Auto Insurance Company vs. Broker: Differences Explained (2024)
What is the difference between an auto insurance company and a broker? Auto insurance brokers help you compare quotes and coverage from multiple insurers. Companies only work to sell their insurance, which means you will have to do the work of comparing auto insurance quotes yourself. Find cheap car insurance quotes by comparison shopping.
Read more
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Jeffrey Manola
Licensed Insurance Agent
Jeffrey Manola is an experienced insurance agent who founded TopQuoteLifeInsurance.com and NoMedicalExamQuotes.com. His mission when creating these sites was to provide online consumers searching for insurance with the most affordable rates available. Not only does he strive to provide consumers with the best prices for insurance coverage, but he also wants those on the market for insurance to ...
Licensed Insurance Agent
UPDATED: Sep 7, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Sep 7, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Shopping for new auto insurance quotes from time to time is a smart idea for all drivers
- The difference between an insurance company and a broker is that an auto insurance broker works with you as an insurance shopper to gather and compare quotes
- Because the broker gets car insurance quotes for you, you can benefit from saving time when working with a broker
- You can contact auto insurance companies directly to obtain a quote
What is the difference between insurance broker and insurance company? What about the difference between insurance broker and agent The biggest difference is that an insurance company sells directly to the client, while a car insurance broker works with companies to find clients and sell them insurance.
Regardless of which method you use, car insurance rates adjust regularly based on a number of different factors. Because of fluctuations in these factors, many drivers may find cheap auto insurance rates by taking the time to get a few different auto insurance quotes today.
What is a car insurance broker? What is the difference between an auto insurance company vs. a broker? What are the advantages and disadvantages of a broker? We can answer those questions.
Before you read more about insurance broker vs insurance company, enter your ZIP code into our free auto insurance comparison tool to compare cheap car insurance rates right now.
Insurance Company vs. Broker: What’s the difference?
What is the difference between insurance agent and broker? Well, two of the options for buying car insurance are to get quotes directly from a car insurance company or to get car insurance broker quotes. While they may seem similar, insurance companies are not brokers.
So what is the difference between a broker and an insurance company, and which one should you work with to get quotes?
An auto insurance brokerage works in a similar fashion as a mortgage broker or other similar types of brokers. They work as a liaison to help buyers and sellers come together to execute a transaction.
Because of the use of a middleman when using an insurance broker vs agent, some people may prefer insurance companies not brokers.
So, what is an automotive insurance broker? The auto broker definition is fairly simple. Broker auto insurance personnel do much the same thing between insurance shoppers and insurance companies.
A broker works to facilitate a transaction between you and the insurance company. This process involves the broker helping you to get quotes from different auto insurance companies as well as answering any questions you have about the quotes you are receiving.
Auto broker for insurance quotes can be gathered from multiple companies, and the goal is to find you the best possible rate.
After all, you likely will not be agreeable to switching insurance companies if a lower rate cannot be found.
However, the National Association of Insurance Commissioners (NAIC) cautions shoppers to make sure that their agent, broker, or company is licensed to sell. Fraud can be all too common when it comes to selling insurance, sometimes even among auto insurance broker companies.
How can I know to trust an affordable auto insurance broker or company? Shoppers should check credentials and complaints to make sure their chosen company or brokers for auto insurance are reputable. We’ll cover more about insurance licenses below.
How do brokers get rate quotes?
If you make the decision to work with an auto insurance broker, you will provide the broker with many specific details about yourself, your car, and your driving history in order to get car insurance brokers quotes..
These are the same details you would provide to an auto insurance company if you were to get a full insurance quote, as these are the factors that affect auto insurance rates. This information may include:
- The make, model, and year of your car
- Safety equipment in your car like an anti-theft alarm system, air bags, and more
- Your age and gender
- Your driving history
- Your home and work address
The auto insurance broker then takes your information to different auto insurance companies to get quotes on your behalf. Because the broker gets quotes for you, you can benefit from saving time when working with a broker.
