What is an independent insurance agent?

Q:

I want to use the services of an insurance agent but I'm not sure what kind of agent I should work with. What is an independent insurance agent and how can they help me?

A:

To put it simply, an independent insurance agent is someone who works for you. Your independent agent will help you determine what kind of coverage you need and will have access to different insurance companies, allowing them to shop around for the best prices (see Insurance Agents: What's the Point? to learn more). This is the key difference between independent agents and captive agents. A captive agent is one that works for an insurance company so they can only sell the products of that particular company. The advantage of working with a captive agent is that they usually have in-depth knowledge of their company's products. The disadvantage, however, is that they can only sell you a single company's products so you can't be sure you're getting the best deal (another option is dealing with an insurance broker. Find out more in What Is an Insurance Broker?).

An independent insurance agent has 6 main duties:

1. Gather client information: This will help the agent identify loss exposures, determine coverage needs, and gather underwriting information required by insurers.

2. Search for insurer(s): Your broker will shop around for interested insurers and look for the best prices.

3. Discuss and select insurer: Your agent will then meet with you to discuss all the quotes, summarizing the pros and cons of each and working with you to select the right insurer for your needs.

4. Request coverage: Your agent then goes back and requests coverage from the insurer you've selected.

5. Review and deliver the policy: Your agent will review the policy terms with you, going over coverage and exclusions. Once everything is approved, they will send you a copy of your policy documents (learn about The Key Components of Your Insurance Policy). This is the final step in the insurance buying process.

6. After-sales and claim services: A good agent will be available to answer any coverage questions and provide some general insurance and risk management advice. In case of a claim, it is also a good idea to contact your agent and have them help you with emergency and claim services.

It is important that you select your insurance agent carefully (consult these 5 Questions to Ask Before Choosing an Insurance Agent). Not all agents have access to the same insurers, nor do they all have the same industry and product knowledge. Your insurance agent is your adviser. Unlike an employee of an insurance company, an independent agent's responsibility is to their client, representing their interests to the best of the agent's ability.

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Written by Jacques Wong
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Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won an Insurance Council of BC award in 2015 for academic excellence in the insurance licensing courses and educates insurance professionals through PNC Learning.   Full Bio