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What is an independent insurance agent?

Fact-checked with HomeInsurance.com

Ever wonder if you’re getting a good deal on your insurance? Most of us have, but it’s not always easy to tell. The insurance industry is a confusing place, but insurance agents can act as guides to show us the ropes.

Let’s walk through what it means to be an insurance agent who is independent, how they differ from other agents in the industry and which choice is best for you.

What is an independent insurance agent?

Insurance agents can be divided into two groups — captive and independent. Captive agents are employed by a single provider, while independent agents work for a number of providers. Each kind of insurance agent comes with upsides and downsides for you as a consumer.  

Independent agents have the freedom to sell insurance policies from different providers, which means they are not under the same obligations to lock you into any specific policy. The same cannot be said for captive agents, who work for the provider.

The caveat to this is that independent agents work on commission. If one provider offers a higher commission, then the independent agent might have an incentive to push you toward that provider’s policy. 

On the other hand, working for one provider gives captive agents in-depth knowledge of the policies they sell, which is not always true for independent agents, who must have a working knowledge on a range of insurance policies from different providers.

Ultimately, both types of agents offer advantages and disadvantages to consider.

Who needs an independent insurance agent

When you’re not sold on the policies offered by any one provider and need help deciding which way to go, independent insurance agents can coach you on the benefits and downsides of the policy options available from different companies. The independent agent will sort through all the policies available and find the ones you qualify for that will also fit your needs.

Why hire an independent agent

Independent agents are a great choice for people who are new to shopping for insurance because they take a lot of the guesswork out of the process for you. You can tell them what you’re looking for out of a policy, and they’ll give you options based on their experience and industry knowledge.

People with specific insurance needs can also benefit from an independent agent. For instance, if you have a spotty driving history that might disqualify you from signing up with most auto insurance providers, an independent agent can show you which policies you can still get, so you don’t have to worry about doing all the research yourself.

To help decide between a traditional or independent insurance agent, consider the following:

Knows about many providers and policies.Less in-depth knowledge of specific providers. 
Can show you policies from other companies so you can compare. Might not be able to give you the lowest price on a policy compared to a captive agent.
Helps people new to shopping for insurance decide which option is best.Some providers only work with captive agents.
Helps save time when shopping for insurance.Some independent agents may be inexperienced or a bad fit.
Keep the same agent when changing providers.

How much does it cost to hire an independent agent

It won’t cost you anything directly to hire an independent agent, because they typically work on commission. If an independent agent successfully signs you up for a policy, the provider of that policy will pay them directly so that cost does not fall to you. 

Keep in mind that independent agents make different commission percentages depending on the policy they sell. This may be factored into their recommendation, so be sure to ask for several comparable options to get the best rate for your needs. 

How to hire an independent insurance agent

Finding a good independent agent means doing some research. Here are the steps to hiring an independent agent who can help you find the right policy.

  • Define what insurance you need. Before searching for an agent, make sure you have a solid grasp on the kind of insurance you need and what coverages you want included. Writing down as many specifics as possible can help.
  • Ask around for recommendations. The people in your personal network are a good place to start when looking for a recommended agent. If you find an agent you like, read reviews and see what others say. 
  • Check the agent’s qualifications. Insurance agents can get professional certifications, which are good indications for their experience and expertise. If you ask for an agent’s certifications, and they only have one in auto insurance, then that agent might not be the best choice for finding a home insurance policy.

One of the easiest places to find an independent agent who serves your area is an independent agent network. Here are a few of the large networks that cover many U.S. regions:

Alternatives to independent agents

Aside from using an independent agent, the other ways you can find insurance is by using a captive agent or signing up directly through a provider’s website.  If you do use a provider’s website to sign up for insurance, a follow-up phone call with the provider is often required.

Banks or lenders might also refer providers to you. For instance, if you have a mortgage lender, they may be able to direct you to a reputable home insurance provider. Personal referrals from people you know can also help you find a provider.

The takeaway

  • Independent agents work with numerous providers
  • Captive agents only work for one provider
  • Independent agents get paid on commission—you don’t pay them directly
  • Finding a reputable independent agent takes some research on your part

What do independent insurance agents do? They find the best policy that’s available in your area to fit your unique insurance requirements. Independent agents are a great tool for people who don’t want to compare different insurance policies on their own. These agents are also helpful for people who have specific insurance needs that cannot be filled by most providers. If you need a new policy and you’re not sure where to look, an independent agent might be for you.

Julian Dossett

Julian is a freelance writer for Coverage.com, where he writes about auto and home insurance with an eye toward consumer advocacy. His work has appeared at The Simple Dollar, Bankrate, Reviews.com, Blockchain Beach and MSN.com. He’s currently based in New Mexico.

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