Regardless of if you’re using an insurance agent vs broker, your personal factors matter. To give you an idea of how one of the above factors (age and gender) can drastically change your rates, we’ve included rate data from Quadrant below.
Auto Insurance Rates by Age and Gender
| Auto Insurance Rates by Age and Gender | Single 17-year-old Female Average Annual Auto Insurance Rates | Single 17-year-old Male Average Annual Auto Insurance Rates | Single 25-year-old Female Average Annual Auto Insurance Rates | Single 25-year-old Male Average Annual Auto Insurance Rates | Married 35-year-old Female Average Annual Auto Insurance Rates | Married 35-year-old Male Average Annual Auto Insurance Rates | Married 60-year-old Female Average Annual Auto Insurance Rates | Married 60-year-old Male Average Annual Auto Insurance Rates | Average Annual Auto Insurance Rates |
|---|---|---|---|---|---|---|---|---|---|
| Allstate | $9,282.19 | $10,642.53 | $3,424.87 | $3,570.93 | $3,156.09 | $3,123.01 | $2,913.37 | $2,990.64 | $4,887.95 |
| American Family | $5,996.50 | $8,130.50 | $2,288.65 | $2,694.72 | $2,202.70 | $2,224.31 | $1,992.92 | $2,014.38 | $3,443.09 |
| Farmers | $8,521.97 | $9,144.04 | $2,946.80 | $3,041.44 | $2,556.98 | $2,557.75 | $2,336.80 | $2,448.39 | $4,194.27 |
| Geico | $5,653.55 | $6,278.96 | $2,378.89 | $2,262.87 | $2,302.89 | $2,312.38 | $2,240.60 | $2,283.45 | $3,214.20 |
| Liberty Mutual | $11,621.01 | $13,718.69 | $3,959.67 | $4,503.13 | $3,802.77 | $3,856.84 | $3,445.00 | $3,680.53 | $6,073.46 |
| Nationwide | $5,756.37 | $7,175.31 | $2,686.48 | $2,889.04 | $2,360.49 | $2,387.43 | $2,130.26 | $2,214.62 | $3,450.00 |
| Progressive | $8,689.95 | $9,625.49 | $2,697.73 | $2,758.66 | $2,296.90 | $2,175.27 | $1,991.49 | $2,048.63 | $4,035.52 |
| State Farm | $5,953.88 | $7,324.34 | $2,335.96 | $2,554.56 | $2,081.72 | $2,081.72 | $1,873.89 | $1,873.89 | $3,260.00 |
| Travelers | $9,307.32 | $12,850.91 | $2,325.25 | $2,491.21 | $2,178.66 | $2,199.51 | $2,051.98 | $2,074.41 | $4,434.91 |
| USAA | $4,807.54 | $5,385.61 | $1,988.52 | $2,126.14 | $1,551.43 | $1,540.32 | $1,449.85 | $1,448.98 | $2,537.30 |
As you can see, rates are drastically different among companies. Car insurance for teens and young drivers is the most expensive. Without the services of an insurance car broker, you would have to sort and compare each and every insurance company’s rates you request a quote from.
What are broker fees?
What is the auto insurance broker fee and how do brokers make money? If you’re comparing broker vs agent insurance, you probably want to find out if you can get car insurance with no broker fee.
Usually, yes, you can find no broker fee auto insurance. In most cases, an auto insurance broker is paid a commission from the auto insurance company you decide to purchase your new insurance through.
In some cases, drivers do not pay any fees at all in order to use a broker’s services. Some brokers work only on commission. Brokers will not get paid from the insurance company unless you actually purchase insurance, so you don’t need to worry about broker fee car insurance.
In order to accomplish this, the broker must help you find a lower rate and convince you to purchase that coverage. With this in mind, many brokers will work very hard to find you a lower rate and to answer all of the questions you have about insurance coverage.
The percentage a broker makes off of a commission changes by state, but usually, they make anywhere from two to eight percent commission from every policy they manage to sell to a client.
