You took the plunge and opened a business. You may be just starting out, or have been in business for awhile. Now, you're hearing about agents, brokers, carriers and insurance agencies and aren’t sure which you should choose for your business. We will briefly walk through the difference between agents and brokers and help you decide what's best for your company.
Commercial Insurance Agent Vs Brokers
What is a commercial agent? A commercial insurance agent will represent an insurance company as an intermediary. They may be captive, meaning they represent just one insurance company, or an independent, representing a number of insurance companies. In broad terms, the agent’s liability to the customer is administrative in scope.
On the other hand, commercial insurance brokers work as independents with a broad scope of products to offer. Brokers hold a different license which often indicates a higher level of education—such as a college degree—and more certifications than an insurance agent.
Why Choose an Insurance Broker?
Brokers—in most cases—have a higher standard of accountability to the customer. They have a duty to analyze and determine the scope of coverage required by your business. Often, brokers will charge administrative fees or higher premiums to help pay this increased level of expertise.
Insurance brokers usually offer a full range of commercial insurance options and may have specialists in their firm. They may also offer services like safety education, safe driving education, and more. So when should you consider a broker?
- The larger your business is, the more important you should consider using a broker.
- If you have a large number of employees
- A large number of vehicles and drivers on the road
- A high-risk business industry/job
In these instances, it makes more sense to use a broker over an agent.
When to Choose a Commercial Insurance Agent
If you have a small business with just a few employees, a couple of vehicles, and work in a standard or low-risk industry, it's fine to use an agent who specializes in business coverage.
How to Get More Information
Before deciding whether you will deal with an agent or broker, get as much information to make your decision. Other small business owners can offer insight, as can your trade organization or association. Your state department of insurance can also be a great resource. The bottom line is that your small business needs insurance coverage and you need the right person to come alongside you as an advisor.
Related Articles: How to Choose an Insurance Agent, Business Insurance Agent