The options when you are shopping for insurance can seem overwhelming. Do you want a captive agent or an independent broker? What is the difference? While one option may seem equal to another, the coverage you get and the price you pay can wind up being quite different depending on the path you take. Lets look at the two major options when you are shopping for insurance:
In many ways, insurance agents and independent insurance brokers are similar to one another. Both are required to be licensed in the state where they work. Neither position requires special education or degrees and although most brokers and agents will take classes to increase their level of knowledge. Both insurance agents and independent brokers can help you assess your personal insurance needs to help you find a policy with the right benefits. Both put together insurance policies and help people settle claims. Both typically work on a commission basis. However, there are significant differences between the two, as well.
Insurance agents works for an insurance company. Their primary allegiance is to that company, rather than to you, the buyer. This is particularly true for a captive agent, also known as an exclusive agent, think State Farm or Allstate. A captive insurance agent works exclusively for one insurer. In return, they receive benefits from that company like health and life insurance, paid vacation, an allowance to cover their office costs, and other benefits. They are almost always not allowed to sell insurance policies from other companies. This means they can only offer you policies that are available from the insurer they work for. If the insurer they represent does not have a policy that fits your needs, they are usually not allowed to refer you to someone who can help. If the need to make a claim against your insurance policy ever arises, you insurance agent merely acts as a liaison between you and the insurance company.
By contrast, an insurance broker works directly for the buyer. A broker is an independent agent who can work on your behalf to get the best coverage. They can work with a range of different types of insurance products, or choose to specialize in a single one, such as life insurance or home owners insurance. Independent brokers are not contractually bound to offer just one insurance company’s products. They are able to sell insurance policies from many different companies, which means that they are often able to get you the best deal for your personal situation. If you need a type of insurance policy that is outside the range of what they offer, they are in a position to refer you to another broker who can sell you the policy you need.
If you ever need to make a claim, an independent insurance broker is in a position to be of more help to you. In addition to preparing claim forms for you, they are able to advocate on your behalf. While not all insurance brokers offer this service, it is one they are in a far better position to provide.
When comparing your options for purchasing an insurance policy, it just makes sense to pick someone who, by definition, works for you and is on your side. Adequate insurance and successful claims can sometimes make the difference between a quick recovery from an incident and suffering serious financial problems after the fact. Pick the person who can sell you the product that is best for you and who can advocate for your interests to help ensure your best peace of mind.
Pick a fully independent insurance broker that works for you, say, like us, at Susman Insurance Agency!
Karl Susman
