When shopping for insurance, you want to receive the most value for your money. This means you need to hire an agent who has your best interests — not their own bottom line — at heart. The key to finding an agent who'll always do what's most favorable for you is to understand the differences between the two main types — independent and captive agents — and know which type will steer you in the right direction. Here's what you need to know.
Captive Insurance Agents Offer Limited Choices
Captive agents work for one insurance company and are limited to selling the policies of that particular company. This means that they have thorough knowledge of company-specific insurance policies, but can't assist you if you don't need or qualify for those policies.
They usually receive a salary and commission, or just commission. They may be hired as full-time employees or independent contractors with the company; if they're independent contractors, they typically receive reimbursement for their expenses.
They may be encouraged to sell certain policies or meet certain sales quotas, and failure to hit targets can result in lower wages or job losses. This means that they may place pressure on you to purchase insurance you don’t want or need.
Independent Insurance Agents Offer More Choices
Independent agents sell policies provided by multiple insurance companies, offering you more choices of coverage and multiple price quotes. They aren’t considered employees of any one particular insurance company, and they receive the majority of their earnings through the commission of insurance policies sold.
Some independent agents are completely independent of a primary insurance company, but most report the majority of their business to one company. However, their independence and detailed knowledge of the market allows them to compare and sell policies offered by other insurance companies when their primary insurance company's policies don't meet your needs. Independent agents also evaluate the financial stability of the companies they work with, providing you with added peace of mind.