Expense Allowance

What Does Expense Allowance Mean?

An expense allowance is the amount of money an insurance company provides to an agent, separate from their commission earnings. This allowance may be issued to reimburse business-related expenses incurred prior to conducting transactions.

Some states impose limits on the amount an agent can receive as an expense allowance.

Insuranceopedia Explains Expense Allowance

Many insurance agents earn their income through commissions rather than a fixed monthly salary. These commissions are based on a percentage of each insurance product they sell.

Earning commissions, however, often involves additional costs. Agents frequently travel, meet clients over meals, and take other steps to ensure a positive client experience. Some of these expenses may be covered by the insurance company the agent represents.

Usually, these allowable expenses are reimbursed after the agent submits receipts.

Agents who operate as independent contractors typically also carry their own business insurance on top of any allowance from the carriers they represent. The cost of business insurance for an insurance agent depends on the size of the agency and the type of products being sold.