With more than 275 million registered automobile vehicles on the road, insurance companies are doing what they can to capture the attention of drivers to sell them a policy. Not only do the big names come up with eye-catching commercials, but they also simplify the process of obtaining a quote and purchasing insurance directly online – in some cases, cutting out the need for an agent.
There are 1.2 million insurance brokers, agents and employees who can help you to iron out the specifics of coverage, but do you always need to speak to one to get a good deal? You might have the same question as others: Is it cheaper to buy car insurance online or through an agent?
Keep reading to learn about buying insurance online vs. with an agent.
- Buying a policy online can be a quick and easy way to get coverage without the go-between.
- When you are concerned about obtaining only the coverage you need or want to have questions answered before purchase, you should speak with an agent.
- Insurance brokers are agents that work for you, and not for insurance companies, who can help you to compare quotes and shop for the best policy to fit your needs.
Is it cheaper to buy car insurance online or through an agent?
Whether you want to buy insurance through an agent or directly, the basic fact remains: If you have a car, you need car insurance in most states. And while the first half of 2022 saw slowed auto insurance shopping growth, the 2023 LexisNexis Auto Trends Report shows that shopping volumes grew in the third and fourth quarters of 2022 in response to rate increases.
And consumers shopped more and switched more, with record new business volumes in November and December, resulting in 10.2% growth in the fourth quarter of 2022.
That said, auto insurance companies are trying to attract new customers and keep their current customers with loyalty discounts. As companies move toward telematics and AI, they also offer products directly to customers to streamline purchasing.
Pros of buying car insurance online
How often have you called an insurance company to ask a question or obtain a quote, and the expected 10-minute phone call runs 30 minutes or longer? It’s often easier to research policies independently than to call an agent and be put on hold or wait for a return call.
The ease of obtaining quotes and purchasing a policy online is remarkable, but there are other pros to buying online, too.
According to Lauren McKenzie, an insurance broker/agent with A Plus Insurance: “Some people may not feel comfortable providing information over the phone to an agent and prefer the privacy of being able to submit their answers online themselves.”
Being comfortable purchasing is a factor, but you may also find discounts online. Many car insurance companies offer a discount for purchasing a policy online. Called the “Online Purchase Discount” or something similar, this discount is only available for online purchases.
And you can obtain other discounts online when you get a quote. Discounts you might be eligible for include choosing paperless billing, obtaining insurance for more than one car (a multi-car discount), or getting a discount for preferred payments, like paying for your policy in full or opting for automated payments.
Finally, many consumers prefer buying insurance online vs. from an agent because they don’t need to talk to an agent. This can be a good option for people who understand what they want in a policy, know how to comparison shop and want a straightforward auto policy. The tech-savvy, auto-insurance educated and efficient-minded shopper will likely find the no-hassles online purchasing option appealing.
Cons of buying car insurance online
One con to buying insurance online vs. through an agent is that you might not purchase the coverage you need – your policy will only pay up to its limits. While online insurance quote tools typically correlate to coverage requirements in your state, an agent can help you make sense of the details.
This is something to think about, given that there is a range of insurance coverage systems across states, including no-fault or tort (at-fault) coverage.
In fact, two opposing things could happen when you purchase insurance online without fully understanding what you need for coverage:
- You could choose more coverage than you need and overpay for your policy.
- More problematic: You could end up with low liability limits that won’t protect you against legal action if you’re found at fault for an expensive accident. Remember, liability insurance is for the other guy – and the other guy might own a Tesla.
“The disadvantage to purchasing a policy online without speaking with an agent first is the possibility of selecting incorrect coverages,” McKenzie says. “There are several different coverage options you can choose from to customize your auto policy.”
Pros of buying car insurance from an agent
Buying from an agent can be advantageous for people with more complex needs. This could be the need to get a rideshare endorsement, add a teen driver, bundle with homeowners insurance or get gap coverage for a new vehicle.
High-risk drivers could also benefit from talking to an insurance agent, particularly an insurance broker who can provide quotes from different companies.
“Buying online could potentially speed the process up, but I would rather clients go to Google and look for a trusted broker near them to be sure they get the best coverage at the best price,” says Noah White with Ark Insurance Group.
“You always want to discuss bundling discounts with an agent. Also, if you have young drivers, there are often discounts for them for being students. Tell them where you work and if you are a first responder, police officer, EMT, military, etc. These positions often bring more discounts.”
