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Insurance agent vs. broker: What’s the difference and how to find the right one

Both insurance agents and brokers are licensed professionals who help small businesses get insured. But while an agent represents a small number of insurance providers, a broker works with a variety of carriers. Understanding the difference can help your business find the right partner.

What are insurance agents and insurance brokers?

Insurance agents and brokers are professionals who sell insurance. They may choose to specialize in a certain area, such as property and casualty insurance (P&C), which protects businesses against lawsuits and property losses.

Both agents and brokers are licensed in the state where they operate and must comply with all governing statutes and regulations. And like any small business, insurance agents and brokers both need business insurance themselves in order to operate in many locations.

Regardless of which option you choose, agents and brokers are obligated to act in good faith in helping you find the best policy for your needs. Let’s look at the similarities and differences between the two, and how either option can help you find the best coverage in small business insurance.

What is an insurance agent?

An insurance agent represents one or more insurance companies and sells their policies for a commission. They can either work full-time at insurance sales for an agency, or as independent contractors.

Their job is to represent the insurance company in the transaction while also helping customers find the right coverage. The agent has an agency agreement, or contract, with the insurer that stipulates the different types of insurance the agent is able to sell and the commission rates for each policy.

There are two types of insurance agents:

  • Captive agents typically represent only one specific insurance company.
  • Independent insurance agents typically represent more than one insurer.

Both captive and independent agents work on commission and can execute an insurance transaction from start to finish, on a variety of insurance plans.

What is an insurance broker?

An insurance broker represents consumers in their search for coverage and can sell policies from several different insurance companies for a commission. Unlike captive and independent agents, who represent one or more insurance companies, a broker’s primary duty is to the client.

A retail broker examines a client’s needs and searches from several providers to find their client the right policy at the right price. They make their money through broker fees, which are a percentage commission on the policies being sold.

Since brokers don’t represent insurance companies, they can’t bind coverage on behalf of an insurer when purchasing insurance. They must hand over the account to an insurer or insurance agent to complete the transaction.

Our licensed experts can help you find the right insurance coverage

View video transcript.

[video: an animated header displays the Insureon logo]

KARI ALLEN, VP SALES, INSUREON: You know, we're the pioneer in the marketplace, we are the number one digital agency, we have our web content and information that we provide small business owners is amazing.

[video: an illustrated header displays the text: "1 million+ policies written"]

90% of customers don't understand the coverage they need, so they go to the internet looking for assistance, and that's when we come in to say "not only can we answer your questions, but we can offer a solution for you to compare coverages and get immediate quotes."

[video: illustrated footer displays the text: "Kari Allen, VP Sales"]

Once you've gone through that process, now you're introduced to a best-in-class sales team that's going to help you through any of those questions that you have, which will help you find the great coverage for your needs and to protect your business.

[video: an illustrated header displays the text: "Experts with decades of experience"]

Our producers are specialists in the small commercial market. They pride themselves in understanding all of the state specifics, they understand insurance company specifics, all the underwriting, they understand the true needs of the small commercial industries.

[video: an illustrated header displays the text: "Licensed in all 50 states"]

Whether it's contracting, whether it's lawn care, whether it's professional and business services, they pride themselves in understanding all of the industry verticals. Our digital agency has access to insurance companies that not all traditional agencies have, or digital agencies across the market.

[video: a number of animated logos display for a variety of insurance carriers, including The Hartford, Philadelphia Insurance Companies, AmTrust Insurance, Travelers Insurance, Acuity Insurance, Chubb Insurance, The Hanover Insurance Group, Hiscox Insurance, and Liberty Mutual Insurance.]

We have partnered with our top national carriers across the country to make sure that we can provide coverage in just about every scenario that we would run across for small businesses. Customers, the way that they want to interact, changes. And it's getting a little bit more involved every day, they want to be more involved in their decisions, but they also need to be understanding what the product is that they're purchasing.

Everything we do is on the cusp of making it with the customer's thoughts in mind. We were the pioneer in the tech sector. Our tech vertical we started back in 1997. This was something that we started in the industry, we are still the number one in industry in the agency sector. We have specialized producers who that's all they do all day long.

[video: an illustrated header displays the text: "Deep tech sector knowledge"]

They understand contracts, they understand coverages, the specific needs of the IT Tech sector; They understand exactly what coverages are need under every circumstance. Cybersecurity, obviously, and cyber losses are making huge headlines.

[video: an illustrated header displays the text: "61% of small businesses hacked" (as of 2021)]

Obviously, it's something that's not going to go away, and if anything, cybersecurity is going to become even more important as we move forward. I foresee this coverage exploding over the next five years, it's going to be just second nature that everybody's going to have to have it. If you have any sort of digital presence, you need cybersecurity coverage.

A certificate of insurance is really verification that you have the coverage that you need. It shows you that you have the liability coverage or workers' comp coverage that you need to secure a contract.

[video: an illustrated header displays the text: "Proof of insurance may be required"]

Without that, your ability to maybe secure those contracts could be in jeopardy. Think of it as a contractor: So, you are bidding on a contract job, and you want to secure that bid. If you don't have the correct insurance for general liability, you could lose that contract. People want to make sure that you're covered appropriately in case of loss.

[video: an illustrated header displays the text: "Dedicated client portal"]

As a small business client of our agency, you can go into to your own dedicated client portal and pull your certificate of insurance any day, and you can have it at your fingertips, print it out, and it will be exactly what you need to provide proof of insurance coverage.

[video: an animated header displays the Insureon logo]

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What are the key differences between an insurance agent and a broker?

While both agents and brokers act as intermediaries between insurance buyers and the insurance market, and can offer insurance quotes on different policies, there are two key differences between the two:

  • Agents represent insurers, while brokers represent the client.
  • Agents can complete insurance sales (bind coverage), while brokers cannot.

While brokers search for policies from multiple different carriers, an agent must sell policies from one or more of the insurance providers that they represent. Agents explain the different insurance options and leave the decision up to the client, at which point they can then help facilitate a completed transaction and bind coverage to the client.

Brokers typically play more of an advisory role in finding coverage than agents, because brokers have a responsibility to represent the best interests of the client. Brokers examine several policies and recommend certain coverages from different companies, but then must turn to an agent or an insurance provider to have a selected policy bound to a client.

Businesses that have a good idea of their coverage needs might find that an agent can best serve their needs. A business that faces unique risks and challenges in finding coverage might be better served by an insurance broker.

What to look for in an insurance agent or broker

When looking for small business insurance, many people start by getting recommendations and referrals from their friends and business associates. They also might solicit advice from any trade or professional organizations that they belong to and search the Internet for options.

It’s important to find an agent or broker who is licensed and has experience dealing with the your business needs, has experience working with your , and can sell or connect you with policies from reputable providers.

Insurance agents and brokers can provide many different types of small business insurance coverage, including:

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Is Insureon an agent or a broker?

Insureon is both a business insurance agency and a brokerage, with insurance professionals licensed in every state. Our agents help small business owners with coverage options from top carriers in the insurance industry so that they can find the right policies for their needs.

Our insurance brokers help clients find coverage outside of standard insurance products, such as excess and surplus lines, from a variety of insurance underwriters. We can help put together an insurance program that fits risk management needs of your business and are available for questions after we help you find coverage.

Find business insurance quotes and buy online with Insureon

A pioneer in insurance technology, Insureon operates the largest online marketplace for small business insurance in the United States. Our technology platform enables business owners to easily compare quotes and purchase the insurance policies they need. Start an application today to protect your business.

Updated: September 22, 2023
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