Independent agent vs going direct: what's the difference?

An independent agent is licensed to sell policies from several insurance companies, so one conversation can put more than one option in front of you. Going direct means buying from one company, either on its website or through its own captive agent, who sells only that company’s policies.

I’m an independent agent, so I’ll be upfront: I think it’s the better fit for a lot of people. But both ways of buying are legitimate, and the right one depends on you. Here’s how they actually work.

Three ways to buy

The National Association of Insurance Commissioners describes two kinds of agents, and the third option is buying from the company yourself:

• Independent agent. Can sell policies from many different companies. You tell them what you need once, and they compare across the companies they work with.
• Captive agent (the NAIC also calls this a direct agent). Sells insurance for only one company, so every option they show you comes from that company.
• Direct. You buy from the company yourself, online or over the phone, usually without a dedicated agent.

There’s also a broker, who represents you rather than an insurer and searches the market on your behalf. Brokers more often show up in business insurance, and they generally charge a fee for their services.

How agents get paid

This is the question people are often too polite to ask. Both independent and captive agents represent insurance companies and are generally paid a commission by the company for the policies they sell. A broker who represents you may charge you directly, and should be clear about it before you agree to anything.

What an independent agent changes

One application, several quotes. Instead of filling out the same questions on five websites, you share your information once and see more than one option side by side.

You can move without starting over. If your company raises your rate a lot at renewal, or stops writing policies where you live, an independent agent can often shop the same coverage elsewhere. Your agent stays the same; the company behind the policy changes.

Someone who knows your whole picture. Home, car, boat, umbrella. When one person sees all of it, gaps between policies are easier to spot.

What an independent agent can’t do is offer a company they’re not appointed with. In Florida, agents must hold active appointments with specific companies to sell their policies. So “independent” means several options, not every option. It’s fair to ask any agent which companies they work with.

When going direct can make sense

If you know exactly what you want, your situation is simple, and you’re comfortable managing your own policy, buying direct can be quick and easy. Some people also like having one company for everything and dealing with it directly.

The trade-off is that you do the comparing yourself, and when something changes, like a big renewal increase or a non-renewal letter, you start the search over on your own.

Whatever you choose, check these

1. The license. Make sure both the agent and the company are licensed in your state. In Florida, use the Department of Financial Services licensee search or call 1-877-MY-FL-CFO. In Illinois, use the Department of Insurance’s agent and company lookup.
2. Like-for-like quotes. The Illinois Department of Insurance recommends getting written quotes with the same coverages and limits, so you’re comparing price, not different policies.
3. A quote is an estimate. Florida’s Department of Financial Services notes that the company can change the price after it reviews your application. Answer every question accurately.
4. Who to call at claim time. Know whether you’ll call your agent, the company, or both.

Curious what independent looks like?

Send me your current declarations page and I’ll put the same coverage in front of the companies I work with and show you what comes back, side by side. If what you have is already the right fit, I’ll tell you that too.

Talk to Elona