Insurance broker vs. agent: Which should you choose?

If you're shopping for insurance, you might be wondering whether to work with an insurance broker vs. agent. Here’s what you should know: An insurance agent sells policies from one or more companies, while a broker shops the wider insurance market to find you a policy.

In this article, you’ll learn the difference between an insurance agent and insurance broker, how each one gets paid, and why an independent agent might be the right choice to help you find coverage.

Insurance broker vs. agent: What's the difference?

Both insurance brokers and insurance agents help you buy policies, and both need a license in the state where they operate. So, what is an insurance broker vs. agent in practice? Here's a closer look at what each one does.

Insurance agents

Insurance agents represent insurance companies, and they sell policies from the companies they contract with. When you find the right policy, agents can put the policy into effect, which is known as binding coverage. There are two types of insurance agents:

• Captive agents represent one insurer and sell only its products
• Independent agents represent multiple insurance companies, so they can compare policies and quotes from all the insurers they work with

Insurance brokers

Insurance brokers represent you, the insurance shopper. They don’t contract with individual insurance companies, so they can shop the wider market and compare options from regional and national insurers. But unlike agents, brokers usually can't bind coverage on an insurer's behalf. You typically have to work with the insurance company directly to buy your policy.

To help you weigh the insurance broker vs. agent pros and cons, here’s a realistic example of how each professional could help you.

Imagine this: You're buying your first home and your lender needs proof of homeowners insurance before closing in a few days. An independent agent can compare quotes from several insurance companies, look for discounts, and likely put your policy into effect on the same day.

An insurance broker could also shop the market and give you several policy options to choose from. But since brokers typically can't bind coverage, you'd probably need to go to the insurer to buy the policy, which could add time to your already tight closing schedule.

How do insurance brokers and agents make money?

Insurance agents and insurance brokers usually make money the same way: They earn a commission from the insurance company when they sell a policy, and that company builds the commission into your premium.

However, some brokers and insurance agents charge fees for their services. Before you start working with one, ask what fees they charge, if any, to avoid surprise costs.

How do I choose the best insurance agent or broker?

Whether you go with an agent or a broker, asking these five questions can help you find the right insurance professional for your needs.

Which insurance companies do you work with? Ask an agent which insurers they represent, and ask a broker which insurers they can get quotes from. Keep in mind that more insurance companies isn’t always better. What matters is that the insurers have a solid reputation, good financial stability, and offer the types of insurance you need.

How do you get paid, and what fees do I pay? Ask the agent or broker how they’re compensated, and whether they charge any fees on top of your premium. If they do, the fee might be worth it if they can find you a more affordable policy.

Do you have an active license to sell insurance? Agents and brokers need a license in the state where they sell insurance. You can verify an insurance license through the National Insurance Producer Registry (NIPR) or your state's Department of Insurance.

Can you bind coverage? Many insurance agents can bind coverage right away, which is beneficial if you need insurance quickly. Because brokers usually can’t bind coverage, the process of getting a policy through them can take longer.

Can you assist with claims or policy changes? Ask the agent or broker whether they can help you file a claim or update your policy. Most agents can, while brokers may not.

Insurance agent vs. broker FAQ

Is it better to use an insurance broker or an agent?

When it comes to choosing broker vs. agent insurance services, it depends on your situation, but for many people, an independent agent is the more convenient choice. Independent agents can compare multiple insurers and quotes, bind coverage, and provide ongoing support after the policy sale. Brokers typically help you find a policy, then send you to the insurance company to buy it.

Can an insurance agent also be a broker?

Sometimes. Insurance regulators use the term “insurance producer” to refer to both agents and brokers, so an insurance agent may also work as an insurance broker, and vice versa.

Do insurance brokers charge more than agents?

Not usually. Insurance agents and brokers typically earn a commission that the insurance company builds into your premium. Some brokers and agents charge a separate fee, though, so ask about any out-of-pocket costs when interviewing professionals.

Is it cheaper to buy insurance directly than through an independent agent?

Not necessarily. Insurers build commissions into your premium, so buying insurance directly from an insurance company doesn't automatically mean paying a lower rate. Plus, an independent agent can compare quotes from several insurers and look for discounts, which can help you find the most affordable policy.

Do insurance agents and brokers sell the same types of insurance?

Although both agents and brokers can help you buy personal insurance — like auto, home, life, and/or business insurance — what each professional sells depends on the types of insurance they're licensed to sell and, for agents, the insurers they represent.

Find the right policy for you

Still weighing an insurance broker vs. agent? For many people, an independent agent can offer greater benefits. Get connected to a local independent agent who can help you choose the right policy.