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  • Writer's pictureRaina Walton

5 Reasons Why You Should Only Buy Your Insurance From An Independent Insurance Agent

Understanding how to get the best advice and the best price.

If you’ve been watching television lately,

or listening to the radio,

chances are you’ve heard multiple advertisements from tons of

different insurance companies — each one claiming to have the

best products and the best price.

Insurance is the most heavily marketed product in the world next

to automobiles. It’s so heavily saturated, that people have begun to

tune out the messaging being thrown in their faces non stop, on a

daily basis.

Not all insurance companies are created equal. The same can be

said for insurance sales people. This guide aims to help the general

public understand the different insurance delivery models, and

how each one differs in how you receive advice and guidance.

While many insurance companies paint insurance as a price based

commodity, it’s important to understand that having the correct

coverage is serious business.

Insurance is a legal contract that you agree to. It’s important that

you have an understanding of the terms and conditions of that

contract (not just the price) before you agree to it.

Unfortunately the way insurance is marketed today, that point is

conveniently glossed over, and in our opinion, that does a great

disservice to the general public and insurance consumers.

What’s more, depending on who you purchase your insurance

from, you could also be misled, or not told the full truth, and that’s

why it’s important to understand the 5 reasons why you should

only do business with an independent insurance agent.

First, let’s discuss the different types of insurance delivery channels

and insurance salespeople.

Captive (Exclusive) Model

A Captive Agent (a.k.a. “exclusive” agent) is an agent who works

exclusively for one company and one company only. Think of

Allstate, State Farm, Nationwide or Farmers. These companies

have agents, and local agencies, however a huge drawback is that

they only sell their own proprietary products.

In addition to sales, Captive’s also typically service your policy too.

If you have a policy question or claim situation, you can contact

them and someone at their office will assist you.

Captive agents are typically compensated on a salary +

commission + bonus model.

Direct Writer Model

To simplify this, a direct writer is someone who sells it’s insurance

products without the use of agents. Instead, they have employees,

who typically work out of large call centers, and sell direct to the


Typically direct writers separate their sales and service

departments meaning that after the sales rep sells you a policy

you will most likely never speak to them again afterwards.

An example of a direct writer is Geico, Progressive, 21st Century

Insurance, eSurance, etc..

Direct writer reps are paid generally on a salary + incentive model,

meaning that they get a small salary to start, and get paid per-sale,

usually on a sliding scale. The more sales they get in a month, the

more each sale is worth in incentive dollars.

This compensation model in combination with very competitive

work environments means that direct writers are usually more

aggressive with you because they have a smaller window of

opportunity to sell insurance, usually a 15-20 minute phone call,

which is usually monitored by a quality control team.

Have you heard of the term “hard sell” before? That’s typically a

direct writers M.O..

Independent Agents

Independent’s do not work for any one insurance company. They

work for themselves. Think of them as being self employed. This

means that they are generally compensated 100% on commission.

Independent agents are very much like Captive agents, but unlike

Captive agents, independents have access to a wide range of

insurance companies and products (sometimes as much as 30-50

companies) so they can shop your coverage to see who offers you

the best possible deal.

Because Independent’s aren’t employees of an insurance company,

they can provide advice that is truly unbiased and objective

because there is no corporate “big brother” pulling the strings.

They are not monitored or pressured into presenting certain

products to customers when others may be more suitable.

Because Independent agents work with so many companies, they

also tend to have a better grasp on the different markets, and the

insurance industry in general.

This is extremely important because there are a lot of companies

and products out there in the market place, and you can’t give

someone sound advice unless you have a good understanding of


Independent agents have access to a wide range of products and

insurance carriers. This means they can find a solution that fits the

needs of their clients in an unbiased fashion, not finding a client to

jam into some proprietary product.

You see, not every insurance professional does business this way.

It’s like buying a new car

Let’s say you were in the market for a new Ford truck.

You walk into the Ford dealership and are immediately

approached by a salesman. You walk over to a truck you like and

then start discussing the exact specifications you’re looking for in

that truck. You know you want an extra cab and something that is

4×4. You also want your new truck to be dark blue, with a sprayed

in bed protector and fog lamps.

When it comes down to talking about price, do you think that the

Ford salesman would tell you that right down the street there was

a Dodge dealer who had a truck that matched your exact

specifications, or maybe even better, but for $4,000 less?

Of course not. Why? Because that salesman is not independent.

His job is to sell Fords and Fords only. Of course he is going to try

and position the Ford as if it was the best truck on planet earth.

The same can be said for direct writer reps and captive agents.

When you speak to a AAA, State Farm, Allstate, Geico, eSurance,

etc., sure you are talking to a licensed insurance professional, but,

who you’re really talking to is an employee of their respective


An employee whose job it is to only sell it’s company’s products.

The general public doesn’t really understand this distinction.

If you’re not a savvy insurance shopper, you may not even realize

that you are not getting unbiased, objective advice when talking to

one of these employees.

That is a problem, because as we mentioned earlier, getting the

right coverage is the entire point of insurance.

The Truth about Commissioned

Insurance Agents

As long as insurance has been around, insurance salespeople have

been getting paid on commission. To many people the word

commission has a negative connotation.

It’s important to understand though that the insurance company is

paying the agent a commission to service their customers’ policies.

For the insurance company, this is a much more cost effective way

to distribute their insurance products. It’s cheaper for them to pay

someone a couple hundred dollars per year commission per

customer than it is to pay them a five or six figure salary with other

benefits like health insurance, retirement planning, etc..

As an insurance consumer, you do not pay the agent any fees or

other costs. They are compensated by the insurance carrier


Some people may ask, if an independent agent is compensated on

100% commission, wouldn’t they be the very ones trying to sell the

most insurance possible, regardless of suitability?

No. You want to deal with someone who is 100% commission

because they have a lot of skin in the game to make sure you are

properly insured, but also they have to earn your business year

after year after year, or they will lose your business.

They care, and are actually vested in you and your protection.

5 Reasons Why You Should Only Buy

Insurance from and Independent Agent

1.) Independent agents offer a wide range of products and services

across multiple lines of insurance which gives you choice

2.) Independent agents generally have a better handle on the

overall insurance market and various products and programs

3.) Independent agents are local, small business owners. When you

support local small business, everyone wins

4.) Independent agents can offer advice that is truly unbiased and

objective because there is no “big brother” pulling the strings

5.) Independent agents have a bigger interest in providing better

coverage options. They aren’t just trying to sell the lowest quality

plan to make a fast sale.


With all of that being said, there are good, bad, and great

insurance professionals in all three of these categories. We are in

no way trying to throw mud, but simply speaking from personal

experience and industry knowledge.

I just know that if I were buying a new truck, I’d rather go

somewhere who sold all brands, makes and models. That way, I’d

know the advice I was getting was honest.

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