Now that you’ve gone into business for yourself, you’ve heard tell of insurance brokers and insurance agents. But you’re not clear on which one you should using.
An insurance agent is an insurance professional who represents an insurance company in the capacity of an intermediary. The agent may be captive, which means he represents a specific insurance company, or the agent may be an independent, meaning he represents more than one insurance company.
Suffice it to say that the agent’s responsibility to the client is administrative.
Insurance brokers work as independents who offer an array of products. A broker has a different kind of license, and it usually requires a higher level of industry certifications and education than the licensing an agent must have
Usually, a broker’s standard of accountability to the customer is higher than the standard of an agent.
A broker has the duty to analyze and determine what scope of coverage your business needs. Further, a broker generally charges higher premiums and/or administrative fees in keeping with such an increased level of expertise.
Generally speaking, the larger your business, the more essential the knowledge and guidance of a broker becomes.
If you work in a high risk industry, or if you have a large number of employees, or vehicles, it makes good business sense to to use a broker rather than an agent.
If your business is small with few employees and a low risk or standard risk industry, an agent would work just fine for you.
As we always caution, you would be wise to amass as much information as possible before you decide whether you need to go with a broker or an agent to make the best decision.