What Is a Car Insurance Broker?

A broker collects your information and contacts multiple insurance companies to get quotes. You review the options and pick a policy. The broker's job is done at that point. The insurance company handles billing, claims and policy changes from there.

The broker doesn't manage your coverage after you buy. An SR-22 is a document your insurance company sends to the state to prove you have coverage. The broker won't track it for you or alert you if it lapses. You and your insurance company are responsible for keeping coverage active.

The right option depends on your driving record, not a personal preference.

An independent agent does the same comparison work as a broker and doesn't charge you a fee. Drivers who already understand car insurance basics might compare quotes independently.

Brokers earn money two ways: a fee you pay directly and a commission the insurance company pays them for your business. The fee runs $25 to $100 per policy. The commission is already included in the price you pay whether you use a broker or not.

State law requires brokers to disclose their fee before you buy. Ask for that disclosure in writing. If a broker charges a fee that wasn't disclosed upfront, you can file a complaint with your state's insurance department. The commission doesn't add to your cost the way the fee does.

Use a broker if a major insurance company has already turned you down, or you expect they will based on your driving record.

• You have a DUI or multiple violations. Many major insurance companies decline DUI drivers outright. Those that do sell coverage charge 70% to 100% more than they charge a driver with a clean record, and prices vary by more than $600 a year between companies. A specialist broker knows which ones are currently willing to sell you a policy.
• You need an SR-22 filing. The insurance company files the SR-22 with your state's motor vehicle department, not the broker. A lapse in your policy triggers an immediate suspension notice to the state, not a call from your broker. In Florida and Virginia, a DUI requires an FR-44 instead, which sets liability limits roughly double what each state requires of standard drivers.
• You've been denied or non-renewed. Being turned down by a major insurance company doesn't mean you're out of options. Specialty insurers called surplus lines carriers operate outside state rate-filing rules and cover drivers that standard companies reject. You need a broker with a surplus lines license to reach them.
• You drive a specialty or high-risk vehicle. Exotic, modified and high-value vehicles require insurance companies that price those risks differently. The right broker knows where those companies are.

Most licensed brokers only have access to admitted carriers (insurance companies that file rates with the state and cannot deviate from them). Admitted carriers won't sell to drivers with a DUI or a prior denial. If one of these companies has already turned you down, a broker who only works with them will come back with the same answer.

Surplus lines carriers don't file rates with the state, so two surplus lines carriers can quote the same DUI driver more than $1,000 a year apart for identical coverage. Most standard brokers don't hold a surplus lines license and can't place policies with these companies. Before paying a fee, ask the broker directly whether they hold a surplus lines license in your state.

Surplus lines carriers are not backed by your state's insurance guaranty fund. If a surplus lines carrier goes out of business, your state won't cover outstanding claims. Check the company's AM Best rating before you buy and look for an "A" (Excellent) or better.

If your SR-22 policy cancels for any reason, your insurance company is legally required to notify the state immediately. Your license is re-suspended, the SR-22 clock resets to zero, the time you already completed doesn't count and there's no grace period. Set up automatic payments before the broker's involvement ends.

You must keep your SR-22 active for three years in most states. California requires five for certain DUI convictions. Delaware, Kentucky, Minnesota, New Mexico, New York, North Carolina, Oklahoma and Pennsylvania don't use SR-22 and each require a different proof-of-financial-responsibility filing, so confirm the specific form required with your state's DMV before asking any broker for an SR-22.

Skip the broker if your record is clean and your coverage needs are standard.

Major insurance companies file their rates with the state and charge every buyer the same price, so a broker fee of $25 to $100 per policy adds cost with no rate reduction attached. The price difference between the cheapest and most expensive major insurer for a clean-record driver can reach $600 to $900 a year, and comparing three to five quotes directly finds that gap at no cost.

Knowing what liability, collision and comprehensive coverage each pay for makes it faster to compare quotes and harder to buy the wrong policy.

A broker fee adds no value for drivers with a clean record. A driver who wants help choosing coverage but has a clean record gets better value from an independent agent, who compares multiple companies and charges no fee.

For high-risk drivers, the price gap between the most and least expensive specialty insurer can run more than $600 a year for the same DUI driver. A surplus lines broker can find a rate low enough to cover the $25 to $100 fee within the first year. Before paying, confirm the broker holds a surplus lines license. A broker who only works with standard companies can't help a high-risk driver regardless of what they charge.