Brokers

What They Do and Who Needs One (2024)

What Is an Insurance Broker?

An insurance broker is an independent insurance professional who works to find the best insurance policies for you. It can sell you any insurance you may need, including car, home, health, renters and life insurance.

Unlike insurance agents who work for a specific provider, brokers can sell you any policy on the market. If you need commercial insurance, they’ll help you find the best business insurance policies for your organization.

Insurance Broker vs. Agent

There are several differences between an insurance agent and a broker. While an insurance agent works on behalf of the insurance company they serve, brokers don’t affiliate with specific providers. This separation allows them to make your insurance needs their top priority.

Another difference is insurance agents earn their income from commissions from the insurance agency. Insurance brokers earn commissions on your policy and can charge a broker fee for their services.


When To Use an Insurance Broker

Consider using an insurance broker if:

  • You have multiple homes or cars you want to insure
  • You own a small business and need insurance coverage for risk management purposes
  • You need someone to shop around for car insurance policies for you
  • You want to buy from someone with no conflict of interest
  • You want to better understand the details of your insurance options
  • You want someone to go over the types of policies you might need and provide solutions to protect your assets 

How To Get an Insurance Broker

There are several ways to connect with insurance brokers. You can find them online, through word-of-mouth recommendations or by visiting a broker’s office. When searching for an insurance broker, keep these questions in mind:

  • How long has it been in business?
  • Does it have any references?
  • Is it licensed in your state?
  • Does it specialize in working with individuals or with companies?
  • Is the broker attentive to your coverage needs?
  • If it works for an insurance brokerage, what is that brokerage’s reputation like?

Answering these questions will help you feel confident in the professional you choose.


How Are Insurance Brokers Paid

Insurance brokers make money through commissions and broker fees. Here’s a breakdown of each.

Insurance Commission

When a broker recommends a policy that you buy, the broker earns a commission from the insurance company that sold it. Many companies pay the broker a percentage of the premium. 

Keep in mind that some insurance policies (specifically life insurance) earn brokers a higher commission during that first year. This commission may lead brokers who specialize in life insurance to recommend more coverage than you need. If you need life insurance, consider consulting a financial advisor for guidance on options you should look at. These professionals only charge a set fee for the services they provide.

Brokers can also make money on clients who decide to renew their insurance coverage after the initial policy expires. Renewals give brokers an incentive to help you maintain coverage. If you stop paying your policy within the first few years, they might have to pay their commission back to the provider. That’s why they focus on making sure the policies they recommend are truly right for you.

Insurance Broker Fees

Insurance brokers can also earn money through broker fees. Broker fees are up-front charges for the services a broker offers. Many states cap how much brokers can charge clients. While this might seem like a bad deal on the surface, insurance brokers can help you save enough money on your policies to offset this extra expense.


Ways To Buy Car Insurance

There are several ways to buy car insurance. You can purchase a policy online, call the provider on the phone, or visit an insurance agent in person. You’ll need to supply the following information:

  • Personal details: This includes your name, address, birth date, Social Security number and occupation.
  • Vehicle information: You’ll need the year, make, model, mileage and vehicle identification number (VIN) of the vehicles you want to insure.
  • Driving history: This includes the number of miles you drive annually, whether you use the vehicle for business purposes and whether you’ve had any accidents or moving violations in the past three to five years.
  • Coverage options: Do you need liability insurance to meet your state’s minimum requirements? Do you want full coverage with comprehensive and collision to meet your lender’s directives? You can even add extra coverage like emergency roadside assistance, gap insurance and more. 

What Influences Your Car Insurance Rates?

Keep in mind that many factors can influence your car insurance costs. These include your:

  • Driving history: If you have a clean driving history with no accidents, or traffic violations like speeding tickets and DUIs, you’ll pay less for car insurance.
  • Location: Insurance carriers charge more if you live in an area where there are higher concentrations of uninsured drivers, vandalism, theft, traffic incidents and accidents.
  • Marital status: Single drivers usually pay more for car insurance than married drivers.
  • Gender: At certain ages, women often pay less for car insurance because they cause fewer fatalities than men. However, some states don’t allow gender to be used in rate decisions. 
  • Age: Teen and senior drivers can be more expensive to insure. California and Hawaii don’t allow insurers to use age to set rates.
  • Vehicle: Your vehicle’s year, make, model and mileage also affect your insurance rates. If you have a high-value vehicle, it might cost more to insure it.
  • Credit: In many states (but not all), providers can check your credit report to assign you a credit-based insurance score. If you have a lower credit score, you could pay more for coverage.

Some companies favor certain factors over others, which is why it’s best to get multiple quotes when shopping for car insurance. Comparing quotes will help you get the best possible price for the coverage you need. 

An image of a driving profile that shows details car insurance companies use to set premiumsAn image of a driving profile that shows details car insurance companies use to set premiums

Insurance Brokers: The Bottom Line

Insurance brokers can help individuals and business owners make sense of their insurance choices. Unlike independent agents who represent the insurance companies they work for, brokers focus on your needs. They work with you to learn more about what kind of insurance you’re looking for and then present solutions.

Brokers earn money through commissions and fees. While they might not be for everyone, they can help demystify some of the more confusing insurance policies on the market and save you time by doing the shopping for you. 

Top Auto Insurance Recommendations

Before you buy a policy, compare insurance coverage and prices from multiple providers. This comparison will help you find the cheapest car insurance available. Here are two of the best carriers you may want to consider.

State Farm: Best Customer Experience

State Farm offers customized insurance coverage to suit any driver’s needs. If you drive or deliver food with ridesharing services, State Farm has coverage for you. It also has liability and full-coverage options with speciality policies for commercial auto, antique car coverage and rental car coverage.

This provider also offers many discounts to make its low prices even more affordable. If you’re under 25 and haven’t had any accidents in the past three years, you can save up to 15% off your insurance premium. State Farm also offers discounts for safe driving and bundling policies.

Read more: State Farm Insurance Review

Erie Insurance: Best for Basic Insurance

With Erie’s Rate Lock, you can avoid premium increases before you make changes to your policy (such as removing a driver or altering coverage limits). The company’s accident forgiveness program ensures that you don’t have to worry about your insurance rates spiking after an accident or speeding ticket.

Erie also has ample add-on coverage for things like personal items, locksmith services and pet coverage for up to $500 in vet bills if your pet gets injured.
Read more: Erie Insurance Review


Car Insurance Brokers: FAQ

Below are some frequently asked questions about car insurance brokers.


Insurance brokers scour the market to find the best insurance products for your needs. Whether you’re a business owner looking to supply employee benefits or an individual shopping for car insurance, an insurance broker can help.


The two types of insurance brokers are commercial and retail. Retail brokers work with individuals looking for health, home, car or other types of personal insurance. Commercial brokers work with businesses to set up employee benefit plans and build a strong risk management portfolio.


An insurance agent works for a specific insurance company and will only sell you that company’s products. An insurance broker represents your interests and can work with multiple insurance companies. 


An insurance broker can help you make sense of your personal insurance options, suggest plans to save you money and save you time by doing the shopping for you. Whether you’re searching for an individual health plan or comprehensive home insurance, it’s with you every step of the way. 


Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
  • Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
  • Reputation and experience: Our research team considered market share, ratings from industry experts and years in business when giving this score.
  • Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
  • Customer experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.

Our credentials:

  • 800 hours researched
  • 45 companies reviewed
  • 8,500+ consumers surveyed

*Data accurate at time of publication.

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