The person who helps you buy home insurance matters. But many people don’t know the difference between insurance agents and brokers. Both can get you the insurance that you need but do so differently. Perhaps the biggest difference is that brokers work for you while agents typically work for the insurance company.
Insurance agents vs. brokers: A side-by-side comparison
|Representation||Insurance company||Insurance buyer|
|Sales ability||Can bind policies||Cannot bind policies|
|Access||Often sells one insurer's policies||Can work with multiple insurers|
What does an insurance agent do?
An insurance agent interacts with both insurance buyers and insurance companies, or insurers, but typically represents the insurance companies. Their goal is to facilitate the purchase of insurance with one of the carriers they represent.
A critical benefit of working with an agent is that they can bind an insurance policy for you. This means that you can get coverage by making the down payment of the policy while the policy is still being finalized in underwriting.
Types of insurance agents
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 selling in that domain.
Independent agents must know multiple companies' products, and that can result in greater flexibility and ability to compare policies. In fact, independent agents are often confused with insurance brokers because they can try to sell policies from any of the carriers they are affiliated with. Independent agents may not have as in-depth knowledge about a specific carrier’s insurance product, but they can shop between carriers to try to get a better rate for their client.
All insurance agents get paid a commission for placing a policy with an insurance carrier. They do not charge additional fees like a broker can.
What does an insurance broker do?
Like an insurance agent, an insurance broker is an intermediary between the insurance buyer and the insurance company, representing the buyer.
Insurance brokers cannot bind insurance policies. This means that they can only take the application and submit it to the insurance company. You don’t have coverage until the insurance company approves the application. Brokers operate by soliciting business from buyers and submitting their completed applications to the insurer. This may be a critical difference between agents and brokers if you need to get coverage quickly for a home purchase or mortgage application.
Insurance brokers get paid a commission by the insurance company it places the policy with and may also charge a broker’s fee for shopping the policy around.
Types of insurance brokers
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. When you work with a retail broker, they will usually request quotes for you from different insurance companies to find you the best policy or the best price or both.
However, not every policy can be handled by a retail broker. In instances where standard coverage is not available, like if you were trying to insure a high-value home or a particularly risky property, the torch is passed to a wholesale broker whose line of work is more specialized.
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 they typically send you to people who they’ve had good experiences with before.
However, you may want to 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. You may also want to read reviews of home insurance companies as well agents and brokers, too.
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.
Direct-to-consumer insurance companies
Our model is a little bit different than traditional insurers. While we do have licensed agents working for us, we mainly sell our home insurance directly to consumers. This means we don’t have to pay hefty commissions to independent agents, and we can pass that savings on to our members. Customers report saving an average of $714 per year when they switch to Kin!* Get a quote now.
Editor’s note: This post was originally published in November 2017. It has been updated for accuracy and comprehensiveness.
*Customers who switched to Kin report annual savings of $714 on average. Based on Kin Customer Savings Survey, conducted March 2022 - February 2023.