How does a car insurance agent get paid?

The average salary for a car insurance agent in the US is $4,017/mo. Most also receive an additional commission for each car insurance policy sold.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2020

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Here's what you need to know...

When you buy insurance, you’ll be faced with numerous decisions. The first choice you have to make is whether you’ll buy directly from the company or go through an agent.

Experienced insurance agents can provide a wealth of information and help you save money and frustration in the long run.

Start comparison shopping today by entering your zip code into our FREE tool above!

Commissions Add Up

Most agents have two lines of revenue — a base salary and a commission on each policy sold. In some cases, there may even be a third revenue line in the form of residual commissions paid out when policies are renewed.

As agents increase their volume, their earnings will naturally rise. Many agents will ask people to give them referrals, and they may also advertise their services to increase their volume.

Experience also makes a difference in how much auto insurance agents are paid. The industry average is about $85,000, but this can change based on the region.

Agents who have been in the business for a while have had time to develop a loyal clientele, and they tend to be on the higher end of the spectrum.

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Captive Vs. Independent Agents

It’s important to remember that there are two different types of agents. Major insurance companies have in-house agents who work solely for that company.

These captive agents have access to company resources and support systems, and they can turn to other in-house agents for advice and assistance.

On the other hand, independent agents represent competing companies. They often work from home or a small office, and they have to cover their own overhead expenses.

Independent agents aren’t limited to the products of one company, so they can look at several different carriers to find better rates.

It can be hard for them to get started because they’re typically paid solely on commissions. However, they tend to earn larger commissions than captive agents, so it balances out for them.

You can expect your agent to possess:

  • A high school diploma or higher
  • Substantial knowledge about different insurance lines
  • State licenses that must be maintained through continuing education
  • Current knowledge of the field

A Source of Knowledge

You could spend your valuable time trying to find different articles and educate yourself, or you can let an agent take care of everything for you.

It’s always wise to get some quotes on your own, but you can also rely on your agent for specific information that you may not find otherwise, which includes:

  • Your vehicle’s ISO rating
  • How tickets are likely to impact your rates
  • If your driving habits and claims history are putting you at risk for non-renewal
  • In-depth knowledge about how different claims are handled
  • What types of discounts you may qualify for to lower your rates
  • What activities you’re engaging in that may put your coverage at risk

The agent will look out for your best interests so they can help you save money today and in the future. You can shop around for general quotes, but you may want to work with an agent when it’s time to make the final purchase.

Buying insurance should be a simple matter, but you will need more details in order to make a fully informed decision.

Ultimately, these fees are part of the expenses an insurance company has to cover, but you can still save on your premiums by turning to an agent for assistance.

Make sure you get the best policy at the right price. Enter your zip code into our FREE comparison tool!

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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