How Much Commission Does an Auto Insurance Agent Make?

Last Updated on August 6, 2021

Most people assume auto insurance agents make decent money, enjoy comfortable working conditions, and enjoy a relatively stress-free job. Though some auto insurance agents make upwards of six-figure per year, the vast majority are at least somewhat reliant upon their commissions. Upwards of one-quarter of the typical auto insurance agent’s income is derived from commissions. However, most auto insurance agents are provided with a halfway decent salary so their livelihood is not entirely dependent on sales commissions.

how much does insurance agent make

Why It Is so Hard to Gauge Auto Insurance Agents’ Income

The vast majority of states purposefully conceal the income of their auto insurance agents. However, information about earnings by profession is available through the Bureau of Labor Statistics. This group states auto insurance agents earn a median salary of nearly $48,000 per year. The question begs: what percentage of this salary is derived from commissions? It is tough to provide a concrete answer to this question as this median salary includes income stemming from salary as well as commissions. Furthermore, some auto insurance agents work for multiple employers. The commission level likely differs from one employer to the next.

In general, auto insurance agents that stay with a single employer typically earn more than those who operate independently. Even the agent’s location plays a role in his or her commission level. Those who reside in big cities typically receive more substantial commissions than agents who live in rural areas or areas with fewer people.

Though it is certainly possible to ask auto insurance agents what they make in terms of commission, there is no guarantee you would receive an accurate response. Furthermore, most states do not require that auto insurance agents state what they make from a specific policy. There is an argument to be made that an auto insurance agent who refuses to reveal his or her commission should be fired. However, there is also a chance the next agent you pose the same question to will also refuse to answer your inquiry and so on.

A Closer Look at Auto Insurance Agent Commissions

Auto insurance agents typically receive 15% to 20% of the money their employer makes from the sale of a car insurance policy. This means an auto insurance policy that runs $1,400 per year will produce between $210 and $280 of commission for the auto insurance agent.  However, it is also possible for the auto insurance agent to make money by way of his base salary as well as the renewal of insurance policies and the retention of customers.

Commission stemming from an auto insurance policy differs by the year of business. The first year the customer is in the fold, the car insurance agent is likely to enjoy a commission in the range of 10% to 15%. However, this commission has the potential to increase with each subsequent year significantly. This is quite the contrast to other insurance agents, especially those in the life insurance business who typically make the bulk of their income when selling new policies.

Why Auto Insurance Agents’ Commissions Are Comparably Low

Car insurance agents have relatively low commissions for a variety of reasons. For one, these professionals work in an incredibly competitive business. The sheer level of competition for auto insurance customers keeps agents’ commissions in check. However, customers should not over-focus on their insurance agent’s commission level. Obtaining an auto insurance policy that suits your nuanced needs is much more important than ensuring your auto insurance agent is provided with a fair commission.

What About Renewal Commissions?

The commission paid to an auto insurance agent at the outset of the policy’s issuance is not the sole commission he or she receives. The agent is also likely eligible for a renewal commission. This subsequent commission has the potential to expand to a considerable portion of the insurance agent’s earnings, especially after retaining the bulk of his or her customer base year after year. The logic in providing the insurance agent with a commission for the policy’s renewal is the fact that it allows for the positive reinforcement necessary to motivate him or her to give their all at work, provide top-notch customer service and keep clients in the fold.

Commissions for Independent and Captive Agents

There are two main types of auto insurance agents: captive agents and independent agents. Major insurance providers have in-house agents. These agents work exclusively for the company. Known as captive agents, such in-house insurance specialists have access to vast employer resources, including other agents and support systems.

Independent auto insurance agents typically work from a tiny home office. These agents must cover their own expenses. Independent agents are usually strictly paid through commissions, so it is much more challenging for them to prove successful. However, the silver lining is independent agents typically earn more money from commissions than captive agents as there is no overarching parent company looming overhead to take a cut of commissions.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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