The person who helps you buy home insurance matters. Learn the difference between how a broker and agent operate.
Perhaps the most common gray area lies with insurance agents vs insurance brokers. They sound similar, but there are some key differences.
What Does an Insurance Broker Do?
An insurance broker is an intermediary between the insurance buyer (the customer) and the insurance company, representing the buyer.
Insurance brokers cannot bind insurance policies. They operate by soliciting business from buyers and submitting their completed applications to the insurer. An insurance broker can either operate by retail or wholesale. A retail broker generally deals directly with the customer to get them insurance, and is more common than a wholesale broker. In instances where standard coverage is not available, like an especially valuable or risky home, the torch is passed to a wholesale broker whose line of work is more specialized.
What Does an Insurance Agent Do?
An insurance agent also interacts with both an insurance buyer and insurance companies, but represents the insurance companies. Their goal is to facilitate the purchase of insurance with one of the carriers they represent.
Some agents represent only one carrier. These agents are referred to as "captive" agents, because they only write policies for one carrier. Agents that are free to write policies for multiple carriers are referred to as "independent" agents.
Since captive insurance agents only work for one company, they may have a greater understanding of the products offered because they are only expected to know what that specific company has, however, they are limited to only sell in that domain. Independent agents must know multiple companies products, and can offer more flexibility. They may not have as in-depth knowledge about a specific carrier's insurance product, but can shop between carriers to try to get a better rate for their client.
How Do I Find an Agent or Broker?
When you are buying a home, your real estate agent will usually connect you with their insurance agent or broker of choice. It often makes sense to explore this connection; your agent likely has a good feel for the local market, and who they've had good experiences with before.
However, do your research and ask neighbors. It can be too forward to ask for rates, but checking to see if they've had a positive experience can provide an unbiased option for review. There are also many sites that offer reviews of agents and brokers as well. For example, our reviews are here.
The important thing is to be confident in the relationship that you have with your agent or broker, and to be confident that you have the right coverage for your home at a price that suits your needs and leaves you covered for the biggest risks.