What Is an Insurance Broker and How Many Do You Need?

For small businesses, purchasing insurance, like paying taxes, is a necessity, but wouldn't it be nice if the process could be as painless as possible? That's where insurance brokers come in.

Unlike insurance agents who typically represents one carrier, a broker is independent and is able to represent many different carriers, theoretically giving their clients — that's you — the best coverage at the lowest price. Brokers can help you maneuver the morass of paperwork and translate the industry jargon so common in the contracts.

Like agents, these brokers don't charge you for their services, but instead receive a commission from the carriers directly.

That's the theory, and in general, it's true. But the line between agent and broker can get blurry. Good agents will often find the best coverage for their clients, even if it is with another carrier, and some brokers have special relationships with certain carriers, getting a higher commission the more business they place.