Online, Broker or Agent: The Best Way to Buy Your Car Insurance

by Quiana Darden Updated November 19, 2021

Group of auto insurance brokers talking

Shopping for auto insurance isn’t exactly the most exciting experience, but finding the most suitable option is essential.

You want a policy and company that will provide you with the type of coverage you need without charging you an arm and a leg.

Agents and brokers exist to make this process easier. However, because of online comparison platforms, are either of these a mandatory part of the process?

In this article, we’ll discuss the specific duties of independent brokers and captive agents, along with the pros and cons.

Additionally, we’ll also share the benefits of using online comparison platforms and how they can make the process of finding a suitable policy more efficient.

What is an Auto Insurance Broker?

Auto insurance brokers work for you. You express that you want to purchase car insurance for the lowest price; they’ll ask your desired coverage level, deductible, and so on.

The broker then uses that information to get quotes from several different insurers. They negotiate prices on your behalf, using their expert knowledge of car insurance products to find you discounts and policies that work for you.

Essentially, your auto insurance broker is a jack of all trades when it comes to insurance shopping.

Different Types of Auto Insurance Brokers

There are a few different types of auto insurance brokers. The two primary brokers are independent car insurance agents and captive insurance agents.

The main difference between these two is that the captive insurance agent is bound to offer insurance policies from one company only, while an independent car insurance agent may present you with multiple options.

Independent agents don’t work for one specific insurance company – hence their independence. On the other hand, captive agents are directly employed by an insurance carrier. Many people use independent agents to secure more options when it comes to insurance companies.

Each of these broker options has pros and cons, so let’s examine some of the positives and negatives of these respective agents.

Independent Car Insurance Brokers

Independent car insurance brokers operate separately from a major insurance company. These brokers are in business for themselves, so the guidelines they are required to follow are less stringent than those of a captive agent.

Because these brokers aren’t directly employed by one company, they can be more transparent about which company can provide you with the best options. They’ll wade through the endless sea of insurance carriers and use your specific needs to find the company that works best for you.

Pros of Using an Independent Insurance Broker

  • More Responsive. Many independent auto insurance brokers make their services available 24-hours a day. Using a local agent can be convenient and sometimes means your claim is handled in days or weeks instead of months.
  • Better Communication. Independent auto insurance brokers often provide better and more frequent communication throughout the process.
  • Additional Options. Dealing with an independent agent allows you to compare options from multiple carriers. In doing this, there is a better chance of securing a better deal than if you only have the opportunity to choose from one carrier.
  • Personalized Coverage Reviews. Usually, an independent insurance agent will do a better job at working with you one-on-one. This affords them the ability to provide their clients with more personalized coverage reviews and ensure you secure the most suitable policy.

Cons of Using an Independent Insurance Broker

  • Lesser-Known Insurance Companies. Although an independent agent may have more choices, you might not be familiar with some of the auto insurance companies. Larger companies tend to lean towards captive agents and shy away from using independent brokers. The auto insurance companies that generally do business with these brokers are sometimes smaller or startups.
  • Less Support from Companies. Independent agents typically receive less support from insurance companies because they are not directly affiliated with them. Captive agents can pull strings and receive guidance that independent brokers sometimes don’t have access to. Because of this lack of support, independent brokers often have to use their own resources, which can strain their business.
  • Commissions Could Play a Role. Different insurance companies may provide a higher commission to an independent agent than others. This dynamic could lead an agent to sway you in the direction of a particular company just because it leads to a bigger payday for them.

Captive Insurance Brokers

Captive insurance brokers do business on behalf of one insurance company, and they must follow the guidelines, principles, and policies they provide.

Because of this, they may be able to provide you with more insight into policy details which allows them to create a more custom policy based on your needs.

Pros of Using a Captive Insurance Broker

  • More Knowledge. Your captive broker will know just the right product for you and will be able to help you maximize your discounts. Because of their expertise, they can answer more detailed questions about your policy and the company as a whole.
  • Reduced Stress. Captive brokers don’t have to handle generating their own leads. Because of this free time, some may be willing to go the extra mile and provide you with special benefits from the company they work for.
  • Better Perks. Captive agents typically work for larger insurance companies that have more resources. Often, these captive brokers can offer special discounts and perks at their discretion. If they cannot pull strings directly, they do have access to higher authorities within the company that may be able to provide more assistance.

