What is an independent agent?
An independent insurance agent can also be called a broker, although there are some differences. Independent agents can sell products from multiple insurance companies. The benefit of working in this way is that an independent insurance agent can shop around for their clients. So, if a client's rate for car insurance seems too expensive with one provider because of their credit score, company rates or any other reason, your trusted independent agent can check with another carrier.
What is the alternative to an independent agent?
There are other options when choosing your -insurance representative & policy. One option would be a Captive Agent. A captive insurance agent works for a single insurance company, also called a carrier. Their insurance business can provide insurance products only from the parent company. The insurance rates they provide to their clients are based on what the parent company sets and, often, the clients' credit scores (for certain insurance products such as car insurance). An example would be a captive agent who works only with State Farm. If you are trying to determine if someone is a captive or an independent agent, you can simply ask, “Which carriers do you represent?” Another good indicator is if they have the name of a carrier in their agency name. For example, “John Smith Farmers Agency”.
Another option is to purchase online directly from a carrier. This is not an option for all carriers, but for some of the larger companies like Progressive & Geico, you can choose to go online and obtain you own quote. This is the least recommended option. The largest issue with this option is not having a knowledgeable agent to assist you with the accuracy of the quoting process and to support and advocate for you in the case of a claim.
What is the disadvantage of using a Captive Agent?
For the insurance consumer, there are a variety of reasons that a Captive Agent may not be the ideal insurance c representative for them. Since they are limited in the carriers that they are able to write polices with, they are often not able to offer the best possible rate for the coverages needed. If you have a unique property, that agent may not be able to write the business at all, in which case you would need to find an independent agent to assist you. In the case of a significant rate increase, a captive agent has limited options for decreasing your rate. Typically only being able to lower your coverage or increase your deductible to adjust your rate. Another common circumstance is 2 or more claims in 5 years that will cause many captive carriers to decline to renew your policy. In this case, your captive agent can no longer help the insured and they would be left to find another agent.
How does having an independent agent help me?
An independent agent is beneficial to the insured for several reasons. With access to many carriers, An independent insurance agent can shop around with insurance companies to offer their clients the best health insurance, car insurance, and life insurance products to meet their needs and budgets. Because of this flexibility, independent agents don’t have to focus on the sale and can instead focus on building trusted relationships that with their customers.