Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate drivers about...

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Reviewed by Laura Walker
Licensed Agent for 10 Years

UPDATED: May 28, 2019

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Wholesale auto insurance refers to policies that are considered specialized or for high-risk drivers. Most insurance agents do not have access to these policies, so they rely on wholesale insurance brokers for access.

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While retail agents work with clients, wholesale insurance brokers work with the retail agents. They help find the right policies for hard-to-insure clients.

Retail Insurance Agents

Most people buy insurance through an agent. These agents sell car, home, life, health, and other types of personal insurance. The most common scenario is an agent that is employed by one insurance company. That agent helps find a policy offered by that company that works for the client.

There are some obvious drawbacks to this approach. If the clients need something that company doesn’t offer, the agent won’t be able to help them. And, of course, the agent won’t be able to help them compare policies to those of other companies.

They are, in essence, salesmen trying to make money for their company.

Independent agents can sell policies with different companies. This allows them to pull from a larger variety of policies from more companies.

However, they still might not be able to find the right policy for someone with unusual circumstances. That’s where wholesale brokers come in.

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Wholesale Insurance Brokers

Wholesale insurance brokers are experts in specialty insurance. When a retail agent can’t find a policy for a particular client, he calls on a wholesale broker. The wholesale broker works for the retail agent, and rarely meets with the client.

Wholesale insurance is often sold by smaller, less well-known companies. It’s often tightly regulated by state law. Wholesale insurance is ideal for those who have unusual circumstances that make traditional policies inadequate.

There are also times when a person is denied coverage by traditional companies because they are considered too high of a risk for various reasons.

Wholesale insurance brokers are experts in this field. They keep lists and databases of the different policies available for this kind of need, as well as knowledge of the legal and financial ramifications of the policies.

Because this is expertise most retail brokers do not have, they turn to the brokers that do.

If the retail broker does turn to a wholesale broker for help in finding you an appropriate policy, you will not pay any more in broker fees. The retail agent splits his fees with the wholesale broker.

However, the wholesale insurance policies themselves will probably cost more than standard policies simply because they are specialty products.

If they protect your financial assets better than standard policies though, they are more than worth it.

For more information on the different types of insurance agents and their roles in the industry, consult the American Association of Managing General Agents’ webpage on agents and brokers.

Buying Car Insurance

When buying car insurance, whether it’s online, through a retail agent, or a wholesale policy, there are several things to keep in mind.

First, know your state’s minimum requirements for car insurance. While all states require liability insurance, some also require uninsured/underinsured coverage and personal injury protection.

The former pays for your repairs if a driver hits you and doesn’t have any insurance or doesn’t have enough coverage to cover the costs of the damage.

The state minimum requirements might not be enough to protect you financially, even if they get you out of a ticket.

Experts recommend carrying at least 100/300/50 insurance. This means that your insurance company will pay up to $100,000 in medical expenses per person and up to $300,000 per accident. It’ll also pay up to $50,000 to repair or replace the other driver’s vehicle.

Each person’s needs are different. Go over your financial situation with your insurance agent or financial advisor to see what amount of coverage will best protect your assets. For instance, if your car is paid off, it might be really tempting to drop comp and collision coverage.

These are optional parts of a car insurance policy that pay for repairs to your car if you cause an accident or if the car is stolen or damaged in a storm.

As a general guideline, drop comp and collision if the premium for these is more than 10% of the value of the car. At that point, you’re usually paying more for insurance than the car is worth.

Also research the company from which you’re buying a policy. The National Association of Insurance Commissioners’ Consumer Information Source allows you to learn about a company before you buy.

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