Auto Insurance Brokers: Should You Use One?
Insurance brokers can help consumers understand the insurance landscape and find a policy that meets their needs and budget.
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Written byA.M. Steinbach
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Full-time writer for 5+ years
Two-time Emmy Award nominee
A Harvard graduate, Mark has worked as a freelance personal finance and tech writer. He’s also written for Saturday Night Live.
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Edited byKatie Powers
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Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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Updated November 21, 2024
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Table of contents
Finding the right insurance policy for your needs and budget isn’t always easy, and you may decide you want assistance from a professional. Many consumers rely on insurance brokers to offer valuable insight into the insurance industry and connect them with the right coverage at the right price.
Some buyers may find they don’t need a broker. After all, many online resources make it easy to find relevant information about auto coverage options. Plus, brokers often charge a fee for their services, which might not work for drivers on a budget.[1]
Here’s what you should know about insurance brokers and the pros and cons of working with them.
Quick Facts
Brokers earn money through commissions or broker fees.
Unlike insurance agents, insurance brokers can’t issue policies directly to drivers.
Quote-comparison tools help drivers find the best price on insurance.
What does an insurance broker do?
Insurance brokers help drivers understand their needs and budgets and help them sort through the many insurance coverage options to find a policy that works for them.
Unlike some insurance agents, insurance brokers don’t work on behalf of one single insurance company. This means brokers are unbiased and aren’t beholden to a specific insurer.
But insurance brokers can’t issue you a policy. Instead, they merely direct you to representatives at the company who can handle your purchase.
Insurance brokers can be helpful in the following situations:
You’re buying an auto policy for the first time. Having someone help you understand the many different options across the insurance landscape can make the process easier.
You need multiple coverages. If you need a few different insurance policies, including car insurance, homeowners insurance, and life insurance, you may want someone to connect you with budget-friendly bundling options.
Your insurance needs are complex. A broker can help you find additional coverages like recreational vehicle (RV) insurance, boat insurance, or commercial vehicle insurance.
Good to Know
If you want to compare many different companies across the insurance landscape, Insurify has a free and easy-to-use quote-comparison resource you can use. You just need to enter your ZIP code and some key information about your driver profile to receive quotes in minutes to help you find an affordable policy.
Why comparing car insurance rates gets you cheaper car insurance
Car insurance is a dynamic, complex industry. Insurance rates can vary significantly by insurance company and driver profiles. Several main factors can affect your insurance premiums, including your age, gender, marital status, type of vehicle, ZIP code, driving record, credit history, and more.[2]
Comparing quotes from multiple insurance companies can help you find a company that meets your budget. You might be able to discover a company that calculates rates in a way that’s favorable to your personal background. For example, certain insurers might offer lower rates for drivers in your age group.
Many online quote-comparison tools make it easier than ever to quickly receive quotes from multiple insurers. Insurance experts recommend accessing quotes from several insurance companies before choosing a policy.[3]
Compare average liability insurance quotes from U.S. insurers below.
The below rates are estimated rates current as of: Friday, November 1 at 12:00 PM PDT.
Insurance Company ▲▼ | Average Monthly Quote ▲▼ |
|---|---|
| COUNTRY Financial | $16 |
| NJM | $29 |
| Auto-Owners | $34 |
| USAA | $45 |
| Erie | $50 |
| GEICO | $54 |
| State Farm | $54 |
| Mile Auto | $56 |
| Root | $60 |
| Allstate | $61 |
| Metromile | $63 |
| American Family | $73 |
| Mercury | $82 |
| Safeco | $82 |
| Nationwide | $83 |
| CSAA | $84 |
| National General | $86 |
| Travelers | $89 |
| Dairyland | $91 |
| State Auto | $93 |
| The Hartford | $95 |
| Direct Auto | $97 |
| Progressive | $98 |
| Clearcover | $102 |
| Commonwealth Casualty | $110 |
| Chubb | $110 |
| Farmers | $110 |
| Shelter | $111 |
| The General | $112 |
| 21st Century | $112 |
| Foremost | $117 |
| Bristol West | $118 |
| Elephant | $124 |
| GAINSCO | $125 |
| Amica | $151 |
| Liberty Mutual | $159 |
| AssuranceAmerica | $163 |
| Infinity | $181 |
| Hugo | $227 |
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.
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How auto insurance brokers get paid
Insurance brokers don’t work directly for insurance companies, which means insurance companies only pay them when they bring the company business. This helps brokers present unbiased information and advice.
While the specifics might vary by state, insurance brokers generally make money through commissions, fees, or some combination of the two.
