What’s the difference between an independent agent and a broker?

Although these terms are sometimes used interchangeably, there is a legal difference between them. A broker legally represents you as the policyholder, while an independent agent represents their principal, which is the insurance company they work for. As such, the fiduciary duties of the two are very different.

How are independent insurance agents paid?

Independent insurance agents primarily earn a living through commissions paid by the insurance companies they represent. The amount they earn is based on a percentage of the premiums of the policies they sell. The type of insurance and the individual product dictates the commission structure. For example, a life insurance agent’s commission can be quite considerable during the first year of the policy, but often very small thereafter; and whole life insurance policies will earn a higher commission than a term policy. For property and casualty agents who sell home and auto, first-year commissions are relatively modest but quite consistent thereafter with each renewal. Independent agents also can earn bonuses based on the volume of policies they write per the terms of their contracts.

What is the best car insurance company?

The best car insurance company varies from person to person since everyone’s insurance needs are different. One driver might prioritize an insurance company offering the lowest premium, while another might value a company with a strong financial background and high customer satisfaction ratings. Someone looking to manage their own policies might find that the best car insurance company for them has strong digital tools and a mobile app. To find the best car insurance company for you, determine what you’re looking for in an insurance provider before requesting quotes.

How do I switch car insurance companies?

Switching car insurers is relatively simple unless you have filed a claim with your current insurer, in which case you may need to wait until your claim is resolved. When the time for renewal comes up, tell your current insurer that you are not renewing. However, only do this if you have another company and policy lined up to begin when your current one ends.

How can I lower my car insurance costs?

Since multiple factors affect your car insurance rate, there is no magic formula for getting cheap car insurance. Purchasing your policy from a company known for affordable rates is one step that could help you save money on car insurance. You may also want to ask for quotes from several potential carriers to see which offers you the lowest rate. Be sure that each company you approach includes all available discounts when giving you a rate. Once you have a policy that works well for you, one of the best ways to keep the rate low is to maintain a clean driving record, without any moving violations, if possible. Insurers also often offer the best rates to drivers who do not make frequent claims on their policies.

Benefits of independent insurance agents

Written by

Jessica Gibson,

Edited by

Maggie Kempken,

Reviewed by

Mark Friedlander,

Expert verified

Published on September 19, 2024 | 5 min read

Bankrate is always editorially independent. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation of . Our content is backed by Coverage.com, LLC, a licensed entity (NPN: 19966249). For more information, please see our . Our is to ensure everything we publish is objective, accurate and trustworthy.

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When it’s time to purchase a car insurance policy, you may wonder where to start. These days, you can buy your insurance from an agent or even, from some providers, directly online. But even if you decide you prefer working with an agent, which kind should you choose? There are several types of insurance agents, including captive agents, who work with just a single company, and independent insurance agents, who represent multiple companies. So when is an independent insurance agent the right person to help you? Bankrate’s insurance editorial team created this guide to review the pros and cons of using an independent insurance agent so you can make the best choice for your own policy when it’s time to purchase new coverage.

What is an independent insurance agent?

An independent agent represents multiple insurance companies to offer a broader range of insurance products to help meet consumer needs. In addition to auto insurance, independent agents can also help you find life insurance and homeowners insurance. They are also able to offer similar insurance products across a broad range of companies. Meanwhile, captive agents represent just one insurance company, offering only the products offered by that specific company.

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The benefits of choosing an independent agent

Before you look for an independent agent to work with, decide if an independent or captive agent is right for you. To help you make an informed decision, we’ll cover the advantages and disadvantages of working with an independent agent.

What are the advantages of independent insurance agents?

There are several potential advantages to working with independent insurance agents vs. captive agents. There are no extra costs when working with an independent agent, and it can save the customer time by allowing the agency to shop for quotes from multiple insurance companies. An independent agent may be able to find a better deal for your insurance needs than you can. Ultimately, you will need to decide if these and other possible advantages are beneficial to you.

Multiple quotes from different companies

One of the best benefits of working with an independent insurance agent is having them shop for insurance quotes for you. With access to multiple companies, the agent can check rates and coverage types with multiple companies at once.

When working with an independent agent, you only have to provide your pertinent information once, saving yourself time. Independent insurance agents may also know which companies have the qualities you’re looking for, which will also save you time and could potentially save you money.

Agent can stay with you if you switch providers

When your policy comes up for renewal, reach out to your independent agent if you receive a rate increase. They can shop for competitive rates to help you decide if you should stay with the same company or switch.

Even if you switch insurance carriers, you can stay with the same agent. This can allow you to maintain a relationship with your independent insurance agent no matter what company you choose for your insurance policies.

