New York Car Insurance Broker's Fees

Ron Trumbo Insurance Editor

As you shop for cheap car insurance in New York, be aware that many New York auto insurance agents are entitled to charge you a “broker’s fee” that is separate from the actual car insurance policy they are selling you.

Insurance agents receive a commission from insurance companies for selling a policy, but in many cases, the commission is not fully earned by the agent until the newly insured driver (you) pays premiums up to a certain amount, or for a specific period of time. To offset the risk of not making any money, many New York agents depend on a broker’s fee. Generally, riskier drivers are sacked with brokers fees. If you are 25 or younger, have multiple accidents and tickets, a DUI, require an SR 22, or have had your license suspended, you'll find that some of your insurance quotes will included a brokers fee in New York.

Why do I have to pay a broker’s fee for car insurance in New York?

Broker’s fees are completely optional to auto insurance consumers in New York; meaning that if your insurance agent intends to charge you an additional broker's fee, you have the option to shop around and find another NY auto insurance agent that doesn’t charge a fee.

Comparing different insurance quotes from New York insurance agents

If you have an accident or speeding ticket on your New York driving record, you should compare different insurance quotes from at least 5 different insurance agents. Always be sure to ask: “Are there any fees that I’ll have to pay that are separate from the actual insurance policy?” Make sure you get everything in writing and save all of your records and communications if you can.

The truth about broker’s fees in New York

A broker’s fee does not always mean that your NY insurance agent is trying to rip you off or pull a fast one. Insurance agents are small business people that have to get paid fairly for their services. In many cases, NY drivers are desperate to find any type of car insurance coverage and quickly buy a policy from any agent, only to not pay their bill or switch companies a month later. What happens is that the insurance agent does not get paid for your business. Insurance agents are not in the business of helping you for free, so some mitigate their risk by charging a broker’s fee. In New York, you should never pay a brokers fee higher than $50. Trust your instincts: If you ever feel like you’re being sold, you probably are.

An alternative to broker’s fees in New York

The opposite of a broker’s fee, is simply a good insurance agent relationship. If you’re a responsible New Yorker, you should look for a local insurance agent and discuss your long term financial goals. For example, tell them that you either have a home or you’re planning on buying a home, and that you may have additional insurance needs in the future such as life insurance, more auto insurance and health insurance. You would present that agent with so much value that they would be nearly foolish to charge you with a broker’s fee.

Sources: Insurance Information Institute, New York Department of Insurance