There’s a lot to consider when you’re buying insurance, and an insurance agent is usually the person who helps you find the coverage you need. However, insurance agents have limitations and may only be able to sell you products from the insurer they represent. So it’s important to compare prices and policies from more than one company and to understand all of the options you have for purchasing anything from car insurance to homeowners insurance.
Below, CNBC Select shares what you need to know about insurance agents and the role they have when it comes to purchasing insurance.
What is an insurance agent?
An insurance agent is a provider’s representative who is responsible for selling policies and helping policyholders navigate the claims process. Some agents offer a variety of coverages, while others specialize in one category — such as homeowners insurance, auto insurance or life insurance.
There are two types of insurance agents: Captive agents and independent agents.
A captive agent (also known as an exclusive agent) is an employee for a single insurance company who can give you in-depth knowledge about that provider’s portfolio of offerings.
Independent agents sell products from multiple companies, so they may invest more in saving you money.
Insurance agent vs. insurance broker
The main distinction between an insurance agent and an insurance broker is that an agent works for an insurance company— like Nationwide or Farmers — and a broker works for you, the consumer.
Brokers work with multiple insurers to secure the coverage you want. An agent may work for a single insurance company or, if it’s an independent agent, help you get quotes from several different providers.
An insurance broker is helpful if you want to compare policies from many different insurance providers. They help you price shop and analyze different types of coverage. Insurance brokers are paid commissions from the insurance company and could charge broker fees, although many do not.
Insurance agents only offer products from the providers they represent and they typically get paid on commission. An agent can also have access to products not available to brokers.
If you know exactly what type of policy you want or what company you want to buy from it may make more sense to work directly with an insurance agent.
Do you need an insurance agent?
Depending on the company and the type of policy, you may be able to buy coverage fully online without interacting with an insurance agent. For example, you can buy car insurance directly from either Geico and Progressive.
Geico Auto Insurance
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Policy highlights
Geico offers 16 discounts and a variety of optional add-ons, such as emergency roadside assistance, rental car reimbursement and mechanical breakdown insurance.
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Availability
Geico auto insurance is available in all 50 U.S. states and Washington, D.C.
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Accident forgiveness
Accident forgiveness is automatic if you remain accident-free for five years. It can also be bought as an upgrade when you buy or renew your policy.
Terms apply.
Progressive Auto Insurance
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Policy highlights
Progressive offers an array of riders, including rideshare insurance and a Deductible Savings Bank that deducts $50 each policy period you go without a claim. It also offers mechanical breakdown insurance, which covers unexpected major systems failures.
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Accident forgiveness
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Availability
Progressive auto insurance is available nationwide
If you work with a broker, an agent will still be needed as the insurance company’s representative who can finalize the details of the policy.
It can often be cheaper to buy insurance online directly, but you may miss out on unadvertised deals and hands-on customer service.
Insurance agent FAQs
What’s an insurance agent?
Insurance agents are salespeople for insurance companies. Their role is to help find insurance customers and to help those customers find the right types of coverage for their needs.
Do I have to work with an insurance agent?
A growing number of companies sell insurance directly online. This is more prevalent in auto insurance and term life insurance than in more complex plans like homeowners insurance or whole life insurance.
Will an insurance agent get me a better deal?
The agent represents the insurance company and will encourage you to enroll with that brand, even if it’s not the cheapest or best option. They will be able to give you deeper insights into policy options and may be able to share deals not advertised to the general public. If you want a more objective comparison of competing insurance companies, you can work with an insurance broker or do your own research.
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