Why you should only do business with an independent insurance agent or adviser

Independent insurance agents have the best products and the best customer service — period.

Independent agents have access to a wide range of products and insurance carriers. This means they can find a solution that fits the needs of their clients in an unbiased fashion. You see, not every insurance professional does business this way.

If you were going to purchase a new truck, say it was a Ford in this example. You walk into the Ford dealership and are immediately approached by a salesman. You walk over to a truck you like and then start discussing the exact specifications you’re looking for in that truck. You know you want an extra cab and something that is 4×4. You also want your new truck to be dark blue, with a sprayed in bed protector and fog lamps.

When it comes down to talking about price, do you think that the Ford salesman would tell you that right down the street there was a Dodge dealer who had a truck that matched your exact specifications, but for $4,000 less? Of course not. Why? Because that salesman’s job is to sell Fords and Fords only. Of course he is going to try and position the Ford as if it was the best truck on planet earth.

The same can be said for insurance agents. When you speak to a AAA, State Farm, Allstate, Geico, etc., sure you are talking to a licensed insurance professional, but, who you’re really talking to is an employee of their respective company. An employee whose job it is to only sell it’s company’s products.

If you’re not a savvy insurance shopper, you may not even realize that you are not getting unbiased, objective advice when talking to one of these employees. That is a problem.

You see, there are three main categories of insurance professionals. Let’s take a look.

Captive Agents

A Captive Agent (a.k.a. “exclusive” agent) is an agent who works exclusively for one company and one company only. Think of Allstate, State Farm, or Farmers. They have agents, and local agencies, however they only sell their own products. In addition to sales, Captive’s also typically service your policy too. If you have a policy question or claim situation, you can contact them and someone at their office should be able to assist.

Captive agents are typically compensated on a salary + commission model (although weighted more on the commission side), and when your policy renews each year, or every six months, the agent will earn a commission. Depending on the premium, it could be as little as $10, up to a couple hundred.

Remember the insurance company is paying the agent a commission to service the customers policy. For the company, this is a much more cost effective way to distribute their insurance products. It’s cheaper for them to pay someone a couple hundred dollars per year, than it is to pay them a five figure salary with other benefits like health insurance, retirement planning, etc.

You do not pay the agent any fees or other costs. They are compensated by the insurance carrier directly.[quote]If you’re not a savvy insurance shopper, you may not even realize that you are not getting unbiased, objective advice when talking to one of these employees.[/quote]

Insurance Representatives

An insurance representative is someone who works for a company typically in call center. There really isn’t a physical office and reps aren’t responsible for servicing your policy. Their number one goal is to sell you insurance. You will most likely never speak to them again afterwards. Think of Geico, Progressive, eSurance, etc..

Reps are paid generally on a salary + incentive model, meaning that they get a small salary to start, and get paid per-sale, usually on a sliding scale. This payment model in combination with very competitive work environments means that insurance reps are usually more aggressive with you because they have a small window of opportunity to sell insurance, usually a 15-20 minute phone call.

This was exactly how AIG was, and honestly, it’s the reason I got so burnt out. There was so much pressure with every call to “make a sale”, and for many reps, it definitely didn’t lend itself to doing the what was right for the customer 100% of the time.

Independent Agents

Independent’s do not work for any one insurance company. They work for themselves. Think of them as being self employed. This means that they are generally compensated 100% on commission.

Independent agents are very much like Captive agents, but unlike Captive agents they have access to multiple companies, (sometimes as much as 30-50 companies) so they can shop your coverage to see who offers you the best possible deal.

This also means they have access to a wide range of products. Did a company decline you because of your driving record? No problem, an independent agent can try other companies for you, on your behalf. You don’t have to lift a finger.

Furthermore, because Independent’s aren’t employees of an insurance company, their advice and guidance is typically more objective because there is no corporate “big brother” pulling the strings. They are not monitored, or pressured into presenting certain products to customers when others may be more suitable.

Because Independent agents work with so many companies, they also tend to have a better grasp on the different markets, and the insurance industry in general. This is huge because there are a lot of companies and products out there, and you can’t give someone sound advice unless you have a good understanding of many of them.


With all of that being said, there are good, bad, and great insurance professionals in all three of these categories. I am in no way trying to throw mud, or say one is better than the other. I’m simply speaking from personal experience and industry knowledge.

I just know that if I were buying a new truck, I’d rather go somewhere who sold all brands, makes and models. That way, I’d know the advice I was getting was honest.

Thoughts? Questions? Leave a comment below!