White, who sells all lines of insurance – including auto and life – said that most of the time, consumers can save money by talking to an insurance agent. He explained that commissions, which are paid from the carrier, are based on the total premium amount of a policy.
“Some agents may add on extra coverages to increase the premiums, but buying online does not cut out the agent commission,” he added. “It does not play a factor in the pricing decisions.”
How does purchasing insurance through a local agent work instead of a website?
“Buying direct means you go directly to the company site or representative and purchase your insurance,” White said. “Buying from an agent means there is an agent that represents that one specific company you are looking at, and buying from a broker is buying from a licensed professional who is not tied down to any one company or carrier.”
Captive agents vs. brokers – what’s the difference?
Brokers and agents – it gets a bit confusing. Here’s a quick breakdown of the different kinds of folks you can buy insurance from:
- Captive agents: Captive agents work for one company.
- Independent agents: Independent agents work for several companies.
- Brokers: Insurance brokers work for the client rather than an insurance company.
“A captive agent is an agent who can only sell one company,” White says. “This means they will not shop the best price for you because they only have one product to offer.”
When an insurance agent or agency is licensed to sell in different states and has relationships with many companies, they can comparison shop for you. This is true at A Plus Insurance, where the agents are licensed brokers, which enables them to sell insurance in 38 states and more than 20 different insurance companies.
“Sometimes it is easier to go through an insurance brokerage – because we can shop for the customer and find affordable prices by searching several insurance companies for the coverage desired,” McKenzie says. “If you use an online quoting service to receive multiple insurance quotes, you will likely be spammed with phone calls and emails from several insurance companies trying to offer a quote.”
Cons of buying car insurance from an agent
Your perspective, goals and prior experiences may affect your opinion about buying auto insurance from an agent vs. online. For instance, agents who do not have a personal relationship with you may be more inclined to sell you coverage you do not need to get a commission, while agents who focus on honesty and client needs tend not to oversell.
If efficiency and speed of the process are your focus when obtaining an auto insurance policy, buying from an agent could take longer than buying online. Depending on your online insurance company, you can get a quote and purchase a policy within a day or days.
That circumvents the need to wait for a return call or email from an agent, who has many other customers they are working with, too. You manage the purchase process by buying directly through the company instead of a middle person. And what about those commissions that agents receive? Everyone wonders about that.
According to the U.S. Bureau of Labor Statistics, commissions are a “common form” of compensation for agents, especially agents with substantial industry experience.
Generally speaking, the commission an agent receives depends on the amount of insurance sold and whether the policy is new or a renewal. An agent could also be motivated to upsell if a bonus is available when they meet sales or profit goals.
It can be a this-or-that situation. Car insurance purchased through a Progressive agent includes the commission the agent receives. On the flip side, auto insurance bought directly through Progressive includes a more significant portion of marketing costs in addition to costs for staffing and sales centers, according to Progressive’s website.
Final thoughts: Buying car insurance online vs agent
When buying car insurance online vs. through an agent, this choice depends on what makes you comfortable and the complexity of your insurance needs. Sure, many factors affect this choice, including the ease of purchasing a policy, the ability to answer your questions, how simple it is to compare quotes and your self-confidence in getting the right coverages and discounts.
Sometimes, even when shopping for car insurance online, you must speak with an agent or customer service representative to finalize your policy purchase.
“While some companies allow you to bind a quote online without ever needing to speak with an agent, clients are often asked to provide information to confirm that the details on the policy are accurate,” McKenzie says. “At this point, they may be given a number to speak with an agent or an agent may reach out to them to follow up on details and give a final quote.”
Resources & Methodology
- LexisNexis. “Auto Insurance Trends Report.” Accessed June 2023.
- Statista. “Motor Insurance in the U.S.” Accessed June 2023.
- Statista. “Number of agents, brokers in U.S. form 1960 to 2018.” Accessed June 2023.
- U.S. Bureau of Labor Statistics. “Insurance Sales Agents.” Accessed June 2023.
- Progressive. “Why Insurance Prices May Vary.” Accessed June 2023.
Why you can trust CarInsurance.com
The CarInsurance.com editorial team bases its reporting on data it commissioned Quadrant Information Services to gather on average auto insurance rates for more than 34K ZIP codes across the United States.
Typically, averages are based on rates for a single, 40-year-old male, with no violations who commutes 12 miles to work each day and has a full-coverage policy with limits of 100/300/100 and a $500 deductible for collision and comprehensive coverage.