Many people are hesitant to buy insurance through an independent agency because they assume it costs more. But is that the case? Typically, no. Agents are not charging extra fees or marking up policies to the consumer. They’re actually paid by the insurers they work with, not by you. That means you can get expert guidance, help comparing options, and personal support—all without paying anything extra.
Here’s a breakdown of how independent insurance agencies are paid—and what that means for you as a client.
1. Commission from Insurance Carriers
The most common way independent insurance agents are paid is through commissions from the insurance companies they work with. When you buy a policy, the carrier pays the agent a percentage of the premium—usually anywhere from 10% to 20%, depending on the type of policy and the company.
For example: If you purchase a $1,200 annual auto insurance policy, your agent might receive $150 to $240 in commission from the carrier.
These commissions don’t affect your premium—whether you go directly to the insurer or through an agent, the cost is typically the same.
2. Renewal Commissions
Independent agents continue to earn money as long as you keep your policy active. These are called renewal commissions, and they’re usually a bit lower than the initial commission, often around 5% to 15%. This gives agents a strong incentive to provide ongoing service and help you stay satisfied with your coverage.
3. Contingency or Bonus Payments
Some insurance companies offer contingency bonuses or profit-sharing agreements to independent agencies that meet specific goals. These goals might include:
- Maintaining a certain volume of business
- Having a high policy retention rate
- Writing policies with low loss ratios (i.e., not many claims)
These bonuses are typically paid annually and can vary widely. They’re a way for insurers to reward agents who consistently bring in profitable business.
4. Some do Charge Fees
Some independent agencies also charge broker fees—especially for complex or specialized policies like commercial insurance, excess liability, or hard-to-place risks. These fees must be disclosed upfront and are regulated by state law.
At The Kind Insurance, we don’t charge broker fees. We provide easy-to-understand guidance free of charge.
Why This Matters
It’s important to know that when you work with an independent insurance agent, you’re not the one paying them. Their commission comes directly from the insurance company when you purchase a policy—not out of your pocket. In fact, the price you pay for insurance is typically the same whether you go through an agent or buy directly from the insurer.
By working with an independent agency, you’re paying the same amount of money. But guaranteeing yourself easy access to an agent and assistance in the event of a claim. Getting on the phone with a human at a massive insurance provider is not always easy. But the team at The Kind Insurance is always a phone call away.
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Our agents work with you to understand your needs and budget and then find a plan that suits you the best.
Get in touch today for more expert insurance advice.