Get Licensed To Sell Auto Insurance: A Step-By-Step Guide

If you're interested in selling auto insurance, one of the first steps is to obtain an insurance license in the state where you plan to operate. The requirements to become an insurance agent vary by state, but they can often be completed much faster than other professions that require a license. You don't need a college degree, but you do need a license for each type of insurance you plan to sell. To sell auto insurance, you'll need a Property and Casualty (P&C) license. This will also allow you to sell homeowners insurance, business casualty insurance, and other types of insurance. Most states require you to complete a pre-licensing course, pass an exam, and undergo a background check, including fingerprinting. Once you've obtained your license, you'll need to be appointed by an insurance company before you can start selling their products.

Decide on the type of insurance agent you want to be

When deciding on the type of insurance agent you want to be, it's important to consider the different categories of insurance agents and the various specialisations within the field. Here are some key points to help you decide:

Types of Insurance Agents

Broadly speaking, insurance agents can be categorised by their employment structure. You can choose to be an Independent Agent or a Captive Agent.

• Independent Agents represent multiple insurance companies and can offer a wider range of insurance products. They have the freedom to work with several insurers and are not tied down to just one company. This allows them to offer a diverse selection of policies to their clients.
• Captive Agents, on the other hand, work exclusively for a single insurance company. They have extensive knowledge of the products offered by their affiliated company and can provide detailed information about the specific coverage.

Specialisations within the Insurance Field

Insurance agents can also specialise in different lines of insurance, catering to various needs. Here are some common areas of specialisation:

• Life Insurance Agents focus on selling life insurance policies that provide financial benefits to beneficiaries upon the insured person's death.
• Health Insurance Agents assist individuals and businesses in finding suitable health insurance plans within their budgets. They sell medical, disability, Medicare supplement, and long-term care policies.
• Property and Casualty Insurance Agents deal with products that protect against damage or loss to property, such as homes, cars, or businesses. They also handle inland marine policies and crime coverage.
• Disability Insurance Agents help individuals and businesses with plans that provide income protection if the insured becomes unable to work due to illness or injury.
• Long-term Care Insurance Agents assist clients in planning for future long-term care services, such as assisted living facilities and nursing homes.
• Personal Line Insurance Agents help individuals find coverage for multiple personal items, including cars, homes, and life insurance.
• Commercial Line Insurance Agents cater to businesses, aiding them in finding coverage options for their buildings, worker's compensation, and liability insurance.

Other Factors to Consider

When deciding on the type of insurance agent you want to be, it's also essential to consider factors such as your personal interests, the level of interaction you want with clients, and the flexibility you desire in your work schedule.

Additionally, research the different agencies you may want to work for, as they often have specific requirements and processes for their agents. Understanding the various categories, specialisations, and factors will help you make an informed decision about the type of insurance agent you want to be.

Choose your insurance line of authority

To sell auto insurance, you need to obtain a license for that specific line of insurance. These are known as "lines of authority" (LOAs). LOAs are groups of similar insurance products that fall under a similar subject area.

There are six major LOAs that form the backbone of the insurance industry, as defined by the National Association of Insurance Commissioners (NAIC) in the Uniform Licensing Standards (ULS). These are:

• Life insurance: Coverage on human lives, including benefits of endowments and annuities, benefits for disability income, and death benefits.
• Accident and health or sickness insurance: Coverage for sickness, bodily injury or accidental death, which may include benefits for disability income.
• Property insurance: Coverage for the direct or consequential loss or damage to property of every kind.
• Casualty insurance: Coverage against legal liability, including death, injury, disability, or damage to real or personal property. Casualty insurance often includes auto insurance, so this is likely the LOA you will need to sell car insurance.
• Variable life and variable annuity products: Insurance coverage provided under variable life insurance contracts and variable annuities.
• Personal lines: Insurance coverage for individuals and families for losses resulting from death, injury, or property damage. Personal lines generally include products such as homeowners insurance, personal earthquake insurance, renters insurance, auto insurance, umbrella insurance, and health insurance.

In addition to these six major LOAs, there are also limited lines that cover more specific types of insurance products. While there are over 50 different limited lines licenses offered across the United States, the ULS restricts each state to no more than nine limited lines, including four core lines: car rental insurance, credit insurance, crop insurance, and travel insurance.

It's important to note that the requirements to obtain a license to sell insurance vary from state to state. Therefore, you should check with your state's department of insurance or insurance commissioner to determine the specific requirements for obtaining a license in the LOA you desire.

