Finding the right Homeowners and Auto insurance can seem overwhelming, and often shoppers tend to go with someone they know, or what comes easiest. One way people navigate this complexity is by talking with an independent insurance agent. These agents are licensed to sell insurance products from multiple companies instead of being direct employees of just one company. Generally, individuals have the option to work with three types of agents: direct writers, captive agents, or independent agents.

There are positives and negatives with working with each one, but individuals or families who care more about advice, guidance, service, and having the best possible outcome after a loss should consider the independent agency. The other two options tend to sacrifice those values as an attempt to find a lower price.

This blog was written to highlight the benefits of working with an independent agent, and to equip you with the knowledge of the differences between insurance agents so that you can make the best decision for yourself.

Definitions to Know:

• Captive Agent – A person licensed to sell insurance products but can only provide policies from the insurance carrier they work for. (State Farm, All State, Farmers, etc.)
• Direct writer – An insurance carrier that does not have personal agents and sells policies mainly online or through a call center. (USAA, Geico, The General, etc.)
• Independent Agent – A person licensed to sell insurance products for multiple companies and works at an agency but works for the client. (Local Independent Agencies and National Independent Agencies)

First Off, What is an Independent Insurance Agent?
An Independent Agent is someone who is licensed to sell insurance and works for an agency that represents multiple insurance carriers. This allows them to offer a range of insurance products to meet the client's needs. Many times individuals will shop one company, and if the coverage offered seems comparable to existing coverage but offers a lower premium, they will make the switch without any other research. There are many issues with this such as signing up with a company that has poor customer service or often low balls on a claim or just outright won't pay. An independent agent can help find a better deal for your insurance needs and is familiar with the companies track record in showing up when you need them, and provides your extra value by shopping multiple insurance companies without costing you any extra money.

(1) They Give You a Choice

Independent agents represent many different insurance companies that offer a wide variety of coverage options and price points. When you shop through an independent insurance agency, you’ll put in your personal information one time and get a wide selection of policies from different insurance providers. If you were to look for insurance by yourself online or work with a captive agent, you would have to go through the quoting process over and over again to compare options from different providers.

(2) Keep the Agent, Change the Provider

Insurance rates are constantly shifting. When it comes time to renew your policy, your agent can help you shop around to see if you could get the same coverage for less money from a different provider. With an independent agency, you can continue working with the same agent even if you decide to switch providers.

(3) Customer Service Tailored to your Needs

On top of personalized customer service, an independent agent can use their knowledge of companies and policies to steer you in the right direction. Most independent insurance agents work strictly on commission, which means they get paid a percentage of the premium amount for your insurance. In those cases, it is in the agent’s best interest to keep their clients happy.

(4) Unbiased Advice

Since independent insurance agents aren’t advocates for a single company, they don’t care which policy you buy. They simply look for the best policy for your situation, and that’s the one they’ll suggest to you. This freedom also allows independent insurance agents to find plans better suited to your needs. Captive agents working with one company will have a narrow view of the industry.

(5) They Advocate for You

If you have a billing or claim concern, or need to change your coverage, your agent can be your advocate, working with the insurance company on your behalf. This can save you from picking up the phone and waiting on hold, which we all can relate to and often try to avoid.

(6) Dealing with Unusual Circumstances

Because independent agents offer their customers more options than captive agents, they’re usually the better option for homeowners, drivers, or other customers with unusual circumstances. For example, if you have a low credit score, a bad driving history, or another issue that drives up the cost of insurance, an independent agent is your best option for finding a policy that gives you enough coverage without breaking your bank. With a captive agent, your choices would be more limited, and you might end up paying more for the same amount of coverage.

(7) They Get to Know You

An independent agent is someone in your local community who can serve your insurance needs throughout your lifetime. They often offer advice and learn about which companies have provided you with satisfactory service in the past. Additionally, local insurance agents have knowledge about specific risks to the area. This knowledge can ensure you avoid any gaps in coverage. A local agent is nearby with the capability to take care of your issues right away when you have to file a claim or have questions about your coverage. This personalized service helps you avoid the frustrations of long waiting periods on the phone to talk to an agent in another state who may not even know your name.

(8) Bonus Information

Agents who work for national companies often work just the sales side of the fence. In most cases, they don't deal heavily in the process when a claim is made, as that often is handled by a different department. Independent agents are involved throughout the process and see the process from start to finish. They can provide key tips such as making sure your policy states that the house is owned by a trust, or your car is owned by your business (LLC). This can be a small, but paramount piece in making sure that claims are paid when these details are often not reviewed or known.

There May Be Disadvantages with Independent Insurance Agents

Although we clearly feel it is best to shop many companies for your insurance needs, which highlights the process an independent agent will walk you through, we would be remiss if we told you there aren't any disadvantages that may arise when working with an independent agent.

(1) Not All Agents Are Equal

The good thing about captive agents working for a single company is that they undergo training on that company’s policies and procedures. Again, like any sales agent, they’re expected to know every detail about every product their company offers. Independent agents are stretched a little thinner because they work with multiple providers, and in some cases, there may be a few gaps in their knowledge about how a provider operates in a specific scenario.

(2) Knowledge of Policies

Due to working with many insurance companies, they may not be as familiar with the policy offerings and you may miss out on unique coverage or discounts, simply because they were not aware.

(3) Not All Companies Work with Independent Insurance Agents

It is true that some companies will not work with independent agents, as they often only work with captive agents within their own umbrella. It is possible that you might miss out on better coverage options or rates from a company that does not work with independent agents.

(4) Potential for Less Support for the Agent

When working with a captive agent, the parent company will usually provide resources, training and support to captive agents, whereas independent agencies will have to use their own interpretation of companies’ materials to run their business

Additional Information:

• If you want to ensure you are working with a top tier independent agent it’s important to do some research. Much like working with a financial planner who has earned their CERTIFIED FINANCIAL PLANNER™ designation, insurance agents can also go through rigorous additional training to prove they are qualified expert in their field.
• Insurance carriers vary greatly from the very best to the very worst. It is important to ask questions to the agent and do research to make sure the company you are choosing to use will cover your claims when the need arises.
• Not all independent agencies have access to the same set of insurance carriers. Some agents may not have the best options for you.

In summary, protecting your home and auto assets is an important piece to your LifePlan. Although McKinley Carter does not provide insurance products, we view insurance planning as a foundational piece in building your Financial LifePlan and achieving your financial goals. We offer help in analyzing and identifying the best steps you can take to protect yourself. Reach out to any member of our advisory team. We are here to help!