Insurance broker
An insurance broker is a licensed professional who helps you find, compare and purchase insurance coverage, whether it’s for your car, home or something more specialized. Say you’re buying your first home and want to make sure it’s properly protected. Instead of calling multiple insurance companies yourself, a broker can do the heavy lifting for you by shopping around and presenting the best options from multiple carriers. Both insurance agents and brokers are licensed insurance professionals, but their roles and obligations differ within the insurance industry. Unlike an insurance agent, who typically represents a specific insurance company and facilitates coverage transactions on behalf of that insurer, brokers work on your behalf to offer unbiased recommendations and access to a broader range of policies.
Anyone selling or helping you buy insurance must be licensed, whether they’re a broker or an agent. An insurance broker acts as an intermediary who sells, solicits, or negotiates insurance on behalf of a client for compensation. Brokers do not act as legal representatives of insurers.
Insurance company relationships: how brokers work with insurers
Insurance brokers maintain strong working relationships with a variety of insurance companies, which enables them to offer clients a wide selection of insurance products and coverage options. By partnering with multiple insurance companies, brokers can shop the market on your behalf, comparing rates and policy features to find the best fit for your needs.
This access to multiple insurance companies is a key advantage, as it allows brokers to negotiate favorable terms and secure comprehensive coverage for their clients.
Brokers play an essential role in communicating client needs to insurance companies and advocating for the best possible outcomes. Insurance companies often train brokers and give them resources, so they stay up to date on new products and services.
If you need special coverage that regular companies don’t offer, your broker may work with another expert to find the right protection. The relationship between brokers and insurance companies is built on trust and collaboration, with both parties working together to deliver quality insurance solutions and expert advice to clients.
What is the benefit of using an insurance broker?
Using a broker gives you access to expert advice and multiple insurance carriers, providing a wider range of insurance options without having to research each company yourself. Brokers help ensure you’re properly covered and can often identify gaps in coverage you might not notice on your own. Insurance brokers represent consumers in their search for coverage and can sell policies from several different insurance companies for a commission.
For example, if you have unique insurance needs or complex assets, a broker can compare offerings from various insurance carriers to find the best fit for your situation. Other examples include navigating complicated policy terms or seeking better rates and coverage than what is available directly from a single insurer.
What are the different types of insurance brokers?
Independent brokers
Also known as independent agents or independent insurance agents, these professionals represent multiple insurance companies. This allows them to offer clients a variety of policy options from different providers, helping clients compare and choose the best coverage for their needs.
Captive brokers
Typically work with one insurance company but offer more flexibility than agents.
Retail brokers
Work directly with individuals or businesses. For example, a retail broker evaluates a client's insurance needs, compares policies from several providers and facilitates the purchase of the most suitable insurance policy.
Wholesale brokers
Support retail brokers by accessing specialty insurance companies.
When should I use an insurance broker?
Use a broker when you have complex insurance needs, want to compare options or need coverage for something valuable like a home, car or business. Brokers assist with selling and managing complex insurance policies, making it easier to navigate your choices. They’re especially helpful for bundling policies or managing non-standard risks. Non-standard risks refer to insurance risks that fall outside the scope of traditional or standardized underwriting guidelines.
Brokers help customers select the most appropriate insurance policy for their needs by examining several policies and recommending certain coverages from different companies, but cannot bind coverage.
What to look for in picking an insurance broker
Look for someone who can guide you clearly, advocate for your needs, and provide access to a variety of policy options. The right broker can simplify a complicated process and make you feel confident about your coverage decisions. Here are a few qualities to keep an eye out for:
- Is a licensed person in your state – Brokers must meet your state’s licensing requirements.
- Has experience with the type of insurance you need – This is especially important if your situation is complex.
- Works with a wide range of carriers – Access to more carriers means more options for you.
- Communicates clearly and answers your questions – Good brokers make insurance easier to understand.
- Acts in a fiduciary capacity – Your needs should always come first.
Brokers don’t legally represent insurance companies. They are legally required to act in a fiduciary capacity, meaning they prioritize their clients’ best interests when providing advice or recommendations.
How are insurance brokers regulated?
Most states license and regulate insurance brokers to keep consumers protected. State laws require brokers and agents to hold an active license before they can legally assist you with buying insurance. These regulations help guarantee that you’re working with someone qualified, knowledgeable and accountable.
They also take continuing education courses and follow laws that protect you as a customer. Both insurance agents and insurance brokers are licensed professionals who must comply with all governing statutes and regulations.
Common myths about insurance brokers
- Brokers are more expensive – Not necessarily. They may help you save by finding better rates.
- They only work with a few companies – Independent brokers often work with many. VIU by HUB works with 50+ carriers nationwide.
- You don’t need a broker if you shop online – A broker adds personal advice that a website can’t.
What licenses or certifications do insurance brokers need?
Brokers must be licensed in the states where they operate, which means they’ve passed exams and met specific education requirements. These licenses help make certain that they understand the laws and products they’re advising you on. Some brokers also go above and beyond by earning certifications like:
- CIC (Certified Insurance Counselor)
- CPCU (Chartered Property Casualty Underwriter)
What is the difference between an insurance broker and an agent?
A broker represents you, while an agent represents the insurance company. Brokers can offer more policy choices, while agents typically offer products from just one insurer. Unlike insurance agents, who represent one or more insurance companies, a broker's primary duty is to the client.
Insurance broker FAQs
Can I switch brokers?
Yes. You have the right to switch brokers at any time, even if you've already purchased a policy. Just be sure to check if you're under a contract or service agreement so you understand any possible obligations or fees involved.
What should I ask a broker before buying a policy?
It’s smart to ask about their experience with your type of insurance, how many carriers they work with, and how they get paid. You should also ask how they’ll support you after the policy is in place, like with claims, renewals or policy reviews. These questions can help you feel confident that you're choosing a broker who has your best interests at heart.
Do insurance brokers charge a fee?
Some do. Many brokers are paid by the insurance company through commissions, but some may also charge broker fees directly to clients for additional services. What you pay may change based on the kind of insurance or the services your broker offers. It’s always best to ask upfront.
How do insurance brokers get paid?
Brokers are usually paid by the insurer through commissions. Some may charge flat fees for service. A trustworthy broker will always explain how they get paid.
Should I buy insurance through a broker or directly from an insurance company?
Using a broker gives you expert help and more policy choices. A broker is especially helpful if you’re unsure what coverage you need or want to compare prices. They can guide you through the options, answer questions, and help you feel confident in your decision.