How Much is Your Insurance Agent Making Off You?

The question arises about how much an insurance agent is making on you. It seems significant because in the world of insurance any commission would likely increase the cost of your premium. The subject of this article is about that very topic. How much do insurance agents make? How does it affect your premium? How much do you save by using companies that don't go through agents? It seems like a simple equation but the reality is a little more confusing. Agencies can sometimes be more expensive but direct agencies aren't always the cheapest option. This article is simply a primer and the ultimate decision is up to you when you and what works best for you and your family.

What is the difference between agents and direct insurers?

So, let's get into it. Agents come in two stripes, captive and independent. The independent agent sells products from an array of companies and allows for a much more personalized touch. Captive agents sell insurance for one company and are bound by their companies to move their products effectively. That's not to say that the captive agent will sell you the most expensive plan and ignore your options for discounts. It does mean that they have a limited scope and will only sell products for that one company but they will endeavor to personalize the customer experience to give a more personalized touch. Independent agents will sell you the best plan to meet your individual needs.

Direct insurers march to a different drummer. Direct buy tends to be a lot quicker and you're not attached to an agent's hours. For computer-savvy consumers, it is an easy decision. There are several pros to buying directly. You tend to pay less, you can make changes to your policy quickly, and you know exactly what agency insures your vehicle. In the direct scenario there is no middle man and therefore no commission however you may miss some important factors that phone operators won't know or care to tell you. If you do end up needed more personalized help you are stuck on a phone to an employee who may or may not even be able to help you.

Agents are an interesting lot. They know the ins and outs of the industry and while there are captive agents that work with one company an independent agent can shop around and find the best policy for your individual needs. The personalized touch goes a long way towards customer satisfaction. They do hold regular hours so in the event of an accident you may have to wait a few days to process a claim. You may also lose out on opportunities discounts and products not provided by agents that are captive or independent. Independent doesn't cover every agency after all. Finally, premiums with an insurance agent may run a little higher due to commissions and other associated fees that a direct company doesn't charge.

On to commission, insurance agents do take a commission on the sale of a policy and upon renewal. However, they aren't necessarily making a boatload of cash off their customers. Home and automotive Insurance agents typically make between 10 and 15 percent on the first year of a new policy. Although 15 percent is at the expensive end of the spectrum. Some make only 8% on the first year of the policy premium. Renewal isn't as expensive, typically agents make between 2 and 15 percent although typically the renewal rates are much lower between 2 and 5 percent of the annual premium. Although these commissions exist most agents are actively working to make sure your car or house is covered. The commission is an aspect of your insurance premium but it shouldn't deter you from checking them out. You may end up paying far less than you would with a direct buy insurer.

Insurance can be costly and it is important to get the most affordable coverage for your needs. An insurance agent can act as a guide through the labyrinthine passages of the insurance industry and even if there is a cost associated you may find that beneficial to your needs. Often most agents will be happy to sit down with you so you can compare and make the most informed decision for you and your family.