What type of insurance agent is best for me?
Are you trying to determine if you should work with a captive agent, a direct agent, or an independent agent? Not sure what the differences are? This how-to guide will allow you to decide what type of insurance agent is best for you.
Many people know the different types of insurance agents you can work with, just not by these terms. You will now learn about all three and which type of agent fits you best.
The following descriptions include each type of agent and include some examples. You will learn which types of people prefer a particular type of agent. Knowing this information will allow you to decide which type of agent you would like to work with first. You can connect with more than one type of agent, much like obtaining a second opinion from another doctor.
Types of insurance agents
Captive agents work with one specific insurance company, which is the only company they can represent. That one company may have subsidiary companies that are branded with a different name, but the primary company has exclusive control over what companies the captive agent can represent.
Sometimes captive agents have their own office and staff. They also work in a central location with many other captive agents representing the same company.
These agents get compensated with a combination of a base salary plus commissions. The pay plans vary significantly from one company to another. One company may have a smaller base plan but a more significant commission percentage. Another company may pay a higher commission in the first year but a smaller commission when the insurance policy gets renewed.
Often, they work with a company that is coast to coast. There is office support to help process paperwork, claims, payments, etc. There is also an advertising budget that the company spends trying to generate business for their captive agents.
Examples of captive agent companies are State Farm, Allstate, and Liberty Mutual.
There can be some blurry lines defining the difference between a direct writer and a captive agent. Depending on the insurance company, the terms can be almost interchangeable.
They both are only allowed to represent one insurance company. Both often work for national companies. There is typically a national advertising campaign, an advantage for this agent (this applies to both direct and captive agents).
However, direct writers are more often going to work in a centralized office environment rather than having their own separate office space. The office is more likely to be a large space with cubicles rather than individual desks.
Direct writers are more likely to be paid a salary. If there is a commission portion of their compensation, it will not be a majority of what they earn.
An example of a direct writer company is GEICO and USAA.
Independent agents represent multiple insurance companies and can write policies for clients they believe have the best coverage at the best price. That degree of flexibility can be advantageous to the consumer. The advantage of this flexibility for the agent is keeping the relationship with the client when they change insurance companies, which saves everyone time, energy, and effort.
The insurance companies do not pay these agents a salary; they get paid commissions only. However, an independent agent can work in an office and be paid a salary by their employer. That is very different from being paid a salary by the insurance company.
These offices typically represent regional insurance companies that will only write insurance policies within a specific geographic footprint. Often, these regional insurance companies write policies in several states, but not coast to coast.
The agent will primarily pay the marketing budget. Some assistance could come from the insurance company, but only as reimbursement of locally co-branded marketing rather than Super Bowl advertisements.
Which path should you take?
Are you the type of person who does your research and prefers to make your own decisions without assistance from a third party or an agent? If you have confidence in the type of coverage, the amount of coverage, and you’re ready for the insurance company’s price, then contacting a direct writer would be a path for you. This conversation will likely be via an online chat or phone call, not as likely to be face to face.
A similar description will apply to a captive agent with one notable difference; you can likely get to an office and sit down with the captive agent. As with the direct agent, there will be only one insurance company represented, but being able to visit the office for that conversation is helpful for some folks.
An independent agent will be local, allowing you easy access for a conversation. This agent will have multiple insurance companies to develop the needed insurance policies. An advantage that the independent agent has is if one insurance company raises insurance rates for whatever reason, they have access to other companies.
For full disclosure, we are independent agents representing multiple insurance carriers. We take pride in searching for the best coverage at the best price. So we hope you will consider us as an agent on your journey if you are trying to learn how to get car insurance, homeowner’s insurance, landlord, renters, or even business insurance.
What else should you know about buying car insurance?
No matter which agent option you choose, they’ll all have at least one thing in common. They’ll all need some personal information to complete a quote and sell you an auto policy. What does that mean for you? You’ll learn more by reading the information needed to buy a car insurance policy.
If you’re ready now and want to get started, tap the Get a Quote button below.