What is a Broker Fee?
A Broker Fee is a fee that is added to the actual auto insurance premium. These fees are taken up-front which increases the amount of the down payment necessary to start a policy. The fee does not go toward the actual auto insurance policy but into the broker’s pocket. Broker fees do not end after the policy is started. It is very common for the brokerage to charge fees for making any changes on your policy or for even just making payments.
What is a difference between Broker and an Agent?
A broker is not a representative or an employee of an auto insurance company. Instead a broker will shop around your rates and try to find the lowest possible price for you. They may not be concerned with the financial rating of these smaller lesser known auto insurance companies. A broker gets paid through fees or commissions that are added to the auto insurance premium. Also, since insurance brokers also make money by referring you to insurance providers, they may be overeager to sell you a policy. In some cases, this may not actually be the best policy for you, but the one that will provide the most money for them.
An insurance agent has entered into a contract with an insurance company in order to sell insurance to consumers. Therefore, when you transact business with an insurance agent, you are purchasing insurance through the auto insurance company that agent represents directly. Therefore, there are no broker fees when you are purchasing insurance directly through an Agent. All payments made to the licensed agent is the same as making a payment directly to the insurance company. All agents and brokers must pass a insurance licensing exam conducted in their state in order to conduct business as an insurance agent.
Why would anyone ever choose to pay a Broker Fee?
Many people hear the horror story when they get a DUI or when they need an SR-22. They are told that they are going to have to pay a ridiculous amount on their insurance and that nobody is going to want to insure them. With the help of the Internet, many people are doing the research and shopping themselves to find that a quality insurance company like Farmers can help you with your situation with a fair price.
By purchasing insurance through a Farmers Agent directly:
- You are avoiding paying any broker fees
- You are going to a financially strong company with SUPERIOR claims service.
Why would you ever pay a Broker fee? An educated buyer never would!
Please give us a call at 800-875-8712 for your free auto insurance quote or please enter your information in our short quote request form and we will be happy to offer you the best rate Farmers can offer you.
