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What is a car insurance broker?

Fact-checked with HomeInsurance.com

The auto insurance industry is full of countless providers to choose from, with many claiming to be the best auto insurance provider for you. When trying to find a new policy, sorting through all of the coverage options and add-ons can be a time-consuming or frustrating process. 

It can be helpful to have an expert help guide you through the process. Car insurance brokers are experts that can work for you and act as your personal buyer for car insurance. Let’s dig into the role of car insurance brokers and how they can help you find a policy that works for you. 

What do car insurance brokers do?

Anyone wondering, “what’s an insurance broker?” should know that insurance agents can be divided into two main groups—captive agents and independent agents. Captive insurance agents work for one specific insurance provider as an employee of the company. 

Independent agents work with many different insurance providers. Essentially insurance brokers are independent insurance agents. So instead of working for a specific car insurance provider, car insurance brokers work for you.

If you use a car insurance broker, they will gather your personal information and ask about your car insurance needs. Then the broker will take that information and use it to get customized insurance quotes from different providers. You’ll be able to choose between the different quotes the insurance broker provides. 

What does it cost to use a broker?

Insurance brokers earn income in two ways: commissions and fees. If the broker works on commission, there will be no charge for you to use the broker. In this case, the insurance provider will pay the broker a commission if you decide to buy a policy.

Some insurance brokers require fees. If this is the case, you must pay the fee. Before contracting an auto insurance broker, you should ask about the fees and commission associated with using their services.

Who pays a car insurance broker? 

Usually, using a car insurance broker won’t cost you anything. But that’s not always the case. Let’s take a closer look at the two different ways a car insurance broker makes money and whether or not you are responsible for any of the costs.

Commissions

Car insurance brokers are independent agents. Like many independent professionals, insurance brokers generally work on commission. That commission comes from the provider. If you sign up for a policy with a provider, the provider will pay the broker a percentage of your insurance premium as the commission. Although you are technically responsible for some of the cost of a broker in this situation, having it worked into your premium means less up-front cost to you. 

Fees

Car insurance brokers may also charge customers a brokers fee for using their service. These fees are controlled by state laws, and the amount a broker can charge for their services is generally capped. Before using a broker, make sure you have a clear understanding of what fees are associated with their services. 

When to use a car insurance broker

Car insurance is one of the more straightforward forms of insurance people use. Because of this, many people choose to seek out their own car insurance using online quote tools — usually available from the large insurance providers. 

However, vehicle insurance brokers can be a huge help if you have particular insurance needs. If you’re looking for a policy to cover a specialty car, or if you need insurance for a company vehicle, insurance brokers can help with the finer points of finding the right coverages and limits in a policy. 

Why use a car insurance broker?

Car insurance brokers are not for everyone. In many cases, individuals can figure out a good car insurance policy on their own. But there are benefits to contracting an expert when you need help. Let’s go through a few of the pros and cons that come along with using automobile insurance brokers.

Pros:

  • Expert guidance – If you have specific car insurance needs, or if you are completely new to car insurance, having a guide who knows the industry inside and out can be a huge help. Insurance brokers are experts in their field, so contracting one means you also have access to their expertise. 
  • Saves time – If you don’t want to deal with the hassle of getting quotes from different insurers and comparing them yourself, using a broker can save a lot of time. They’ll take care of the legwork for you and save you valuable hours hunting down information and researching yourself. 

Cons:

  • May be unnecessary – If your insurance needs are simple, the nuances of coverage are not that complex, especially compared to life insurance or homeowners insurance. If you have some working knowledge of the auto insurance industry and a bit of time for research, you can likely figure things out for yourself.
  • Works on commission – Most car insurance brokers work on commission that gets paid by the provider who you sign up with. If one provider pays a better commission than others, it’s possible the broker could be incentivized to push you towards a provider who may or may not be a good fit for your needs. 

How to find car insurance without a broker

Car insurance brokers aren’t mandatory for finding reliable insurance. Here are the steps to follow if you want to find a policy without using a broker:

  • The first step to finding car insurance without a broker is assessing your own insurance needs. What’s your current financial situation? Is your car expensive or low value? Do you want minimum or full coverage? Could you pay out-of-pocket to replace your car if it’s totaled? These are all questions you should ask yourself before looking for a provider.
  • The second step is gathering quotes from different insurance providers. To do this you’ll need personal info like your address and info on your car like make and model. Most of the big car insurance companies have websites with online quote tools. Try to get quotes from several providers to ensure you’re looking at all the options. 
  • The third step is comparing the quotes and selecting the best one for your needs. The monthly premium is the cost you’ll pay, so it’s important to note. But you should also pay close attention to which coverages are included, coverage limits, deductibles as well as the discounts and bundles that are offered by each provider. 

Once you have a sense of the policies that are available, you’ll be better able to choose the one that will provide adequate protection for you and your car at a reasonable rate. 

The takeaway: 

  • Car insurance brokers are independent insurance agents.
  • Instead of working for a specific provider, brokers work for you.
  • Most brokers work on commission, which you don’t pay (unless the cost is factored into your premium).
  • Some brokers charge fees, which you do pay.
  • Getting car insurance doesn’t require a broker.

Using a broker can be a big help in finding a good insurance policy, but brokers aren’t needed in many cases. Most people with some basic knowledge of the car insurance industry will be able to find their own insurance. But if you have specialized insurance needs and little time to spend on finding a provider, then an insurance broker can be a trusty tool to employ in the insurance quoting process.

Julian Dossett

Julian is a freelance writer for Coverage.com, where he writes about auto and home insurance with an eye toward consumer advocacy. His work has appeared at The Simple Dollar, Bankrate, Reviews.com, Blockchain Beach and MSN.com. He’s currently based in New Mexico.

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