Workers compensation brokers represent you, the client, to an insurance company. They are historically different from agents in that insurance agents traditionally represent the insurance company to the buyer. This line between broker and agent is becoming vaguer.
Agent Versus Broker
Both agents and brokers work as intermediaries between you and your insurer. They both have a legal duty to help you choose the appropriate coverage at a reasonable price. They both need to be licensed to sell workers’ compensation insurance.
The main difference between an agent and a broker is whom they represent. Unlike agents, brokers are not appointed by insurance companies. Instead, they solicit quotes and policies from insurers by submitting applications on behalf of a buyer. Agents have the authority to bind coverage and brokers do not. A broker has to obtain a binder from the insurance company. Binders are legal documents that serve as temporary insurance policies. A policy later replaces the binder.
Choosing a Representative
Many buyers are not aware of the status of the representative they are working with. As licensing laws change, the differences between brokers and agents are becoming less distinct. When deciding on whether to go with an agent or a broker, remember, brokers represent you to a company and might know you and your business better. Because brokers don’t work for insurers directly, they are unable to bind coverage.
Workers compensation brokers work directly for you, their client. There are benefits to the distinction between a broker versus an agent.