Orlando Harmon
If you want to become an auto insurance broker, you'll need to obtain a license. The requirements for this vary depending on the state, but there are some general steps you can follow. First, decide on your level of education—while most states only require a high school diploma, a degree or further training can improve your employment opportunities. Next, choose your specialty and research the pre-licensure requirements for your state. Once you've met these requirements, you can schedule and take the licensing exam. After passing, you can apply for your license by submitting an application and paying a fee. You may also need to undergo a background check and provide fingerprints. Finally, you can start building your clientele or apply for jobs with insurance agencies.
| Characteristics | Values |
|---|---|
| License type | Individual Resident License, Individual Non-Resident License, Business Entity License |
| Education requirements | High school diploma or minimal postsecondary coursework |
| Age requirement | 18 years or older |
| Pre-licensing requirements | Pre-licensing education courses, background check, fingerprints |
| Exam | 70% pass mark, $33 fee, 150 items, 2 1/2 hour duration |
| Application | Online, $40 fee |
| Additional documentation | Work and personal history, pre-licensing education and exam details |
| Licensing fee | $170 for all license types except bail agents ($566) |
| Bonding requirement | $10,000 California insurance broker bond |
What You'll Learn
Pre-licensing education requirements
The pre-licensing education requirements for an auto insurance broker license vary across different states in the US. Here is a breakdown of the requirements in a few states:
New York
The New York State Insurance Law requires individuals seeking a broker license to complete a pre-licensing course approved by the Superintendent of Insurance. The pre-licensing minimum hour requirements for a Property/Casualty Broker license are 90 hours. However, applicants with certain professional designations, such as Charter Property Casualty Underwriter (CPCU) or Chartered Life Underwriter (CLU), are exempt from the pre-licensing course.
Ohio
In Ohio, applicants must complete 20 hours of pre-licensing education for a single line of authority or 40 hours for a combined line through a state-approved training course. They must then pass a pre-licensing final exam and receive a certificate of completion before scheduling their licensing exam.
Texas
While Texas does not mandate prelicensing education, applicants can opt for a temporary 90-day license, which requires 40 hours of prelicensing education. This temporary license allows individuals to be licensed before passing the examination and receiving their permanent license.
California
In California, aspiring insurance brokers must complete 32 hours of pre-licensing education, including 12 hours of education in ethics and California insurance codes and 20 hours of specialized education in their chosen insurance field. Alternatively, they can take a 40-hour course that covers a combination of two fields if they want to specialize in more than one type of insurance.
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Exam requirements
To become an auto insurance broker, you will need to pass a licensing exam. The specific requirements vary depending on the location. Here are the exam requirements for some states/provinces:
California
The California Department of Insurance (CDI) administers the licensing exam for insurance brokers in the state. The exam can be taken either at CDI testing sites or testing sites administered by PSI, a testing company. The CDI also offers the option of taking the exam remotely through a secure and proctored service.
To pass the exam, you need to achieve a score of at least 60%. The exam fee is payable to the CDI. Before taking the exam, you must complete 32 hours of pre-licensing education, including 12 hours of education in ethics and California insurance codes and 20 hours of specialized education in your chosen insurance field. If you want to specialize in more than one field, you can take a 40-hour course that covers two fields.
New York
In New York, the state's Department of Financial Services (DFS) is responsible for the insurance licensing exam. The exam consists of 150 items and must be completed in 2.5 hours. There are two tests: Life, Accident, & Health (LA&H) and Property & Casualty (P&C). If you plan to practice in both combined lines, you must pass both exams; otherwise, you only need to take the test for your chosen specialization.
To pass the exam, you need a score of at least 70%. Each exam attempt costs $33, and you must present a valid signature-bearing ID with your photo and the original copy of your pre-licensing education certificate. After passing the exam, you must wait at least 48 hours before applying for an insurance license.
Alberta, British Columbia, and Saskatchewan
In Western Canada, each province has its own set of licensing requirements. The Insurance Brokers Association of Canada (IBAC) offers guidance on licensing courses and exams.
The Canadian Accredited Insurance Broker (CAIB) program, for example, consists of four courses, each culminating in a national examination. Passing all four examinations confers a college-level professional CAIB designation. The first course covers general insurance concepts, while the second focuses on commercial property, crime, and business interruption insurance. The third course deals with commercial general liability, commercial auto, ocean marine, aviation, surety bonds, and risk management. The fourth and final course explores brokerage management.
Passing the CAIB 1 exam qualifies you for a Level 1 or General insurance broker license, similar to the licensing exams. However, completing CAIB 1 is also a prerequisite for the Canadian Professional Insurance Broker (CPIB) designation, and both CAIB and CPIB are required for the Canadian Certified Insurance Broker (CCIB) designation.
