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Which One is the Right Option for You – a Captive Insurance Agent and an Independent Insurance Agent?

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insuranceYou might have heard that insurance agents fall into categories like captive agents and independent agents, and might wonder whom to turn to when you need insurance. Let’s learn about these two so that you can make an educated decision about whom to approach for buying insurance.

Difference between a Captive Agent and an Independent Agent

The main difference between these two is the number of insurance providers they work for. While a captive agent works for a single insurance company and can sell only their policies and get paid by them, an independent agent work only for themselves and sell products of multiple insurance providers. Although independent agents usually charge high fees, they also have a broader range of products for you to choose from.

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A normal trend while buying insurance is to approach agents, as most people find it convenient. These agents work with insurance companies and have been licensed to sell insurance in their state. Based on the nature of agreements, agents are paid by the insurance providers either in the form of salary, commission or both.

Captive agents have signed on to sell insurance from only one carrier and are typically contractors or employees of the provider. Independent agents can partner with multiple providers.

These differences are important to understand for insurance buyers who want to find the best insurance coverage for their needs.


When Should You Use a Captive Insurance Agent?

The benefit of buying from a captive agent is their in-depth knowledge of a particular provider’s insurance products. This knowledge is the captive agent’s best friend. Captive agents are fully trained in their insurance provider’s products and know all the details of getting appropriate coverage for businesses and individuals. If the buyers trust the name of a particular insurance provider, it’s best for them to buy insurance from a captive agent of that provider.

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Other scenarios in which a captive agent is the most beneficial are:

When you don’t want to pay brokerage: Depending upon your state law, independent agents may be allowed to charge high fees, while captive agents are not usually allowed to.

When you have time to shop: Captive agents can show you products of only one insurer; hence you may need to get quotes from other agents which will require applications and appointments for which you should have time.

Insurance Agent

When Should You Use an Independent Insurance Agent?

When you want to shop around and compare insurance products from multiple providers and choose the best one, an independent agent is useful. An independent agent can help you in comparing and finding the most suitable product for your needs. They will walk you through each quote, compare prices and policy terms and thus will educate you about each product.

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Other events in which an independent agent is useful include:

If you want to save time: Filling out insurance forms is time-consuming. But once an independent agent has all your information, they submit it to their provider; so, you don’t have to spend time in filling out the form.

If you want to save money: Since independent agents can get quotes from multiple providers, it usually means you can find either the best value or the lowest price. This is especially useful for small business owners when it comes to workers’ compensation.

If you have complicated risks: Since independents have greater access to a variety of policy options than captive agents, they can usually find the most affordable coverage for your unique complicated risks.

Insurance Agent

Buying Directly from the Insurance Company

You can also buy directly from the desired insurance company either online or on phone through their in-house agents. This eliminates the time consumption.

Depending on your needs, choose one of the above ways to buy insurance and get the desired peace of mind.

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