What Is an Independent Agent?
Last Updated on March 7, 2021
When shopping for car insurance, you’ll find people who call themselves independent gents.
An independent agent is an insurance agent that sells policies from multiple companies. The agent reviews your needs, then recommends the best insurance.
What does an independent agent do? What are the advantages and disadvantages of working with an independent agent? Find out everything you need to know about independent auto insurance agents today.
How Independent Agents Work
An independent agent is an insurance industry professional who sells policies from multiple providers.
Some companies exclusively do business through independent agents. Other companies do business online, over the phone, and through independent agents.
An independent agent is different than a captive agent. A captive agent is an insurance industry professional who can only sell products for one company (their employer). An independent agent sells products from several.
How Independent Agents Make Money
Independent agents receive a commission from each insurance policy they sell.
If the company recommends Farm Bureau insurance to one customer, for example, then Farm Bureau will pay the agent a cut of the premiums.
Independent agents do not receive a salary from an insurance company.
Independent Agents vs. Captive Agents
There are two main types of insurance agents: independent agents and captive agents.
Independent agents work for themselves and sell products from multiple companies. They work as independent financial advisors, offering clients a range of options based on their needs. The independent agent reviews your needs (like your driving habits and the level of coverage you want), then recommends the best policy based on those needs.
Captive agents are salaried employees of an insurance company. They work for one insurance company, and they only recommend products from that insurance company.
Captive agents are also known as direct insurance agents. You’re buying directly from the insurance company instead of through a middleman.
Independent Agents vs. Insurance Brokerages
Independent agents and insurance brokerages perform similar roles at different scales.
An independent agent is a single person (or a small company) selling insurance to customers based on their needs.
An insurance brokerage company also sells insurance products from different insurers, recommending the best policies based on the customers’ unique needs. However, an insurance brokerage tends to be larger than an independent insurance agency.
Insurance brokerages can be captive or independent.
A captive insurance brokerage works with a specific insurance company. The brokerage has contracts with specific providers and sells only their products.
An independent insurance brokerage is not affiliated with any insurance companies, allowing them to recommend policies from multiple insurers.
Advantages of Working with an Independent Agent
Independent agents come with several advantages. Some people have worked with independent agents their entire lives.
Some of the reasons to use an independent agent for car insurance include:
Get the Best-Fitting Policy: Independent agents review your needs, then recommend the best insurance products based on those needs. Sometimes, Farm Bureau will offer the cheapest coverage to you, but State Farm could have better coverage at a slightly higher cost. You can easily get the car insurance you need instead of buying an ill-fitting policy from one provider.
Retain an Agent When Switching Carriers: Many people like independent agents because they can continue working with that agent even after switching carriers. If you like GEICO’s car insurance more than Allstate’s, for example, then you can make the switch without changing your agent.
Claims Filing: Most independent agents file claims on your behalf. If you need to make a claim, you contact your insurance agent and the agent files the claim with the parent company. That means you don’t need to deal with an agent from your insurer.
Review Competitors’ Offerings: When you work with an independent agent, it’s easy to see what competitors offer. Instead of viewing one policy from one company, you can view multiple policies from across the industry.
Get Many Quick Quotes at Once: Getting quotes from multiple insurance companies takes time. With an independent agent, you input your information once, and the agent gives quotes from multiple companies.
Get the Best Price: A captive agent might sell you a full coverage car insurance policy for $1,500. You assume that’s a good deal, but it’s impossible to know. You’re not comparing the premiums to other companies. If you want a cheaper full-coverage plan, then you’d need to shop around with other companies.
Personalized Customer Service: Some people like independent agents because they get a personal level of service they would not get with captive agents or a website. If you like the idea of personally interacting with an insurance agent who reviews your needs and recommends the best policies, then independent agents may be the right choice. If you work with an insurance agent, you spend less time dealing with 800 numbers or faceless insurance company websites.
Local Service: Many independent agents live and work in the communities they serve. Instead of directing business through a website or faceless corporation, you’re doing business with a local.
Objective: Instead of recommending a single insurance company, the independent agent is objective. They work with multiple insurers. Theoretically, they recommend the best insurance for your unique needs instead of pushing you towards one provider.
Disadvantages of Independent Agents
Some people avoid working with independent agents. Although independent agents provide multiple advantages, others prefer websites, captive agents, or other ways of doing business.
Some of the disadvantages of independent agents include:
Not Always Objective: Theoretically, independent agents are objective. They recommend the best insurer based on your needs. However, independent agents make money from commission, and some insurers pay higher commissions than others. Independent agents are not always objective, and they might push you into a policy that pays a higher commission.
Can’t See All Competitors: Independent agents work with multiple insurance companies, but they don’t work with all insurance companies. The agent might provide five quotes from insurers serving your area, for example, when there are 25 total insurers serving your area. You might still need to do your own research. Not all insurance companies work with independent agents, and many major brands only sell insurance through their own agents.
Limited Business Hours: An independent agent is a human being – not a website or call center. The independent agent will maintain normal business hours. If you want to review your insurance policy at 11:30 pm, then you might need to use a website instead of an independent agent.
Final Word on Independent Agents
An independent agent is an insurance industry professional affiliated with multiple insurers. The agent reviews your needs, then recommends the best insurance.
If you need car insurance and prefer a personalized approach, then independent agents may be the right choice for you.