What is the Difference Between a Captive Agent and an Independent Agent?

There is a big difference between a captive insurance agent and an independent insurance agent. For price-savvy consumers who want to receive the most value for their insurance purchasing dollars, deciding whether to use a captive agent or an independent insurance agent should be their first assessment. First, let’s look at the differences:

Captive Agents Represent Limited Choices

Captive agents typically represent only one company and are limited to the products, placement guidelines and pricing structure of that one company. Because the parent company owns the agency, there is little choice in products. Only if the parent company offers that product or access to that product can you rely on a captive agent for competitive quotes.

Captive agents may be obligated to sell other products in addition to the coverage you seek. For example, a captive agent may be required to sell the parent company’s life insurance or annuities, which may place added pressure on you to purchase insurance you may not want or need.

Independent Agents Represent Many Different Companies and Offer More Choices

Independent agents typically represent many different insurance companies, offering you broader choices of coverage and multiple price quotes for each type of insurance you need. For example, if you are shopping for homeowners insurance coverage, an independent agent may represent several companies willing to quote on your home. This gives you choices in price and coverage options to help you determine which insurance company best suits your needs.

One of the most important issues facing insurance buyers is the financial stability of the insurance company they choose. An independent agent evaluates the financial stability of each company he or she works with, providing you with an added level of confidence. With the choice of several or more companies, an agent can gauge the strength of the carriers quoting on your home and offer guidance into those carriers’ financial ratings.

An independent agent may also represent companies that meet the specific needs of your home’s geography. For example, coastal homes, condos or rental homes face unique weather-related challenges. Not every insurance company offers coastal home coverage, especially in the challenging Florida and South Carolina homeowners insurance marketplace. An independent agent understands the challenges facing the southeastern homeowner and can offer you the widest choice of insurance companies that can underwrite your home.

Independent Insurance Agencies Offer Many Wins for the Consumer

Let’s explore the many benefits of teaming up with an independent insurance agent. There are many reasons to utilize an independent insurance agent. The independent agent has access to insurance companies that meet specific needs for their customers. Here are a few examples.

  • Some insurance companies offer highly competitive rates on new homes. These companies often market special programs of this nature through independent agents, who can reduce your rates with a single phone call.
  • If you own an older home, obtaining insurance can be a challenge and many companies have strict guidelines on older homes.
  • Although Americans love their dogs, increasingly, insurance companies do not. Certain homeowners companies will insure Florida and South Carolina homeowners with certain breeds of dogs, while others will not. An independent agent offers homeowners markets that cater to dog lovers, or may offer access to specialty coverage for liabilities associated with dog ownership, such as dog bites.
  • Finding wind coverage on coastal homes is becoming increasingly problematic as storm severity continues to build. Companies like Frontline® Homeowners Insurance will write insurance coverage on homes that include wind coverage, even if that home is located close to the water in Florida or South Carolina.
  • Has your insurance carrier ever raised your rates or imposed a new guideline that triggered your non-renewal? When this occurs with captive agents as it did recently to thousands of South Carolina homeowners, an independent agent offers readily available alternative markets. Once a captive insurer increases your homeowners premium or non-renews your coverage, you must find another agent to meet your needs.

With multiple companies from which to choose, the independent agent offers coverage for a wider variety of risks. The captive agent, on the other hand, must work within the underwriting guidelines of the one parent company that they represent.

An independent agent will evaluate and develop a risk profile specifically designed to protect you and your family and help you select the best policies to protect you from today’s risks. Why wait? Get an online quote from Frontline today and be referred to one of our Independent Agents in your area.

Please remember that the comments contained in this blog are general in nature and that coverage under any specific policy of insurance will depend upon the terms and conditions of such policy.