Insurance Agents vs. Insurance Brokers - What’s the Difference? - NYCM Insurance Blog

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May 31, 2020

Insurance Agents vs. Insurance Brokers - What’s the Difference?

Perhaps you’re familiar with the term “insurance agent” or “insurance broker.” Perhaps you’re also unclear as to what these terms mean, exactly. If you don’t work in the insurance industry or deal with insurance on a daily basis, then you may find that there are a lot of terms and expressions that you might not understand. This can make acquiring and managing your insurance policies difficult to say the least.

To read up on important insurance words and terms, click here. But to better understand what insurance agents and brokers are and the difference between the two, read on.

Some similarities between insurance agents and insurance brokers:

       Both agents and brokers are qualified insurance professionals that work within the insurance industry.
       Both professionals are designed to be an intermediary between the customer (you!) and your insurance company.
       They are both licensed to sell insurance policies.
       They both have a legal obligation to help you get the coverage you need at a reasonable price.
       Both sets of professionals work on commission.

Despite these similarities, it’s important to remember that insurance agents and insurance brokers are not the same thing. Let’s take a more in-depth look at both professions.

Insurance Agents

Insurance agents are insurance industry professionals who represent insurance companies. Agents can be either “captive” or “independent.” Captive agents only represent one insurance carrier, while independent agents represent a variety of insurance carriers. The purpose of an agent is to provide the insurance buyer or customer (you!) with information about different coverage options. Long story short, they are a conduit between insurance companies and insurance buyers.

One thing to be mindful of when working with insurance agents is that they essentially work for the insurance carriers that they represent and receive commission based on the policy they sell you. That being said, they are also human! Insurance agents will do their best to match you with the insurance carrier that they believe best suits your needs. One of the benefits of working with an agent is that they have binding authority - meaning they can confirm or “bind” your coverage as a representative of the insurance company! The can also help you file a claim, should you ever need to.

Insurance Brokers

Similar to insurance agents, brokers are an inter mediary between insurance buyers and insurance companies. The main difference between brokers and agents is that brokers work for the customer instead of the company. Brokers are best known for working with individuals on a personal level and finding the best coverage and options based on their individual needs. Unlike agents, brokers can not usually bind coverage. This is because they are not legal representatives of the insurer. But they can help their customers file a claim!

So what is the main difference between an agent and a broker?

The main difference between insurance agents and insurance brokers is who they work for. As a reminder, an agent acts as an extension of the insurance company. A broker represents the customer.

If an insurance company ceases business with an insurance agency, the agents are able to continue doing business with the customers they have acquired by selling them insurance through one of their other insurers. The agency - not the insurance company - owns the business.

While similar, there are definitely a few differences that set these two professionals apart.

At NYCM Insurance, we’re proud to work with over 1,200 independent agents across New York State to offer our Home, Auto, Commercial and Umbrella coverage to our fellow New Yorkers. To find an agent near you, click on the button below.