Understanding Insurance Terminology

Understanding Insurance Terminology

Car Insurance Agent Versus Car Insurance Broker—Which Is Best For You?

by Vilma Maki

When shopping for car insurance, you may need the help of an insurance agent or broker to make the best choice. The terms car insurance agent and insurance broker seem like the same thing, but they are very different. Here is a look at the differences between the two to help you choose the one suited for your situation.

What Does an Insurance Agent Do?

An agent sells insurance from one company. They are like salespeople who work at call centers with a fixed price for products. There are two types of auto insurance agents: independent and captive. Captive agents represent one insurance company, while independent insurance agents represent more than one insurance company.

Comparing packages for any insurance is daunting because you need to review the documentation for each one. The upside to buying insurance from an agent is that you can easily get a quote online or over the phone. This will make it easier to compare packages. Both of these agents earn from commissions and can execute insurance transactions on various insurance plans from the beginning to the end.

What Does an Insurance Broker Do?

A broker works for you, unlike agents who represent the interests of the insurance company they work for. Brokers are out to find the best insurance package based on your specific needs. Brokers are independent businesses that are familiar with the evolving insurance industry. They will work closely with you to compare insurance options and terms from various carriers.

However, a broker will not execute the transaction but will hand you over to an agent when you choose an insurance package. Therefore, they cannot transact on behalf of an insurance company. A broker earns a commission that is reflected in the premium.

Between an Agent and Broker Which Is Right for You?

Choosing an insurance agent may be better if you already have a policy with the insurer and want to gain discounts from bundling your coverage. Also, if you want to compare the insurance packages by yourself and complete the policy purchase, you're better off working with an agent. They are also helpful if you want to work with a specific insurance carrier.

On the other hand, you can opt for an insurance broker if you want to compare coverages on a wider scale. Since they aren't tied to any insurance company, they are less likely to be biased. Furthermore, if you are looking for insurance that is not popular, their ability to pursue more options makes them right for the job. However, you should note that while an agent receives their commission from the company, an insurance broker may charge a broker fee.

For more information on auto insurance, contact an agency like Clover Insurance.


About Me

Understanding Insurance Terminology

After we purchased our first home, we realized that it might be a good idea to evaluate our insurance coverage. Although we had purchased homeowners insurance before, we had never owned a policy as large as the one we would need for our new place. Also, our new home had a trampoline and a swimming pool, which made us worried about liability. To iron out the details, I decided to meet with our insurance agent. We talked about things like monthly premiums, coverage limits, and deductibles, and it was incredible to learn more about the terminology. This blog is designed to help you with the same types of questions.