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.

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