Auto Insurance Company vs. Auto Insurance Broker: Simply Explained (2023)
The difference between an insurance company vs. an insurance broker is that one sells policies directly, and the other helps you compare insurance companies. There is also a difference between an agent and a broker, with one working for insurance companies and others working for you, the client. There are several types of insurance brokers, and the work for multiple insurance carriers. There are both advantages and disadvantages of insurance brokers, including broker fees of up to $35.
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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: Oct 27, 2023
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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 insurance industry 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: Oct 27, 2023
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 insurance industry 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
- Insurance brokers focus on your specific needs.
- Insurance companies will offer a broad selection of auto insurance options.
- You could pay a broker fee if you go to an insurance broker.
Did you know auto insurance agents and auto insurance brokers aren’t the same? What is the difference between an insurance company and an insurance broker? If understanding auto insurance seems complicated, don’t worry. We’ll look at insurance company vs. insurance broker differences in this article.
Do you want a quick check of auto insurance quotes before we go over the difference between a car insurance company and a car insurance broker? Enter your ZIP code in the FREE comparison tool above to compare auto insurance in your area.
What is the difference between an auto insurance company and an auto insurance broker?
The difference between an insurance company and an insurance broker is that companies have agents and employees that help customers get coverage. The auto insurance broker represents the insurance buyer and gets an insurance policy using the customer’s information.
Captive agents represent one company, while independent agents represent multiple insurance companies.
Read more: What is the difference between a captive and independent auto insurance agent?
An insurance agent can represent one or more auto insurance companies. An auto insurance agent, or any other type of insurance agent, is an extension of the company they represent.
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The Differences Between Agent and Broker in Marketing
Brokers in marketing represent a buyer or a seller, and they’re paid by the person or company who hires them. Brokers can represent several manufacturers of non-competing products, like insurance, on a commission basis. Brokers don’t carry an inventory of products or take on risk.
Watch this video to learn more details about the differences between an agent and a broker.
Agents in marketing don’t take legal ownership or physical possession of products they sell. Agents work for insurance companies. They connect the buyer directly to the seller and receive commissions from each customer they get.
Read more: What is the difference between an auto insurance agent and an auto insurance broker?
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What is an auto insurance broker?
As we mentioned before, car insurance brokers represent you, the customer. They help you search for an auto insurance policy that meets your needs.
According to Investopedia, the insurance broker definition is “an insurance expert representing consumers in their search for insurance policies.”
Auto insurance brokers don’t represent companies, so they can’t bind coverage on behalf of a company. Brokers must give the account information to the company or an auto insurance agent representing the company to complete the policy transaction.
Auto Insurance Carrier vs. Auto Insurance Broker
Auto insurance carrier is a synonym for car insurance company or auto insurance provider. These terms are used interchangeably. Auto insurance companies will have everything you need to ensure that you’re covered behind the wheel.
If you decide to go with a broker, your auto insurance coverage will be focused on your needs. However, your auto insurance needs would be determined by the expertise of an auto insurance specialist.
Review the next few subsections for more details about the role auto insurance brokers have and the disadvantages of working with a broker.
Types of Insurance Brokers
There are two types of insurance brokers: retail and commercial. Auto insurance brokers are retail brokers. Commercial brokers specialize in different industries, like gas, airplanes, and marine. Commercial brokers handle more layered policies specific to the industry where a consumer needs coverage.
How much do insurance brokers make?
All salaries vary by state. We did some research and found the average annual salary of insurance brokers by state. Review the salaries below by entering the name of your state in the upper right corner of the data table. Not looking for a particular state? Scroll through the list to compare hourly wages and annual salaries in each state.
| States | Insurance Broker Hourly Wage | Insurance Broker Annual Salary |
|---|---|---|
| New York | $44.82 | $93,222 |
| Massachusetts | $44.39 | $92,341 |
| Washington | $44.08 | $91,696 |
| New Hampshire | $43.21 | $89,869 |
| Hawaii | $42.64 | $88,687 |
| Maryland | $41.14 | $85,577 |
| Connecticut | $41.13 | $85,550 |
| Rhode Island | $40.80 | $84,855 |
| Alaska | $40.74 | $84,745 |
| Vermont | $40.57 | $84,393 |
| Nebraska | $40.52 | $84,287 |
| Nevada | $40.42 | $84,080 |
| North Dakota | $40.27 | $83,762 |
| Wyoming | $40.24 | $83,689 |
| California | $40.17 | $83,554 |
| Virginia | $39.99 | $83,182 |
| Kentucky | $39.19 | $81,508 |
| South Dakota | $39.09 | $81,316 |
| New Jersey | $39.01 | $81,140 |
| West Virginia | $38.96 | $81,041 |
| Pennsylvania | $38.77 | $80,649 |
| South Carolina | $38.57 | $80,232 |
| Minnesota | $38.54 | $80,158 |
| Oregon | $38.44 | $79,964 |
| Delaware | $38.44 | $79,954 |
| Tennessee | $38.41 | $79,897 |
| Colorado | $38.39 | $79,846 |
| Montana | $38.36 | $79,788 |
| Ohio | $38.14 | $79,321 |
| Wisconsin | $38.04 | $79,132 |
| Arizona | $37.96 | $78,967 |
| Kansas | $37.80 | $78,627 |
| Utah | $37.78 | $78,592 |
| Indiana | $37.72 | $78,461 |
| Oklahoma | $37.66 | $78,337 |
| Idaho | $37.56 | $78,115 |
| Maine | $37.53 | $78,056 |
| Louisiana | $37.37 | $77,739 |
| Iowa | $36.99 | $76,939 |
| Georgia | $36.62 | $76,179 |
| Texas | $36.20 | $75,304 |
| New Mexico | $36.13 | $75,141 |
| Michigan | $36.03 | $74,951 |
| Arkansas | $36.01 | $74,896 |
| Illinois | $35.81 | $74,488 |
| Alabama | $35.77 | $74,397 |
| Mississippi | $35.41 | $73,644 |
| Missouri | $35.32 | $73,471 |
| Florida | $34.52 | $71,800 |
| North Carolina | $32.87 | $68,369 |
The research is a general overview of insurance broker salary and doesn’t identify between retail or commercial. You may guess that commercial brokers earn more, considering the industry-specific policies.
