Auto Insurance Company vs. Broker: Differences Explained in 2024 (Key Points Outlined)

Auto insurance company vs. broker: Knowing the difference 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 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 start comparing quotes to find the best coverage for your needs.

Insurance Company vs. Broker: The Difference

What is the difference between insurance agent and broker? Well, two of the 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 in a similar fashion as a mortgage broker or other similar types of brokers. They work as a liaison to help buyers and sellers come together to execute a transaction. Because of the use of a middleman when using an insurance broker vs 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 much the same thing between insurance shoppers and insurance companies.

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.

Insurance auto broker quotes can be gathered from multiple companies, and the goal is to find you the best possible rate. After all, you likely will not be agreeable to switching insurance companies if a lower rate cannot be found.

However, the National Association of Insurance Commissioners (NAIC) cautions shoppers to make sure that their agent, broker, or company is licensed to sell. Fraud can be all too common when it comes to 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 make sure their chosen company or brokers for auto insurance are reputable. We’ll cover more about insurance licenses below.

How Brokers Get Rate Quotes

If you make the decision to work with an auto insurance broker, you will provide the broker with many specific details about yourself, your car, and your driving history in order to get car insurance brokers quotes..

These are the same 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 car like an anti-theft alarm system, air bags, 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 if you’re using an insurance agent vs 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. Car insurance for teens and young drivers is the most expensive. Without the services of an insurance car broker, you would have to sort and compare each and every insurance company’s rates from which you request a quote.

Broker Fees Explained

What is the auto insurance broker fee and how do brokers make money? 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 fee auto insurance. In most cases, an auto insurance broker is paid a commission from the auto insurance company you decide to purchase your new insurance through.

In some cases, drivers do not pay any fees at all in order to use a broker’s services. Some brokers work only on commission. Brokers will not get paid from the insurance company unless you actually purchase insurance, so you don’t need to worry about broker fee car insurance.

In order 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 to answer all of the questions you have about insurance coverage.

The percentage a broker makes off of a commission changes by state, but usually, they make anywhere from two to eight percent commission from every policy they manage to sell to a client.

When those commissions are on the smaller side, some brokers choose to charge a broker’s fee. This is a fee charged to the client for the broker’s services.

Working with a Broker vs. an Insurance Company

So you’re still asking, should I use an insurance broker? There is no right or wrong way to get auto insurance quotes. Working with a broker for auto insurance does have its advantages. Most drivers want to know do insurance brokers save you money and are car insurance brokers worth it?

When working with broker car insurance, you enjoy the free services of a professional who is 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 representative of that company 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 insurance broker definition, you might look for a cheap auto insurance broker.

Many people who take the time to learn about the difference between an auto insurance broker and an auto insurance company make the decision to work with a broker after weighing the pros and cons of insurance brokers. You may also feel better knowing about secured car brokers, who make it a priority to help their clients be completely protected during the whole 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

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 certain car insurance discounts you’re eligible for.

If an insurance broker is not familiar with all of the available companies in the area, 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.

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 cheap car insurance brokers 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 and that includes 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.

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 directly to obtain 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 will be able to head straight to the company that may provide you with the lowest rate rather than spend time shopping around from company to company.

Regardless of which option you choose to obtain new auto insurance rate quotes, an insurance broker or company, start comparing rates with your ZIP code in our free auto insurance comparison tool now and find affordable car insurance near you.