Independent vs. Captive Agents- Who are they and what do they do?

Independent vs. Captive Agents- Who are they and what do they do?

If you have your home, auto, or even business insurance placed with an independent agent, do you know what that means? Maybe you’ve heard there are two types of insurance agents- captive and independent- but what’s the difference? You’ve possibly asked yourself before- is one better than the other? Let’s take a closer look and hopefully answer some of the questions you may have had.

Independent Agency

An independent agency represents several different insurance companies and will recommend the best fit based on each client’s individual needs.

What do you mean “represents”?

Agencies represent companies by gaining access to them through contracts. Once an agency is contracted to write with (do business with) a certain insurance company, they are said to “represent” them.

While you may think your insurance company is “Knowles Associates” the reality is your insurance company may be Travelers or Progressive while your insurance agent is Knowles Associates. The job of your agent is to evaluate your risks and decipher which of the companies they represent are best equipped to protect these risks. Different companies specialize in different things and it is the job of your agent to see which company is best for you. For reference, here are the companies Knowles Associates represents in our personal lines department:

Captive Agency

So, if an independent agent represents several insurance companies, then what is a captive agent? A captive insurance agency only represents one insurance company. For instance, if your insurance company is AllState your insurance agent is also AllState. While you may “be in good hands”, there are more benefits of an independent agent….

Independent vs. Captive

One of the biggest benefits that an independent agency offers is their ability to adapt to your needs. Think for a moment about how much can change in a year. Sometimes we are too busy with our evolving lives to think about our insurance- in fact it’s probably the last thing on our minds. While our lives are changing and our assets are growing, we may be outgrowing our current insurance program. In the captive agency model, we may completely outgrow the coverage offered while in the independent agency model, we may just be growing into a new program.


Some common life changes throughout the history of an insurance policy may be getting a new pet, purchasing a new home, or moving business operations to a new location. The manor in which your insurance agent can help cover your new exposures depends on the structure of their agency- simply put: are they a captive or an independent agent? Let’s take a closer look at how the two types of agencies handle these changes:


You have just purchased a $2.5-million-dollar home and recently gained a new family member; a Rottweiler puppy (for the record, I would be more jealous of the puppy than the home in this example). You are all set to move into your new home with your new puppy so you give your agent a call to make sure the new home is covered. During your conversation with your agent you find out the dwelling limit of $2.5 million is outside the range they will cover AND they exclude Rottweilers. Now you are faced with a situation where your current agent no longer works for you- you’ve outgrown their capabilities. Since you are not a fit here, you need to find yourself a new insurance home which can seem like a daunting task considering you are busy with the rest of your life.


Let’s take the same example mentioned before- $2.5-million-dollar home and a really cute new puppy. In this example, you will be giving your independent agent a call. You find out that the current company you have coverage with can not cover these exposures BUT there is a big difference in what happens next. Remember earlier when we discussed independent agents representing numerous companies? That is exactly what your agent will be able to do. Instead of you doing the work of finding yourself a new insurance program, your agent will do it for you.

While this example is aimed strictly at a Homeowner’s Policy, the same situation can and does arise for business. Let’s take a look.

 One more example:

Imagine as a business owner, you decide to move your company’s operations to a new location. When moving, are you thinking about whether or not your insurance company will still cover you in the new location? – maybe not. You may find yourself in a predicament if your (captive) agent does not cover properties in that area due to certain risk factors. Given the same situation but with an independent agent, you will have more options. Your independent agent will have the ability to find you and your business a new insurance program that better suits your growing needs due to their extensive relationships with multiple carriers.

While the two types of agencies we reviewed here have their differences, one thing they have in common is their desire to serve the client. It is important to understand and realize the difference between the types of agencies and make an informed decision about where you feel you fit best in the insurance world.

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