What Is an Insurance Broker?

An insurance broker is a middleman between you and insurance companies, helping you find the right policy for your needs. Unlike insurance agents representing a single insurer, brokers work independently and access policies from different insurers. This allows them to give unbiased advice and tailor their recommendations to your situation.

An insurance broker works closely with their clients, evaluates their unique needs and then shops around for the most suitable policies. Since brokers are not tied to any single insurer, they can offer a wide range of options, making it easier for clients to find the right fit. This can be useful for businesses with complex insurance needs or people who need specialized coverage.

Brokers in insurance also assist with the application process. They help clients complete the necessary paperwork, ensuring that all forms are filled out correctly and submitted on time. Brokers are often advocates for their clients, especially during claims processing. For example, if a business owner files a claim after property damage, the insurance broker can liaise with the insurer to ensure a smooth process.

The key differences between an insurance agent and a broker are what they represent, the products they offer and their scope of work.

Representation

Insurance agents represent one or more insurance companies and act as a liaison between the insurer and the client. They're responsible for selling the insurer’s products and often have sales targets to meet. Their primary duty is to the insurance company, and their recommendations may be influenced by the products they're authorized to sell.

An insurance broker represents the client and works independently to find the best policies from various small business insurance providers. Their loyalty lies with the client, and they prioritize finding coverage that best fits the client’s needs, regardless of which insurer offers it.

Product range

An agent typically offers a limited range of products from the insurance companies they represent. They may be restricted to selling policies that align with their contracts, limiting the client's options.

An insurance broker has access to a wide variety of insurance products from multiple insurers, allowing them to present clients with more choices.

Client interests

While an agent can provide valuable advice, they work for the insurance company and may be incentivized to sell certain products over others. This can sometimes lead to a conflict of interest when trying to balance the client's needs with the insurer's sales goals.

An insurance broker focuses solely on the client’s interests, providing unbiased recommendations. They're not tied to any insurer, so they can offer objective advice and are more likely to prioritize the best outcome for the client.

Claims assistance

Many agents assign clients with claims, but their affiliation with the insurance company often limits their role. They might focus on ensuring the claim aligns with the insurer's guidelines and may not fully advocate for the client’s interests.

Brokers in insurance provide comprehensive claims assistance, acting as advocates for the client. They work to ensure that claims are processed fairly and efficiently, often stepping in to negotiate with insurers on the client's behalf.

Brokers help you find the best coverage and provide ongoing support. Their expertise and access to various policies make them valuable partners in securing the right insurance. Here are some of the advantages of using a broker:

• Access to multiple options: An insurance broker has access to different types of small business insurance, such as general liability insurance, workers’ compensation insurance and professional liability insurance.
• Personalized advice: Insurance brokers take the time to understand your needs and provide expert and personalized advice. Unlike agents who may push specific products, brokers focus on finding the best solution for you, regardless of the insurer.
• Claims assistance: One of the most significant benefits of an insurance broker is their support during the claims process. If you need to file a claim, your broker can guide you through the paperwork, advocate on your behalf and work with the insurance company to ensure a fair outcome.
• Ongoing support: Brokers provide continuous support throughout your policy's life, helping you adjust as your needs change. Whether you need to update your coverage, renew your policy or explore new insurance options, your insurance broker will assist you.

Whether you're dealing with complex policies, short on time or seeking impartial advice, a broker can greatly help. Here are some scenarios where you need the expertise of an insurance broker:

• You have complex insurance needs: If you require specialized coverage, such as workers’ compensation insurance, professional liability insurance or general liability insurance with unique requirements, a broker can help you find the right option. They understand the nuances of different policies and can tailor coverage to meet certain needs that might be difficult to address through standard insurance options.
• You don’t have time: Researching and comparing multiple insurance policies can be time-consuming and overwhelming. If you're pressed for time or lack the expertise to evaluate the fine print, a broker can do the legwork for you. They'll handle the research, provide you with the best options and save you time by narrowing down choices that fit your needs and budget.
• You need unbiased advice: If you want advice that's not influenced by an insurer, working with a broker is better. Brokers work independently and represent your interests, not the insurance company’s. They can provide objective recommendations based on what’s best for you without pressure to push particular products or brands.
• You want to simplify the claims process: If you had trouble with claims before or anticipate issues with future claims, an insurance broker can help streamline the process. They have experience working with insurers and can advocate on your behalf to ensure fair and efficient claims handling.

Insurance brokers can charge a fee for their services, depending on the broker type and services provided. Commission-based brokers typically don't charge clients directly, as they earn a percentage of the premium from the insurer. However, some brokers may charge a fee, especially if they provide additional services such as consulting or managing complex insurance needs.

Some brokers operate on a fee-based model, where clients pay directly. Depending on the complexity of the work involved, these fees can be a flat rate or on an hourly basis. In some instances, brokers may use both methods, earning a commission while charging clients for specialized services or additional consulting.

Below are some common places to start your search for a qualified and reputable broker:

• Online directories: Online directories often include detailed profiles, client reviews and contact information, making it easier to find a broker specializing in the type of insurance you need. Websites like the National Association of Insurance Commissioners (NAIC) are excellent resources for finding brokers near you.
• Referrals from friends and family: Personal recommendations from friends, family or colleagues can be helpful when searching for an insurance broker. These referrals are often based on firsthand experiences, giving you insight into the broker’s customer service, expertise and reliability. Ask people you trust if they have worked with a broker they would recommend, especially if they have similar insurance needs to yours.
• Local insurance agencies: Local agencies often hire brokers with strong community ties who understand local insurance needs. Meeting with a broker in person helps you gauge their professionalism and how well they can address your requirements.
• Financial advisors or accountants: These professionals often work closely with insurance brokers and can recommend one that suits your needs. They can provide referrals based on their experience working with brokers who specialize in various types of insurance.

We address common questions about insurance brokers to help you find the best fit for your needs.