What Does Brokerage Fee Mean?
A brokerage fee, the context of insurance, is what insurance brokers charge to clients in exchange for finding insurance policies at a low cost with the most benefits for the buyer and negotiating deals with insurance companies.
A brokerage fee might also be known as a broker fee.
Insuranceopedia Explains Brokerage Fee
Unlike insurance agents, brokers represent the individual looking for coverage. As they generally do not earn a commission from the insurer, they charge a brokerage fee to make money. It may either be a flat fee or a percentage of the total transaction. For example, a broker might charge a 10 percent fee and therefore would earn $200 on a policy premium of $2,000.
Depending on the state, certain regulations and rules apply to how and what agents and brokers can charge. Nevertheless, disclosure of the amount is a prerequisite in any transaction.