4 Differences Between a Home Insurance Agent and Home Insurance Broker
When it comes to insurance, there can be an endless series of questions, answers, and confusions about the fine print that’s involved. For instance, the exact difference between a home insurance agent and a home insurance broker confuses a lot of people that are shopping for coverage. Buying insurance is complex enough without trying to figure out who you need to go to in order to get it. As such, here’s a fairly simple checklist you can go down to find out whether you need to go to a broker or an agent for your home insurance needs.
- Agents work for insurance companies; brokers work for you: The first difference between the two is the job description (and for many people that’s the only difference you really need). A home insurance agent is employed by an insurance company, the insurer, which means that he’s the middle man between you and the company providing the insurance. A home insurance broker on the other hand acts on behalf of an insurance buyer and solicits the best possible deals from insurers and agents that he or she can get for you. So to sum it up: an agent works for an insurance company, and a broker works for you, the buyer.
- PC versus BR licensing requirements: The next difference between these two positions is the licensing requirements they need to have. In order to be an insurance agent, you have to hold a PC license. You have to pass all of the necessary tests and pay the licensing fee. In order to be an insurance broker you have to take a completely different set of tests and pay a separate fee in order to get a BR license. Both of these licenses have to be renewed at certain times, and just because a person has one license, it doesn’t stop them from obtaining the other. This makes it entirely possible for a single individual to act as both an agent and a broker, as long as they have both applicable licenses. However, it would be less than moral for someone with both licenses to solicit insurance from himself, in essence getting paid twice for a single transaction.
- Brokers have it harder and are more qualified: Insurance brokers are more highly qualified than insurance agents, and a broker’s job comes with more inherent responsibility and duties. A broker is expected to analyze policies, help direct a buyer’s interests, network with insurance companies and agents and to be a guide into the jungle of the world of insurance policies. An insurance agent on the other hand is lower on the administrative food chain, and they act as more of a face for a company, handling paperwork and making sales in a street level kind of way. As a result, being a home insurance broker is much more difficult, and more costly in terms of fees and education, which is why these individuals can often claim higher fees for the work they get done than regular insurance agents can.
- Free agents versus captive employees: Both home insurance agents and home insurance brokers can be free or captive. A captive broker or agent is employed expressly by a single entity or company, like someone on staff. A free agent, on the other hand, is a freelancer, and may work for several different clients or companies at a single time to maximize earnings for him or herself. There are benefits and drawbacks to both types of work, and it depends on what sort of position in which the individual is more comfortable working.