Do Insurance Agents Have Any Control Over What I Pay For Insurance?

Many people believe that insurance agents set the price they pay for insurance, but this couldn’t be farther from the truth.

The price you pay for insurance is established by the company you purchase your insurance from, not the agent that represents the company. Insurance agents simply take your information and enter it into the quoting software provided by the company, and the rate that is calculated is the rate you pay.

Insurance agents have no control over your rates other than making sure all information is accurate. Unfortunately, truthfulness can sometimes lead to higher rates, such as when you notify your agent of your new swimming pool in the backyard. But it’s absolutely essential that you disclose all potential risks to your agent, because otherwise you could potentially have a claim denied if the company was not aware of a particular risk.

When you sign your insurance application, you are stating that all information is accurate, so if you intentionally neglected to inform you agent of your two Rottweilers, you could have your dog bite claim denied in the future.

Insurance agents are paid on commission, so they receive a predetermined amount on each policy they write. They cannot charge you more or less than the price set by the company. They also cannot “entice” you to buy a policy by offering other incentives.  In most states this is illegal and can result in the agent losing their license to sell insurance in their state.

Different companies pay different commissions, and commissions are different depending on the type of policy written. But in no way does the insurance agent have any control over the amount you pay for your insurance.