Independent Insurance Agents: What Are They and What Do They Do?
Written by
Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
Ever wonder what exactly an independent insurance agent does? Look no further. In this article, we'll address the different types of insurance agents and why working together with an independent insurance agent is the best option for many people.
No matter what your current insurance needs are, you can find the best kind of agent to protect your assets and unique risks. Local independent insurance agents can help you find the coverage you need, from homeowners insurance to boat insurance, business insurance, and beyond. But first, here's a breakdown of what independent insurance agents do.
What is an Independent Insurance Agent?
Independent insurance agents can sell a variety of insurance and financial products. They work with multiple insurance companies and aren't bound to just one carrier, as captive insurance agents are. This makes independent insurance agents able to help a wider variety of insurance customers looking for any kind of coverage, ranging from general liability insurance to car insurance and more.
Independent insurance agents aren't employed by any particular insurance company, so they're free to browse as many carriers as necessary to find the right policy for the client. These agents can shop and compare quotes, policy options, available discounts, and more from different insurers. They can also help file insurance claims for customers and update their policies as necessary.
What Do Independent Agents Sell?
Independent insurance agents represent several different carriers, giving them and you more options. Instead of a one-size-fits-all approach, they can tailor each policy to your specific needs and price range.
In addition, independent agents know the complexities of the insurance market and what laws may apply. Not having an agent can cost you time and expertise, but having one could possibly save you from large financial losses.
An independent insurance agent is licensed to sell one or all of the following products:
- Property and casualty insurance: This type of license allows your agent to provide advice about and sell you insurance to cover the property you own, like your home, vehicles, and business property. The casualty insurance portion allows them to sell liability coverage to protect against legal responsibility for causing unintentional injuries or property damage to a third party.
- Life insurance: This type of insurance license allows your agent to provide advice about and sell you life insurance products such as term life insurance, universal life insurance, and permanent life insurance.
- Health insurance: Health insurance has changed over the years, so having an agent who's knowledgeable about the coverage and licensed to sell it is essential. A health insurance license allows just that.
How Do Independent Insurance Agents Work?
You can think of an independent insurance agent as similar to an independent financial advisor since they provide customers with various options for insurance policies and other products. Independent insurance agents start by talking with their customers to assess their coverage needs, including any specific or unique risk exposures. From there, they can get an idea of exactly what type and how much coverage the customer really needs.
Captive insurance agents work for one insurance carrier, either as a full-time employee or as an independent contractor. Either way, they're contracted by that carrier to sell its products to customers, so they can't shop around between insurers for the best available prices or coverage options.
Since independent insurance agents aren't bound by just one insurer, they're free to shop and compare policy and price options from multiple carriers for their customers. However, independent agents may still try to influence customers to buy certain policies that offer them a higher commission rate.
While independent insurance agents often work for customers for free, they do get paid a commission by the insurance company they ultimately sell a policy from. Still, independent insurance agents work hard to find customers the best possible deal, including selecting a carrier that offers more or better discount options.
The Benefits of Working With an Independent Insurance Agent
Working with independent insurance agents vs. captive agents provides many benefits for the customer. Independent agents have a wider range of products to browse and, thus, many more options to present to customers. When shopping for coverage, working with an independent agent can lead to better policy options and the best available premium rates and discounts.
Licensed Experts
To earn their insurance licenses, independent agents must pass state exams first. These state exams help prove a prospective agent's readiness to assist those looking for the right coverage, their knowledge of the industry and the coverages they want to specialize in, and their ability to identify and define important insurance terms. Having this knowledge allows independent agents to break down the complex jargon found in insurance policies for their customers and help them get matched to the right coverage from the right provider.
Local Insurance Experts
An independent insurance agent can help you get matched to the absolute best available coverage for you because they're local, so they know the carriers that specialize in and offer the policies you need in your area. Having local independent insurance agents can help you find coverage much faster than trying to shop by yourself since these experts have been trained in the industry. They know exactly which carriers sell the products you need based on the information you provide them.
Independent Agents vs. Captive Agents, Direct Sales Agents, and Insurance Brokerages
There's a lot of debate about which type of insurance agent is best to trust your most significant assets with. The difference between each type of available insurance agent should be noted before you start shopping for coverage.
