What is 'Independent Agent'

An independent agent is an insurance agent that sells insurance policies provided by several different insurance companies, rather than a single insurance company. An independent agent receives commissions for the policies that he or she sells, and is not considered an employee of a specific insurance company.

BREAKING DOWN 'Independent Agent'

Independent insurance agents, like independent financial advisors, are thought to be able to provide their clients with a wider array of options when it comes to insurance products. They take into account the different coverage needs of the client, and select a policy that provides the necessary coverage at a reasonable price.  

An insurance agent that sells policies offered exclusively by a single insurance company is referred to as a captive agent. While the policies offered by a captive agent may be less expensive than those offered by an independent agent, it will be difficult for the client to know whether he or she is getting the best deal if only one option is made available. Captive agents may show the prices offered by competitors even though they will not be able to offer and sell those policies.

While independent agents can offer their clients with policy options from a variety of different insurers they may not be considered completely objective. Because the insurance companies pay a commission to the insurance agent when he or she sells a new insurance policy, the agent may push clients to select policies that provide the agent with a higher commission rate. 

Because independent agents are not fully supported by a single insurance company, they are often responsible for generating their own business. They may have to produce their own marketing material and manage their own operations, though they do benefit from the general advertising and marketing done by insurance companies. However, if the independent agent does not sell the policies offered by an insurance company that is conducting a large branding advertising campaign the benefit will be limited. 

Advantages of Independent Agents for Consumers

Quick quotes from multiple insurance carriers are one of the major benefits of working with independent agents to obtain insurance. If someone is shopping for insurance, independent agents are a great place to start checking out policies because they can check several different companies’ rates all at once. The more companies checked equals a greater chance of finding the best rate for you and your family. The time-saving factor is huge because a prospective policyholder only has to provide their information one time.

RELATED TERMS
  1. Direct Writer

    A direct writer is a captive agent that only issues insurance ...
  2. American Agency System

    American Agency System is a method of selling insurance policies ...
  3. Account Current

    An account current summarizes the performance of an agent's insurance ...
  4. Agent

    An agent is any person who has been legally empowered to act ...
  5. Real Estate Agent

    A real estate agent is a licensed professional who represents ...
  6. Exclusive Listing

    An exclusive listing is an agreement where a real estate agent ...
Related Articles
  1. Investing

    How Real Estate Agent and Broker Fees Work

    Are you buying or selling a home? Here's what you need to know about real estate agent and broker fees.
  2. Insurance

    How Hard Is a Career Selling Life Insurance?

    Learn why selling life insurance is a difficult way to make a living, but also how agents who persevere are rewarded.
  3. Investing

    Top 5 Signs Of A Bad Real Estate Agent

    The signs of a bad agent go beyond whether your home sells quickly.
  4. Investing

    Understanding Real Estate Commissions: Who Pays?

    When you set out to buy or sell a house, one factor worth considering is the real estate agent's fees.
  5. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  6. Investing

    Would You Make A Good Real Estate Broker?

    How to tell if you'd be good in this field. It is a common second career for many people, but isn't a good match for everyone.
  7. Investing

    Why You Don't Need A Real Estate Agent

    While there are times when a real estate agent earns the commission, there are other times when you can do it yourself.
  8. Insurance

    How Much Life Insurance Should You Carry?

    Before purchasing life insurance it is important to decide if you really need it, what type of policy is best, and how much coverage you should get.
RELATED FAQS
  1. Do real estate agents work on weekends?

    Learn how working weekends and evenings is one way real estate agents increase their chances of making a sale to a potential ... Read Answer >>
  2. How do real estate agents get listings?

    Learn about how real estate agents get listings in top real estate markets, as well as in smaller areas, through utilizing ... Read Answer >>
Trading Center