Here’s how commission and broker fees work for brokers.
1. Commission
Insurance companies dedicate part of their budget to commissions, which insurers pay to brokers who bring the company business. The size of these commissions can depend on various factors. Some states, like New York, don’t set specific commission amounts and instead leave that decision to the insurer and broker.[4]
2. Broker fees
Most auto insurance brokers charge a fee for their services. The size of this fee can vary based on the insurance agency you’re working with and the level of service you require. They may charge you a flat fee, an hourly rate, or a percentage of the price of your overall coverage package.
State regulations may affect how much a broker charges. For instance, New York law doesn’t establish a maximum fee for insurance broker services. State law says the fee must be “reasonable,” and both parties must agree on it initially.[5]
Pros and cons of using a car insurance broker
You might be on the fence about using a car insurance broker. Here are some pros and cons to consider as you mull over this decision.
Pros
Unbiased: Brokers don’t work on behalf of a specific insurance company, so you can be confident they’re working in your best interests.
Insider knowledge: Many brokers have developed deep knowledge of the region they work in, making them invaluable resources as you search for the best coverage in your local auto insurance market.
Important pricing information: Brokers don’t just have policy expertise — they can also help you gather quotes to find the best price on coverage.
Cons
Fees: In many cases, brokers charge a fee for their services. Given rising premiums, you might not want to take on another insurance cost.
Can’t issue policies: Working with a broker is just step one in the buying process — you’ll still have to connect with an agent to purchase a policy.
Online can sometimes be easier: Some drivers or homeowners might prefer to look for insurance information online from the comfort of their own homes.
Are auto insurance brokers worth it?
If you’re looking for an insurance policy, you should first evaluate your personal insurance needs and budget before deciding whether to use a broker.
Drivers with complex insurance needs and minimal knowledge of their local insurance market might find it worthwhile to work with a broker. This broker can help them better understand their region’s insurance landscape and make the right choice when it comes to coverage.
Meanwhile, drivers looking for the cheapest policy might benefit from using a free quote-comparison tool instead. While insurance brokers can help you compare rates and find the best deal, broker fees may offset these savings.
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Auto agents vs. brokers: What’s the difference?
It’s important to understand the difference between an auto insurance agent and a car insurance broker.
First, captive insurance agents work on behalf of an insurance company. They can only provide information about the policies of the specific insurer they work with. Agent-driven service is more about looking at your situation and finding a policy from the specific company they work for. It’s also important to note that an agent can earn a salary, commission, or both, depending on how the company provides compensation.
A car insurance broker, on the other hand, provides expert advice about different policies from various insurers without ties to a single company. They can take into account your unique situation and find a policy that’s more likely to meet your needs in terms of insurance premiums and coverage.
But unlike an agent, a broker can’t actually issue you a policy. Instead, they’ll need to work through an agent to get your policy once they help you find your best choice from a variety of car insurance companies.
A broker usually receives a commission from the company once you’ve chosen a policy. Sometimes, though, you might need to pay an extra cost in the form of a broker fee, so it’s important to understand all your costs up front.
Car insurance broker FAQs
Here’s some additional information about car insurance brokers so you can decide if using a broker to buy an insurance policy is right for you.
What does an insurance broker do?
Insurance brokers help people find insurance policies that meet their needs and budget. Brokers can also help clients compare insurance quotes, understand available discounts, and find specialty insurance products that cover your boat, RV, or motorcycle.
How do insurance brokers earn money?
Insurance brokers either earn a commission from the insurance company they connect you with or charge their clients a fee in exchange for their services. In some cases, a broker’s payment structure can be a combination of commission and fees.
Which company typically has the cheapest car insurance?
All insurance companies calculate rates differently, so the cheapest car insurance for you will depend on your specific background. For instance, the price of car insurance can vary based on a number of factors, like your age, driving record, choice of car, and more.
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Sources
- National Association of Insurance Commissioners. "How to Choose an Insurance Agent."
- Insurance Information Institute. "What determines the price of an auto insurance policy?."
- Insurance Information Institute. "How to find the right auto insurance."
- New York Department of Financial Services. "Broker Commissions and other Compensation."
- New York Department of Financial Services. "OGC Opinion No. 05-06-35."
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A.M. SteinbachInsurance Writer
A.M. is a Brooklyn-based writer, editor, and content marketing strategist who's worked with major brands in insurance, tech, finance, and healthcare. He also contributes to The Average Joe, a personal finance newsletter that reaches over 250,000 daily readers. Since 2019, he's written for Insurify, breaking down a diverse range of insurance topics into crisp, readable prose.
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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