Auto Insurance Company vs. Broker: Differences Explained in 2024 (Key Points Outlined)
The difference between an auto insurance company vs. broker lies in how they operate. Insurance companies offer their own policies while brokers compare rates from multiple insurers. Brokers can save you time, but rates may vary. For example, 17-year-olds might pay $200 to $400/mo for coverage, depending on the provider.
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Jeffrey Manola
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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 ...
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UPDATED: Nov 28, 2024
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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 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: Nov 28, 2024
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 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.
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Knowing the difference between auto insurance company vs. broker can help you choose the best option. An auto insurance company sells its own policies, meaning you must compare quotes from multiple insurers to find the best deal. On the other hand, an online insurance broker acts as an intermediary, gathering quotes from several insurance companies and presenting them to you.
While auto insurance brokers save you time by doing the legwork, working directly with an insurance company may offer more control over your choices. It’s also important to note that rates can vary significantly. For example, a 17-year-old driver could pay anywhere from $4,807 to $13,718 annually.
Brokers generally earn commissions from insurance companies but can help you secure better rates by leveraging their expertise. Enter your ZIP code above for more information and compare quotes to find the best coverage for your needs.
- Auto insurance companies sell their policies, while brokers offer multiple options
- Brokers save time by comparing quotes, but insurers provide more control
- Decide between a car insurance broker vs. direct for affordable, tailored coverage
Insurance Company vs. Broker: The Difference
What is the difference between an insurance agent and a broker? Well, two options for buying car insurance are to get quotes directly from a car insurance company or to get car insurance broker quotes. While they may seem similar, insurance companies are not brokers. So, what is the difference between a broker and an insurance company, and which one should you work with to get quotes?
An auto insurance brokerage works similarly to a mortgage or similar brokers. They work as liaisons to help buyers and sellers come together to execute a transaction. Because of using a middleman when using an insurance broker vs an agent, some people may prefer insurance companies, not brokers.
So, what is an auto insurance broker? The definition of auto broker insurance is fairly simple. Broker auto insurance personnel do the same thing between insurance shoppers and insurance companies. Insurance auto broker quotes can be gathered from multiple companies, and the goal is to find you the best possible rate.
A broker works to facilitate a transaction between you and the insurance company. This process involves the broker helping you to get quotes from different auto insurance companies as well as answering any questions you have about the quotes you are receiving.
After all, you likely will not be agreeable to switching insurance companies if a lower rate cannot be found. Learn how to switch auto insurance companies to ensure a smooth transition and maintain continuous coverage. However, the National Association of Insurance Commissioners (NAIC) cautions shoppers to ensure their agent, broker, or company is licensed to sell.
Fraud can be all too common when selling insurance, sometimes even among auto insurance broker companies. How can I know to trust an affordable auto insurance broker or company? Shoppers should check credentials and complaints to ensure their chosen company or brokers for auto insurance are reputable. We’ll cover more about insurance licenses below.
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How Brokers Get Rate Quotes
Suppose you decide to work with an auto insurance broker. In that case, you will provide the broker with many specific details about yourself, your car, and your driving history in order to get car insurance broker quotes. These are the exact details you would provide to an auto insurance company if you were to get a full insurance quote, as these are the factors that affect auto insurance rates. This information may include:
- The make, model, and year of your car
- Safety equipment in your vehicle, like an anti-theft alarm system, airbags, and more
- Your age and gender
- Your driving history
- Your home and work address
The auto insurance broker then takes your information to different auto insurance companies to get quotes on your behalf. Because the broker gets quotes for you, you can benefit from saving time when working with a broker.
Regardless of whether you’re using an insurance agent vs a broker, your personal factors matter. To give you an idea of how one of the above factors (age and gender) can drastically change your rates, we’ve included rate data from Quadrant below.
