Do Insurance Agents Make CA Insurance More Expensive? Myth or Truth?
- Jennifer Matulich
- Oct 9
- 3 min read
You’ve probably heard the rumor: “Buying insurance through an agent costs more.” It sounds logical, right? Middleman, extra layer, added cost. Except it’s not true. Not even close. Let’s break down why this “agents make it more expensive” story is one of the biggest false narratives in insurance, especially here in California.
1. Direct Doesn’t Mean Cheaper — It Just Hides the Costs
Online and call-center insurance companies still pay people to sell. They’re called licensed reps, and they earn base pay plus bonuses or commissions tied to sales. When you add in millions spent on digital marketing, paid search, and national ads, you'll see that "direct" distribution doesn't remove cost; it repackages it. With a California insurance agent, the commission is transparent. With a call center, the cost is buried under marketing spend and overhead. In either case, someone gets paid to sell you a policy. The difference is whether that person actually knows you and your needs.
2. In California, It’s Illegal to Charge You More for Using an Agent
California’s Department of Insurance regulates rates under Proposition 103. Carriers cannot charge higher auto insurance premiums simply because you used an agent instead of buying online. Rates must be filed and approved based on actual risk factors like driving record, territory, and mileage; not how the policy was sold. So when someone says, “It’s more expensive with an agent,” in California, they’re flat-out wrong. The state doesn’t allow it.
3. Call Centers Are a Single Touchpoint — Agents Are Accountable
Here’s a key difference most people overlook: accountability. When you buy through a call center, you’re dealing with a single-touch representative. That person may never talk to you again, and they won’t be the one helping if your claim goes sideways. There’s no long-term relationship, no follow-through; you are just another transaction. A licensed local agent, on the other hand, must stand by every coverage choice they recommend for you. If something’s missing, they’re the ones you’ll call — and they’ll be the ones trying to help you fix it. That’s real accountability, not a voice in a queue that disappears after the sale.
4. Well-Run Agencies Actually Help Keep Rates Down
Data proves it: strong agency books have lower loss ratios than corporate call centers. That means fewer claims per premium dollar — which leads to lower rate pressure for everyone. Why? Because agents take the time to ask questions, correct rating errors, and spot coverage gaps before they become claim problems. If major carriers standardized their performance around their best agencies, overall pricing would drop, not rise.
5. The Real Cost Drivers Aren’t Agents — They’re Losses and Inflation
Auto and home insurance premiums rise because claim costs rise: parts, labor, medical bills, lawsuits, and reinsurance — not because your agent earned a commission. Commissions are a small, stable piece of total expense. A one-point improvement in loss ratio offsets years of commission cost. That’s not marketing talk; that’s basic math.
6. The “Cut Out the Middleman” Slogan Misses the Point
“Cut out the middleman” sounds slick in a tech ad, but insurance isn’t shoes or gadgets. Your agent isn’t a middleman, they’re your advocate. They translate policy language, manage coverage updates, and help you recover when things go wrong. Automation can issue a quote, but it can’t help you when your claim gets denied, your payout falls short, or you chose the wrong coverage and want to avoid future claim issues.
The Bottom Line
Well-run insurance agencies don’t make insurance more expensive — they make it smarter. They bring local accountability, human insight, and better risk management to every policy. So before you assume “buying online is cheaper,” ask yourself: Would you rather deal with a stranger who may never answer your call again — or with a licensed professional who’ll still be here when life hits the fan?
Talk to a California Insurance Agent Who Stands Behind Their Work
At our agency, we don’t just quote prices — we explain the why behind them. If you want clear, data-driven answers instead of marketing myths, talk to a real person who knows your coverage inside and out. Contact us today at (310) 228-3627, because real advice still matters.