Cons of Using a Captive Insurance Broker

  • Fewer Options. Buying from a captive broker means you’re only getting a quote from one company. To ensure you receive the best premium, you’d need to secure quotes from several different companies. Doing so one by one can be a long and tedious process.
  • More Pressure. Many captive agents are being pushed to meet a sales quota. This can lead certain agents to bait you into buying a policy just because they need to hit a certain number. In these situations, you might not get the policy that’s most suitable for you.
  • Less Availability. Captive agents are limited to the call-center hours of the company they work for. Typically, this is between 9 AM and 5 PM, Monday-Friday. In emergencies, it’s less likely they’ll be available to support you with your questions or concerns.

How Much Does an Auto Insurance Broker Cost?

The cost of an auto insurance broker is dependent on the type of policy you select. Their pay is based on a percentage of the total policy, ranging between 10-20% on average.

For example, if the policy you purchase is $1,000, most agents will profit anywhere from $100 to $200 on this transaction. Their prices vary depending on the carrier and type of policy you purchase.

An independent agent will never have a direct “fee.” However, you can rest assured their commission is being paid on the backend of your insurance policy.

Who Pays the Car Insurance Broker Fee?

Although the insurance company you end up choosing a policy from pays the broker, it comes out of your pocket in a roundabout way. This is because the commission is worked into the total cost of the policy the broker ends up selling you.

Unfortunately, this can cause the price of your policy to increase substantially. That’s what makes working with an independent broker one of the most expensive options available for choosing a policy.

How to Find Car Insurance Without a Broker

One of the most efficient ways of finding insurance without the help of a broker is through a comparison platform. These platforms prompt you to input all of your relevant information, and they find the most suitable policy options based on cost. Compare is one of the leading and highly rated platforms available online.

Use an Insurance Comparison Platform

Type in the website, input your personal details, and within a few minutes, you have insurance quotes from various companies to choose from at your fingertips.

Pros of Buying Insurance Online

  • No Pressure: When you buy an insurance policy online using an insurance comparison platform, the company doesn’t make a dime until you choose a policy. That’s why you can rest assured the options presented to you are truly the best options available. If you also don’t like the hard sell of a broker or agent, this is a clear choice.
  • Numerous Options: Compare.com can provide you with just as many options as an independent agent. The rates will also be far lower because there’s no commission. An additional benefit is that Compare can offer you rates from some of the top carriers on the market. They aren’t limited to smaller companies that don’t carry as favorable of a reputation.
  • No Solicitation: Another highlight of Compare is that you won’t be solicited by agents trying to sell you insurance. They have a strict no-spam policy in place that protects you as a consumer.

Cons of Buying Insurance Online

When you buy directly through an online comparison site, you don’t have an expert on hand to tell you where to look for discounts, additional savings, or whether or not another insurance company might have a similar product for a lower price. However, sites like Compare.com have easy-to-use tools and countless other resources to answer almost any question you might have. You’re most likely to find the best deal when you’re comparing prices from several companies and forcing them to compete for your business.

Takeaways

In the end, you need to weigh whether taking the time to get multiple quotes is worth saving the money and having various options for savings and quality.

When you use an independent agent, you will have a human to research for you. However, this isn’t anything more advantageous than what Compare can provide you with. In the end, going this route could end up costing you hundreds of dollars throughout your policy based on the savings you could secure.

Using a captive agent doesn’t provide you with the options you need. Sure, having an insider within a major company can have its benefits, but if this company can’t provide you with the savings you deserve, the advantages are null and void.

In the end, the most significant deciding factor should be the fact that only you can look out for your own best interests. Both independent agents and captive agents have ulterior motives when it comes to selling you a particular policy.

When you use an insurance comparison platform like Compare, you genuinely have nothing to lose and everything to gain. The end goal is to be as thrifty as possible while exercising all of your options, and Compare can provide you with this type of experience specifically.

FAQs About Auto Insurance Brokers

How do auto insurance brokers get paid?

Auto insurance brokers are paid out by the insurance company you buy your policy through. After the company has finalized your policy details, they will provide the agent with their commission. It’s important to note that usually, these commissions are directly factored into the total of your policy.

What does an auto insurance broker do?

An auto insurance broker will take your information regarding auto insurance. They use this information to provide you with a list of the best potential options for insurance coverage. The list will be based on the coverages you request and the best prices available.

How much do car insurance brokers charge?

Car insurance brokers don’t have a direct charge for providing clients with insurance options. Instead, they receive a 10-20% commission directly from the insurance company you purchase your policy from. This percentage is factored into the total amount of the policy.

Is it better to go with an insurance broker?

Because of the existence of online platforms like Compare, it is not as necessary to do business with an insurance broker. These platforms can typically provide more options through major carriers at a much better price. You are essentially paying an agent for the same service Compare can provide you for free.

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