Insurance Broker vs. Agent vs. Producer Salary
So, who earns more money, the insurance broker, agent, or producer? And what are insurance producers?
Insurance producers are licensed sellers of insurance that can sell and negotiate all types of insurance products, such as life, health, auto, and property.
While insurance producers are licensed sellers, insurance brokers and agents work to connect consumers to companies that sell the insurance. For example, a health insurance broker or agent may hand over information about you to the company that’s selling insurance, but a health insurance producer directly sells you the insurance coverage.
Which one of these professionals earns the most? Here’s a quick summary that shows the average hourly wage and annual salary of all three professions.
| Insurance Professional Title | Average Hourly Rates | Average Annual Salaries |
|---|---|---|
| Insurance Broker | $38.69 | $80,478.16 |
| Insurance Agent | $23.33 | $48,533.70 |
| Insurance Producer | $17.98 | $37,394.48 |
The broker earns the most out of the three insurance professions. However, the individual salary is based on how many services you can provide your customers. Commissions are based on the number of policies, but some agencies offer an hourly wage in addition to commissions.
Disadvantages of Auto Insurance Brokers
Auto insurance brokers are intermediaries between customers and insurance companies. Brokers compare car insurance quotes for you. It’ll be up to the broker to ensure that you get the coverage you need, and you’ll pay for their expertise through a broker fee. Also, auto insurance is more expensive if you go through a broker or an agent to get car insurance.
Retail auto insurance brokers may not always work in the consumer’s best interest. However, a commercial car insurance broker can connect a business to the right insurance company. If the fee is too expensive, try another broker or shop around for an affordable commercial insurance policy yourself.
Insurance Broker Fee vs. Commission
To understand the difference between an insurance broker fee and commission, we’ll need to explain both. A broker fee is a fee you pay in addition to the auto insurance policy rate (a deposit to get your auto insurance started). A commission is charged by the broker agency (retail) and wholesale insurance brokers, which the consumer (you) will pay to the broker.
Insurance brokers have to tell you about fees and commissions, and the costs must be reasonable. Broker fees are under strict state law. Some states, like Florida, have a relaxed approach and allow companies to administer broker fees as they see fit. According to Florida State Law, broker fees must be reasonable, but the state law doesn’t indicate a dollar amount.
Independent Auto Insurance Agent Commission Rates
According to The Street, captive insurance agents get a small percentage of an auto insurance policy, which is about five to 10 percent. Independent agents receive about 15 percent. That means if your policy is $1,030 for the year, a captive agent could make between $52 and $103. The independent agent could earn roughly $155.
Speaking of rates, don’t forget to use our FREE comparison tool to compare auto insurance companies in your area!
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Frequently Asked Questions
What is an auto insurance company?
An auto insurance company is a business that sells auto insurance policies directly to consumers. They assume the financial risk associated with providing coverage for various types of automobile-related losses, such as accidents, theft, or damage. Auto insurance companies typically have their own underwriting departments, claims processing teams, and customer service representatives.
What is an auto insurance broker?
An auto insurance broker is a professional intermediary who helps individuals and businesses find suitable auto insurance coverage. Unlike insurance companies, brokers do not underwrite policies themselves. Instead, they work with multiple insurance companies to provide clients with options from different insurers. Brokers assess the insurance needs of their clients, compare policies from various providers, and assist in selecting the most appropriate coverage.
How does the pricing differ between an auto insurance company and an auto insurance broker?
Auto insurance companies usually set their own rates based on several factors such as the driver’s age, driving history, vehicle type, location, and coverage preferences. The pricing offered by an auto insurance company is specific to that particular company’s policies.
Which option offers a wider selection of insurance policies?
Auto insurance companies typically offer a range of insurance policies, allowing customers to choose from various coverage options and add-ons. However, the selection of policies is limited to those offered by that particular company.
Do auto insurance brokers charge a fee for their services?
In most cases, auto insurance brokers do not charge a fee directly to their clients for their services. They earn a commission from the insurance company with which the client chooses to purchase a policy. The commission is typically a percentage of the premium paid by the client.
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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.