When shopping for insurance, it’s tempting to use the route that’s most readily available. That often means an online quote or worse, your brother-in-law’s cousin’s best friend’s daughter who sells insurance for one of the major underwriters. Investing a bit of research into the different agencies available is smarter. So, how do you choose between different sales pitches, and what’s the deal with independent vs. captive agencies?
Independent insurance agencies are representatives for sometimes hundreds of different underwriters. They are able to supply you with quotes from every facet of the industry to allow you to choose the best rate, best company and best service available.
Captive insurance agents, however, are, as the name suggests, captive to the company for which they work. They can only obtain quotes and sell policies for a single underwriter. Thus, they are unable to offer you competing rates. This is important not just at the time of purchase, but at renewal time as well. Independent agents are able to offer you multiple rates if your premiums go up at renewal, where captive agents are locked into a single company, and can only offer you excuses when you ask for a check of your rates.
For example, when looking at quotes from independent vs. captive agencies, you might receive quotes from an independent agent at $678, $789, and $803 per year. A captive agent might give you a quote for a similar policy at $716 per year. As you can see, although the captive agent is actually lower than 2 of the 3 policies, you would still pay more via the captive agent than the independent agent. The same scenario is likely to occur when it’s time to renew.
When choosing an independent vs. captive agency, be careful to seek out the best long-term option, rather than the easiest. While it might require some research, it could mean saving hundreds of dollars.