Do I Need an Insurance Broker?

Insurance Broker

There are all types of insurances out there, including auto insurance, homeowners insurance, health insurance, and so much more. Before you do something major in life, such as buying a car or home, you may be wondering: Should I use an insurance broker? Although insurance brokers can help you choose the right policy for your needs, they are not necessary for all. It’s smart to compare quotes from several insurance companies to find the best deal when buying insurance. Although anyone can easily compare rates online and find the best price, it is sometimes a good idea to have someone guide you through your options.

What Does It Mean to Be an Insurance Broker?

An insurance broker acts as an intermediary for you and your insurer. They can help you find the right policy for your needs at a fair price by combining their insurance knowledge that they learned when they obtained their insurance license with your background. Brokers can help you save time and money but keep in mind that you might have to pay a fee. However, you may actually spend less even with the fee!

Insurance Broker

When Should I Use an Insurance Broker?

A broker is not a one size fits all type of deal. It is up to you how you purchase insurance. However, brokers are recommended for those with more complex insurance needs such as landlords or small-business owners who need multiple policies. Other times an insurance broker might be a good idea to have is when you own multiple cars or homes, when you want to understand every facet of your insurance policy, or when you are ready to build a relationship with a professional who can help with every single one of your needs.

Insurance Broker

How Are Insurance Brokers Paid?

Knowing how brokers are paid can help you protect yourself from the brokers who only care about making money instead of keeping your best interests in mind. Insurance brokers can make money through commissions or by charging broker fees. Many states require brokers to reveal commission rates and any other fees from the very beginning. We recommend that you inquire about any additional fees that you may have to pay outside of premiums.

Insurance Broker

Commissions-Based Payments

When they place you with an insurer, brokers receive a commission from the insurer which is dependent on the policy and the company you use. The commission is usually a percentage of your premium. Brokers are often paid a higher commission for new policies than they receive on renewals.

Brokers have an obligation to maintain their reputation and ensure that you are happy with your policy. The broker might need to reimburse the insurer if you cancel your insurance policy or cease making payments within the first few years. The policy price includes the commission automatically. 

Some companies offer bonuses and gifts to insurance brokers for bringing clients in, as well as larger incentives for those who bring more business. Always ask about the commission structure upfront before choosing a broker!

Payments By Broker Fees

Some insurance brokers charge fees in addition to commissions. Broker fees should be disclosed to buyers and must be reasonable, but you might have fee restrictions in your state. Broker fees are usually non-refundable. If you cancel your policy, your money will not be refunded unless the broker was dishonest.

What is the Difference Between an Insurance Broker and an Independent Agent?

The difference between independent agents and insurance brokers is often misunderstood and it’s easy to understand why! Both earn commissions, provide excellent customer service to maintain business, and work for multiple companies. Independent agents, however, make their money solely from commissions.

Another key difference is that insurance brokers represent the buyer, while independent agents represent insurance companies. Agents can also bind policies or provide temporary coverage before the policy is issued while a broker must work with an insurance company to bind a policy.

Insurance Broker


Remember that hiring an insurance broker is not necessary and whether or not you choose to use one is based on what you need. If you do not want to use an insurance broker, you can contact an insurance company directly or use an independent licensed insurance agent; however, insurance brokers are your best bet for choosing someone who wants to take care of you and make sure you can get the best insurance you could possibly get for all of your needs. 

Do I Need an Insurance Broker?

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