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Many people wonder what the difference between an “insurance agent” and an “insurance broker”, and often, are not sure which to go with.  The terms tend to be thrown around as if they are the same, but there are not.  And while the differences are small, they are important to understand. Here is a breakdown of what you should know.

An agent is a term used when a person can legally represent, and sells or services policies for and Insurance Company. There are two basic types of agents: Independent Agents and Captive Agents.

Independent Agent

This agent has contracts with multiple insurance companies.  An independent agent represent more than one company and can "shop around" for the best deal on insurance coverage and get you the most bang for your buck!.  

For example; The Travelers Group of Insurance Companies have many different insurance groups under their control, so do  The Hartford, Mercury, Met Auto & Home, Progressive, Foremost, AutoOne, Utica, Safeco, Farmers insurance company, to name a few.

Also, it’s important to remember that while independent agents can represent many different companies, few, if any, represent all insurance companies.   

Captive Agent
This term is used when an insurance agent represents one insurance company. Examples, Allstate, Statefarm, Geico, Nationwide. They only have the ability to offer you insurance from their one company


Another person in the insurance marketplace is a broker. A broker can be defined as, "a person who functions as an intermediary between two or more parties in negotiating agreements, bargains, or the like."  While that is very close to the definition of an independent agent, it differs. A broker is not appointed by a insurance company and has no authority to bind policies.

Brokers also work with very large companies, such as those on the Fortune 500 list. They can usually approach any insurance company to find out about insuring that very, very large company. Instead of being paid a commission, they may simply charge a fee for their services. But this isn't practical for the average company.

Regardless of whether you buy insurance from an agent or broker, that person is paid a commission based upon your policy. So, when shopping around for coverage, be sure to ask which companies someone represents so that you will get quotes from several different sources.

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