Personalized customer service

While captive agents can also provide customer service tailored to the strengths of a specific company, independent insurance agents may be more motivated to work hard to keep your business. This means answering questions about rates, coverages and claims or filing claims on your behalf. If issues arise with your coverage, you can call on your independent insurance agent to help resolve your problem.

Your best interests

An independent agent has a legal duty to act ethically and put your best interests first. They thoroughly review your individual circumstances and needs before exploring the wide range of options they have access to in order to help find you the best insurer and product for you.

Smaller insurance companies

Independent insurance agencies can work with all types of companies, ranging from smaller regional companies to major national insurers like Progressive and Nationwide. An independent agent may present you with an insurance quote from a smaller, unfamiliar company but one that still meets your needs and offers the right insurance coverage for your family.

What are the disadvantages of independent insurance agents?

While there are several potential advantages to working with an independent insurance agent, there are also some possible drawbacks.

Knowledge of policies

One benefit of working with a captive agent is they are often experts on the company they represent. This means they know the ins and outs of the policy options, coverages, available discounts and how to get you the best deal with the insurance company.

Independent agents in insurance represent multiple companies and, therefore, may be stretched a bit thinner in regard to in-depth knowledge.

Less support for the agent

Independent agents don’t have the backing of a large insurer in the same way captive agents do. This may mean having fewer easily accessible resources and being required to be more proactive in finding training and support.

Fewer large insurance companies

Some large well-known companies, like State Farm, do not work with independent agents. Therefore, while independent agents are able to provide products and rates from multiple insurers, they may not have access to specific companies you may be interested in.

Potential conflict of interest

While an independent agent has a legal duty to act in the best interest of their client, there might be a conflict of interest for the agent if one insurance provider pays a higher commission than another. To act ethically, the agent should present the advantages and disadvantages of both providers, regardless of the commission offered.

How to find an independent insurance agent

You may be able to find an independent insurance agent simply by doing an online search for “independent insurance agents near me.” Websites like Yelp and Google Maps are likely to show ratings and reviews for local independent agents, or you may be able to get referrals from friends and colleagues. Another option is to use the “Find an Agent” link at the website for the Independent Insurance Agents & Brokers of America (IIABA).

How can you purchase insurance other than through an independent agent?

If you don’t want to work with an independent agent or agency, there are other ways to purchase insurance:

Use a captive agent: If you like a particular insurance company or have other lines of insurance through a specific company and want to bundle coverages, consider using a captive agent from that provider instead of an independent agent. Captive agents are well-versed in the company they represent and should be able to get you the best rate for insurance from that company.
Purchase directly: Whether you go online or over the phone, you can also get quotes and purchase insurance directly through the insurance company.

Frequently asked questions

Although these terms are sometimes used interchangeably, there is a legal difference between them. A broker legally represents you as the policyholder, while an independent agent represents their principal, which is the insurance company they work for. As such, the fiduciary duties of the two are very different.
Independent insurance agents primarily earn a living through commissions paid by the insurance companies they represent. The amount they earn is based on a percentage of the premiums of the policies they sell. The type of insurance and the individual product dictates the commission structure. For example, a life insurance agent’s commission can be quite considerable during the first year of the policy, but often very small thereafter; and whole life insurance policies will earn a higher commission than a term policy. For property and casualty agents who sell home and auto, first-year commissions are relatively modest but quite consistent thereafter with each renewal. Independent agents also can earn bonuses based on the volume of policies they write per the terms of their contracts.
The best car insurance company varies from person to person since everyone’s insurance needs are different. One driver might prioritize an insurance company offering the lowest premium, while another might value a company with a strong financial background and high customer satisfaction ratings. Someone looking to manage their own policies might find that the best car insurance company for them has strong digital tools and a mobile app. To find the best car insurance company for you, determine what you’re looking for in an insurance provider before requesting quotes.
Switching car insurers is relatively simple unless you have filed a claim with your current insurer, in which case you may need to wait until your claim is resolved. When the time for renewal comes up, tell your current insurer that you are not renewing. However, only do this if you have another company and policy lined up to begin when your current one ends.
Since multiple factors affect your car insurance rate, there is no magic formula for getting cheap car insurance. Purchasing your policy from a company known for affordable rates is one step that could help you save money on car insurance. You may also want to ask for quotes from several potential carriers to see which offers you the lowest rate. Be sure that each company you approach includes all available discounts when giving you a rate. Once you have a policy that works well for you, one of the best ways to keep the rate low is to maintain a clean driving record, without any moving violations, if possible. Insurers also often offer the best rates to drivers who do not make frequent claims on their policies.