First Steps to Becoming an Insurance Agent - What Type of Insurance Would You Like to Sell
- Property & Casualty – P&C
- Any kind of vehicle that requires a license ( Commercial Trucks, Personal Cars, Boats, Planes, Farm Equipment, Wave Runners, ATV’s, Classic Cars ) and in some cases no license ( Go-Karts, Golf Carts )
- Any kind of structure ( Home, Condo, Townhouse, Apartment Complex, 2-4 Unit Rental Properties, Malls, Warehouse, Industrial Buildings )
- Jewelry, Personal Items ( Engagement Rings, Expensive Equipment )
- Liabilities that occur as a results of a properly insured vehicle or structure
- Floods ( Flood Insurance is a completely separate type of insurance required to protect your home from Floods, all lenders require this type of insurance if your home is classified )
- Workers’ Compensation
- Health & Life
- Medical Plans ( Includes Medicare and Medicaid Supplements )
- Dental Plans
- Life Insurance ( Term and Whole Life )
- Prescription Drug Plans
- Title Insurance
- Lender’s Policy ( All mortgage companies require this type of Title Insurance )
- Owner’s Policy
- Construction Policy
What’s Required to Become Licensed as an Insurance Producer?
Insurance is regulated by each individual state. Each state requires a written test to be taken, where the test is graded on a Pass or Fail system. Passing grades in most states are a score of 70 or higher, which is not too tough.
Every state typically has prerequisites that you must complete before taking the insurance test. The prerequisite requires you to attend an official insurance learning class or to purchase online software that you must complete. Every insurance line requires 20 hours of study time, so if you are going for your Property & Casualty license, you can expect to put in 40 hours in just required studying.
What to do After I Pass the Insurance Test
Once you pass your insurance test, you then have to find an agency to hire you or you can start your own insurance agency. Insurance can be very complicated and expensive for rookies, so it’s recommended to work for an insurance agency before you try to start your own.
When you do decide to start your own insurance agency, you will have to register your insurance agency with the state you wish to write insurance policies. Many states will require that you have a ”Brick & Mortar” location for your insurance agency, this location cannot be your home address. Then you will need to obtain Errors & Ommission Insurance ( E&O Insurance ). E&O Insurance is required by all major insurance carriers, $1,000,000 in coverage is typically needed by AIG and the other major carriers. $1,000,000 in E&O coverage should run you between $3,000 – $4,000 a year for a 1 person agency. E&O Insurance becomes much cheaper as you gain experience under your belt.
After registering your agency name, leasing an office space, and obtaining E&O insurance…you need to sign insurance carriers. Insurance carriers are very hesistant to sign with a new insurance agency that has no book of business and has little or no experience in the insurance industry. Your best bet is to find a Managing General Agency ( MGA ). A good MGA gives you access to all the big name insurance carriers; such as Progressive, Liberty Mutual, AIG…and allows you to keep your book of business. MGA’s may charge you a small monthly service fee, such as $10-$25 per insurance line, but it’s well worth the price if you are serious about breaking into the insurance industry.
For you internet insurance guru’s, check out http://www.agentsecure.com, I personally do not use an MGA at this time, but I like how Agent Secure provides online access to obtain insurance quotes for your clients. However, the only downside is there limited market place in many states. You always want to have at least 2-3 competitive, well-known insurance carrier options to offer your clients.
