How to Start an Insurance Agency: A Step-by-Step Guide

Running your own insurance agency from home sounds like an exciting opportunity to be your own boss while maintaining flexibility in your work schedule. However, make no mistake—learning how to start an insurance agency from home is no easy feat. It requires patience, strategic planning, and a relentless commitment to growth. Success in this industry doesn't happen overnight, but with the right approach, you can build a thriving business without ever stepping into a traditional office. If you’re wondering how to start an independent insurance agency, there are several key steps to consider. From obtaining the necessary licenses and certifications to choosing the right insurance carriers and marketing your services, every decision plays a crucial role in shaping your agency’s future. Additionally, understanding client needs, leveraging digital tools, and establishing a strong online presence will help you stand out in a competitive market. This guide will take you through everything you need to know about how to start an insurance agency, even if you’re working from home. Whether you’re an industry newcomer or an experienced agent ready to strike out on your own, we’ll walk you through the essential steps to build a successful, profitable insurance business from the comfort of your home. Keep reading to turn your entrepreneurial dream into reality! Also read: Is Hirey legit? Here's what you need to know What Makes Up an Insurance Business? Before jumping in, it’s good to understand who does what in an insurance company. Here’s a quick rundown of the key roles that keep an insurance business running smoothly: Insurance Agent Agents are the face of your company. They sell policies, talk to potential clients, and explain what your company offers. They also have the authority to finalize (or “bind”) insurance coverage. Insurance Broker Brokers are similar to agents but with one major difference—they represent the customer, not the insurance company. They offer policies from different providers but typically don’t have the authority to bind coverage. Insurance Underwriter Underwriters analyze risk. They decide whether or not your company should offer coverage to a particular client and help determine pricing to balance competitive premiums with profitability. Claims Adjuster When a client files a claim, adjusters investigate it. They determine how much should be paid out and check for fraud. Insurance Actuary Actuaries crunch numbers. They analyze risks, set pricing for policies, and ensure your company follows regulations. Account Manager These folks handle client relationships, address policyholder concerns, and work with agents to boost sales. Risk Manager Risk managers oversee your company’s insurance program, evaluating and advising on potential risks to minimize losses. Customer Service Representative (CSR) CSRs answer questions, provide support, and make sure clients are satisfied with their policies. Also read: In the increasingly complex world of hiring platforms, here's why customers chose Hirey Step-by-Step Guide to Starting an Insurance Agency from Home Starting your own insurance business is challenging. There’s a lot of competition, and industry rules are always changing. But with the right approach, you can build a thriving agency from home. Here’s how: Step 1: Create a Strong Business Plan If you’re serious about starting an insurance agency, a solid business plan is a must. It will help you set goals, identify your target market, and plan out your expenses. Plus, if you ever need investors or a loan, a good business plan will make your agency look more credible. Step 2: Pick Your Business Structure The legal structure you choose impacts your personal liability and taxes. Here are your main options: Sole Proprietorship – Easy to set up, but you’re personally responsible for debts. Partnership – A shared business, meaning shared profits and risks. Limited Liability Company (LLC) – Offers liability protection, but requires more paperwork. Corporation – Provides the most protection but is the most complex. S Corporation – A mix of a corporation and a partnership, with tax benefits. Step 3: Secure Funding Starting an insurance business isn’t free. Costs may include: Office equipment (laptop, phone, internet, etc.) Business registration fees Licensing costs Insurance coverage for your business Marketing and software tools If you need extra funds, consider taking out a business loan, applying for grants, or trying crowdfunding. Step 4: Get Licensed and Register Your Business Even if you’re working from home, you need to meet certain legal requirements. These typically include: Registering your business name – Some states have restrictions on business names, so check before deciding. State registration – Every insurance agency must register as a “resident business entity” in their state. Business permits and licenses – Some states require a general business permit on top of an insurance license. Tax ID Number – Sole proprietors can use their Social Security number, but partnerships and corporations need an Employer Identification Number (EIN). Check with your state’s insurance commissioner for the exact requirements. Step 5: Set Up Your Home Office Your workspace plays a big role in your success. Make sure you have: A good laptop A strong internet connection A quality headset and phone Video conferencing software A quiet, distraction-free space Step 6: Learn the Technology The insurance industry is moving away from paper, so it’s important to get comfortable with digital tools. Many companies now use: E-applications – Digital forms instead of paperwork Automated underwriting – AI-driven risk assessments Customer Relationship Management (CRM) Software – Helps keep track of clients and