Buying car insurance can feel overwhelming at the outset. You have to choose the types of coverage you need, and how high to set your coverage limits and deductibles. If you lease or finance your car, you may have to add certain required coverages to your policy. Then you have to compare car insurance
A car insurance broker can help you with all that. Car insurance brokers are a type of agent who work on behalf of car insurance companies to help you compare and choose insurance policies.
Unlike captive agents, who are employed by a single carrier and can only get you a policy through that carrier, a broker, also called an independent agent, works with a variety of different car insurance companies. This allows them to help you understand your options without trying to sell you on one specific policy.
You don’t necessarily need a car insurance broker to find a policy that’s right for you — buying car insurance can be done in a single day and is often straightforward — but shopping with a broker could make the process more convenient. The car insurance broker can also help you make sense of what car insurance entails, including what’s in your policy and how much coverage you’re obligated to purchase in your state.
A car insurance broker works with multiple insurance companies to offer shoppers a range of car insurance quotes
Most brokers are paid by a commission that’s baked into the premiums you pay, so you usually don’t need to pay them a fee to help you shop
A good broker will help you compare quotes and choose the coverage that’s best for your needs and your budget
A car insurance broker helps drivers shop for a car insurance policy by comparing quotes from multiple car insurance companies. A captive agent who works for a single car insurance company may have more detailed information about that company’s products, but an independent broker can help you compare rates across multiple insurance companies and choose the best policy for your needs, without bias. A broker can also help you decide which kinds of additional coverage to purchase and how much coverage you need.
When you work with a car insurance broker, they’ll submit the amount of coverage you want, plus all your basic personal info to the companies they work with. By doing this, they’re able to get a range of car insurance quotes at one time, rather than you submitting that information again and again to each car insurance company individually.
Insurance rates are highly regulated by your state government, based on a “rate table” negotiated with the insurance carriers, so one car insurance broker can’t necessarily get you a better deal than any other broker or agent. But a broker can help you understand how your car insurance needs and factors like your age, ZIP code, driving history, and the make and model of your car, are reflected in your car insurance rates.
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Brokers solicit car insurance quotes — the estimated amount you’ll pay in premiums once your policy is in effect — from insurance companies, but may not be able to actually take out the policy for the customer. In that case, they would send you over to the insurer for the final step. The insurance company pays the broker a commission out of the insured’s premium payments.
Insurance brokers also have to be licensed by your state’s office of insurance. That means not only taking a class and passing an insurance exam to get their broker’s license, but also taking continuing education classes and renewing their license every couple of years (every state has its own laws and regulations regarding insurance).
In most cases, using a broker to purchase car insurance doesn’t cost you anything directly. However, some may charge you an insurance brokers fee for their services, the amount of which is regulated by state law. Your state may also regulate when the broker can charge you the fee — sometimes, the broker cannot receive both a fee and commission — as well as mandate that the broker signs a fee agreement with you.
Always ask your broker up front about any brokers fees associated with their service. Fee-only brokers are rare, so it’s more likely that your broker works on commission from the various car insurance companies they partner with.
Brokers get paid a percentage of insurance premiums, called a commission, but not directly from the driver. As with broker fees, state law regulates how much of a percentage the broker can receive. The commission is baked into your premium costs, so buying a policy through a broker doesn’t come at any extra cost to you.
Because brokers work with multiple car insurance carriers, and they’ll be paid no matter which one you choose, they shouldn’t have any financial incentive to push you towards one carrier over another. Instead, they should help you weigh your options and choose the best policy for your needs.
Car insurance brokers are a little bit like a personal shopper. They know what you want and have the resources to get it for you as conveniently as possible, saving you time and energy when you’re shopping for car insurance.
They also already have all your information on hand, which they use to recommend carriers that are more likely to insure you. If you have bad credit, they can provide you with a range of car insurance quotes from car insurance companies that service people with bad credit.
The same is true if you have a poor driving history or if you’re a new driver. Without a broker, you won’t know how your profile affects your rates unless you take the time to compare them yourself.
Brokers can help you navigate the application process, such as finding the right documents to submit. When you choose how much coverage you need in each component of the car insurance policy, a car insurance broker can help you understand what that coverage means and how much they recommend for your particular situation. They can also help you add additional coverage to enhance your financial protection further.
Because they have your application, it’s easy for a broker to quickly gather quotes from all the companies they work with, while if you were doing it alone it might take you a long time to get the same number of quotes. And they can keep your information at the ready in case you want to go back to the same broker for another insurance product, like homeowners insurance or renters insurance.
The biggest downside to using a car insurance broker is that it may not be necessary. That’s because you can usually go directly to a car insurance company’s website and either apply for coverage directly on the page or get a number to call the company and take it from there. You may be able to find coverage for the same rates without going through a broker, if you do your due diligence.
If you decide to find and purchase a car insurance policy on your own, you’ll want to apply with multiple carriers, and then compare coverage options and rates. Make sure you’re comparing the same coverage limits, deductible amounts and term lengths, though — one quote might look significantly cheaper than another if it’s for a six-month policy instead of a year-long one.
You should also read reviews of popular car insurance companies to see how they score on metrics like claims satisfaction or customer service. You probably don’t want to go with the cheapest car insurance quote if the company is known for denying claims or delaying payouts.
One of the perks of using an independent broker is that they’ll know a lot about the reputation of each carrier already, and they can help guide you towards companies with higher rates of claims satisfaction.
If you have a documented record of safe driving or good credit, you’ll be eligible for the best rates at virtually any car insurance company when you contact directly, meaning you won’t necessarily need the car insurance broker’s ability to query a lot of them at once.
While federal law makes it easy to become licensed in other states, your insurance broker may only be licensed in your state. That could make it difficult to insure cars you own in another state, or to make sure your coverage remains the same when you move.
Anna Swartz is a Managing Editor at Policygenius, where she has been since 2018. An expert in home, auto and renters insurance, she loves making tough concepts easy to understand and helping readers feel confident about their insurance options. Before joining Policygenius, she was a senior staff writer at Mic. Her work has appeared in The Dodo, AOL, HuffPost, Salon and Heeb.
Stephanie Nieves is an insurance editor at Policygenius in New York City, specializing in auto and home insurance. She's been writing about insurance, finance and financial planning since 2018, and loves helping readers get the knowledge they need to make financial decisions with confidence. Her words can also be found on PayScale, Fairygodboss, and The Muse.
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