What is the difference between a captive agent and an indepedent agent?

You can think of your insurance agent as your insurance salesperson. In general, their job is to work with you to help you understand your insurance needs and pick the right product in terms of coverage, affordability, and other features. Now, their effectiveness in completing this task will depend on whether they are a captive agent or an independent agent.

A captive agent is an insurance agent who works for only one insurance company. They might be paid a salary, commissions, or a combination of both. A captive agent is more likely to be a salaried employee, and in this case, you might feel less pressure during the sales process and there is no incentive for them to sell you coverage you do not actually need.

Since they only sell their firm’s products, a captive agent will likely have more in-depth knowledge of the policies they offer, as they work with the same ones everyday. Often, this greater product knowledge and direct line to the insurer will enable a captive agent to provide better customer service.

The major downside of using a captive agent, however, is that they will only be able to sell you their firm’s products. This means that your options will be restricted and you might not be getting the best value for your money.

An independent agent, on the other hand, is someone who represents many insurers. While they might be less knowledgeable about each insurance product, the main advantage of working with them is that they should be able to shop around and get you the best deal available in the market.

As you can see, there are pros and cons to either and neither is the perfect option for every situation. If you’re looking for the best value, I recommend that you shop around with different agents, both captive and independent. Alternatively, you can also explore working with a broker (to learn more about this option, see What Is an Insurance Broker? for an overview of what they can do for you).