Complete pre-licensing education

To sell auto insurance, you need a Property & Casualty (P&C) license. Before you can register to take your insurance license exam, you must complete a state-approved pre-licensing education course. Around half of the US states have pre-licensing requirements. Pre-licensing courses usually provide between 20 and 40 hours of insurance education and cover both national and state-specific information. For example, in California, you need 32 hours of pre-licensing education, including 20 hours focused on general insurance and 12 hours dedicated to ethics training. In Hawaii, you need 24 hours of coursework plus 12 hours of ethics.

The insurance licensing exams are challenging. They cover a wide range of topics that aren't common knowledge. Therefore, it is strongly recommended that you take a pre-licensing education course, even if your state doesn't require it. This will greatly improve your chances of passing the insurance license exam on the first try.

Pre-licensing courses are available in both online and classroom settings, providing flexibility to accommodate different learning styles and schedules. When deciding which course is right for you, consider the course's flexibility, price, and reputation.

Pass the state insurance licensing exam

Passing the state insurance licensing exam is a crucial step in becoming a certified auto insurance salesperson. Here are some detailed instructions and tips to help you prepare for and pass the exam:

Understand the Exam Format:

The state insurance licensing exam is a multiple-choice test, typically with four options available as answers. The exam is timed and proctored, meaning someone will be present to supervise the candidates during the assessment. Most states use third-party testing companies such as Pearson VUE, PSI Exams, or Prometric to administer the exams. The exam will be computerized, and you will be given ample time to complete it.

Know the Exam Content:

The state insurance licensing exam consists of two parts: the "national" insurance section and the "state" section. The national section focuses on general insurance concepts, while the state section covers state-specific laws, regulations, and statutes relevant to the insurance industry. The exam will test your knowledge of insurance basics, ethical business practices, and state-specific insurance rules.

Complete Pre-Licensing Education:

Before taking the state insurance licensing exam, it is highly recommended to complete pre-licensing education. This step is mandatory in about half of the US states. Enrolling in a pre-licensing course will provide you with the foundational knowledge and prepare you for the exam. These courses usually offer 20 to 40 hours of insurance education, covering both national and state-specific information. America's Professor and Kaplan Financial Education are reputable providers of pre-licensing courses.

Study Strategies and Tips:

Passing the state insurance licensing exam requires dedication and a well-planned study strategy. Here are some tips to enhance your preparation:

• Allow yourself enough time to study; give yourself at least a week to thoroughly cover the material.
• Take practice exams to familiarize yourself with the question types and format.
• Organize your study space to ensure a comfortable and distraction-free environment.
• Use visual aids, such as flow charts and diagrams, to help with revision and understanding complex concepts.
• Explain the concepts to others to reinforce your understanding and identify areas that need further review.
• Take care of your physical and mental well-being by exercising, getting enough sleep, and staying hydrated.
• Manage your test-taking anxiety by establishing a consistent pre-test routine and learning relaxation techniques.
• Stay focused during your study sessions, and don't be afraid to reach out for clarification if needed.

Exam Registration and Logistics:

To register for the state insurance licensing exam, it is recommended to call the testing company (such as Pearson VUE or Prometric) at least three days in advance of your desired exam date. Be prepared to provide identification and, if required, a completion form from your pre-licensing education provider. Leave all personal items, including study materials and electronic devices, outside the testing room.

Exam Retake Policies:

In the event that you don't pass the exam on your first attempt, don't be discouraged. Most states allow multiple attempts, but you may need to wait a specified period before retaking the exam. Review the areas where you struggled and focus your studies accordingly. Utilize additional resources or seek guidance from mentors to improve your understanding of challenging topics.

Submit your insurance license application

To sell auto insurance, you need a Property & Casualty (P&C) license. This is a requirement in all states, and the process is state-specific.

Once you have completed the necessary pre-licensing education, passed the relevant state insurance exam, and completed a fingerprint and background check, you can submit your insurance license application. This is usually done through the National Insurance Producer Registry (NIPR) and is typically accompanied by a filing fee. The cost of this fee varies depending on the state and the lines of authority you are applying for, ranging from $20 to $150.

It is important to note that the process for submitting an application may differ depending on the state. For example, in California, applicants must complete the prelicensing education course and pass the qualifying license examination before submitting their application. In Florida and Michigan, applications are submitted much earlier in the process.

After submitting your application, all that is left to do is wait. Processing times vary by state and can take anywhere from a couple of weeks to a few months. Once the application has been processed, the state will send you an email containing your license number and National Producer Number (NPN).

Frequently asked questions