Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • A captive agent represents a single insurance company in your local area by offering all of the products carried by that company
  • The independent agent is a self-employed business owner who often represents multiple insurance companies
  • Be wary of you wish to buy insurance from as not all agents are trustworthy

If you’re looking for car insurance, you should at least consider the option of buying from a local agent.

Especially in light of the fact that the one option you don’t explore might be the one that saves you the most money.

Purchasing auto insurance from a local agent is one of three options; also included are purchasing from a company selling policies online and purchasing directly from an insurance company over the phone.

All three options have their pros and cons. However, at the end of the day, you need to make your decision based on what’s right for you and your circumstances.

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Does a local agent work for an insurance company?

There are two types of local agents: captive and independent.

A captive agent represents a single insurance company in your local area by offering all of the products carried by that company.

Sometimes the captive agent is directly on the insurance company’s payroll, other times he works as a self-employed contractor representing the insurance company in question.

The independent agent is a self-employed business owner who often represents multiple insurance companies. For example, he might represent five different car insurance companies, three different life insurance companies, and so on.

He is paid on commission, so it is advantageous to sell the policy, but with multiple companies to choose from, the agent has even more options to offer you.

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What are the advantages of using a local agent?

Using an independent agent may offer more choices but there are often still limited in what they can provide compared to the power of car insurance comparison shopping online.

However, local agents do offer several other benefits, not the least of which is a more personalized service.

Since local agents live in or near the communities in which they work, it’s a lot easier for them to build stronger relationships with their clients than for a telephone agent 2000 miles away.

For example, if you live in an area that is prone to flooding every spring, your insurance agent will know that and include coverage against flood in most of the options he offers you.

An agent on the other side of the country may know the state regulations but probably won’t know your area is prone to flooding, so coverage against that is something you’ll have to ask for.

While some insurance companies prefer to keep the agent out of the equation, those who allow the agent to become involved, often make the claims process easier for customers who prefer it.

Keep in mind that even when you can initiate a claim with your local agent, you will still ultimately have to deal with the claims division at some point.

Are there disadvantages to using a local agent?

No system is without its flaws, and purchasing car insurance from a local agent is no exception. At the top of the list of disadvantages is the very real possibility that using a local agent could mean higher premiums.

The fact is the car insurance company whose policy you eventually decide on, needs to pay the agent commission.

The commission is typically built into your premiums, which are sometimes slightly higher than what you normally pay buying directly from the company.

The second disadvantage is the fact that your local agent may not get you the best deal, even if he has five or six companies to compare. This is because most states regulate the number of insurance companies a single agent can represent.

Since that number is limited, it is possible that one of the companies not on your agent’s list could actually be better for you.

Although the agent takes a lot of headache out of searching and buying car insurance, what he has to offer you in terms of options may be somewhat limited.

Is it okay to switch agents?

If you’ve been working with a local insurance, yet decide to switch to a different agency for better service or more options, you certainly have the right to do so.

However, if your new agent represents the same company from which you purchased a policy through your old agent, you will probably have to cancel your policy and start a new one with your new agency.

You should be aware that insurance laws in most states require local agents to do everything within their power to make sure they are representing their insurance companies honestly, while at the same time trying to put together the best options for their customers.

In essence, they must look out for the best interests of both parties because they are representing both.

If you should come across an agent with whom you just don’t click, it might be wise to consider checking out some other agencies. Ready to compare affordable car insurance quotes now! Enter your zip code below to get started for FREE!