Berks Connect
Money & Insurance

Do You Pay an Insurance Agent? How Agents Get Paid in PA

No. For a home or car policy the insurer pays the agent a commission out of your premium. What that commission is, when a fee is legal in Pennsylvania, and what you get for it.

Berks Connect Blog|Published October 1, 2026
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No, you don't pay an insurance agent for a home or car policy in Pennsylvania. The insurance company pays the agent a commission, included in the premium you'd be paying anyway. Pennsylvania law allows a fee on top of that in two narrow cases, and in both the fee has to be put to you in writing before it's charged; no one may charge you a fee for filling out an application.

So if you've got a renewal notice on the counter, or a closing date, and you're wondering whether "do you pay an insurance agent" has a catch in it, it doesn't. The county's agencies are on our Berks County insurance agents page, and picking up the phone costs you nothing you weren't already going to pay. What the call changes is who does the work on your policy.

Is a broker cheaper than an agent, or just paid differently?

Paid differently. In Pennsylvania the difference between an agent and a broker is who pays them and how. The state issues one license for both, the insurance producer license, and the words agent and broker aren't defined anywhere in the licensing law.

What the two words mean in everyday use comes down to who the person works for. An agent represents insurance companies and gets a commission from the company when one of its policies sells. A broker represents you, and generally charges you a fee for that. The license is the same; the money comes from a different place. On price, the state's advice is the same no matter who you talk to: compare at least three companies.

Do you pay an independent insurance agent?

No. An independent agent and a captive agent are both paid by the insurance company, not by you. The company pays a commission on the sale of its policies. The pay comes from the company either way. What differs is the quotes: a captive agent brings you one company's, an independent agent brings you several, and we cover that split in independent vs captive agents in Berks County.

One agency with an office in Wyomissing says it plainly on its own website: it's typically paid by commissions from the insurance companies, included in your premium, and most customers pay no separate fee, with any fee disclosed up front. The two cases where a fee can appear are in the fee section below.

How much does an insurance agent make on your policy?

The commission is a fixed percentage of your premium, paid on the new policy and again every time it renews. At one national carrier, personal auto commissions run about 7 percent to 16 percent of premium and homeowners about 7 percent to 15 percent; at another the commission averaged 11.4 percent on auto and 14.9 percent on home in its latest disclosure.

A Berks agency publishes its own numbers. Spotts Insurance Group is an independent agency in Wyomissing with offices in Temple and Mertztown. It says that, on everything except life insurance and surety bonds, its commissions range from 5 percent to 20 percent of each policy period's premium, and that larger premiums tend to carry a smaller percentage. Its average across everything it writes, personal and business policies together, is about 12.5 percent. Life insurance pays differently: typically 55 percent to 80 percent of the first year's premium, then about 2 percent a year after that, if anything.

When can an insurance agent charge you a fee in Pennsylvania?

In two cases, and both have to be on paper first. Pennsylvania law lets a producer charge a fee on top of commission for commercial policies, and even then it has to be disclosed to you in advance, in writing, and be reasonable for the services provided. And on any policy, no producer may charge you a fee for completing an application.

The other case is the broker arrangement, where the producer works for you rather than for an insurer. The law requires a written agreement, signed before they act on your behalf, that spells out the services and gives full disclosure of the fee you'll pay.

What buying direct changes, and what it doesn't.

When you buy from an insurer's website or phone line, the company doesn't pay an agent's commission on that policy, so the policy may cost less. It may not: one large insurer that sells all three ways, by phone, online and through independent agents, says on its own site that prices vary based on how you buy. So the way to know what direct does to your bill is the state's way: compare at least three companies, and let an agent's quote be one of them.

What does an insurance agent do for the commission?

The state lists the work that takes a license. A licensed agent can advise you to buy a particular policy or to insure with a particular company, counsel you on which coverages to buy, recommend additions and deletions to your policy, and answer your questions about what a provision covers. Taking the facts of a claim and reading your coverages off the records are clerical, and anyone in the office may do those. The advice is the licensed part, and the commission pays for it.

The clearest Pennsylvania example is the tort election on your car policy. Every car policy in Pennsylvania asks you to choose between full tort and limited tort. Limited tort means giving up the right to sue for pain and suffering after a crash, except for a serious injury or the other exceptions the policy lists. Full tort keeps that right. If you never sign and return the notice, you're treated as having chosen full tort and charged for it.

The discount for limited tort is on part of the bill, not all of it. It comes off the parts of the policy that pay for injuries: the liability coverage for injuring someone, your own medical benefits, and the two coverages for uninsured and underinsured drivers. There the state's rule is a discount of at least 40 percent, unless an insurer shows the state data that justify a different figure. The rule covers only those coverages, so the difference on your whole bill depends on what you carry. On request, even by phone, the insurer has to tell you what the minimum coverages would cost under each option. That's a conversation, and an agent is the person to have it with.

With your renewal notice or your closing date in hand, pick an agency from our Berks County insurance agents page, make the call, and ask two things: how they're paid on this policy, and what full tort and limited tort would each cost on your cars. The call costs you nothing extra. There's more to ask, but you can start with those two at any agency on that county page.

Questions Berks readers ask about paying an insurance agent.

Does the agent get paid again when I renew?

Yes. The company pays the commission on new policies and on renewals, so every year you stay the agency earns its percentage of that year's bill.

Can an agent charge me an application fee in Pennsylvania?

No. Pennsylvania law says no insurance producer may charge a fee for completing an application, on any policy. The two fees the law does allow, a fee on top of commission for business insurance and a fee when a broker works for you, both have to be put in writing first.

Do I pay more for insurance if I go through an agent?

Not necessarily. Buying direct means the company pays no agent's commission on that policy, so it may cost less, and prices vary based on how you buy. The state's advice is to compare at least three companies, so put an agent's quote beside two others.

Does it cost anything to use a Medicare agent?

No. A Medicare plan agent is paid by the plan, and the federal government caps the payment: for 2026 in Pennsylvania, $781 for a first-year Medicare Advantage enrollment and $391 a year after. PA MEDI at 1-800-783-7067 is the state's counseling program and sells nothing.

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