What Is an Independent Insurance Agent?

Independent Insurance Agents Explained

An insurance agent and client seated at a desk with a laptop and documents
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An independent insurance agent acts as an intermediary between you and multiple insurance companies. Independent agents have been around since the early to mid-1800s, which eventually led to the creation of the Independent Insurance Agents & Brokers of America, Inc, a trade organization, in 1896. Today, there are about 36,000 independent insurance agencies in the U.S.

Before you start working with an independent insurance agent, learn who they are, how they can help you, and how an independent agent compares to other types of agents.

Definition of an Independent Insurance Agent

An independent insurance agent represents multiple insurance carriers, typically offering consumers a choice of insurers, policies, and pricing.

In general, independent insurance agents sell:

  • Property insurance (such as homeowners, renters, and auto insurance)
  • Life and health insurance
  • Small business insurance and employee benefit plans
  • Retirement products
  • Non-standard auto insurance such as non-owner policies

How Does an Independent Insurance Agent Work?

Some independent agents work for themselves, selling products from multiple insurance carriers. They may be required to complete company-specific training or apply and get approved to sell a company’s insurance. Usually, the agent needs to prove they have a promising pipeline of customers and are a good fit for sales. Other independent agents work with insurance membership networks or wholesalers, providing carrier access and administrative support. 

When you request a quote, an independent agent shops for you through various insurance companies. A good agent will provide side-by-side pricing and coverage options, so you can see the pros and cons and compare pricing between insurers.

Independent agents may also be able to access carriers that the average shopper can’t access online. For example, the average person can’t access Chubb insurance online and must contact an agent to get a quote.

Once you buy your policy, the insurer pays a commission to the independent insurance agent. Agent commissions typically are comparable, no matter which insurance company you choose.

What's the Difference Between Captive, Direct Sales, and Independent Insurance Agents?

In addition to buying insurance from an independent insurance agent, you can also buy from a captive agent, or from a direct sales agent at the insurance company. Here’s a look at the differences between the three types of agents:

Independent Insurance Agent Company or Direct Insurance Agent Captive Agent
Definition An insurance agent approved to represent and sell an insurance company’s products An employee of the insurance company who sells its policies  An insurance agent who exclusively sells one company’s policies; usually an independent contractor, but may be an employee
What they sell Policies from multiple insurance companies Policies from the insurance company that employs them (and sometimes affiliates) Policies from one insurance company (and perhaps affiliates)
How they’re paid Receives a commission from the insurance company Receives a base wage or salary and may also receive a commission or bonuses Receives a commission from the insurance company
Insurers that use this approach Progressive, Erie Insurance Amica, USAA State Farm, GEICO

An independent insurance agent is approved to sell policies from multiple carriers, while both direct agents and captive agents only sell one insurer’s policies. All receive commissions, but direct salespeople will likely receive a base salary or wage.

Pros and Cons of Independent Insurance Agents

Pros
  • More choices for convenient shopping

  • Local knowledge and support

  • Customized service

  • Good for complex insurance needs

Cons
  • Not all insurers are available

  • May not be able to provide immediate coverage

Pros Explained

  • More choices for convenient shopping: Independent insurance agents may sell a range of coverages (health, auto, RV, commercial) from many different insurers, which can streamline your shopping process without the need to gather multiple quotes via websites or phone representatives.
  • Local knowledge and support: An independent agent is often a resident and local business in your community, so they know your area and potential hazards. You can typically stay with your agent for life. An independent agent can be a good choice if you want to support a local business.
  • Customized service: An independent agent will expect to have a conversation about your specific needs and living situation. As a result, they may be more equipped to find discounts or better coverage that more precisely suits your requirements.
  • Good for complex insurance needs: If you have a DUI on your record, multiple homes in different states, a small business, or high-net-worth assets, an independent agent may be able to find you coverage more efficiently than you would on your own.

Cons Explained

  • Not all insurers are available: Independent agents can only represent companies they’re approved to sell. In addition, some insurance companies only make sales through employees or captive agents, so an independent agent can’t offer you options from all insurers. For example, an independent agent may not be able to sell you coverage from State Farm, USAA, or Amica, nor online insurance brands like Lemonade.
  • May not be able to provide immediate coverage: An independent agent may not be a good fit if you need coverage immediately—say, in the next 10 minutes—and don’t have time to have an agent-customer conversation, determine your coverage needs, and wait for the agent to research your options.

Key Takeaways

  • Independent insurance agents can help streamline the shopping experience by providing various types of coverage from many carriers.
  • Because independent agents can only sell policies for insurers they represent, they may not represent all the insurance carriers you hoped to investigate.
  • If you have specialized insurance needs, an independent insurance agent may be able to find the right policy for you.

Frequently Asked Questions

How do I become an independent insurance agent?

Becoming an independent agent requires you to study, complete course hours (set by the state), and pass one or more exams, depending on the types of coverage you wish to sell. A license allows you to sell different types of insurance or sell policies in different states. Many newly licensed agents work for an established agency to gain experience before starting their own. Additional education is required as you move forward in your career.

How does an independent insurance agent get paid?

An independent agent is paid on commission, much like other types of agents.

How can I tell if an agent is independent?

You can find out in a few ways:

  • Ask the insurance agent directly: "Do you work with multiple insurance companies, or just [company X]? How many carriers do you represent?"
  • Look for website or advertising wording that describes them as an “independent agent.” 
  • Review their record with your state licensing agency and see how many insurance companies they represent.