How to Start a Car Insurance Company

As auto insurance is required for driving in most places, and as driving continues to increase in popularity, the demand for auto insurance companies continues to grow as well. If you can raise investment capital and want to make money offering legal services to anyone who drives, starting an auto insurance company may be for you.

Preparing to Sell Insurance

Obtain a property and liability insurance license from your state. This license allows you to legally sell auto insurance in the state where you plan to operate your business, and ensures that you have the necessary knowledge and skills to do so.

[1] Take a pre-license course. You will likely be required to take courses covering insurance and ethics. These courses will be specific to the state in which you hope to obtain a license. Most courses are available online and can be completed at your own pace, but require a course fee.

Take the exam administered by the state. This is required to obtain an insurance license in most states.

Find out what requirements apply in your state from the state insurance department (which sometimes goes by various names). They will also tell you about the financial and other terms related to the license.

Some states will allow you to transfer your license from one state to another.

Create a business plan for your auto insurance company. Your business plan should describe how you will attract customers, which insurance companies you will work with, and the expected start-up costs and projected revenue for the first few years of business. Of course, there are also simpler decisions to be made.

Choose your business location specifically. You must know the state or states in which you intend to do business in order to obtain an insurance license.

Also specify the city where you will locate your business. This will help you start considering whether to buy, rent, or build an office.

Be aware that the details of your business plan will likely change as you begin to build your business.

One of the pressing needs of insurance companies is the ability to determine risk when insuring your clients. (Large companies, with whom you may be able to partner with or purchase information from, will have the best access to this type of information

ASI and the latest technologies used for it.)

Be prepared to offer as much as possible to your customers. The more policies you have, the more different policy and rate options you can offer your clients. You can even sell policies offered by larger insurance providers.

Be sure to offer liability insurance, collision insurance, and comprehensive insurance, as well as multiple auto insurance policies and umbrella policies.

Reduce unexpected surprises by getting advice on your business plan from lawyers, accountants, public relations professionals, and other business people as soon as possible.

Build strong relationships with contacts at insurance providers and other insurance companies, at all levels of the industry. These people, whom you should treat as professional associates and friends, are likely to be important sources of information, if not legitimate business partners.

Do research independently of what is available. Get to know all the plans you will be able to offer (both as you open and as you grow), and what it will take to offer them. Some of these will require cooperation with other insurance companies.

The sooner you know who you need to work with, and who you want to work with in the future, the better you will be able to develop those relationships.

Consider buying an existing auto insurance agent. Acquiring a business has the advantages of saving time, gaining an existing customer base, and avoiding start-up costs. There are always opportunities to form partnerships or join a successful insurance company as well.

[2] Buying or joining an existing company is easier and more reliable than starting your own business - partly because a business plan has already been developed and likely implemented.

Build your own brand to have full control over your insurance company by starting from scratch.

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