How does an agent differ from a broker in insurance?

The distinction between an agent and a broker is primarily based on whom they represent in the insurance transaction. An agent is typically an individual or business that has a contractual agreement with an insurance company to sell its policies and represents the company in dealings with clients. In contrast, a broker acts as an intermediary for the insurance buyer, providing them with options from various insurers and advocating for their interests.

This representation allows brokers to provide a wider array of coverage options to clients, as they can shop around among multiple insurance companies to find the best coverage and prices that meet the needs of the policyholder. By fulfilling these different roles, agents and brokers serve different functions in the insurance industry, which is crucial for understanding the dynamics of insurance transactions.