The internet has quickly become an easy way to shop for everything, including comparing insurance options. However, you might unknowingly compromise some valuable rights when shopping for well-known brands online.

Most people don’t think about the fact that insurance agents work for insurance companies while insurance brokers work for their clients. Insurance Brokers and Agents are very similar but, in a key way, almost polar opposites.

So, what are some of the distinctions?

One of the biggest ones in our estimation, is that Insurance brokers always have a fiduciary duty to their clients—that’s you.

An insurance broker can also save you money by finding better rates and coverage than you could on your own. The best part? The insurance company typically pays their commissions, not you. Some people do not appreciate the distinction between insurance agents and brokers. 

How does this Work?

When you hire an insurance broker, they work directly for you, not the insurance companies. So, you can think of an insurance broker as a middleman between insurers and businesses, with no vested interest in the policy itself.

Brokers owe their loyalty to the client, even though carriers typically pay them. In other words, they act as agents for you and have a fiduciary duty to you as the insurance purchaser. Because brokers work for you, not the insurance company, their advice should serve your best interest.

Being a fiduciary means being legally and ethically bound to act in the client’s best interests. Fiduciary duty requires representatives in positions of trust to act in good faith and honesty on behalf of the client. A “standard of care” is established between these parties and must be upheld, regardless of external interests.

Their duty also ensures that brokers advise and work for you when purchasing coverage, without being beholden to a specific insurance company.

Although brokers cannot directly enroll you in binding coverage, they will secure your policy through an agent.

When you need to reconsider policies or file a claim, your insurance broker can be a liaison between you and your insurance carrier. 

The distinction between fiduciary responsibility for an agent compared to a broker becomes less clear when agents work for insurance carriers to sell their products.

So, what is an insurance agent?

An independent or captive insurance agent primarily represents the insurance companies they work for. As for fiduciary duty, liability usually falls upon the insurer if the representative is deemed an agent. This means the agent does not have a fiduciary duty to you, the insured.

Agents may work on salary and/or commission from the provider and can be either captive or independent. Captive agents work for just one insurance company, while independent agents can represent multiple insurance providers and compare policies. Insurance agents can help you enroll in a binding policy, making them a one-stop shop.

An insurance agent works for a specific insurance provider or a few providers and can help you choose a plan at no cost. They are experts on the offerings of that particular company and can assist you in finding the right policy.

Now, what is an insurance broker?

An insurance broker can help you shop for insurance policies from multiple providers at no cost. They excel at comparing policies across providers and can help you determine the coverage you need within your budget. Brokers represent you, the consumer, and usually earn commissions or fees from insurance providers, with their compensation coming from your premiums and potentially additional amounts upon policy renewal.

As a result, brokers are motivated to find a plan that satisfies you in the long term. They typically work with many providers and are not obligated to sell you a particular policy, making you more confident in their recommendations.

In summary, understanding the key distinctions between an insurance agent and an insurance broker can assist you in making the right choice when searching for insurance policies.

*Various online sources were culled to assimilate this composite article for brevity and clarity, including but not limited to Mployer Advisor, and Experion,

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Drew Morgan—Broker Associate 01124318 | Christine Morgan—Sales Associate 01174047

CEO & President of Morganhomes, Inc. Real Estate licensed under RE/MAX Star Properties 01811140

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