What is an insurance broker?

An insurance agent, also called an insurance broker in some cases, is the local representative for any number of insurance companies. A legitimate insurance agency must be licensed by a state board before it can legally sell insurance policies to customers. Generally, an agent functions as the local face of a single insurer, but occasionally an independent agent may work with different companies depending on their areas of expertise and coverage.

Most consumers interested in purchasing insurance coverage will only negotiate directly with a local insurance agent. He or she is authorized to present all available coverage options through the largest insurer. Since part of an agent's salary is based on commissioned sales, he or she will generally provide a one-stop shop for all of a client's insurance needs. He or she may sell individual policies for auto, home, life, and medical insurance, or offer a package plan that incorporates a combination of these needs.

Insurance customers must make regular payments called premiums to the insurance company, so part of an insurance agent's job is to ensure compliance. He or she can send reminders of an impending premium payment or notify customers of any proposed rate changes. A good agent can also keep track of any developments in a client's life, such as a new teenage driver or a new home. Customers may need to change their coverage from time to time in order for the agent to negotiate the new terms with the parent.

Perhaps the most visible part of an insurance agent's job occurs during an actual insurance claim. After a car accident or natural disaster, for example, customers should contact their local insurance agent as soon as possible. Claims for insurance benefits must be processed through an authorized agent who can verify the circumstances of the accident or disaster. The insurance agency may send a specialist called a claims expert to personally inspect the damage and estimate the value of the claim.

An insurance agent often acts as an informal arbitrator between the client and the parent insurance company. He or she can learn the best ways to file a claim to get the most favorable settlement from insurers.