Insurance Agent vs Insurance Broker: What is the Difference?

If you’re new to purchasing insurance, you’ve probably heard the terms “insurance agent” and “insurance broker” floating around. But, like the rest of the population, you probably disregarded any part after the word “insurance.” It’s fine – (we’re not offended!) – but there is some value in understanding what the differences are between agents and brokers, especially if you’re in the process of purchasing insurance for the first time and you’re looking to cut down on costs.

Alas, an insurance agent and an insurance broker are not the same. They perform similar duties, but the manner of how they work and who they work for is different. As someone looking to purchase insurance, you may have considered both portals as a means through which to buy your policy. Wait! Before you decide, read on for Excalibur’s breakdown of insurance agent vs insurance broker.

What is an insurance “agent?”

Insurance agents are professionals who represent an insurance company. They are loyal to their insurance company first, not you, and their duty is to sell you the products that their parent company specializes in. They’ll have extensive training in marketing and sales and receive a great deal of support from the insurance company they represent.

This isn’t to say that insurance agents don’t know what they’re doing. They have the same level of training, they have an in-depth understanding of the industry and, because they represent one company, they have a deeper knowledge of what that company has to offer. But, in the end, they may only offer buyers products from that insurance company, and nowhere else. This means that they are bound to that group of policies and may not be able to offer you flexible solutions for your unique situation. And, if you’re with that company and that company opts to raise your rates or discontinue a specific product, you’d be forced to look elsewhere and begin the shopping process all over again.

What is an insurance “broker?”

Where insurance agents are professionals representing an insurance company, insurance brokers are professionals representing you. They have connections with multitudes of insurance companies, but they do not have any contractual obligations with those they sell on behalf of, meaning that they can shop around for you to find you the best fit and the cheapest rates for your situation.

Brokers have extensive training the same way that agents do and, with that training as well as their connections, they are able to complete your insurance policy and offer you insurance documentation in as little as under 24 hours. Depending on the type of your insurance you are purchasing and the insurance company you end up purchasing from, this can vary, of course.

Some advantages of working with an insurance broker are the support you receive and the array of choices. If you need to make a claim, you’ll have a third party to contact and ask for advice. You’ll also have a larger pool to select from if your insurance needs change, and you’ll be guaranteed the best price and coverage that your insurance broker can find you – even if you need to switch insurers.

What is the difference?

The main difference, in a nutshell, is that insurance brokers represent you and insurance agents represent their insurance company. Both are insurance professionals with plenty of hours of experience and a strong understanding of what it means to sell insurance, but oftentimes people will prefer to work with insurance brokers because of their wide array of options and prioritization of you.

What are the advantages of an insurance agent?

The advantage of an insurance agent is that the middleman is cut out. You won’t be doing a crazy comparison of multiple policies so you can receive a quick quote instantly over the phone or online. You may not get the best price since you’ll only be looking at one company, but the convenience of an insurance agent is excellent. Insurance agents are licensed and are subject to specific regulation and governance, so you’ll know that their services must meet a certain standard.

What are the advantages of an insurance broker?

The advantage of an insurance broker is choice. Many insurance brokers share a higher degree of knowledge because they work for multiple companies and, like agents, they must uphold a specific standard. Insurance brokers, however, work on commission. The insurance company they sell for will pay that commission. When you need to file a claim, insurance brokers will fight to ensure that you receive your proper compensation – where an insurance agent would likely side with their company.

Which should I choose?

If you’re in the market for a new insurance policy, you’ll likely have dozens of options and multiple considerations. If the most important thing to you is to have all your finances in one place, no matter the price differences, you can choose to get insured through your bank. It’s easy, simple, and right there. If you would rather find the best deal for your needs, opt to go with an insurance broker.

We might be biased, but an insurance broker is a resource to have in your corner no matter what. If you need to make a claim, we negotiate on your behalf. If your insurance needs change, we help ensure your policy can continue to meet your needs, even if that means switching insurers.

Give us a call today or request a free quote to see how Excalibur Insurance can help you start saving money. We’re happy to help.