Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 13, 2022

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Here's what you need to know...

  • A portion of your premium is used to pay commission to an insurance agent
  • An insurance agent gets paid a salary as well
  • Some insurance agents also receive a bonus when they hit sales goals

When you buy car insurance, you pay a premium for your coverage. A portion of that premium pays a commission to an insurance agent. This commission pays the agent for the activities they performed when selling you the car insurance policy.

This fee includes the services provided when the policy first is issued plus the costs the agent incurs like renting an office and hiring staff to service customers. This commission provides the agent compensation for activities like:

  • Assisting with insurance claims
  • Answering questions
  • Assisting with coverage changes when needed
  • Maintaining accurate records
  • Preparing reports
  • Contacting you when coverage changes should be considered

That means that the commission that a car insurance agent receives pays for more than the initial sale of the policy but also for servicing your needs.

To get started finding an agent with the best rate, enter you zip code in the rate tool above!

How Car Insurance Agents Get Paid


There are five different ways that a car insurance agent could get paid and they are:

  • Commission Only
  • Salary plus commission
  • Salary plus bonus
  • Salary
  • Renewal commission

There is not one payment method that is better than the others for the insured. All methods of payment require the car insurance agent to have the same licensing and training. You have the right to ask the agent how they receive payment for issuing a new policy.

When you compare the rates of different insurance companies, you may see a difference in pricing between various insurance companies. That pricing difference is why comparison shopping for car insurance can help you get the best coverage for a fair price.

Commission Only

The most commonly found form of compensation for car insurance agents is earning only a commission and no salary.

The commission rate is different for each car insurance company. The commission the agent earns on a car insurance policy could be up to 15 percent of the policy premium for the first year of coverage.

A renewal commission is usually also paid by the insurance company to the agent each year when the car insurance policy renews. The renewal fee is often a lower percentage of commission when you compare it to the commission that they earned when the policy first was issued.

The renewal commission is paid as a servicing fee to the agent to assist the insured in making changes or providing other assistance to the insured. The renewal commission assures you that your car insurance agent is available to give you any help that you need.

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Salary Plus Commission

Some car insurance companies pay agents a salary and a commission. The salary will represent part of the total earnings for the agent and is often a lower dollar amount than earning a salary alone. A commission makes up the other portion of the earnings for the agent.

Some car insurance companies pay a higher salary and a lower percentage while others will do the opposite. Neither of those two options has an impact on the quality of your car insurance policy.

Car insurance companies often pay a higher salary to a new agent in the industry since a new agent does not earn as much money in renewal commission.

As a car insurance agent has more years of experience they will have higher total earnings. A seasoned agent can earn more money in renewal commissions since they have a greater number of customers.

Salary Plus Bonus

Some insurance companies pay a base salary to the agent and also pay a bonus. The bonus that gets paid is usually less than the salary and gets paid to the agent when they meet specific goals like a level of profit or a level of sales.

Salary Only

Some car insurance companies pay a salary with no commissions. This type of income would often get paid to a company employee that works for a single insurance company.

The employee may be responsible for executing policy changes or providing a new policy coverage that replaces an existing policy when a person moves to another state.

This type of job position could include customer service representatives or assistants that would help the agent or company to take care of the needs of the insured when any assistance is required.

Renewal Commissions

Many car insurance companies will pay an agent a renewal commission when you renew your car insurance policy. This payment is for the service work that is done by the insurance agent and would include the following activities:

  • Maintaining accurate records
  • Preparing Reports
  • Assisting with insurance claims
  • Answering questions
  • Assisting with coverage changes when needed

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Qualifications To Be A Car Insurance Agent


When you buy car insurance, you will have certain state-mandated requirements that you must meet. To provide the coverage that you need each state has created insurance laws to protect the consumer.

The insurance laws require that a person must be licensed as a car insurance agent in the state before they can sell car insurance.

The licensing requires that they complete and pass an examination. Each state also requires that a set number of hours of training get completed before taking the insurance test.

The training involves understanding the coverage options and learning the required state information that applies to car insurance.

The states also require that the agents complete additional training before they are allowed to renew their insurance license.

These protections are designed to provide the consumer confidence and knowledge that the car insurance agent understands car insurance policies and the state requirements for car insurance.

When you do comparison shopping for car insurance, they will give you different options for coverage limits. The agent will be able to explain the minimum coverage requirements in your state and the advantages of increased coverage limits.

The agent can also discuss the benefits of additional coverage options that could be available in your area.

You can save money when you do comparison car insurance shopping. You want to make sure that when you are doing comparison shopping that you compare similar coverage options.

You also want to have an agent assist you with understanding any additional coverage options and how they could benefit your needs.

Find a company that will give you the best coverage for the best price. Enter your zip code below and compare companies side-by-side!4