How does a broker differ from an agent in the insurance industry?

In the insurance industry, the distinction between a broker and an agent is fundamental to understanding their roles. A broker represents the interests of the client, seeking to find the best coverage options among various insurance providers. Their primary obligation is to the client they serve, allowing them to offer a broader range of policies from multiple insurers. This means brokers work to ensure that clients receive the most suitable insurance products based on their specific needs and often negotiate terms on their behalf.

In contrast, an agent operates on behalf of an insurance company, representing the insurer's interests rather than the client's. They typically have a fiduciary responsibility to their employer, the insurance company, which influences the way they advise clients. Because of this fundamental difference in representation, the correct answer highlights the broker's role as an advocate for the client, contrasting with the agent's responsibility to the insurer. This distinction is crucial for clients to understand when seeking insurance advice and services.