Auto Insurance Rates by Age and Gender
| Auto Insurance Rates by Age and Gender | Single 17-year-old Female Average Annual Auto Insurance Rates | Single 17-year-old Male Average Annual Auto Insurance Rates | Single 25-year-old Female Average Annual Auto Insurance Rates | Single 25-year-old Male Average Annual Auto Insurance Rates | Married 35-year-old Female Average Annual Auto Insurance Rates | Married 35-year-old Male Average Annual Auto Insurance Rates | Married 60-year-old Female Average Annual Auto Insurance Rates | Married 60-year-old Male Average Annual Auto Insurance Rates | Average Annual Auto Insurance Rates |
|---|---|---|---|---|---|---|---|---|---|
 | $9,282.19 | $10,642.53 | $3,424.87 | $3,570.93 | $3,156.09 | $3,123.01 | $2,913.37 | $2,990.64 | $4,887.95 |
 | $5,996.50 | $8,130.50 | $2,288.65 | $2,694.72 | $2,202.70 | $2,224.31 | $1,992.92 | $2,014.38 | $3,443.09 |
 | $8,521.97 | $9,144.04 | $2,946.80 | $3,041.44 | $2,556.98 | $2,557.75 | $2,336.80 | $2,448.39 | $4,194.27 |
 | $5,653.55 | $6,278.96 | $2,378.89 | $2,262.87 | $2,302.89 | $2,312.38 | $2,240.60 | $2,283.45 | $3,214.20 |
 | $11,621.01 | $13,718.69 | $3,959.67 | $4,503.13 | $3,802.77 | $3,856.84 | $3,445.00 | $3,680.53 | $6,073.46 |
 | $5,756.37 | $7,175.31 | $2,686.48 | $2,889.04 | $2,360.49 | $2,387.43 | $2,130.26 | $2,214.62 | $3,450.00 |
 | $8,689.95 | $9,625.49 | $2,697.73 | $2,758.66 | $2,296.90 | $2,175.27 | $1,991.49 | $2,048.63 | $4,035.52 |
 | $5,953.88 | $7,324.34 | $2,335.96 | $2,554.56 | $2,081.72 | $2,081.72 | $1,873.89 | $1,873.89 | $3,260.00 |
 | $9,307.32 | $12,850.91 | $2,325.25 | $2,491.21 | $2,178.66 | $2,199.51 | $2,051.98 | $2,074.41 | $4,434.91 |
 | $4,807.54 | $5,385.61 | $1,988.52 | $2,126.14 | $1,551.43 | $1,540.32 | $1,449.85 | $1,448.98 | $2,537.30 |
Are insurance brokers more expensive? As you can see, rates are drastically different among companies. Discover how to switch auto insurance companies and find the cheapest options for teen auto insurance to simplify the process.
Broker Fees Explained
What is the auto insurance broker fee, and how do brokers make money? Is there a no-broker fee for auto insurance? If you’re comparing broker vs agent insurance, you probably want to find out if you can get auto insurance with no broker fees. Usually, yes, you can find no broker auto insurance fee. In most cases, an auto insurance broker is paid a commission from the auto insurance company through which you decide to purchase your new insurance.
In some cases, drivers can access no broker auto insurance fees, as some brokers operate solely on commission. Brokers will not get paid by the insurance company unless you purchase insurance, so you don’t need to worry about broker fee car insurance. To accomplish this, the broker must help you find a lower rate and convince you to purchase that coverage.
With this in mind, many brokers will work very hard to find you a lower rate and answer all your questions about insurance coverage. The percentage a broker makes from a commission changes by state, but usually, they make anywhere from two to eight percent commission from every policy they sell to a client. Some brokers may charge clients a fee for their services when commissions are smaller. However, auto insurance options are also available with no broker fees.
Working with a Broker vs. an Insurance Company
There is no right or wrong way to get auto insurance quotes. Whether you use an insurance broker or go directly to insurers, it’s essential to understand how to get auto insurance quotes and compare the options to find the best deal. Working with a broker for auto insurance does have its advantages. Most drivers want to know if insurance brokers save you money and if car insurance brokers are worth it.
When working with broker car insurance, you enjoy the free services of a professional dedicated to helping you find an insurance policy that will save you money.
You will also benefit from having a live person who wants to answer your questions and help you make the best decision for your needs and budget even if you find a car insurance broker online.
Whereas when you get quotes directly from an insurance company, you are talking to a company representative who wants to sell you the policy they have to offer. So when you compare an auto insurance broker vs an agent of a company, the agent may not be looking out for your best interests. After learning the definition of insurance broker, you might look for a cheap auto insurance broker.
Choosing between an auto insurance company and a broker boils down to control versus convenience. Brokers offer comparison shopping, but insurers give you direct access to their products.Schimri Yoyo Licensed Agent & Financial Advisor
Many people who take the time to learn about the difference between an auto insurance broker and an auto insurance company decide to work with a broker after weighing the pros and cons of insurance brokers. You may also feel better knowing about secured car broker insurance, who make it a priority to help their clients be wholly protected during the process.
There are, of course, disadvantages to a broker as well. Let’s take a look at some of them. Take a look at the following list of disadvantages of insurance brokers in the table below and ask yourself, is it worth it?
Disadvantages of Insurance Brokers
| Insurance Broker Disadvantages | Reason for Disadvantage |
|---|---|
| They work on commission | They usually only get paid after you buy a policy, which means they may be more concerned with selling you something than finding the perfect policy for your needs. |
| Incentive clauses may cause bias | Ask for a compensation disclosure statement to ensure your broker is not selling with a bias. |
| Slower than other means of getting quotes | They submit your information to companies on your behalf, which takes time. |
| They don't know you as well as you do | No one knows you better than yourself; a broker may get things wrong. |
| Auto insurance comparison websites work better. | They do the same thing but faster and more efficiently. |
| They do not work for the insurance company | Insurance brokers may not know all available bundles and savings opportunities an agent might have access to. |
| You may not need all of the coverage they recommend | They may recommend you take out more coverage to get a higher commission. |
| They may not be aware of all discounts | It's virtually impossible for one person to know all of the bundles and discounts offered by every insurance company. |
| Lack of knowledge | A newer insurance broker may not know enough about you or the industry to secure your best rates. |
| Lack of experience | They may not know enough about local, smaller insurance companies. |
| There's no guarantee they'll provide you with the best rates | You cannot be certain that they're presenting you with the best options. |
As you can see, while insurance brokers are legally and ethically obligated to present you with your best rates, some may lean into bias and sign you up for more coverage than you need, or they may not know about the car discounts you’re eligible for.
