Should I buy car insurance through a broker or a company?

Whether you should buy car insurance through a broker or a company depends on your needs. Using a broker or company to buy car insurance is a personal choice, as is buying from a broker vs agent. There are advantages and disadvantages to consider when making your choice.

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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: Jan 25, 2021

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Here's what you need to know...

  • Insurance brokers are salespeople who work directly for you
  • A non-exclusive agent works for the insurer
  • A direct writer is an insurer that works directly with the customer

Whether you buy car insurance from an auto insurance broker or directly from the company is a personal choice that depends on more than just price.

No matter which method you prefer, it’s always a smart thing to shop around and compare cheap car insurance rates from as many companies as possible.

You can’t buy from a broker online in most cases, but you can here. Enter your ZIP code above to start getting quotes right now from many different companies.

What are car insurance brokers?

What are brokers? Why use an independent insurance agent instead?

Brokers are salespeople who sell for different insurers.

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What’s a broker’s salary?

Between $36,000-$120,000 a year.

They offer insurance through the following process:

  • Collect your information
  • Submit it to a variety of car insurers
  • They are paid by an amount incorporated into your car insurance rates

What is the purpose of an insurance agent? What are the disadvantages of an insurance agent?

Alternatively, you can use a non-exclusive agent. Typically, he has his own office and is an agent for a variety of different insurance companies.

Like a broker, he will present your information to different companies and advise you on which coverage you need.

When it comes to buying car insurance directly from a company, there are two different ways it may be handled:

  • One way is using an agent who works only for one company and is a local representative of the company. This is a good fit for those who like to deal one-on-one with their agent or those who like to deal with someone they know
  • The other option is to use a direct writer, which is simply an insurer that sells directly to the customer without involving a third party. Many direct insurance writers claim that they can offer the best prices because they keep their overhead lower.

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For comparison, let’s look at car insurance rates from different companies. You can compare those rates with rates from an agent.

Average Annual Car Insurance Rate Based on Type of Coverage
CompaniesAverage Annual Car Insurance Rate for Low CoverageAverage Annual Car Insurance Rate for Medium CoverageAverage Annual Car Insurance Rate for High Coverage
State Farm$3,055.40$3,269.80$3,454.80
American Family$3,368.49$3,544.37$3,416.40
Liberty Mutual$5,805.75$6,058.57$6,356.04
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Liability coverage averages $312 a month through these companies. Compare quotes from companies with those from agents to find competitive car insurance rates.

Is it worth it to use an auto insurance broker?

This is beneficial for most car insurance buyers. You have a much better chance of finding the best deal possible for you because they are drawing on a large number of companies on your behalf.

In fact, they will be able to access certain companies that only sell through brokers or agents giving you more choice than if you contacted companies directly.

Non-exclusive agents are an excellent choice when you are looking to shop around for the best price especially if you have unusual car coverage needs or if you are considered to be a high risk.

The advantages and disadvantages really depend on your unique situation this is also true re: the disadvantages of health insurance brokers.

The major disadvantage with brokers and agents is that they may have different commission schedules or even bonuses from certain companies when they sell policies— and that may influence what you are offered.

Purchasing directly from an insurer you may not save as much money as if you purchased through an agent.

Buying directly from the company typically takes longer than using an agent or broker, especially if you are shopping around, as you will have to contact various companies to get a price.

However, if you have unusual car insurance needs, you may be more successful in dealing directly with a specific company than through an agent.

There are many different types of car insurance and it’s not one size fits all. Some drivers will want very specific coverages due to their specific needs.

Whichever way you go, most states require you to have at least a minimum amount of coverage. You have to fulfill those minimums to drive without penalty.

According to the Insurance Information Institute, uninsured drivers average about 13 percent of drivers on the road. States levy fines and can suspend your license if you don’t carry insurance.

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Are auto insurance brokers cheaper?

Is it cheaper to go through a broker? Is it better to use an agent?

That answer really depends on what you are looking for. If you need specialty insurance, you might want to go directly to a company.

Brokers and agents can also charge fees that get added to your car insurance rates, making those rates go even higher. Also, it’s easier to get quotes from companies since you can mostly do that online.

Despite all the various ways you can go about getting auto coverage, there is one way that may prove to be most efficient.

Using an online quote tool is faster and more accessible than dealing with any of the insurance professionals mentioned above.

In no time, you’ll have a variety of quotes to compare and contrast, so you can make the best decision for your car insurance needs.

Now that you know if you should buy car insurance through a broker or a company, find affordable car insurance quotes now by entering your ZIP code below.

Free Car Insurance Comparison

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

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