What Is an Independent Insurance Agent?

An insurance agent can prove to be an invaluable asset for consumers when they’re looking for the right policies for their family, or when they have to file a claim due to an insurable event. Many consumers are unaware that there are two types of insurance agents available: independent and captive agents. Below is a description of each type:

  • Captive agents are agents who write and represent policies for one insurance company. The captive agent can write policies for subsidiaries of the insurer they represent, but cannot write insurance policies for other insurance companies.
  • Independent agents are not bound to one insurance company. They can create insurance policies with many different insurers. Additionally, they can compare rates and policy types from many insurance companies to help you choose a policy. They have the freedom to offer you more insurance options than any captive agent. This freedom is not only important when you first shop for insurance. It can also be useful every year when certain types or policies need to renewed. Policy renewals allow you to compare rates and policies to ensure that the policy you choose still meets your needs.

An agent can’t sell insurance policies from any insurer just because they are independent. Before they can sell their product, an agent must first be licensed. If an agent is not licensed or appointed by the insurer, they might not be able give you details about a policy that you saw in a TV commercial. It is possible for independent agents to be appointed with other insurers. Your agent may even be willing to do so if they are unable to offer you a policy.

A professional agent can help you find affordable premium rates and the right combination of benefits. Take, for example:

  • An insurer may offer a variety of riders and policies. Independent agents are more likely to be able to help you find the right policy for your needs.
  • Insurance companies may have different underwriting standards, which could make some insurers more suitable. Let’s take, for example, life insurance. Insurers may consider anyone who has smoked tobacco products in the last two years a smoker and charge them smoking rates. However, some insurance companies consider occasional cigar smokers to be a nonsmoker and charge them premiums. These underwriting differences can not only affect your premiums but also make a difference in whether a policy is approved or denied.
  • A captive agent remains with one insurer, regardless of whether the company has a good rating from insurance rating agency A.M. Best. A captive agent cannot sell policies from financially unstable or poorly rated companies.
  • Many independent insurance agents assist their clients in obtaining a claim check following an insurable event. They are often familiar with which companies pay quickly and make claims easy.

Consider the differences between independent and captive insurance agents when choosing an agent to purchase insurance. It is a big decision to purchase insurance. The choice of an agent may be just as important as the policy.