Suppose an insurance broker is not familiar with all of the available companies in the area. In that case, they may miss great rates from smaller independent insurers and that can happen even with independent car insurance brokers. Find out rates for car insurance companies even without using an insurance broker for auto coverage.
Read More: How to Get Fast and Free Auto Insurance Quotes
The Difference Between an Insurance Agent and a Broker
People often think of insurance agents and brokers as much the same, but there are differences. So what about the disadvantages of an insurance agent? What are the benefits of an insurance agent? What’s the difference, again? You might be looking for the cheapest car insurance broker online.
As we’ve discussed, insurance brokers work for you, the client. They are truly independent as they don’t have contracts with specific companies. On the contrary, an insurance agent is contracted by one or more specific insurance companies.
An insurance agent can either be a captive agent, meaning they work for one specific company, or they can be independent agents, meaning they have multiple contracts with different companies. In both scenarios, the agent always represents the auto insurance company or companies they’re contracted with. Keep in mind that there will still be pros and cons of independent insurance agents.
Understanding an Insurance License
An insurance license is required for an individual to sell insurance. The process for qualifying for and receiving an insurance license varies by state, including an auto insurance broker license. You must complete a certain number of training hours before you can qualify for an insurance license. The more types of insurance you’re licensed to sell, the more required hours of training you must complete.
Oftentimes, an individual will make the most of their training hours by getting licensed to sell multiple different kinds of insurance, including auto, life, health, and homeowners insurance.
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Other Ways to Get Auto Insurance Quotes
It is important to note that getting auto insurance broker online quotes is not the only way to obtain quotes. You can contact auto insurance companies for a quote instead of going through broker direct car insurance. While you can call a company for a quote, many auto insurance companies also provide an online rate quote generation form.
You may also use a rate comparison website to get customized rate estimates. These can be used to determine which companies may offer you the lowest rate.
Based on this information, you can head straight to the company that may provide you with the lowest rate rather than spend time shopping around from company to company. This is an efficient approach to how to compare auto insurance quotes and find the best coverage for your needs.
Regardless of which option you choose to obtain new auto insurance rate quotes, an insurance broker or company, start comparing rates by entering your ZIP code in our free auto insurance comparison tool now and find affordable car insurance near you.
Frequently Asked Questions
What is the difference between an insurance company and an insurance broker?
An insurance company directly sells its own policies, while insurance brokers act as intermediaries, comparing multiple insurers to help clients find the best coverage.
What is the relationship between an insurance broker and an insurance company?
Insurance brokers collaborate with insurance companies by presenting their policies to clients. Brokers are independent and can work with multiple insurers to offer various options. Enter your ZIP code below to compare rates and discover the best coverage for you.
What is the purpose of an insurance broker?
The primary purpose of an insurance broker is to help clients find the best insurance coverage by comparing quotes from multiple companies and providing professional advice. Find out where to compare auto insurance rates.
What is the difference between an insurance company and an insurer?
The terms are often used interchangeably, but an insurance company and insurer refer to entities that underwrite and sell insurance policies.
What are the disadvantages of using an insurance broker?
Some disadvantages include potential bias toward certain insurers, limited knowledge of the best auto insurance discounts, or added costs if the broker charges a fee for their services.
What is the difference between a broker and an agent?
A broker works for the client, offering policies from multiple insurers, while an agent represents one or more insurance companies to sell their policies.
What is the difference between an insurance broker and an advisor?
An insurance broker finds and compares policies for clients, while an advisor provides guidance on selecting insurance coverage but may not facilitate the purchase.
What is one of the main advantages of using a broker?
One of the main advantages is access to multiple insurance options, saving time, and potentially securing better rates by comparing different policies. Check out why to get multiple auto insurance quotes and how to get multiple auto insurance quotes for more details.
Are insurance brokers liable?
Insurance brokers can be held liable if they fail to perform their duties responsibly. This includes providing inaccurate information, neglecting to secure requested coverage, or engaging in fraudulent practices. Brokers are expected to act in the best interests of their clients, and legal action may be taken if negligence or misconduct causes financial loss.
What is the role of an insurance broker in managing insurance claims?
An insurance broker is an intermediary between the client and the insurance company during the claims process. They help clients on how to file auto insurance claims, ensure that all required documentation is submitted, and advocate on behalf of the client to ensure a fair settlement. While brokers do not settle claims directly, they provide valuable support and guidance.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
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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.