What is the Difference Between an Insurance Agent and an Insurance Broker?

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An insurance agent is typically a representative of the insurance company. Agents must be licensed in the states in which they do business and licensed with the various companies they represent. Captive agents typically do the vast majority of their insurance business with one company and may be contractually prohibited from selling other companies’ products. Some agents can be licensed with multiple carriers and make products from all of those companies available to their clients.

Insurance brokers differ in that they represent the client. Brokers typically have additional tests they must pass as well as bonding requirements that may be determined by the state in which they are licensed. Most often a broker will represent many companies and offer multiple alternatives to their clients.

When contemplating an insurance purchase consider asking the person you are working with whether they are an agent or a broker, or both. Also ask them for a list of all of the companies they have done business with in recent years and what percent of their business has gone to each. There are a wide array of choices, prices, products, and financial strength of companies, which should all be taken into account during the insurance acquisition process. Generally, the more options you have, the better.