have the ability to set their own fees or tack on extra admin fees that could make it more expensive. 

But in either situation, both agents and brokers are legally required to disclose all of this to you before your purchase. So you’ll know what you’re signing up for and how much it'll cost you at the start of the process.

Should I Work with an Insurance Broker or an Insurance Agent?

Whether you should work with an insurance agent or a broker depends on your unique needs. If you’re looking for business insurance for a large business that requires employee coverage for thousands of workers, a broker would most likely be your best bet. But if you’re looking for homeowners insurance and auto insurance for yourself or your family, an independent insurance agent is probably perfect. 

Here are a few example scenarios to help you determine which insurance professional would be right for you to work with:

• If you know what type of coverage you need, use an agent: If you're aware of which type of insurance you need, opt for an agent. An agent can complete the entire insurance process for you, including binding and purchasing the policy.
• If you have limited time, use a broker: If you're on a tight schedule or just too busy to shop around for coverage yourself, opt for a broker. They can shop for the ideal type and amount of coverage for you by browsing policy options from an endless number of carriers.
• If you have an insurance company in mind, use an agent: If you already know which trusted insurance company you want to get your coverage through, an agent can help you browse that carrier's coverage options and answer any questions you may have about the policies or the carrier.
• If you want to compare policies and quotes, use a broker: If you want to be able to compare quotes and policy options yourself, a broker can gather the information you need.
• If you want someone to shop and compare policies for you, use an independent agent: If you want someone to narrow down the best options for you by comparing policies and quotes from multiple insurance providers, use an independent insurance agent.

An independent insurance agent can always begin your process, and if necessary, a broker can help you search for and negotiate the right options. Similarly, you can start your insurance journey with the assistance of a broker but finish the process with the help of an independent insurance agent to actually buy your policy.

Ready to Save On Insurance?

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

Request a Quote

How to Find an Independent Insurance Agent Near You

If you're looking for an independent agent, then you're already in the right place. We can help you find local independent insurance agents who specialize in the exact types of coverage you're looking for. 

TrustedChoice.com connects prospective insurance customers with the right agents 24/7. It all starts with just a few simple questions to identify your needs, and we’ll direct you to options that fit you best in a matter of minutes. Whenever you’re ready, you can get started by connecting with an independent insurance agent in our network.