Two types of professionals can help you navigate the world of small business insurance: insurance agents and insurance brokers. And while their names sound similar, there are critical differences between them and the job that they do.
Understanding the differences between an insurance broker vs. agent will help you decide which one is the best fit for your small business.
Jump ahead to learn:
Talk to an insurance broker if:
Unlike agents, insurance brokers represent you, the client. They work with multiple insurance companies to find the right policy for your specific needs. Brokers are like your personal insurance shoppers, comparing prices and coverage options to find the best deal.
Sounds great, right? However, you should understand that brokers can potentially have higher costs. Brokerages may charge fees in addition to commissions, which can increase the overall cost of your premiums. Also, the process of getting quotes and comparing multiple policies can be more time-consuming than working with an agent — not always feasible for a busy business owner.
Speak with an insurance agent if:
An insurance agent is essentially a salesperson who represents one or more insurance companies. However, the job is more than just sales. Agents work directly with every client to evaluate risks, identify insurance coverage and create lifelong partnerships. Think of them as the face of the insurance industry.
In many cases, an insurance agent works directly for one specific insurance provider, selling the company’s insurance products. This kind of agent is known as a captive agent.
However, when an insurance agent works with multiple insurance carriers, they’re known as an independent agent. Independent insurance agents give small business owners quotes from different insurers to help them find the right coverages and companies to meet their client’s needs.
Most agents work according to a general subject area of insurance (also called ‘lines of authority’) that they must be licensed to sell, such as life insurance, property insurance or health insurance. This means that a single agent may not be unable to help with every aspect of your insurance needs. For example, an agent who can sell you commercial property insurance might not be able to sell you a life insurance policy.
The decision to use an agent or broker ultimately depends on your business needs and preferences. Consider the following factors when making your choice:
Remember, finding the insurance coverage that best protects your business is the goal. Whether you choose an agent or a broker, ask plenty of questions and compare quotes to ensure you get the right coverage at the best price.
By understanding the differences between insurance agents and brokers, an insurance buyer can decide who to partner with to create an insurance plan that protects your business.
TIP: With NEXT, you can partner with one of the 20,000 insurance agents we work with in every state, or you can buy insurance directly from us in minutes.
Whether you use an insurance agent or broker, NEXT can help protect your business so you can get back to running it.
You can talk to one of our agents or buy your business insurance 100% online. Start a free instant quote online, answer a few questions about your business and choose a package tailored just for you — all in about 10 minutes. We ensure you know what you’re paying for, and we won’t charge for coverage you don’t need.
Your certificate of insurance will be available right after purchase, and you can access your policy 24/7 via web or mobile app.
If you have questions, our licensed, U.S.-based insurance professionals are available to help.
Kim Mercado is a content editor at NEXT's blog, where she writes and edits posts for small business owners. She enjoys helping entrepreneurs solve their business challenges and learn about insurance. Kim has contributed to Salesforce, Samsara and Google.
You can find Kim trying new recipes and cheering the 49ers.
