Independent Agent vs Captive Agent: What’s the Difference?
Insurance Companies Represented
Independent Agent: Indie Agents work with multiple insurance companies. Understand, the Indie Agent does not work for any one insurance company. They have contracts with these companies, in turn they can offer their products.
Captive Agent: They represent one insurance company. When you contact him/her to review your insurance they will only have one insurance company to offer.
There are some Captive Agents who may be able to offer a quote from a couple of additional companies. Usually if this agent has access to more than one insurance company, the company is a specialty insurance company that insures individuals and businesses that a standard insurance company won’t.
For instance, maybe an individual with has experienced several auto accidents and tickets. Most of your well known insurance companies won’t consider this person. Where a specialty insurance company may not have a problem offering insurance in this situation.
Interestingly enough, a lot of the insurance companies Independent Insurance Agents represent don’t spend their marketing dollars to market to the masses like you will see Captive Insurance Companies do. Just because you haven’t heard of the insurance company your Indie Agent is offering doesn’t mean they’re a poor choice. That insurance chose not to buy advertising on every TV station.
Shopping
Do you want (or have time) to contact multiple insurance agents for quotes?
Independent Agent: Will be able to shop with multiple insurance companies to compare both coverage and price.
Captive Agent: They have one option (i.e. one insurance company) available.
Keep in mind, you may have time to call several insurance agents to get quotes, but a good insurance agent will be able to provide guidance on the nuances between the different quotes/insurance companies. You’re buying so much more than price.
What’s the different between an independent agent and a broker? In most cases, nothing. Most people correlate a broker as being a person who shops with several companies and an agent as one who does not. Indie Agents can also be called Brokers.
Products & Coverage
Let’s say you have a wood shake shingle roof on your home. Not all insurance companies want to insure a home with wood shake shingles.
Independent Agent: Will be able to work with multiple insurance companies to determine who has the appetite to insure houses with wood shake shingles.
Generally when it comes to a unique, complicated, specialized, risk or situation, Indie Agents will have access to insurance companies with broader appetites.
Captive Agent: May be limited on the ability to help. It will either be yes or no.
In most cases, Captive Agents will have in an in-depth knowledge about the insurance carrier they work for.
Compensation
Independent Agent: Salary or salary plus commission.
Captive Agent: Salary or salary plus commission.
Who ever you choose as your insurance agent should be someone you trust. Someone you’re proud to have on your team. There is nothing wrong with getting paid for doing your job.
If you’re salty about your insurance agent making money you need to rethink your situation.
The Bottom Line
It comes down to trust. If you don’t trust the individual providing you with the means that will restore you financially when your world is upside down, you need to leave. Quickly. Find someone you can work with that will listen to your needs.
Music Credit: Brock Berrigan, Split Decision
