Whether you’re purchasing home, tenant, auto, or condo insurance, getting quotes from multiple insurers is a smart way to find the right coverage at the best price. While this can be done independently, working with a licensed insurance broker can make the process much easier.
But what exactly is the difference between an insurance broker and an agent? What do brokers do, and do you have to pay for their services? This guide answers those questions and more.
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What Is an Insurance Broker?
An insurance broker is a licensed professional who helps you find the most suitable insurance policy for your needs by comparing quotes from multiple insurers. Unlike insurance agents—who work for one company—brokers work for you. Their goal is to secure the coverage that best aligns with your needs and budget.
Brokers understand the type of insurance you need and search the market for the most competitive options. They walk you through each choice to ensure you aren’t overpaying or missing important protections. Because brokers aren’t tied to one company, their advice is more objective and personalized.
What Does an Insurance Broker Do?
Brokers offer more than just price comparisons. Here’s what they typically do for clients:
- Assess your situation to determine the type of coverage you need
- Evaluate risks in your life or property that require insurance
- Explain policy details and answer your questions
- Compare a range of policy options that fit your lifestyle and budget
- Clarify what you’re paying for and what’s covered
- Offer ongoing support if you need help or want to file a claim
Who Pays the Insurance Broker?
You don’t pay the broker directly. Insurance brokers are compensated by the insurance company when you buy a policy. Their commission, which ranges from 10% to 20%, is typically built into the cost of the policy itself. This percentage depends on the type of insurance and the insurer.
Some brokers may charge a service fee—especially if they’re handling high-risk policies or working with specialty insurers. If there’s a fee involved, the broker is required to disclose it upfront so you can make an informed decision.
Insurance Broker vs. Insurance Agent: What’s the Difference?
Although the terms are often used interchangeably, there is a key difference between brokers and agents:
Insurance Brokers
- Work independently
- Offer products from multiple insurers
- Act in the best interest of the client
- Earn commissions from the insurer after a policy is sold
Insurance Agents
- Work for a single insurance company
- Sell only that company’s products
- Represent the insurance company, not the customer
- Receive a fixed commission from their employer
In short, brokers provide more options and impartial advice, while agents are limited to promoting their employer’s offerings.
