A car insurance broker will work with you to help find the right coverage at the most affordable rate. While comparing rates is always a good idea before buying insurance, deciding whether or not to use a broker depends on your situation.
What is a car insurance broker?
A car insurance broker is an independent individual that can help you determine what insurance policy best suits your needs and finances. Some states require that insurance brokers have a fiduciary duty to their client, meaning that they are legally required to act in their client’s best interests.
Insurance brokers work for you — not the insurance company — and act as your own personal insurance shopper. They are not able to sell the policy to you directly, but instead work with an insurance agent on your behalf.
Brokers provide expert advice on insurance options and help you personalize coverage based on your lifestyle and preferences, rather than purchasing a generic insurance plan. Plus, many brokers deal in multiple types of insurance — so whether you’re looking for car, life or health insurance, a broker can likely help you compare different plans to find the right policy.
How are car insurance brokers paid?
Brokers are typically paid through broker fees and commissions from insurers, though some offer free services. To ensure you have a thorough understanding of the process, make sure to ask your broker about any fees you’ll pay for their services.
Commissions
Brokers typically make their money on commission, which generally means they earn a percentage of the policy they sell to you, paid by the insurer. The amount they earn varies by the company and plan you choose.
Because of this, be aware that an insurance broker may want to upsell you to earn a higher commission. They shouldn’t be biased towards one company over the other because a broker gets a commission from every company, but some might complicate that process by giving brokers a higher commission fee.
This commission-based pay structure also means that your broker is invested in you liking your policy long-term. If you end up canceling your coverage, the broker may have to return part of their commission — and if you renew your policy, they may receive additional payment.
Broker fees
A broker might charge you an additional fee for using their services. Fees vary, but should be disclosed upfront. You can also try to negotiate the broker fee, though their commission is usually set by the insurance company and not negotiable. Keep in mind that these fees may not be refundable, even if you cancel your policy. Your state might also cap the amount a broker can charge.
Should you use a car insurance broker?
Though nearly everyone can benefit from shopping around for different plans, car insurance brokers are most useful when you have uncommon needs, like commercial car insurance or special coverage. Because a broker can likely find better deals from insurers than you would on your own, you may also want to consider one if you have a bad driving record.
Here are the most common reasons to use a broker — and examples of when you might not need one.
Use a broker if you:
- Don’t want to spend your own time and energy to find the right car insurance policy.
- Want to find the best deal.
- Have unique coverage needs, such as requiring business coverage or owning multiple homes or vehicles.
- Have a poor driving record.
You likely don’t need a car insurance broker if you:
- Know what car insurance company you want to use and the kind of coverage you need.
- Want to stay with your same insurer and policy.
- Don’t require any specialized coverage.
The difference between an insurance broker vs. an agent
The biggest difference between an insurance broker and an insurance agent is that brokers don’t work for a specific company. This means they’re more flexible to help you find the provider that will best fit your insurance needs.
There are two types of licensed insurance agents:
Captive agents: They are ambassadors for one specific insurance company. You won’t receive quote comparisons from captive agents, so you may pay a higher insurance premium depending on the company they work for.
Independent agents: While they’re not tied to a single insurer, independent insurance agents still have contracts with specific companies. They’re similar to brokers, but since they still work for the insurers, they have an incentive to upsell.
How to find a car insurance broker
One way to find the right car insurance broker is by asking your friends and family for recommendations. You can also search online and check reviews before choosing someone.
Car insurance comparison sites like Jerry can also provide free quotes to help you find the right policy at the cheapest rate.
If you want to speak to a real person before making your decision, do a local search on Google or check your state’s insurance department page for listings. Just make sure to read reviews and confirm that they are a certified broker.
Kayda Norman is an insurance writer and editor with more than 12 years of content experience. She previously worked at NerdWallet as an insurance writer and content management specialist. She has covered a wide range of insurance topics such as high-risk drivers, auto insurance rate factors, and credit-based insurance scores. Her work has been featured in The New York Times, The Washington Post, and USA Today.
Everett Cook is an award-winning journalist and editor with more than 10 years of experience across a variety of industries. In editing for Jerry, Everett’s mission is to help readers have a better understanding of the costs of owning or leasing a car and to better understand their vehicle in terms of insurance and repairs. Prior to joining Jerry, Everett was an editor for Axios. His previous work has been featured in The New York Times, The Los Angeles Times, The San Francisco Chronicle, The Atlantic, Atlantic Re:think, The Boston Globe, USA Today, and others. He’s also been a freelance writer and editor with experience in SEO, audience building, and long-term content roadmaps. Everett is a proud graduate of the University of Michigan.
