Independent Vs Captive Agent: Which Should You Contact for Homeowners Insurance?

Are you shopping around for homeowners’ insurance? The information required and the documentation process can be cumbersome. That is why most homeowners prefer working with insurance agents. These agents are intermediaries between policyholders and the insurance company.

Independent agents and captive agents are the two most-popular insurance agents to choose from. But it can be difficult to choose between independent vs captive agents. That is why we have written this article to help you understand the differences between the two.

Who is a Captive Agent?

A captive agent is an insurance agent that sells only the insurance policy from one company. Thus, the agent’s loyalty is to the insurance company it works for.

Also, captive agents do not always offer external services beyond the horoscope of the company they work for. If you are looking for an insurance agent to offer additional services, this may not be the one to talk to.

What Does an Independent Agent Do?

Independent insurance agents work for multiple insurance policies. They can help Insurance Company A sell the policy, likewise Insurance Company B and C.

They are more “freelance insurance agents” that are open to working for as many companies as possible.

Because of the versatile service provision, most independent agents are not retained as permanent employees. Instead, they are free to work as for many insurance companies as possible. All they have to do is to promote the policies of these companies and earn a commission on each.

What is the Difference Between Captive Agent and Independent Agent?

The major difference between the two is the number of insurance companies they work for. A captive agent works for one, while an independent insurance agent works for more.

Both of them earn a commission or a percentage of each insurance policy they sell.

Read on to discover additional differences between captive vs independent agents.

The Pros of Working with a Captive Agent vs Independent Agent

Below are some of the reasons why you should contact a captive agent to help you get a homeowner’s insurance:

1.    Customer Satisfaction is Certain

Are you looking for an insurance agent that can provide excellent service? It has to be the captive agent. This agent is committed to offering you value for money because he works hard to earn a commission.

Unlike the independent agent contracted to different insurers, this one isn’t. So, every commission must be earned.

2.    A Captive Agent has Extensive Knowledge of Your Ideal Policy

You can rely on the expertise of a captive agent when shopping for homeowner’s insurance. Since he works for the company alone, the agent knows firsthand the type of coverage options that can protect your home.

You can also count on the agent’s extensive knowledge of the policy to help you make informed decisions.

3.    Captive Agents are not Money-Hungry

Captive agents are paid salaries by the insurance company they work for. The insurer may also cover additional costs for advertising and the rest.

With the addition of commissions, captive agents don’t necessarily need to sell you a policy just to make money.

Therefore, you can be confident that the agent is not trying to “rip you off” just to make a sale.

Disadvantages of Choosing a Captive Agent for Homeowner’s Insurance

Here are some drawbacks to using the services of a captive agent when buying a homeowners’ insurance policy:

1.    Captive Agents Do Not Always have a “Mind of Their Own”

Captive agents do not have all the freedom to sell homeowner’s insurance as they wanted to. It is because of the domination of the insurer’s influence on what the agents do.

For example, some homeowner’s insurance companies can require the captive agents to meet a specific target per month.

In this case, the agent may be more interested in meeting the target than helping prospective policyholders.

2.    Limited Coverage Options

Captive agents do not have access to all insurance policies. Rather, they only get to sell what the parent company they work for sells.

For example, you may not get a homeowner’s policy through the agent if the parent company doesn’t offer that.

Why You Should Contact an Independent Agent for Homeowner’s Insurance

You may have a better chance of getting affordable homeowner’s insurance through an independent agent. Here are some of the reasons why you should work with this type of insurance agent:

1.    An Independent Agent Offers Competitive Quotations

Remember that an independent insurance agent works for different companies? Therefore, you can be sure of getting competitive quotes on home insurance. For example, you can get a quote of $300 premium/month from Insurer A and $200/month from Insurer B.

The independent agent literally “spreads all the options on the table” so you can choose the one you want.

2.    Independent Agents Get You Homeowner’s Insurance in Good Time

Independent agents are not as limited as the captive agents are. They have access to a plethora of home insurance policies. Just let the agent know what you need and it will be fetched for you.

3.    Independent Agents Make Home Insurance Purchase Faster

Aside from being good salespeople, independent agents simplify the home insurance buying process. By offering multiple quotes, they help you pick a home insurance policy faster.

Disadvantages of Contacting Independent Agents for Homeowner’s Insurance

Do not work with independent agents if you cannot afford to influence the buying decision. Most independent agents are not mandated to sell specific insurance policies.

However, they may be inclined to sell the ones with higher commissions because that is what some of them are after.

Therefore, you may just buy what the agent wants to sell to you instead of what you want.

Independent Agents are not Experts

Independent agents do not receive as much support as captive insurance agents do. That is why they may not be great at offering professional advice on home insurance.

Independent Agent vs Captive Agent: Which is Best for Your Home Insurance Policy Purchase?

Both the captive agent and the independent agent offer different kinds of professional guidance for home insurance purchases. The choice of which to choose boils down to your preferences. The captive agent is best if you want professional tips and less haggling. But if you want more coverage options, the independent agent is your guy!


Please enter your comment!
Please enter your name here


Related Articles

Pros and Cons of Whole Life Insurance: Everything You Need to Know

A whole life insurance policy offers death benefits payable...

Professional Indemnity Insurance for Limited Company [What It Is & Isn’t]

Professional indemnity insurance for limited company protects a limited...

What is Cannabis Business Insurance & Who Does it Cover in Canada?

Cannabis business insurance is a type of insurance policy...