How Do Insurance Agents, Like Huff Insurance, Get Paid?
At Huff Insurance, we believe in being transparent about how we earn our income. Many people assume that insurance agents keep the full amount of the premium you pay—but that’s not the case.
Insurance agents, like Huff Insurance, are paid a small percentage of your insurance premium as a commission from the insurance company that provides your coverage. The percentage ranges from 4% to 18%. On average, we are paid around 12% commission. This commission compensates us for helping you select the right coverage, servicing your policy, assisting with claims, and ensuring your protection is always up to date.
Commissions: A Percentage of Your Premium
When you purchase a policy through an independent insurance agency like ours, the insurance company pays us a commission—typically a small percentage of the total premium.
This percentage varies by the type of insurance policy (auto, home, business, life, etc.) and the company offering it. The key point is: we do not receive your full premium. The majority of your premium goes directly to the insurance company to pay for claims, underwriting, and other operating expenses.
Profit Sharing or Annual Overrides
In addition to standard commissions, some insurance companies offer profit sharing or annual override bonuses to agencies that maintain strong performance—such as high customer retention rates, good claims histories, and profitable business.
These bonuses are not guaranteed and depend on how the agency’s overall book of business performs with that carrier. They reward agencies for helping customers maintain safe, stable, and well-managed insurance programs. The amount of the profit sharing varies, but is usually about 1% to 2% of total written premiums with the company paying the profit sharing bonus.
We’re Paid to Protect You—Not to “Sell” You
Our compensation structure is designed to ensure that our focus stays where it should—on protecting you and your assets. The small percentage we earn from insurance company commissions is minimal compared to the potential financial impact of being uninsured or underinsured.
At Huff Insurance, our agents do not receive commission-based pay for selling policies. Instead, we provide a competitive salary and a robust benefits package so our team can concentrate solely on what truly matters—protecting our clients to the fullest extent possible.
That means when one of our team members recommends additional protection, such as a personal umbrella policy, it’s not because they’re trying to earn a commission—it’s because they genuinely want to ensure you have the best coverage in place to safeguard your financial future.
We take the time to understand your unique needs so we can recommend coverage that provides true value and peace of mind. Our goal isn’t just to make a sale—it’s to make sure you’re properly protected when it matters most.
Don’t Be Misled by “Cut Out the Middleman” Ads
You may have seen ads claiming that you can “save big” by buying insurance directly from a company and skipping the agent. These ads often imply that agents take most of your premium — and that’s simply not true.
At Huff Insurance, we want to set the record straight:
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Insurance agents do not keep most of your premium. We earn a small commission—typically 4% to 15% of what you pay—to cover the time, expertise, and service we provide. We are responsible to pay for all of our own operating and advertising expenses and are not subsidized by the insurance companies.
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The rest of your premium goes directly to the insurance company to fund claims, underwriting, customer support, and policy administration.
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Buying direct doesn’t mean you’re cutting costs—it often means you’re cutting out personalized advice and advocacy that could save you thousands if a claim occurs.
And while direct insurance companies aren’t paying agents, they are paying significantly higher advertising expenses to attract new business. In fact, many direct insurers spend far more on advertising than an agent would ever earn in commission. Those marketing costs are built into their premiums—so eliminating the agent doesn’t necessarily lower your price; it simply shifts where the money goes.
The Value of Working With a Local, Independent Agency
When you work with Huff Insurance, you gain an advocate who:
✅ Shops multiple insurance companies to find the right coverage and price for you.
✅ Explains your options so you understand your protection.
✅ Helps you navigate claims and ensures fair treatment.
✅ Reviews your policy each year to identify discounts and coverage gaps.
Direct-to-consumer companies may offer convenience, but they don’t offer personalized service, coverage education, or claims support.
At Huff Insurance, we combine decades of experience with the ability to represent multiple top-rated insurance carriers—so you can trust that your coverage fits your needs and your budget.
The bottom line?
The small commission we receive doesn’t raise your premium—it ensures you have a professional working for you, not the insurance company.
Why This Matters to You as a Consumer
Understanding how insurance agents get paid helps you see that our interests align with yours. We succeed when you’re properly protected, satisfied, and stay insured over time.
When you choose Huff Insurance, you’re not just buying a policy—you’re partnering with a trusted, local agency that puts your best interests first.
🏠 Protect What Matters Most
If you have questions about your insurance coverage or how we work, our team is happy to help.
📞 Call Huff Insurance at 410-647-1111 for a free, no-obligation policy review today.
Frequently Asked Questions
1. Do insurance agents really get paid the full premium I pay?
No. Agents receive only a small percentage of your premium as commission. The bulk of your premium goes to the insurance company to cover claims, administration, and risk.
2. Why is the commission so small — does that mean the agent is not motivated to help me?
The commission is intentionally modest because insurance is about spreading risk, not about high margins. Agents rely on long-term relationships, renewals, referrals, and sometimes override or profit-sharing bonuses—not just a single sale. Our incentive is your protection and satisfaction over time.
3. What is a “renewal commission” or “residual commission”?
After the first year of a policy, an agent often continues to receive a commission each year the policy remains active, many times at a reduces percentage. That ongoing payment is called a renewal (or residual) commission. It rewards agents for servicing, maintaining, and helping you over time.
4. What is an override or profit-sharing bonus?
An override or bonus is extra compensation from an insurer when an agent or agency meets certain performance metrics—such as low claims, high retention, or high volume. It’s not guaranteed and depends on how the insurer views the agency’s overall performance.
5. If the agent’s pay is small, why should I trust them to give good advice and not just sell me something?
Because the financial benefit to the agent is quite limited compared to the risks to you from underinsurance or gaps. We build credibility through long-term service, client referrals, claims advocacy, and maintaining trust. Our success is tied to keeping clients protected, satisfied, and loyal—not just making a one-time sale.