What is a Broker?

A broker is an insurance intermediary who represents the insured rather than the insurer. They assist consumers who are seeking coverage. Unlike independent agents, brokers are not the legal representatives of insurers. This means they often do not have the right to act on behalf of insurers, such as to bind coverage. To bind coverage, the broker must hand off the account to an agent or insurer for the transaction to be completed.

Understanding Brokers

A broker’s duty is to the consumer. They assist the consumer in their search for coverage. Brokers are unique because they can sell policies from several different insurance companies. A broker understands the consumer’s needs and finds the right coverage at the right price for the consumer. 

A broker makes money through broker fees. These are a percentage commission on a policy being sold. Additionally, a broker may also make money by charging transactional fees to initiate changes or help to file claims. They can also make money through consulting fees.

Related Terms




Managing General Agents (MGA)


Surplus Lines Broker

Related Articles

What is the Difference Between Agents and Brokers?

Agents and brokers both act as intermediaries between insurance companies and insureds. They both help consumers find coverage. So what’s the difference? Continue Reading.

Insurance Insights: What is a Broker Responsibility State?

Have you ever heard the term Broker Responsibility state? What does that mean? It is not nearly as daunting as it may sound. Continue Reading.

Players in the Surplus Lines Insurance Industry

Welcome to Surplus Lines insurance 101: an overview of the players in the surplus lines insurance industry and their roles and responsibilities. Continue Reading.