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Independent vs Captive Agent?

When looking to change or purchase auto insurance - a common question many people have is if it would make more sense to purchase their insurance through a captive/exclusive insurance agent or an independent agent.. The answer depends on your specific needs and what is important to you. There is not right or wrong answer to this question.

One thing to consider is if having multiple policies with one carrier is important? This is something that most captive/exclusive carriers do quite well. But they do not have the market cornered in this area. There are some independent insurance carriers that do very well in this area such as Safeco Insurance who was recently purchased by LIberty Mutual. In most cases the captive companies, such as Allstate, American Family and others, do very well in this area but they are not always the cheapest or even have the best coverage but if having all your policies with one company is important to you then a captive agent may be the way to go.

Many people are simply looking for the cheapest insurance they can get. If this is what is important to you than an 1-800 company, such as eSurance or Geico, with their clever little lizard, may be able to provide you with what you are looking for. However, if you put the blinders on and only compare price you may find you self lacking in coverage and even leave yourself open for a lawsuit. An auto insurance policy with quality coverage does not necessarily mean that you need to pay an outrageous premium. A sign of a quality stable company is affordable rates and a quality product. In many cases companies attempt to buy up market share. In doing so they offer artificially low prices are then forced to raise their prices a few months or a year later. I solid company is one that has a proven track record of spreading their risk. One way you can tell is to do an internet search to find out how many rates increases a company has taken in the last five years. You also may want to look at how large the increases have been. If a company is taking increases of 5% or less once a year they may be a good company to work with. If a company is taking increase in excess of 5% annually or is taking several smaller increases you may want to consider looking elsewhere as you will most likely be paying substantially higher premium on your next policy renewal.

One of the most important qualities, according to some is a long-standing relationship with an agent or broker. Establishing a relationship with a good agent can in many cases save you from a costly lawsuit and help keep your premiums under control. This is where an independent agent usually excels. An independent agent has contracts with several carriers. Working with more than one insurance carrier allows the agent to place you with an insurance carrier that can meet your needs as well as provide you with a premium that is within your budget. Another perk to working with an independent insurance agent is the ability to shop for the best price if your current carrier takes a large rate increase. With an independent agent you are able to maintain your relationship with your current agent even when you are switching carriers unlike an exclusive agent who can only represent a single company. Another advantage to an independent agent is the ability to place each individual policy with separate carriers that offer the best coverage and price for your situation. A good agent will be able to determine when splitting your policies apart among multiple carriers makes sense financially - in many cases the savings of a policy out weigh the multiple policy discount that a company offers.

In summary - if you want the cheapest you should do your homework and learn the basics of insurance so you know what you are purchasing. Knowing what is covered and what is not covered under a given policy takes time and training. Many people shop for their initial auto insurance quotes online then call an agent to make the purchase. In my view this is a good idea. This way you can find out what carriers offer an affordable premium and still take advantage of an agents training and years of experience. After-all there is a reason agents are required to be licensed by the state and are required to take refresher courses throughout the year. I would strongly recommend that you refrain from purchasing insurance from a website, whether it be auto insurance, Home insurance or any other personal lines insurance.

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