What Kind of License Is Needed to Sell Auto Insurance?

By Dave Guilford

  • Overview

    What Kind of License Is Needed to Sell Auto Insurance?
    The kind of license needed to sell auto insurance is known as a Property & Casualty, or P&C, license. Each individual state governs the requirements to receive a property and casualty license in that state. In addition to selling auto insurance, a property and casualty license enables an insurance agent to sell all types of property insurance, including homeowners insurance, renter's insurance, disaster insurance (flood, earthquake, etc...), professional malpractice insurance, and any other type of insurance that does not insure against death or illness.
  • Function

    At its simplest, all types of insurance serve as a means of risk transference. The insured is accepting a guaranteed small loss (the cost of the monthly insurance premium) in exchange for the insurance company accepting the possibility of a larger loss involving an insurance claim. The insured pays his auto insurance premiums every month so that, if he ever has an at-fault accident, his insurance company will pay for the damages. It is important that states regulate who may and who may not sell insurance products. As with any financial services product, insurance sales requires a high degree of professional ethics and product knowledge. Recommending the wrong type of auto insurance for a client's situation can result in catastrophic expenses if the client has an at-fault accident.
  • Considerations

    When considering a career in the insurance business, there are several steps to the process. Every state requires attending a course on both the mechanics and the ethics of insurance sales before a potential licensee is allowed to take the insurance exam. These courses generally cost around $300, though the costs vary from state to state. Once the required training is completed, the potential licensee must pass the exam. After passing the exam and becoming a licensed insurance agent, there are annual continuing education requirements that must be met to keep the license valid. Failing to meet the continuing education requirements results in the suspension of an insurance license.

  • Types

    The two types of insurance licenses are Property & Casualty and Life & Health. A Property & Casualty license allows the agent to sell insurance policies covering physical property and personal and professional liability. A Life & Health license allows the agent to sell life insurance policies, health insurance policies, and annuity contracts.
  • Potential

    A career in auto insurance sales can be very lucrative and rewarding. The first step toward that career is to get licensed. That generally involves being sponsored to take the exam by an existing property and casualty insurance agency, and attending the required courses. Each state has different requirements, but the requirements will be listed on each state's Department of Insurance website. Once licensed, the new agent must be appointed by the individual insurance carriers that the agent plans to represent.
  • Expert Insight

    Newly licensed agents may have to work under the appointment of a master agent for a number of years before they can receive their own appointment to sell for a given insurance carrier on an independent basis. Working under a master agent allows new agents to learn the business and to build their own book of clients while under the watchful eye of an insurance professional.
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