When looking for insurance coverage, there are two different avenues that you can take that will shape your experience when it comes time to file a claim. Working with either an independent insurance broker or captive insurance agent will play a major role in your options, pricing, and overall customer service.
Here we breakdown the differences between working with an independent agency versus a captive agent so you can make an educated decision about what best fits your needs.
What Is a Captive Insurance Agent?
A captive agent only writes business for one specific insurance company. Every policy offered is backed by that carrier with no other options. They follow underwriting guidelines, pricing structures, and product plans all created in-house by themselves.
Pros:
Let’s face it, dealing with one company can be easier than navigating multiple insurers.
Agents only specialize in one set of products so they know their company’s policies inside and out. This can be beneficial when it comes to explaining coverages, endorsements, and even the claims process.
Cons:
Product availability is limited to whatever that one carrier offers. If they don’t have the coverage you need that suits your situation, you’re out of luck.
How Does an Independent Broker Work?
An independent agent normally works out of a brokerage and deals with several different insurance carriers. Bowthorpe & Associates Insurance Producers is an example of an independent insurance brokerage.
They compare all of your options and find you the best coverage that suits your needs.
Pros:
Having access to multiple insurance companies allows you to not only have more coverage options but also more competitive pricing.
Because you have flexibility with your coverage, you can adjust as your needs change. If your current insurer no longer fits your situation or suddenly raises prices, you aren’t stuck digging through one company’s policies to find another that fits; your broker can easily switch carriers for you.
Cons:
Some might find working with multiple companies confusing.
Coverage Options
When it comes to coverage options, a captive agent will normally only offer standard packages. These packages are typically easier to understand and come with built-in discounts that help lower your overall cost. However, this also limits your ability to customize your coverage.
Working with an independent agent allows your agent to build your coverage. They can mix and match different policies, adjust limits, and include or exclude endorsements to help you tailor your coverage to your specific exposures.
If you have a simple insurance need, chances are a captive agent will work for you. However, if you have multiple properties, business exposures, or just a lot of liability, then an independent agent will benefit you.
Cost
Price is almost always a question when it comes to choosing between a broker and a captive agent. However, how that price is derived is important to understand.
Since brokers can obtain quotes from multiple carriers, they are able to provide you with more competition between companies. This will normally lead to lower prices or better coverage.
A captive agent will typically have set prices for each policy and may even offer discounts if you bundle multiple policies together. Without obtaining multiple quotes, it can be difficult to know if you’re getting a good deal.
Although price is a big factor, it shouldn’t be the only thing you consider. Sometimes paying a little more can mean having coverage that truly protects you when you need it.
Claims
This is probably the biggest reason to work with an independent broker. During a claim, not only do you want someone on your side, but you also want someone that will fight for you.
An independent insurance broker will help you through every step of the claim process. They can help you file the claim, follow up if you’re experiencing issues, and even compare how your claim is being handled against other insurance companies.
With a captive agent, you are stuck solely with the tools and resources that that one company provides. Which isn’t always a bad thing; some companies have better claims services than others.
Yes, you could potentially get help from your agent, but remember, they literally work for that insurance company. Their job is to make sure you are covered by that company.
Your broker works for you.
Stability vs Options
With a captive agent you are giving yourself stability. You will always deal with that same agent and insurance company when it comes time to renew your policy. This makes things simple and easy because you don’t have to go anywhere else.
An independent broker will provide you with options when it comes to your insurance coverage. If the market changes, your agent can find you different coverage that still fits your needs. If your needs change, you aren’t locked into one specific company.
Which Is Better?
That really comes down to you and your insurance needs. If you have simple coverage needs and don’t mind working with just one company, then a captive agent will work.
If you want the best options and pricing, as well as have coverage that can grow with you, then use an independent broker.
Here at Bowthorpe & Associates Insurance Producers, we give you access to numerous insurance carriers, allowing you to not only have more options but also to help you every step of the way.
Conclusion
Purchasing insurance is more than just buying a policy. It’s about making sure you have the proper coverage that will take care of you if the worst happens.
Deciding between using an independent insurance broker versus a captive insurance agent comes down to how much control you want over your coverage and if you want someone that will fight for you when filing a claim.
Don’t just settle for being covered; make sure you are properly protected by evaluating both options!
Frequently Asked Questions
Q: What is the difference between an insurance broker and a captive agent?
A: An independent insurance broker will work with multiple insurance companies to help you find coverage. A captive agent only writes business for one specific insurance company.
Q: Is it cheaper to work with an independent broker?
A: In most cases, yes. Because your broker can pull quotes from different insurance companies, there is more competition.
Q: Do captive agents provide better service?
A: Captive agents can provide better service within that specific company. However, an insurance broker can provide you help and service from a wide range of carriers.
Q: Which is better for small businesses?
A: It all depends on your business and the exposures you have. However, most small businesses can benefit from an independent broker because they can customize your coverage by pulling from multiple insurance companies.
Q: Can I go from a captive agent to a broker in the future?
A: Absolutely! Many people start with a captive agent because they think they need less coverage, and as their needs grow or they want better pricing, they switch to an independent broker.