An insurance agency and an insurance company serve distinct roles in the insurance market. The main difference between an insurance agency and an insurance company is that the company underwrites policies and pays claims, while the agency sells policies on behalf of the company:
- Responsibility: The insurance company is responsible for managing policies, pricing, and claims. The agency sells products and helps policyholders with questions.
- Policy changes: The insurance company initiates and approves policy changes.
- Premium collection: The insurance company collects premiums, not the agency.
- Coverage: An insurance company only offers its own products, while an agency can offer products from multiple carriers.
When choosing an insurance agency or company, you can consider things like:
- Licensing - make sure the agency and company are licensed in your state. You can check licensing information through the Florida Office of Insurance Regulation website(https://companysearch.myfloridacfo.gov/index.aspx ) or by calling your state insurance department.
- Complaints - check to see if the agency or company has had complaints filed against them.
- Financial strength - check the company's financial rating.
In summary:
- An insurance agency acts as an intermediary between customers and insurance companies. Agencies represent multiple insurers and work to find the best policies for their clients, tailoring coverage options to meet individual needs.
- An insurance company, on the other hand, is the entity that underwrites and provides the insurance policies. It assumes the financial risk, collects premiums, and is responsible for paying out claims. While agencies focus on selling and servicing policies, insurance companies are the ones that create and back the coverage financially.