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.
