Cavemen, geckos, mayhem, Flo, Jake—are we at a theme park here or buying insurance?
The insurance industry sometimes seems like it has a bad case of mascot overload. But you just want to know you’ve got the right coverage and that you’re not overpaying.
So how do you get there? Well, a lizard may not be your best bet. Better to work with a real professional like an insurance broker.
You wouldn’t be alone if you’ve ever wondered, What is an insurance broker? We’ll break down what they are and how they can help you get covered.
What Is an Insurance Broker?
An insurance broker is someone who acts as a go-between for you and insurance companies. They work on your behalf to find you everything from health insurance and auto policies to life insurance, homeowners insurance—and more. If you’re just starting to understand the wild world of insurance, learning about insurance brokers is a good start.
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When you work with an insurance broker, their loyalty is to you, not the insurance companies. They’re kind of like personal shoppers. They can’t sell insurance but instead go into the marketplace and look for the best coverage for you. They’ll present you with different options, and once you find what works best, they’ll work with a licensed professional who can sell the policy—usually an insurance agent.
What Is an Insurance Agent?
An insurance agent helps customers find and buy insurance policies too. Unlike brokers, they sell policies from one or more insurers. There are two kinds: captive insurance agents and independent insurance agents. Let’s see what makes them different from each other and from insurance brokers.
Captive Insurance Agent
It’s kind of a weird name, but a captive insurance agent is someone who only sells policies from one insurer. They’re locked in—captive—to working with one company. They usually work on salary plus commission, meaning they get a percentage of each policy they sell. One downside to working with a captive agent is you might not get the best policy for you if the company they work with doesn’t offer it.
Independent Insurance Agent
Independent insurance agents have access to multiple insurance companies. This means a wider variety of options. They work on commission only and aren’t an employee of any of the companies they work with.
Here are just a few benefits of using independent insurance agents:
- They offer a wider selection of policies from multiple insurers.
- They have an in-depth knowledge about those plans and policies and can help you avoid some of the insurance gimmicks that are out there.
- They won’t steer you toward just one insurance company.
- They are licensed professionals.
Most of the insurance agents in our Endorsed Local Providers (ELP) program are brokers and independent agents. But all of our ELPs are qualified to find the best coverage at the best price for you and your family.
How Insurance Brokers Make Money
Remember, insurance brokers work for you. Even though brokers can’t sell you the policy (they’ll hand it over to an agent to complete the sale), they do have access to a broader range of options than agents tied to only one or a few insurance companies.
So how do insurance brokers make money? Through commissions and brokers’ fees. For every policy they sell, they receive a commission from the insurance company. The commission is usually a certain percentage of the policy’s premium. And that commission is already lumped into the price of the policy. So you’re not being charged extra.
Insurance brokers also make money through brokers’ fees. But these fees are usually really low—like under $100. And you might even save enough on your premium to make up the difference.
Should You Use an Insurance Broker?
Insurance brokers are a great way to get access to a wide range of policies across multiple types of insurance. They save you the work of hunting down every type of coverage you need and instead present you with the best of the best. What’s not to like about that?
And since you’re the customer, they’re motivated to work hard for you, find you the best policies, and earn your long-term business. They’ll also be able to help you later on during big life changes when you need to update your policy.
Get the Right Coverage
If you’re in the market for any type of insurance—or you’re just wondering if you can get a better deal—our ELP program includes both insurance brokers and independent insurance agents. They’re also RamseyTrusted, meaning we’ve personally vetted them and know they’ll take great care of you.
Our insurance pros put your needs as their number one priority. Working with the right professional can make a big difference as you go full steam ahead toward reaching your money goals.