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How much commission do auto insurance agents make?
From real-estate agent jobs to people selling health club memberships, there are many different types of commission based jobs. Insurance agents sell insurance policies for a commission, and many variables go into how much money you can make as a car insurance agent.
One of the most significant variables to consider when looking into employment as a car insurance agent is how the income can start and build. In the beginning, working as a car insurance agent will not make you a lot of money. You will need to build a solid client base to up your income. The reason for this is that you will be able to bring in new clients, while also making money from the renewals that are happening at the same time. Working as an automobile insurance agent is all about the slow build. It can take a number of years to have a reliable and stable income, as you build clients you will understand that growth in this industry is a steady process. You will likely not have a single client that vastly increases your income as an auto insurance agent. Becoming a car insurance agent is something that is a longer-term commitment.
Car insurance agents do not and up selling car insurance plans to the vast majority of people they connect with. It is the smaller percentage of people that say yes who allow you to make decent money. If you put in the work, and the time, you can be a successful automobile insurance salesperson.
Average Car Insurance Agent Commission
Insurance agents are paid a commission, or a percentage, of the total insurance premium that one of their customer’s spends on a policy purchased through them. The percent can vary based on the car insurance provider and is most often between 7% and 20% commission on each policy sold.
If you sell a policy for $1,000 at a 15% commission, you will earn 150 dollars for the sale. This is fantastic, but it gets better.
Once a person has obtained a policy through you, they may decide to renew this policy after a year. If they do, you get a renewal policy commission. While this is often less than the commission for new business, it is still the way most car insurance agents make money, well, most of it. If the renewal policy commission is 12%, instead of 15% (as an example), you will get $120 for a policy renewal commission on a policy that sells for $1,000.
This is why building up your client list is important. You can still make money, each year they renew their policy, and regardless of whether you worked with them more that year or not. It can be a pretty good deal once you have built up the business.
Let’s say that you sell a policy for $1,000 at 15% commission on October 1st, 2019. You make $150. In 2020, they renew their policy and you get another commission, this time at 12% (you make $120) AND you sell another $1,000 policy at 15% commission to someone else (you make $150). In total, on October 1st, 2020, you make $270 dollars and about half that may have not been any additional work.
In terms of goals, a well-run car insurance business can retain as much as 90% of its business. That is a high rate of being paid again year after year, which can be a great way to make money. Remember, the commission you can get can vary depending on the car insurance provider and can be anywhere from 7 percent to 20 percent for new clients.
Does Location Affect What Car Insurance Agents Make?
Yes. Car insurance prices can vary in cost for consumers based on a large number of variables. These can include cost of living, crime rates, accident rates, health statistics, healthcare costs in the area, and many other factors can be part of the equation as well. Since commissions are based on percentages, an area that charges more for policies can make a car insurance agent more money per sale. That said, the renewal rate is also part of the picture. Areas where people with policies renew at a higher rate can also mean higher average incomes for car insurance agents in that area.
Another way that location can affect how much car insurance agents earn is the number of available customers. This can be affected by the amount of competition that is in a given area. If the market in an area is saturated with agents, it may be harder to get new clients, and in turn, renewal commissions.
Lowering Your Car Insurance Premium, And Those Of Your Customers
There are plenty of ways to help you save money on car insurance plans. It all starts with research, and this blog is a great place to get the top car insurance information so you can find the cheapest car insurance plans that cover your needs. As a car insurance agent, you will want to help your customers take advantage of the discounts they can get and help them find the lowest rates on car insurance too. This increases their likelihood of renewing, and those renewals are essential to your income as an auto insurance agent.
Being a car insurance agent can be a rewarding and well-paying job, but you will need to put in the work. With effort, time, education, and drive, it can be a top career choice.