There are plenty of standard insurance terms that you may be familiar with, including policy, premium, claims, third-party, and insurance provider. But what about insurance terms that sound similar like business insurance broker and business insurance agent? Both sell insurance policies but who they represent and how they sell are typically quite different. Keep reading to learn more!
Broker vs. Agent? What’s the Big Difference?
While both insurance brokers and agents sell insurance, a captive insurance agent typically works with one single provider and can only sell policies available from this company. This relationship can significantly limit your options when comparing the coverage options available to you.
Insurance agents are also paid differently from brokers in that they often receive a fixed salary from the company and can receive bonuses based on their individual sales results.
On the other hand, insurance brokers aren’t tied down to one provider but instead have a distributor relationship with multiple insurance companies.
This flexibility allows brokers to compare several policies available on the market anytime that you need to invest in a new policy or make changes to your current business insurance coverage. Insurance brokers are typically compensated through a commission-based program for each policy that they sell.
These differences often mean that brokers can offer you better rates because they have more insurance providers to choose from when considering your business needs.
As a good rule of thumb, whenever you work with an insurance broker, it’s always a good idea to clarify how many providers they work with before committing to a policy.