When you need to buy insurance, your first point of contact is usually an insurance agent. But who is this person? An insurance agent is a licensed professional who serves as the crucial link between you, the consumer, and the insurance company. This article will clarify exactly what an insurance agent is, who qualifies for the role, and what their core responsibilities are to you as a client.
Who is an insurance agent?
Not just anyone can sell insurance. It is a regulated profession designed to protect consumers. Before an agent can offer you a policy, they must meet specific qualifications. Understanding these qualifications, and the different types of agents, will help you choose the right partner for your needs.
Qualifications: Becoming a licensed professional
Agents must meet several essential qualifications before they can operate.
- State licensing: Agents must be licensed by the insurance department in every state where they sell policies.
- Education and exams: This licensing process involves completing pre-licensing education courses. After, they must pass a state-administered exam covering insurance laws, ethics, and specific product lines, such as property, casualty, life, or health.
- Background checks: Applicants typically undergo background checks to verify their financial responsibility and screen for any criminal history.
- Continuing education: Maintaining a license is not a one-time event. Agents must complete ongoing “continuing education” (CE) courses to stay current on new laws, products, and industry practices.
The two main types of insurance agents
This distinction is critical as it directly impacts the range of products and companies an agent can offer you.
- Captive agents: These agents work for and represent only one insurance company (e.g., State Farm, Allstate). They can only sell products offered by that single carrier.
- Independent agents: These agents, sometimes called brokers, are not tied to one company. They represent multiple different insurance carriers and can “shop around” on your behalf.
The main difference from a consumer’s perspective is choice. An independent agent can provide quotes from several companies, allowing for a comparison of both price and coverage. A captive agent, however, will know their one company’s products in great depth. Both types are typically paid a commission (a percentage of your premium) by the insurance company, which is built into the price of the policy.
What is the role of an insurance agent?
Now that we’ve covered who agents are, let’s look at what they do for you. Their job involves much more than just providing a price quote; they are your primary advisor and advocate in the complex world of insurance.
Your advisor: Assessment and education
An agent’s primary duties occur before and during the sale, where their expertise is most critical.
- Risk assessment: The agent’s first and most important job is to act as a risk manager. They must ask detailed questions to understand your unique situation, assets, and potential liabilities. Examples include: “What kind of car do you drive?” “Do you own a home?” “Do you have dependents?” or “Do you own a business?”
- Recommending coverage: Based on this assessment, their duty is to recommend specific types of insurance (e.g., auto, home, life, liability). Crucially, they also recommend the appropriate coverage limits so you are not under-insured.
- Explaining the policy: An agent is responsible for translating complex “policy language.” This means explaining the legal document, including its terms, conditions, exclusions, and endorsements, into plain English so you understand exactly what you are (and are not) paying for.
Your advocate: Service after the sale
The role of an insurance agent does not end once you have paid your premium. Their ongoing service is a key part of their value.
- Policy servicing: The agent is your main contact for any administrative changes to your policy. This includes adding a new driver or car, updating your address, or changing your coverage limits.
- Guiding you through claims: This is one of their most critical responsibilities. When an accident or loss occurs, the agent is your first call. They should guide you on how to file the claim, what information you will need, and what to expect. They act as your advocate with the insurance company’s claims department, helping to ensure the process goes smoothly.
- Periodic reviews: Good agents will proactively contact you (for example, annually or every other year) to conduct a policy review. This review ensures your coverage keeps pace with major life changes, such as a marriage, a new baby, a home purchase, or a child starting to drive.
Conclusion
An insurance agent functions in a dual role: they are a representative for the insurance company and a licensed advisor for you, the client. A qualified agent is a licensed professional, either captive or independent, whose core responsibilities are to assess your personal risks, recommend appropriate protection, translate complex policies, and advocate for you when you need to use your insurance. Choosing a knowledgeable and trustworthy agent is just as important as choosing the right insurance company.
Further Readings & Resources
The following sources and links are accurate as of the publication date of this article.
- National Association of Insurance Commissioners (NAIC): A guide on what to consider when selecting an agent or company.
- Trusted Choice (Consumer brand of IIABA): An explanation of what an independent agent is and how they differ from other types.
- New York Department of Financial Services (DFS): A consumer guide to shopping for insurance that details the roles of agents and brokers.
