What Is a Captive Agent in Car Insurance?

Captive agents work for just one insurance company, while independent agents may work with many different companies.

Aly J. Yale
Written byAly J. Yale
Aly J. Yale
Aly J. Yale
  • National Association of Real Estate Editors member

  • Bylines include Forbes, Bankrate, and CBS News

Aly is a reporter specializing in real estate, mortgages, and personal finance. You can find her work in Hearst newspapers and numerous financial publications.

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Katie Powers
Edited byKatie Powers
Photo of an Insurify author
Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Updated April 18, 2024 | Reading time: 4 minutes

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Captive agents are one of a few types of insurance agents you can work with. These licensed insurance agents work for one insurance company and can only issue policies for that insurer.[1]

As full-time employees, they may earn a combination of salary, benefits, and commissions from the insurer. Some captive agents are independent contractors, but they can only sell policies for their insurer.[2]

Here’s what you should know before deciding to work with a captive insurance agent.

How do captive agents work?

Captive agents, also called exclusive insurance agents, work for one insurance company and only sell insurance products and policies from that company. They receive customer leads from their employer and can earn compensation in a variety of ways — through salary, commissions, or both. They may also receive benefits.

Sometimes, captive agents need to meet sales quotas, meaning they must sell a certain number of policies (or types of policies) in a given period. These agents typically receive special training and have in-depth knowledge of their employers’ insurance offerings.

Good to Know

Captive agents typically can’t sell insurance products or policies issued by outside insurance companies, at least not without giving their employer the right of first refusal for the customer’s business.[3]

Cheapest recent rates

Drivers using Insurify have found quotes as cheap as $35/mo for liability only and $40/mo for full coverage.

*Quotes generated for Insurify users within the last 10 days. Last updated on April 18, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from April 18, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

*Quotes generated for Insurify users within the last 10 days. Last updated on April 18, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from April 18, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

Pros and cons of working with a captive agent

You don’t have to work with an insurance agent to purchase a car insurance policy. If you do want an agent to help you make your decision, the right type of agent to work with depends on your insurance needs, circumstances, and personal preferences.

To assess whether you want to work with a captive agent, you can consider the following pros and cons.

Pros

Working with a captive agent can come with certain advantages, including the following:

  • They likely have extensive knowledge of available policies. Captive agents receive training from the insurance agency they work for because they need to have an in-depth understanding of the insurance products and policies. They should have the knowledge to answer any questions you may have and advise you on what products might work best for you.

  • Captive agents have the support of their employer. Exclusive agents have access to the resources and services of their employer (or their employer’s parent company), including office space, customer service personnel, administrative staff, the claims department, and more.

  • You don’t have to shop around. Captive agents can do much of the heavy lifting for you once you connect with one. You typically don’t have to shop around for an agent because the insurance company will likely assign you to an agent in your area. Your agent will help you compare the insurer’s product lines and discuss how the options meet your budget and needs.

Cons

Working with a captive agent can come with a few disadvantages, including the following:

  • Captive agents don’t have access to as many product options. Captive agents can only recommend the products and policies offered by their employer, so this limits the options available to you. It can also make it harder to get a low rate because captive agents don’t have the freedom to shop around and compare different options from other insurance companies for you.

  • They may steer you toward products that meet their needs — not yours. Some captive agents earn commission-based pay or have sales goals or quotas to meet, which could motivate them to steer clients toward certain policies and products over others. This could result in getting an insurance policy that doesn’t adequately meet your coverage needs.

  • They sometimes can’t help you if you have special circumstances or your rates increase. If you don’t qualify for any policies offered by the company a captive agent works for, or you need specialty coverage, they may not be able to help you secure insurance. They also have fewer options to help you if your rates increase because they can’t compare options from other insurers.

Captive agents vs. independent agents: Key differences

The other main type of insurance agent is an independent agent. These agents work with multiple insurance companies and can sell policies from all of them. Independent agents can help consumers look at a variety of coverage options and choose the best one, but they don’t have the same access to company resources as captive agents.

Type of AgentCaptiveIndependent
Works asEmployeeIndependent contractor
Number of companies worked withOneMultiple
CompensationSalary, commissions, benefitsCommissions
Training and knowledgeProvided by employer or insurance companyResponsible for training on their own
Customer leadsProvided by employer or insurance companyResponsible for finding their own

Captive agent FAQs

You may decide you want help deciding what car insurance policy to purchase from a captive or independent agent. Or you can shop around for coverage on your own through an online quote-comparison tool. The information below can help you decide what makes the most sense for you.

  • What is an independent agent?

    An independent agent is an insurance agent who works with multiple insurance companies. They can sell policies to their clients from any of the insurers they work with. Independent insurance agents typically earn money in commissions.

  • Which is better, a captive agent or an independent agent?

    It depends on what you’re looking for. If you know what insurer you want to buy coverage from and need an agent with deep knowledge of that company’s products, you should work with a captive agent. If you want an agent who can help you shop around for coverage from different companies, you should work with an independent agent.

  • Which insurance companies have captive agents?

    Several major insurance companies have captive agents, including Allstate, Farmers, GEICO, and State Farm.

  • How can you tell if an agent is captive or independent?

    Captive agents only work for a single insurance company, whereas independent agents can sell coverage from multiple companies in the insurance industry. An agent who only sells policies for a single company is likely captive. If you aren’t sure, you can simply ask.

  • What’s the difference between an agent and broker?

    Insurance agents represent one or more insurance companies and earn money through salary or commission. Insurance brokers represent customers rather than insurance companies, and they look for coverage from several different insurers to meet the needs of their clients. Brokers can’t technically complete the insurance contract between the customer and the company, but they earn money via broker fees.[4]

Sources

  1. Financial Industry Regulatory Authority. "Insurance Agents."
  2. Insurance Information Institute. "Background on: Buying Insurance."
  3. California Department of Insurance. "Finding an Agent or Broker."
  4. U.S. Bureau of Labor Statistics. "Insurance Sales Agents."
Aly J. Yale
Aly J. Yale

Aly J. Yale is a freelance writer and reporter covering real estate, mortgages, and personal finance. Her work has been published in Forbes, Business Insider, Money, CBS News, US News & World Report, and The Miami Herald. She has a bachelor’s degree in radio-TV-film and news-editorial journalism from the Bob Schieffer College of Communication at TCU and is a member of the National Association of Real Estate Editors.

Katie Powers
Edited byKatie PowersAuto and Life Insurance Editor
Photo of an Insurify author
Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

Featured in

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