February 5, 2017

What does an Auto Insurance Broker do?

Local insurance agents near me

Why use an Auto Insurance Broker?

Auto insurance brokers help individuals and businesses with shopping multiple insurance companies for affordable insurance coverage that meets the needs of the insured.

Insurance Agent Vs Insurance Broker

In most cases, insurance brokers can find lower insurance premiums with the carriers based on prior driving history, credit, current liability limits and any tickets and accidents. 

Most auto insurance brokers also provide coverage for property as well which enables the opportunity for the multiple policy discounts.

How do Auto Insurance Brokers Work?

Insurance Brokers have relationships with many insurance carriers, which grant them what is called an appointment to be able to represent and sell each insurance companies' products.

These products more commonly known as insurance policies can range from auto coverage, home, life and commercial insurance policies.

These appointments with a variety of insurance carriers allows the broker to be able to shop many companies that have an appetite for your insurance business.

What kind of insurance does an Insurance Broker sell?

Auto and Property Insurance

Insurance brokers can be found representing many different types of insurance including but not limited to auto, home, life, health and commercial business insurance.

An insurance agent will represent only one company and works for the company directly as a sales representative.  Vs. An Insurance broker works for you, not the company. 

Many insurance brokers also can sell insurance products sold by insurance agents that are captive to only one company, which is a tremendous advantage.

Additionally, insurance brokers can be of great benefit with annual review of policies if faced with rate increases.

Most carriers will have a small annual rate increase, but if you’re faced with a higher than the normal rate increase you’d need to start contacting multiple insurance agents looking for a more reasonable premium.  

The benefit of an insurance broker is they already have all your information to start shopping again.  With today’s technology some insurance brokers have the ability to automatically be notified if large rate increases for your policies will happen before the renewal notice is sent out, and with a push of a button re-shop all their companies.

How do Auto Insurance Brokers get paid?

How do Insurance Brokers get paid

Insurance Brokers are paid based on a commission for each product that is purchased by consumers or businesses through the brokerage.  Some insurance brokers may charge a fee, but Insurance Brokers Group does not.  

How much do Auto Insurance Brokers make?

Insurance Brokers can generally earn between 8% to 15%, depending on the complexity and quality of the business presented to the carrier.

High risk or non-standard business will generally bring in a lower commission level due to the exposure, the likelihood of future claims and the potential longevity of the business.

Typically, commercial insurance will pay a higher commission level due to the intricacy of the policy and time involved with quoting and issuing a policy.

Auto Insurance Broker vs. Agent

Insurance agent vs. insurance broker

insurance agent vs insurance broker

There's not a lot of difference between an insurance broker or agent other than agents generally only represent one carrier and is typically considered by contract a captive employee or agent.

Insurance Brokers are free to represent multiple companies and work for the customer, not the companies they represent.  Agents are bound by their agreement to only sell the products offered by the company that employs them.

When insurance policies come up for renewal, there's not much an insurance agent can do, if rates go up, since they are limited by contract to offer only the one product or policy.

Insurance Brokers are independent "Agents" that are not bound by a contract and have the freedom to work with any insurance carrier that will appoint them to represent that carrier. Brokers are agents when represents any one company, but because they have the autonomy to provide their clients a variety of insurance companies, they are considered brokers.

Do Auto Insurance Brokers Charge a fee for service?

insurance agents vs insurance brokers

Some brokers will charge a fee for their service in addition to the commission earn by the carrier, but it must be disclosed prior to binding insurance coverage.

Some of the reasons a broker might charge a fee is based on the risk, complexity and longevity of the business or risk.

An example would be a broker working in an area of town where people only buy insurance to renew their license plate once a year.

Since the brokers work on a commission and if the policy doesn't make it past the first month the broker is doing a lot of work and receive a fraction of the commission since the policy is canceled and almost all the commission must be returned.

Another example would be very large and difficult to place commercial insurance risk, which requires a lot of time and effort trying to find a carrier that is willing to take the risk or policy.

The additional staff and manpower required to contact multiple carriers, submit dozens of applications generally can take days or weeks of work. But, for the normal day to day consumer, most brokers will not charge any additional fees for their service.

Are Car Insurance Brokers cheaper?

It's simply a case of large numbers: most insurance carriers you have available, the more likely you'll have an insurance company with an appetite for your insurance business and willingness to provide attractive rates to earn and keep your business.

Can an Auto Insurance Broker save me time and money shopping for lower rates?

Save money on auto insurance

The simple answer is yes because of technology.

Insurance brokers today utilize rating software which takes the information you'd generally provide to one company and now sends it to dozens of insurance carriers. These rater programs connect with the companies directly and then provide back rates based on the information submitted.

Shopping multiple companies as fast as entering the information in once. If you could provide your information once and let an insurance broker bring back several quotes for free, why wouldn't you utilize their service.

How do I find an Auto Insurance Broker near me?

Insurance agent near me

The easiest way is to find a car insurance broker is do a google search. Some insurance brokers like Insurance Brokers Group offer quoting in multiple states. When you deal with a brokerage like IBG you'll find they work with many insurance companies since they have a wide demographic of clients. 

Plus, IBG sells auto, home and life insurance in multiple states.  Click HERE for availability in your state

For auto and home insurance quotes, click or call 800-459-6060 to speak with a licensed broker.

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John Espenschied is a long-time veteran of the insurance industry. He's worked with thousands of clients over the years, helping to protect their personal and business needs. John's goal is to provide the best advice possible to assist customers in saving money while protecting their property and securing their financial future.
He truly enjoys helping others and takes great satisfaction in providing top-notch customer service. When he's not working, John has fun spending time with his family, golfing, bike riding, and blogging on insurance topics.