When those commissions are on the smaller side, some brokers choose to charge a broker’s fee. This is a fee charged to the client for the broker’s services.
Should you work with a broker or an insurance company?
So you’re still asking, should I use an insurance broker? There is no right or wrong way to get auto insurance quotes. Working with a broker for auto insurance does have its advantages. Most drivers want to know do insurance brokers save you money and are car insurance brokers worth it?
When working with broker car insurance, you enjoy the free services of a professional who is dedicated to helping you find an insurance policy that will save you money.
You will also benefit from having a live person who wants to answer your questions and help you make the best decision for your needs and budget even if you find a car insurance broker online.
Whereas when you get quotes directly from an insurance company, you are talking to a representative of that company who wants to sell you the policy they have to offer. So when you compare an auto insurance broker vs an agent of a company, the agent may not be looking out for your best interests.
After learning the insurance broker definition, you might look for a cheap auto insurance broker.
Many people who take the time to learn about the difference between an auto insurance broker and an auto insurance company make the decision to work with a broker after weighing the pros and cons of insurance brokers. You may also feel better knowing about secured car brokers, who make it a priority to help their clients be completely protected during the whole process.
There are, of course, disadvantages to a broker as well. Let’s take a look at some of them.
11 Disadvantages of Insurance Brokers
Take a look at the following list of 11 disadvantages of insurance brokers in the table below and ask yourself, is it worth it?
11 Disadvantages of Insurance Brokers
| Insurance Broker Disadvantages | Reason for Disadvantage |
|---|---|
| They work on commission | They usually only get paid after you buy a policy, which means they may be more concerned with selling you something than finding the perfect policy for your needs. |
| Incentive clauses may cause bias | Ask for a compensation disclosure statement to ensure your broker is not selling with a bias. |
| Slower than other means of getting quotes | They submit your information to companies on your behalf, which takes time. |
| They don't know you as well as you do | No one knows you better than yourself; a broker may get things wrong. |
| Auto insurance comparison websites work better. | They do the same thing but faster and more efficiently. |
| They do not work for the insurance company | Insurance brokers may not know all available bundles and savings opportunities an agent might have access to. |
| You may not need all of the coverage they recommend | They may recommend you take out more coverage to get a higher commission. |
| They may not be aware of all discounts | It's virtually impossible for one person to know all of the bundles and discounts offered by every insurance company. |
| Lack of knowledge | A newer insurance broker may not know enough about you or the industry to secure your best rates. |
| Lack of experience | They may not know enough about local, smaller insurance companies. |
| There's no guarantee they'll provide you with the best rates | You cannot be certain that they're presenting you with the best options. |
As you can see, while insurance brokers are legally and ethically obligated to present you with your best rates, some may lean into bias and sign you up for more coverage than you need, or they may not know about certain car insurance discounts you’re eligible for.
If an insurance broker is not familiar with all of the available companies in the area, they may miss great rates from smaller independent insurers and that can happen even with independent car insurance brokers.
Find out rates for car insurance companies even without using an insurance broker for auto coverage.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
What’s the difference between an insurance agent and a broker?
People often think of insurance agents and brokers as much the same, but there are differences.
So what about the disadvantages of an insurance agent? What are the benefits of an insurance agent? What’s the difference, again? You might be looking for cheap car insurance brokers online.
As we’ve discussed, insurance brokers work for you, the client. They are truly independent as they don’t have contracts with specific companies. On the contrary, an insurance agent is contracted by one or more specific insurance companies.
An insurance agent can either be a captive agent, meaning they work for one specific company, or they can be independent agents, meaning they have multiple contracts with different companies.
In both scenarios, the agent always represents the auto insurance company or companies they’re contracted with. Keep in mind that there will still be pros and cons of independent insurance agents.
What is an insurance license?
An insurance license is required for an individual to sell insurance. The process for qualifying for and receiving an insurance license varies by state and that includes a car insurance broker license.
