Chris Tepedino is a feature writer that has written extensively about car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, research investigative pieces…

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states…

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Reviewed byRachael Brennan
Licensed Insurance Agent for 14 Years

UPDATED: Aug 27, 2020

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Difference Between an Insurance Agent and Insurance Broker
Insurance Agent and Broker FactsSource
Agents represent either one company or
An agent sells you policies from the companies they
Agents receive commissions on their
Brokers work for
Brokers are not appointed by any
Brokers survey the existing market and give you
Brokers sample a wide range of coverage and put together
Brokers also receive commissions on their
Brokers are required to disclose their fees to
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What is the difference between an insurance agent and an insurance broker? It can be hard to understand all of the terminology surrounding the insurance industry. We understand this and will explain the differentiation between brokers and agents step by step.

It is important to compare auto insurance and get the best price to suit your needs. Before you ask, “What does an insurance broker do?”, type your ZIP code into our free, helpful tool above to find quotes near you.

What is an insurance broker?

What is the insurance broker definition? A broker represents you in the process of purchasing insurance.

According to the Office of the Insurance Commissioner for Washington State, a broker is not appointed by any specific company. Instead, they look over the market and, utilizing the information you’ve given them regarding your needs, supply you with options.

Brokers sample and survey a wide array of available coverage options and put together a package that suits your needs. Brokers receive a commission on whatever you purchase, but they have to disclose what their fee is to you.

This video will further explain the role of an insurance broker. It explains who brokers work for, the process of their service to you, and how they go about providing that service.

How do insurance brokers make money?

As mentioned, an insurance broker’s salary is composed of commissions. A broker’s commission tends to range between two and eight percent of the cost of your premiums. It is also dependent upon existing state regulations.

There is also a broker fee, which combined with their commission adds up to about 15 percent of. For instance, if a policy is $2,000, the commission would be about 10 percent (or $200). The broker would also charge you a five percent broker fee, which would be another $100.

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Is it cheaper to go through an insurance broker?

You could be saving money in the long run. A broker can advise you at no cost. If you decide to work with them further, they could get you discount auto insurance premiums. Although you would be paying them commission, it evens out if your premium is cheaper.

You may be asking, “Why should I use an insurance broker?” Insurance is a complicated industry and it is very easy to either get less than what you need or too much. The bottom line is that a broker can help you get just what you need.

Use our tool below by typing in your ZIP code to find free auto insurance rates in your area.

Enter your zip code below to view companies that have cheap auto insurance rates.

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What is an agent?

What do insurance agents do? Insurance agents also work to get clients what they need. Who does an agent represent during the solicitation of insurance? They most likely work on behalf of an insurance company, though there is the occasional independent agent.

How much do insurance agents make?

An agent’s salary can vary quite a bit, ranging from $42,000 a year to $63,000 a year or more. How do insurance agents get paid? Just like a broker, they receive a commission from your premiums, but they most likely also get paid a salary from the company they represent.

Here’s a look at how much commission an insurance agent may make off of policies they’ve sold.

Insurance Agent Commission Rates per Policy Type Sold

Type of Insurance Solde by AgentFirst Year Policy Sale CommissionPolicy Renewal Commission
Home Insurance8%-15%2%-15% (mostly 2%-5% range)
Car Insurance8%-15%2%-15% (mostly 2%-5% range)
Life Insurance40%-100%1%-2% (for years 2 and 3, but nothing after)
Health Insurance40%-100%1%-2% (for years 2 and 3, but nothing after)
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The primary difference between an agent and a broker is that an agent gets paid a salary by the company they represent while a broker does not receive a salary because they represent you.

Now that you know the difference between an insurance agent and an insurance broker, feel free to use our easy and free tool below by typing in your ZIP code to find quotes now.

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Frequently Asked Questions: What is the difference between an insurance agent and an insurance broker?

#1 – What is the difference between agent and broker in marketing?

In terms of marketing, an agent markets a company’s products to you as opposed to vice versa.

#2 – Who makes more money, insurance agents or brokers?

Agents tend to make more because part of their income comes from a salary.

#3 – Is an insurance agent and broker the same thing?

No, an agent works for a company and a broker works for you.

#4 – What are an insurance broker’s responsibilities and commission structure?

An insurance broker builds and maintains relationships with clients, schedules and attends meetings, discusses their clients’ insurance needs, researches insurance policies, and negotiates policy terms and costs.

An insurance broker’s commission structure consists of between two and eight percent of premiums and a broker fee.

#5 – What are independent insurance agent commission rates?

An agent’s commission structure is typically about 15 percent. A captive agent receives a smaller percentage of about 5 to 10 percent because the remainder goes to the insurance carrier.

#6 – What are the disadvantages of insurance brokers?

The broker may suggest more coverage than you actually need. Be aware of what your needs are and stick to them.

#7 – Is it cheaper to get insurance through an agent?

Yes, if you research ahead of time and have an understanding of how to compare policies to best suit your needs.

#8 – Is there a difference between an insurance agent license and a broker license?

An agent can get their license by completing a course and then passing the state and national board exam. A broker would have to get an additional license.

#9 – Why should I have an insurance agent?

If you are fully unfamiliar with the insurance field, you could end up purchasing the wrong coverage that will not suit your needs.