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Application process
The application process for an auto insurance broker license will vary depending on the state in which you live. Here is an overview of the process in California and New York, which are two states that require licenses for insurance brokers.
California
- Pick a license type: There are three types of licenses in California: Individual Resident License, Individual Non-Resident License, and Business Entity License. Each type of license has different pre-licensing requirements.
- Complete pre-licensing requirements: All applicants are required to take 12 hours of Ethics and California Insurance Code Pre-licensing Education. In addition, applicants must take 20 hours of General Insurance Pre-licensing Education in their chosen field. If you want to specialize in two fields, you can take a 40-hour course that combines "property and casualty" or "life and accident and health" classes.
- Submit your fingerprints: You can submit your fingerprints before or on the day of the licensing exam. Submitting them earlier through a vendor approved by the Department of Justice will help process your application faster.
- Pass the licensing exam: Register for the exam in advance and pay the examination fee. You can schedule the exam at the Department of Insurance or online through the PSI exams service. You must bring a valid form of ID. To pass, you must score at least 60%.
- Complete the licensing requirements: Submit your online application, surety bond, and pay a licensing fee of $170 (or $566 for bail agents). You may also need to submit additional documentation depending on your specialization.
- Obtain a California insurance broker bond: After completing the above steps, obtain a $10,000 California insurance broker bond and submit it to the Department of Insurance.
New York
- Complete a pre-licensing course: Pick an insurance line to specialize in, also known as a line of authority. Common specializations include Accident and Health, Property and Casualty Insurance, and Personal Lines Insurance. Pre-licensing courses can be taken online or in a traditional classroom setting and have minimum required hours depending on the line of authority.
- Take the New York insurance licensure exam: After completing the pre-licensing coursework, take the state licensure exam. The tests are divided into Life, Accident, & Health (LA&H) and Property & Casualty (P&C). Each test has 150 items and must be completed in 2.5 hours. If you wish to practice in both combined lines, you must pass both exams.
- Apply for a New York insurance license: Wait at least 48 hours after passing the exam before applying for a license to give the department time to process the exam results. Submit your application through the DFS website and pay the individual license fee of $40.
- Get your dream job: Once your license is approved, you can start applying for jobs with insurance agencies or brokerages.
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Licensing fees
The licensing fees for becoming an auto insurance broker vary depending on the state in which you are applying. In California, the licensing fee is $170 for all license types, except for bail agents who need to pay $566. In New York, the individual license fee is $40, but if you are applying for insurance licenses for different lines of authority, you will need to pay separate fees. Non-residents in New York are also required to submit a non-resident application form and pay the appropriate fees, which vary depending on the state in which they live.
In addition to the licensing fees, there may be other costs associated with obtaining an auto insurance broker license. For example, in California, applicants are required to obtain a $10,000 surety bond, which can be purchased for a premium of $100 for a two-year bond or $110 for a three-year bond. There is also a fee for the licensing examination, which varies depending on the state. In New York, each attempt at the licensing exam costs $33.
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Fingerprinting and background checks
In California, for example, applicants are required to submit their fingerprints either before or on the day of the licensing exam. Getting fingerprinted in advance through an approved fingerprint vendor can help expedite the application process. Similarly, in New York, all insurance agents and brokers must undergo a background check as part of the licensing process.
The fingerprinting process typically involves submitting fingerprints to be scanned against the FBI's Criminal Database, which can reveal any criminal history. This comprehensive background check is crucial for ensuring that insurance producers are trustworthy and have not had any run-ins with the law.
Some states may also require additional identification or background checks, such as providing valid government-issued photo ID or meeting specific eligibility criteria. It is important for consumers to be aware of the requirements in their state and to ensure that their insurance providers have undergone the necessary fingerprinting and background checks.
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Frequently asked questions
The requirements vary by state, but generally, you must be 18 years or older, have a high school diploma, complete pre-licensing education requirements, pass an exam, submit an application, and pay a fee. Some states also require a background check and fingerprints.
No, a college degree is not required to become an auto insurance broker. However, a post-secondary education or degree can provide a solid background of knowledge, enhance your resume, and potentially increase your employment opportunities.
The pre-licensing education requirements vary by state. For example, California requires 32 hours of pre-licensing education, including 12 hours of ethics and insurance codes and 20 hours in your chosen insurance field. Meanwhile, Hawaii only mandates 24 hours of coursework plus 12 hours of ethics.
The cost varies depending on the state and the type of license. For instance, in California, the license fee is $170 for most license types, except for bail agents who must pay $566. In New York, the individual license fee is $40.
After completing the pre-licensing education requirements and passing the exam, you can submit your application, along with the required fee, to the relevant state department, typically the Department of Insurance or Department of Financial Services.