You must complete a certain number of training hours before you can qualify for an insurance license. The more types of insurance you’re licensed to sell, the more required hours of training you must complete.
Oftentimes, an individual will make the most of their training hours by getting licensed to sell multiple different kinds of insurance, including auto, life, health, and homeowners insurance.
What are some other ways to get auto insurance quotes?
It is important to note that getting auto insurance broker online quotes is not the only way to obtain quotes. You can contact auto insurance companies directly to obtain a quote instead of going through broker direct car insurance.
While you can call a company for a quote, many auto insurance companies also provide an online rate quote generation form.
You may also use a rate comparison website to get customized rate estimates. These can be used to determine which companies may offer you the lowest rate.
Based on this information, you will be able to head straight to the company that may provide you with the lowest rate rather than spend time shopping around from company to company.
Regardless of which option you choose to obtain new auto insurance rate quotes, an insurance broker or company, start comparing rates with your ZIP code in our free auto insurance comparison tool now and find affordable car insurance near you.
Frequently Asked Questions
What do insurance brokers do?
If you’re asking what is a broker for car insurance, we’ve got the answer for you. Brokers for car insurance act as mediators between those buying insurance and the companies selling insurance.
What are some disadvantages of insurance?
Some disadvantages of insurance include lack of coverage for all foreseeable issues, or paying for a policy that is not right for you and your individual needs.
Putting in the time upfront to research different companies and types of car insurance, and to receive multiple quotes before buying, can really save you time and money in the long run.
How do I find an auto insurance broker near me?
Look up different vehicle insurance brokers in your area and be sure they have the appropriate licensing for your state. An easy place to start is googling “car insurance brokers near me” or “car insurance broker near me” to find some good options.
It’s also a good idea to check on their customer service ratings to ensure they are trustworthy and professional.
What are some pros and cons of selling insurance?
Some of the pros of selling insurance include setting your own schedule and building your own network. A job as an insurance broker for car insurance is great for go-getters with good time management skills who are willing to market themselves to build a strong client base.
The biggest con, however, is that many people question if finding car insurance through a broker is really necessary now that it’s easy to get insurance quotes online.
Can I use both an auto insurance broker and contact insurance companies directly for quotes?
Yes, you have the option to use both an automobile insurance broker and contact insurance companies directly for quotes. While brokers can gather quotes from multiple insurers on your behalf, you can still reach out to insurance companies independently if you prefer. It can be beneficial to compare the quotes obtained through a broker with the quotes you receive directly from insurance companies to ensure you’re getting the best possible rates.
Can an auto insurance broker help me with claims or policy changes?
Yes, auto insurance brokers can assist you with claims and policy changes. They act as intermediaries between you and the insurance company, so they can help you navigate the claims process, provide guidance, and address any issues that may arise. Additionally, if you need to make changes to your policy, such as adding or removing coverage, a broker can assist you in communicating those changes to the insurance company.
Can an auto insurance broker help me if I have a poor driving record or a history of accidents?
Yes, an auto insurance broker can assist you even if you have a poor driving record or a history of accidents. Brokers work with multiple insurance companies, including those that specialize in providing coverage to high-risk drivers. They can help you find suitable coverage options and potentially get better rates compared to contacting individual insurance companies directly.
How do insurance brokers make money?
Some drivers might wonder how do insurance brokers work to get paid? They get paid by commission according to how much and what kind of coverage they sell.
Are car insurance brokers cheaper?
Something that every driver probably wants to know is are insurance brokers cheaper? That really depends on your own personal factors and driving record as well as what type of insurance coverage you need.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Jeffrey Manola
Licensed Insurance Agent
Jeffrey Manola is an experienced insurance agent who founded TopQuoteLifeInsurance.com and NoMedicalExamQuotes.com. His mission when creating these sites was to provide online consumers searching for insurance with the most affordable rates available. Not only does he strive to provide consumers with the best prices for insurance coverage, but he also wants those on the market for insurance to ...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.