If you don’t live a life ingrained in the insurance market, it’s understandable that you might occasionally get lost in the terminology.
One of these instances is making the distinction between insurance brokers and insurance agents. Although not many people know it, it’s actually a crucial distinction to make. Why? Because which one you pick can have a heavy bearing on your wallet.
There are a few points to consider when making the call between a broker and an agent:
To add a bit of detail, there are typically 2 types of agents:
Captive agents who work for only one insurance company and only sell that company’s policies.
Independent agents who work for several different insurance companies and can, therefore, offer more variety.
All insurance agents in California are required by law to be licensed, meaning they’re bound to certain rules and regulations.
Although independent agents can put a few more options on the table, they’re still tied to a limited portfolio. An insurance broker, on the other hand, can take a ‘whole of market’ approach, meaning they can help you to compare all of the options available to you.
One of the key benefits of an insurance broker is that they’re able to save you significant amounts of time. Think about it – within minutes, a broker can enter your details into their system and run a search that returns all of the carriers who’ll offer you a policy.
With an agent, it could take far longer and if you’re talking to captive agents, you’ll have to speak with more than one of them to get an accurate picture of the market.
By shopping more insurance markets, a broker will be able to let several competitive insurers know that you’re in the market yourself. By doing this, there’s a good chance they’ll be able to play carriers off against each other and drive prices down, which can result in you picking up a serious deal.
As opposed to agents, the ‘whole of market’ approach brokers take will work to your advantage. You’ll benefit from a wider range of plans and they’ll be dedicated to helping you find a policy that matches your precise needs.
Agents, however, don’t have this kind of foresight. They’re tied to a limited range of products, meaning you won’t benefit from the same level of variety.
With a whole of market approach also comes market knowledge and the ability to utilize supply and demand.
More carriers will be fighting for your business with a broker, as you’ll have more policies to choose from. 90% of the time, this will mean a broker will get you a better quote than an independent agent – whether that be boosted plan benefits or a lower premium.
It’s worth doing your research before making a decision, but if you want experience and a variety of options an insurance broker will be your best bet.