Myths About…

Insurance Premiums & 

Agent Commissions — Busted!

When it comes to insurance, there are plenty of rumors and half-truths floating around — especially in commercials that try to make one company look better than another. One of the most common claims? That “a lot of your premium goes straight to insurance agents.”

Let’s clear the air! Here are some of the biggest myths about insurance premiums and commissions, and the truth behind them.

Myth #1: Most of your premium goes to your agent

NOT true!

Insurance agents do earn commissions, but it’s only a small fraction of your premium. The exact percentage depends on whether the agent is captive (Companies like Farmers, State Farm, Allstate, etc.) or independent (Brokers).

• Captive agents: typically earn 5–10% on new auto or home policies. Those percentages are even less on renewals.

• Independent agents: may earn a bit more, usually 10–20% on new policies.

That means the majority of your premium goes where it should: to cover claims, operating costs, and maintaining the financial strength of your insurance company.

Since our agency is captive, our commissions are on the lower end of the range.

Where Your Premium Really Goes

Myth #2: Agents set your premium

Nope — we don’t.

Your premium is calculated by the insurance company based on state-approved rates. Things like your home value, vehicle type, claims history, driving record, credit score, zip code, coverage choices, etc. all play into the final number. Agents can help you understand your options, but we can’t raise or lower your premium just because we want to.

Myth #3: Agents decide their own commission

Also false.

Commission percentages are set by the insurance company, not the agent. Whether you work with me, another local agent, or even buy online, the commission structure is already baked in by the carrier.

Myth #4: Working with an agent costs you more

Not at all!

In fact, working with an agent can actually save you money. Why? Because agents can:

• Make sure you’re not over- or under-insured

• Bundle policies for discounts

• Find coverage gaps before they become expensive problems

• Advocate for you at claim time

You’re paying the same premium whether you have a local agent or not — but when you choose an agent, you’re getting personal support and expertise at no extra cost.

Myth #5: Online companies cut out the “middleman”

That’s the marketing pitch, but not the whole story.

Online companies often spend millions on advertising instead of paying that expense to provide local support. With an agent, you get a familiar voice who knows your community and your needs — not just a 1-800 number.

The Bottom Line

Insurance premiums are carefully regulated, and agents don’t control what you pay. Our role is to guide you, explain your options, and stand by you when life throws curveballs.

The truth? Agents don’t take “most” of your premium. But we do make sure every dollar you spend on insurance works harder for you.

And since we’re a captive agency, you can trust that our commission is modest — and our focus is 100% on serving you, not shopping around for ourselves.

Want to see how much the right coverage really costs?

Reach out to us anytime — We’re happy to walk through your options, clear up the confusion, and make insurance simple.