sales Investing in the right tech can save you time and keep your business running smoothly. Step 7: Get Insurance to Protect Your Business As an insurance agency owner, you know the importance of having coverage. Here are some key policies to consider: General Liability Insurance – Protects against customer injuries or property damage. Errors & Omissions Insurance (E&O) – Covers you if a client sues over a mistake or oversight. Commercial Property Insurance – If you rent or own office space, this covers damages and theft. Cyber Insurance – Protects against hacking and data breaches. Commercial Auto Insurance – If you use a car for business, this is essential. Some states require certain types of business insurance, so double-check your local regulations. Also read: App reviews can be manufactured and misleading. Here's what legit users have to say about Hirey. How Do Insurance Agencies Make Money? Understanding the revenue streams of an insurance agency is crucial before diving into the business. Insurance agencies primarily make money in two key ways: Underwriting Profits – This refers to the difference between the total insurance premiums collected from clients and the claims paid out. When an insurance company collects more in premiums than it pays in claims, it generates an underwriting profit. Agencies that operate efficiently by assessing risks accurately and minimizing unnecessary payouts can maximize their profitability. Investments – Insurance companies don’t just sit on the premiums they collect. A portion of this revenue is strategically invested in assets like stocks, bonds, real estate, and other financial instruments. These investments generate additional profits, helping insurance companies grow their wealth over time. While independent insurance agencies may not directly invest like major carriers, they still benefit from commissions and renewal income as a steady revenue source. Additionally, insurance agencies can earn money through: Commissions & Fees – Agents and agencies receive commissions from insurance carriers for each policy sold. These commissions can range from 5% to 20% of the policy premium, depending on the type of insurance and the agreement with the carrier. Some agencies also charge service fees for policy maintenance and additional client services. Renewals – One of the most attractive aspects of running an insurance agency is renewal income. When clients renew their policies, agents continue to earn commissions, creating a reliable stream of recurring revenue. Cross-Selling & Upselling – Offering additional coverage options, bundling policies, or suggesting higher-value plans can increase revenue per client while improving customer retention. By leveraging these income sources effectively, independent insurance agencies can achieve consistent profitability and long-term success. How Much Can You Earn? If you’re wondering how much money you can make as an insurance agency owner, the potential earnings can be quite lucrative. However, your income will depend on factors like location, specialization, the number of policies sold, and whether you operate independently or under a larger agency. According to Glassdoor, the median annual income for an insurance agency owner in the U.S. in 2024 is $101,001 per year, broken down as follows: Base Salary: $69,825 per year (with a range between $52,000 and $96,000) Additional Earnings (Commissions, Bonuses, etc.): $31,176 per year (with a range between $23,000 and $44,000) Meanwhile, the Bureau of Labor Statistics (BLS) reports that in 2023, the median salary for insurance agents was $59,080 per year. This is a useful benchmark if you’re planning to operate solo rather than running a full-fledged agency. Factors That Influence Earnings Type of Insurance Sold – Life, health, auto, home, and commercial insurance all have different commission structures, affecting income potential. Client Base & Retention – Building a loyal customer base ensures steady renewal commissions, leading to long-term financial stability. Marketing & Lead Generation – The more effective your marketing strategy, the more policies you sell, boosting overall earnings. Agency Size & Structure – A solo agent may earn less than an agency owner with multiple producers generating sales. Location & Market Demand – High-demand areas with strong economic activity tend to generate higher policy sales and commissions. With the right strategy and dedication, starting an independent insurance agency can lead to a six-figure income or more over time. As your business grows, so does your earning potential, making insurance a rewarding industry for entrepreneurs. To learn more, check out this guide on how insurance agencies earn money: a deep dive into profitability Pros and Cons of Running an Insurance Agency from Home Starting a home-based insurance agency has its perks and challenges. Here’s what to expect: Pros: No commute means more time to grow your business. Fewer distractions than a traditional office. Lower costs (no office rent, fewer transportation and meal expenses). Flexible hours—you decide when and how much you work. Cons: You need a dedicated space at home, which can be tricky in a small house. Working alone can feel isolating without co-workers. The lack of an office environment might make staying motivated harder. You’ll need to troubleshoot tech issues on your own. Starting an insurance agency from home takes effort, but it can be a rewarding and profitable venture. With careful planning, the right licenses, and solid tech support, you can build a thriving business on your terms. Just be prepared to put in the work, stay updated on industry trends, and continuously improve your skills. Now that you have a roadmap, are you ready to take the leap? Also read: How to become an Independent Insurance Agent