Insurance is all the same, right? Whether you purchase from an agent or broker, it really doesn’t matter as long as you’re insured, right?
The truth of the matter is, insurance agents and brokers, although used interchangeably, differ. Therefore, in order to know whether an agent or broker is best for your business, you first need understand the differences between them.
Agents are the channel in which information is presented to buyers. In other words, they are insurance sellers. Those looking to purchase insurance can choose from various policies through the agent.
Additionally, agents have contractual bonds with insurers that determine what policies an agent can offer. A “captive agent” is an agent who is solely devoted to one company’s products. While an “independent agent” can choose to work with multiple insurers.
Although independent agents can compare policies from various merchants, it doesn’t mean they’ll have access to all their policies. However, a captive agent may have exclusive access to a policy that is best for you.
But what if you don’t know what’s best for you? This is where brokers come into play.
Moreover, brokers commonly represent insurance buyers. Therefore, they are a lot more independent. Additionally, they are not appointed by specific insurers. Instead, brokers prepare bids to insurers in the best interests of their clients.
Furthermore, during the application period, brokers obtain a provisional policy that is signed by the insurance company, which is also known as a binder. Typically, after a 30 to 60-day period, the binder is replaced with a policy.
Additionally, brokers can be retail or wholesale.
Not to mention, brokers have extensive knowledge when it comes to various products, and they are equipped to handle inimitable circumstances. This allows them to secure the best policies for your business.
However, this also comes at a hefty fee. Brokers are often more costly than agents. They generally charge administrative fees and higher premiums as well.