How much do car insurance agents make?

Car insurance is among the most common forms of coverage in the country as almost all states mandate drivers to carry one before they can operate their vehicles. But with the myriad of policies available, motorists are often left confused as to what types of protection they really need.  

Enter car insurance agents. These industry professionals represent the insurance companies, helping insurers reach out to clients by explaining to them what policies are offered and the key features and benefits each one brings.  

But how much do car insurance agents make? Is it a worthwhile career? How can you achieve success if you choose to be one? Insurance Business answers these questions and more in this article. 

How much do car insurance agents make? 

There are several factors that affect how much car insurance agents make but based on the employment and industry websites that Insurance Business checked out, the average annual salary falls between the $43,000 and $60,000 range. An agent’s earnings can be significantly higher or lower, depending on different variables, including commission rates, experience level, and partner insurers. 

The table below reveals the percentile wage estimates for car insurance agents across the country based on data from this website.  

How much do car insurance agents make – salary range from lowest to highest  

Most car insurance agents have average salaries between the 25th and 75th percentile, or about $31,500 to $75,500, according to the website. Figures above or below this salary range are considered outliers.   

How much do car insurance agents make – highest- and lowest-paying states 

One of the biggest factors that dictate how much car insurance agents make is where they sell policies. Although almost all states – with the exception of New Hampshire and to some extent Virginia – make it compulsory for motorists to purchase auto insurance, each imposes different requirements (more on this later), which has a direct impact on an agent’s earning potential. 

The tables below rank the top  and lowest-paying states for car insurance agents.  

How much do car insurance agents make – top-paying cities 

How much do car insurance agents make in the highest-paying cities across the country? The table below provides the answer.  

Now that you have an idea of how much car insurance agents make in different states, it may also be helpful to know how much auto policies costs. Learn more about the most and least expensive states for car insurance by clicking the link.  

How do car insurance agents make money? 

Car insurance agents can earn an income through the following: 

1. Commissions 

This is the most common way car insurance agents make money. For captive agents, the commission rate is from 5% to 10% of the total premiums in the first year and about 2% to 5% for every renewal. The figure is slightly higher for independent agents at 15% for new policies. For existing plans, the typical rate is also 2% to 5%.  

If you want to find out why independent agents earn more than their captive counterparts, you can check out our article on how much independent insurance agents make.  

2. Salary 

Many captive car insurance agents work full-time as salaried employees for the insurance companies they partner with. They may earn a fixed wage and receive commissions on top of their monthly salary, depending on the terms of their contract with the insurer.   

3. Profit sharing 

Some insurers that reach a specific profit target share the benefits by giving agents bonuses. 

One thing to take note of is that these income-generating methods are not mutually exclusive. Car insurance agents can receive a monthly wage from their partner insurers, along with commissions for every policy they sell and bonuses if an insurer’s sales exceed the yearly target. 

What factors impact how much car insurance agents make? 

How much car insurance agents make depends on a range of factors. These include: 

• Their partner insurers: Captive agents represent just one insurer, selling policies for that particular carrier exclusively. Independent agents can sell policies from multiple insurers, allowing them to offer clients more options and more opportunities to make a successful sale.  
• Where they sell car insurance: Different states have varying rules on how insurance is sold and who can sell them. This is one of the reasons why a car insurance agent’s income differs from state-to-state and even city-to-city. 
• Type of coverage provided: Each state also has different requirements when it comes to vehicle coverage. Some states mandate only third-party liability coverage, while in others, personal injury protection and uninsured motorist insurance are compulsory. These have a major impact on insurance costs, which likewise affect how much car insurance agents make per policy. 
• The motorist’s risk level: Risky drivers, including teens and those with a history of accidents and traffic infractions, often receive higher premiums than those who have a clean driving record. This also means higher commissions for agents as long as the policyholder meets premium payments. 

What does it take to become a successful car insurance agent? 

To be a successful car insurance agent, you need to have a combination of hard and soft skills that can allow you to guide clients in getting the best coverage. Here are some of the top skills that will enable you to thrive and grow professionally.  

• People skills: As being an insurance agent is a client-facing role, you need to be able to provide excellent customer service. This skill allows you to establish trust and maintain partnerships with clients.  
• Problem-solving skills: A career as a car insurance agent means you will frequently face issues that require you to come up with creative and innovative solutions. These include finding a policy that matches customer’s unusual coverage needs like risky drivers or those with a poor credit history.  
• Communication skills: Insurance agents must possess strong written and verbal communication skills to convey important information in a manner that is simple and free of jargon.   
• Attention-to-detail: With the financial protection of clients at stake, your ability to pay attention to the finer details plays a crucial role in helping provide the right auto policy. This may entail identifying the smallest errors in calculations or picking up technical requirements that can impact a motorist’s ability to access cover.   
• Time management: Agents often face situations that require multitasking. This is where effective time management is crucial. You must be able to prioritize tasks and implement strategies that allow you complete projects in an efficient and less stressful way.  
• Negotiation skills: Because clients may have a different perspective on the type of coverage they need, you may sometimes find yourself in disagreement with clients. When this happens, you must be adept in navigating the situation to find a middle ground that benefits you both.  
• Numeracy: Agents deal with numbers almost every time. Strong mathematical skills are, therefore, a requirement to be successful in the field.  
• Organization: Car insurance agents deal with a huge number of customers. To be successful, you must learn how to keep your records accurate and organized.    
• Self-motivation: As an insurance agent, you must have an intrinsic desire to perform to the best of your ability.   

What types of car insurance policies can agents offer? 

Each state has different rules when it comes to mandatory car coverage, but these are the most common types of policies drivers in the US can access, according to the Insurance Information Institute (Triple-I):  

• Bodily injury (BI) liability: Pays out medical and legal expenses associated with injuries or death for which the motorist is at-fault. 
• Property damage (PD) liability: Provides coverage if the driver’s vehicle damages another person’s property. It also covers any legal cost resulting from a lawsuit.   
• Personal injury protection  (PIP) or medical payments (MedPay): Covers medical expenses for injuries the driver and their passengers suffer due to an accident. It may also pay out for lost income if they are unable to work.  
• Uninsured/underinsured motorist coverage (UM/UIM): Pays out for injuries the driver and their passengers sustain if they are hit by an uninsured or underinsured motorist. 

The table below shows the minimum car insurance requirements in each state as well as the link to the websites of the corresponding departments that you can contact if you have questions regarding coverage.   

Minimum car insurance requirements in the US – a state-by-state breakdown 

Where can you find the best car insurance coverage for your needs? 

The country is home to more than 500 car insurance companies, with each providing policies with different features and levels of protection. The sector, however, is dominated by a few industry giants, controlling over three-fourths of the overall market. If you want to find out who these industry players are, you can check out our latest rankings of the top car insurance companies in the US, where you can also find the different types of coverage they provide.    

Do you agree with how much car insurance agents make? Do you think car insurance agents play a crucial role in helping motorists find the right coverage? Feel free to share your thoughts below.