How do car insurance agents get paid?

How car insurance agents get paid is typically by a combination of salaried pay and commissions from insurance sales. Insurance agents can also earn commissions on renewed policies if you purchased your original policy through that agent or broker. But you don’t need an insurance agent to find cheap auto insurance. Enter your ZIP code below to get free car insurance quotes without the agency.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Oct 29, 2020

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Things to know...

  • Insurance agents are paid commissions based on premiums
  • Commissions are paid for renewals as well as new accounts
  • Direct agents are bound to one company while independent agents work with multiple providers

Insurance is something of a mystery for many consumers. In addition to choosing between companies, you also need to decide if you’ll buy direct or through an agent. It helps to understand how the agents are paid so that you can protect your best interests and still get the coverage that you need.

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The Average Numbers

The Bureau of Labor Statistics reports that agents make anywhere from $26,120 to $116,940 per year. The average annual salary is about $48,000, and they’re typically paid on commissions based on the written premiums of their policies.

One of the biggest factors in an agent’s pay is his or her time on the job. Agents are paid for new plans as well as renewals, so people who have built a healthy clientele will be able to receive attractive residual commissions.

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Captive vs. Independent Agents


Captive agents work for one company and will only have those products to offer. The main priority of a captive agent is to sell programs and plans offered by the parent company, and they are not allowed to sell products offered by other agencies.

On the other hand, independent agents work with multiple companies. They can look at a range of different plans and options to find the right one for their customers, and they can generally provide cheaper quotes.

People will choose to work for one company because they usually have more reliable forms of compensation along with benefits packages. Independent agents don’t have that stability, but they do get to set their own hours and choose the products that they’ll offer.

Working with an Independent Agent

Shopping around for quotes is a great start to finding the best coverage, and you can get a certain amount of information through comparison sites.

If you decide that you really want an agent handling your application, then an independent representative is highly recommended.

You can trust the independent professional to have an impressive array of products for you to choose from, and they’re very knowledgeable about the ongoing industry trends. In order to develop a successful relationship with this person, you should:

  • Ask to see all quotes from the insurance companies
  • Choose a proactive agent who will work hard to meet your individual needs
  • Carefully review your plan every year to ensure that it still meets your requirements

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The Percentage

The commission rate varies from one company to another, but agents generally receive 9 to 15 percent of the premiums charged on accounts they bring to the company. Some companies will pay a slightly lower rate on renewals, but there is also a commission on this activity.

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Traditional Agents No Longer Required

Of course, you don’t have to work with a traditional agent when buying a new plan. You can contact any major carrier and ask for a quote over the phone.

Online retailers and comparison sites are also making it easier than ever before to buy insurance through the Internet. Comparing prices online can provide you with a quick, convenient, and hassle-free way to find better rates on all types of coverage.

How to Find the Right Agent


Finding the right agent is easy when you know where to start.

  • Referrals from friends and other trusted individuals
  • Online searches
  • Checking online reviews
  • Trade associations

It’s natural to worry that an agent will try to sell you a more expensive policy just to boost his or her commission. This is why it’s wise to start by working with someone that comes highly recommended.

You can also look for individual credentials to set your mind at ease.

All agents should be licensed and able to provide you with references. He should be happy to answer any questions that you have and address your concerns.

Refrain from handing out highly personal information like your Social Security Number until you have researched the company and know that you’re working with a reputable agent.

Finally, avoid working with any agency that makes you feel pressured to close a deal. Your agent should be willing to present you with different options, explain the choices, and then allow you to make your own decision.

Save with the Right Agent

The right insurance agent can help you save money while providing you with the information you need about a company. Certain online comparison sites can also answer your questions and match you with various providers.

The main thing is that you should have the opportunity to compare different rates so that you can save on the final premiums while still maintaining good coverage.

Enter your zip code below to find car insurance rates that fit your budget!



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