No. A broker does not add to your price. The insurance company pays the broker out of the premium it already charges, so the same policy costs the same through a broker or through that insurer's own agent. The one thing that can add cost is a separate broker fee, which should be shown to you in writing before you buy. Who this is for: a business owner who wants a broker but worries the broker's cut lands on the bill.
The short version
- The insurer pays the broker. The commission is built into the premium, not added on top.
- Commission on most small business policies runs about 10 to 15 percent, paid by the insurer. Illustrative.
- Buying direct does not remove the commission. The insurer keeps it or pays its own salesperson.
- A separate fee is allowed in most states. It should be shown to you in writing before you buy, so ask.
- A broker usually lowers your total cost by shopping several insurers and fixing how your business is priced.
Who actually pays the broker?
The insurance company does. When you pay your premium, the insurer keeps most of it and sends a share to the broker who placed the policy. That share is the commission. It is set by the insurer, not the broker, and it is the same whether the policy is sold by a broker, an independent agent, or the insurer's own staff. See what separates a broker from an agent.
Because the commission is inside the price, there is nothing for you to pay separately. If a broker quotes you a $6,000 general liability policy, you pay $6,000. Standard insurers file their rates with the state, and the filed rate already includes a cost for selling the policy. Specialty insurers set their own rates, but they build that cost in too. Buying direct does not remove that money from the price. It just pays the insurer's own call center instead of a broker. See using a broker versus buying online.
How much is the commission, and where does it show up?
The figures below are illustrative. Commission varies by insurer, by policy type, and by state.
| Policy | Typical commission paid by the insurer | What you pay extra |
|---|---|---|
| General liability | Roughly 10 to 15 percent of premium | Nothing. It is inside the premium. |
| Workers comp | Roughly 5 to 10 percent, and lower on assigned risk business. In North Dakota, Ohio, Washington and Wyoming the state fund is the only insurer, pays no commission, and cannot be shopped. | Nothing. It is inside the premium. |
| Commercial auto | Roughly 10 to 15 percent | Nothing. It is inside the premium. |
| Umbrella | Roughly 10 to 15 percent | Nothing. It is inside the premium. |
| Specialty policy | Roughly 10 to 15 percent, shared with the middleman a broker uses to reach specialty insurers | A state tax, often a small filing fee, and sometimes a fee from that middleman. Each is its own line on the quote. |
On a $6,000 general liability policy, a 12 percent commission is $720. That $720 is part of the $6,000 no matter who sells it to you.
When can a broker charge me a separate fee?
Some brokers charge a fee on top of the commission, most often on small or hard to place accounts where the commission is tiny. A specialty policy also goes through a middleman, called a wholesaler, and the wholesaler may add a policy fee.
Both are legal in most states. The rule is that the fee has to be shown to you in writing before you buy, and in many states you have to agree to it. Rules vary by state, so ask. Look for a line called broker fee, policy fee, or wholesaler fee on your quote. If you do not see one, there is none.
So how does a broker save me money if the price is the same?
- More quotes. The same policy costs the same everywhere, but different insurers price your trade very differently. See why quotes for the same business vary so much.
- Correct pricing. Your payroll and the job category it is rated under drive the price. A broker who fixes a wrong category or an inflated payroll estimate can cut a premium by a fifth or more.
- No double buying. A broker matches your policy to your contracts so you do not buy a stand alone policy when an add on would do.
- Fewer surprises. Catching missing policy wording before a certificate is rejected avoids idle crew days, which cost far more than any premium difference.
None of this changes the commission. All of it changes the number on your invoice.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A landscaping contractor in Florida with nine employees pays $7,900 a year for general liability, bought directly from one insurer's website. She assumes a broker would add 10 percent on top.
What went wrong: A broker shops her application to seven insurers. Three quote her. The same insurer she already uses comes back at $7,900, the identical price. Two others come back at $6,200 and $6,650 with the same limits and the contract wording she needs.
What it cost: She moves to the $6,200 policy and saves about $1,700 a year. The broker's commission on that policy is about $740, paid by the new insurer out of the $6,200. Her invoice shows no fee. Illustrative figures.
The fix: The commission was already in the price she was paying direct. The broker did not add cost. The broker added six more insurers to the comparison, and one of them was $1,700 cheaper.
Frequently asked questions
Q: Does using an insurance broker add to the cost of my policy?
No. The insurer pays the broker a commission out of the premium, and the same policy costs the same through a broker or the insurer's own agent. Only a separate broker fee adds cost, and it should be shown to you in writing before you buy.
Q: How does a broker get paid if I do not pay them?
The insurance company sends the broker a share of your premium after you pay it. That share, the commission, is set by the insurer and built into the price you were going to pay anyway.
Q: Can I ask a broker how much commission they make on my policy?
Yes, and a good broker will tell you. Many states require brokers to disclose their compensation if you ask, and some require it in writing before you buy.
Q: Is a broker fee ever worth paying?
Sometimes. On a very small or hard to place account, the commission may not cover the broker's work, and a modest fee is the price of getting the policy placed at all. It should be disclosed up front and match the effort involved.
Q: Will a broker push me toward the insurer that pays them the most?
Commission rates for the same policy type are similar across insurers, so there is little to gain. Ask to see every quote the broker received, including the ones they do not recommend, and you will see the whole picture.
Q: My quote total is higher than the premium. What are the extra lines?
Specialty policies carry a state tax, a small filing fee, and sometimes a fee from the middleman who placed it. Those are not broker commission. Every one of them is itemized on your quote.
Q: Can I use a broker for only one policy and keep the rest direct?
Yes. Many contractors start by having a broker shop one policy, often the one a contract is forcing them to change. If the broker does well, they move the rest at renewal.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Showing contractors exactly what a policy costs, with every commission and fee in the open, is how we start most new relationships.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.