- Independent insurance agents: They represent your best interests. Working with multiple carriers, they find you the best coverage and pricing with the ability to shop rates in the future.
- Captive insurance agents: They work for one carrier, and have fewer options for coverage and price. Captive agents have limited products and have to hit specific metrics to keep their jobs, which could compromise your best interests as the consumer.
- Direct sales agents: They represent the insurance company they're employed by. Direct sales agents, as their name implies, sell insurance products directly to their customers.
- Insurance brokers: They represent the customer and are licensed to sell insurance policies from several different carriers. In exchange for their work, brokers receive a commission and may also charge a broker fee to the customer when they sell an insurance policy.
- Independent insurance brokerages: These companies aren't affiliated with specific insurance carriers and are often much larger than independent insurance agencies. As such, they're able to sell customers any type of insurance policy or product that serves them best.
If you've been wondering, "What is an independent broker?" it's actually a real estate term. Independent brokers manage or own independent real estate brokerages. In the insurance industry, however, there is such a thing as independent insurance brokerages, also called "independent brokerages," as defined above.
When deciding which type of insurance agent to work with, the more options you have to choose from, the better your decision can be. With an independent insurance agent, you have several carrier options that fit your needs and budget-friendly pricing.
| Features & Services |
|
|
|
Agents |
|---|---|---|---|---|
| Access to multiple companies and a wide range of products |  |
 |
|
|
| Easy switching from company to company without hassle | |
|
|
|
| Unbiased and objective advice | |
|
|
|
| Claims assistance and advocacy | |
|
|
|
| Policy service from the same person you bought from | |
|
|
|
DID YOU KNOW?
Independent insurance agencies sold about 62% of the $785 billion in property and casualty insurance premiums written in 2021. Captive agents were the second-highest, at about 21%.
Ready to Save On Insurance?
Our independent agents shop around to find you the best coverage.
Which Insurance Companies Are Independent?
Independent insurance agents work with several insurance companies, while captive agents work with one. Insurance agents and companies may choose to be independent to offer more options for their customers.
Being independent may also offer them more freedom in their work. Captive insurance agents and companies may choose to work for and represent just one insurance company due to personal preference or contract or commission incentives.
Most consumers don't know the difference between independent and captive insurance companies. Here's a list of just a few to tell them apart.
Top Independent and Captive Insurance Companies
| Independent Insurance Companies | Captive Insurance Companies |
|---|---|
| Nationwide | State Farm |
| Progressive | Allstate |
| Travelers | Liberty Mutual |
| The Hartford | Farmers |
| Auto-Owners | American Family |
Knowing the difference between independent and captive insurance companies can mean the difference between being pigeonholed into one choice and having a variety of options to compare and choose which is right for you.
How to Find a Local Independent Insurance Agent
Finding a local independent insurance agent is easy with Trusted Choice. Our network of independent insurance agents includes experts in every kind of insurance you can imagine.
Connecting with a local agent is as simple as utilizing the online agent matching tool. Match with an independent insurance agent today and start benefiting from a more personalized experience, better coverage, and the best available pricing.
FAQs about Independent Insurance Agents
You can find out if an insurance agent is independent by asking them directly if they work with multiple insurance companies or how many carriers or providers they represent. You can also review their website to see if their profile identifies them as an independent agent or check your state's licensing agency to view the agent's record and how many insurance carriers they represent.
How independent insurance agents get paid is through commission. They're free to sell insurance policies and products from multiple carriers and their work is often free of charge to customers. Instead, they get paid a commission from the insurance company they sell a policy through.
To become an independent insurance agent yourself, you'll need to take your state's mandated courses and pass license exams. Check with your state's specific requirements for becoming a licensed independent insurance agent to be sure of what you need to take.
https://www.thehartford.com/independent-agent
https://www.investopedia.com/terms/i/independent-agent.asp
https://www.nerdwallet.com/article/insurance/independent-insurance-agents
https://www.ramseysolutions.com/insurance/what-is-an-independent-insurance-agent
https://agentsync.io/blog/industry-news/2022-summary-of-big-i-market-share-report