Agency Fees

Should You Pay Agency Fees? 

Some states allow Insurance agencies to charge an additional agency fee. Texas is one of them. It is up to the discretion of the agent. Many agents charge fees to offset the "cost" of running quotes. You should know the rules about charging agency fees. 

The Texas Insurance Code states:

Sec. 4005.003.  FEES.  (a)  A general property and casualty agent or personal lines property and casualty agent may charge a client a fee to reimburse the agent for costs the agent incurred in obtaining a motor vehicle record or photograph of property described under Section 4005.002.  The fee may not exceed the actual costs to the agent.

(b)  For services provided to a client, a property and casualty agent described by Subsection (a) may charge a reasonable fee, including a fee for:

(1)  special delivery or postal charges;

(2)  printing or reproduction costs;

(3)  electronic mail costs;

(4)  telephone transmission costs; and

(5)  similar costs that the agent incurs on behalf of the client.

(c)  A property and casualty agent described by Subsection (a) may charge a client a fee under this section only if, before the agent incurs an expense for the client, the agent:

(1)  notifies the client of the agent's fee; and (2)  obtains the client's written consent for each fee to be charged.

So what does that really mean?

Blah, Blah, Blah -right? Insurance speak. Let's break it down a little. It states in (a) that an agent may charge a fee as reimbursement for costs incurred for a motor vehicle report or a property photo. The fee may not exceed the cost incurred. In (b) it states the agent may also charge  a reasonable fee for various costs (listed) and in (c) it states an agent can only charge these fees if they notify the client of the fee and obtain written consent for each fee.

Before you agree to pay an "agency" fee, please make sure the agent has fulfilled the above listed obligations. You can refuse to pay the fee if they have not. You have the right to ask what services you are paying for, just like you have the right to ask what coverage your premium buys you.

   Keep in mind, you will pay a policy fee to the carrier. These are fees to cover the cost of underwriting the policy (evaluating the hazardous risk) and for the process of putting a legal policy in place. These are non refundable and non negotiable fees. This means that if you buy an insurance policy from a carrier and then cancel it soon after, you will not get a full refund. You will forfeit the agency fee because it is "fully earned" from day one. Many independent agents do not charge an agency fee on top of the policy fee. Agents receive commissions designated by the carriers. These commissions are based on the premium minus the policy fee. In other words we do not make money off of the carrier's policy fee. This is one of the reasons some independent agencies charge their own agency fee; to replace the fee the carrier gets. Legally, agencies have a right to do this, but within reason. I think charging a $195 agency fee on a $600 policy is excessive. I think charging the fee again to re-shop someone is excessive. It just has never sat right with us. But that is our decision and another agent may decide to charge agency fees. That is their decision. As long as they are following the rules listed above, they are legally able to charge agency fees in the state of Texas.

Agencies have the right to charge these fees, but not if they are not telling you exactly what they are for and getting your written permission to charge them. You, the consumer, have every right to ask for this fee disclosure. Please don't throw that right away. You may be paying quite a bit more than you need to!

 There are three ways to request a quote for your insurance needs: 

* Visit our website

* Email us

* Call Brockman Premier Insurance at 877-987-8683