Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • The price that you pay for your car insurance policy is called a premium. The premium you pay will differ between various insurance companies
  • Auto insurance agents are compensated from the insurance company based on a percentage of the premium that you pay for insurance
  • Auto insurance agents awesome make money based on the number of times a policy is renewed with that same company
  • Auto insurance agents will make more money off of a policy with a higher premium
  • Laws that require auto insurance agents to disclose the amount of their commission are very rare. When you take out and auto insurance policy, it is not common for you to know exactly how much the auto insurance agent is making off of you

The way the auto insurance companies compensate their insurance agents varies. However, most companies pay their agents based on a commission system. When an auto insurance agent sells an insurance policy, the agent will get a percentage of the premium that you paid.

The percentage that the agent gets depends on the rate set by the car insurance company. The company may also compensate the agent when the policy renews as a way to encourage agents to maintain existing business.

While you might be naturally curious about what your agent’s take of your auto insurance premium is, this commission does not have a significant effect on how you should choose a policy or company.

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How an Agent is Compensated Based on the Price of Your Auto Insurance Policy


Since auto insurance agents are paid based on a percentage of your premium, the higher the premium, the more the auto insurance agent makes. For example, if you pay $500 for an auto insurance premium and the agent makes a 10 percent commission, the agent would get paid $50 for that particular policy.

To motivate auto insurance agents to keep customers around, they are also paid by the auto insurance company whenever a policy renews.

It is typical for the commission rate for renewals to be slightly lower than that for a new policy. For the same example as above, if a policy with a $500 premium renews and the agent makes a 5 percent commission on that renewal, he would take home $25 for that policy.

In many instances, your auto insurance policy will automatically renew, unless you go ahead with canceling or switching it. The other alternative is that the car insurance company could decide to cancel or decline to renew the policy.

In general, the most popular reasons for a cancellation or non-renewal are that you failed to make your payments or filed a high number of claims. Either way, you would receive a notification from the company about their decision before your policy expires.

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The Price of Your Auto Insurance Policy

If you are really curious about the commission earned by your auto insurance agent, then you could try asking him directly.

However, the commission paid to your auto insurance agent should not be as serious as a concern as many other factors that contribute to your car insurance rates, such as your driving record or the type of car you drive.

The rate that you pay is also affected by the discounts that you may qualify for. For example, if you are in the military, some companies offer a discount for veterans and/or active duty service members. Also, if you take out a home owner’s insurance policy with the same company, this is another popular way to qualify for a discount.

When you are choosing a car insurance company, your main focus should be on the type of coverage that you need along with the price that you will pay for it.

Do not forget that the reputation of the car insurance company matters too. You do not want to be in the situation where you have to file a claim and are stuck with a company that is difficult to work with or does not fulfill its obligations under your policy.

Do not get caught up in focusing on state minimums for insurance in determining how much coverage you need. These minimums are usually way too low for the actual damage you can suffer in an accident. Instead, take a hard look at how much you could plan to pay on your own if you caused an accident.

Also, figure out what type of coverage, including collision or comprehensive insurance, makes the most sense for you to get. Increasing your coverage increases your rate, but it is the best way to make sure that you will not have your finances ruined if something catastrophic happens to you or another driver in a car accident.

Recap on How Auto Insurance Agents Make Money


Typically, auto insurance agents are paid a commission straight from the auto insurance company for the insurance policies that they sell to drivers. This happens when an agent sells a new policy as well as when a policy renews for a subsequent term.

It is interesting to know how auto insurance agents are paid, but it is not a serious consideration for how much you will pay for insurance. The different commission rates between car insurance companies are not likely to have a real effect on the rate that you pay.

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