Captive agent

A captive agent represents one insurer, or one insurance group, and sells only its products. Many of the biggest personal and small commercial writers distribute this way, such as State Farm, where agents are contractually exclusive. The agent may be an employee or an independent business owner, but either way the contract limits the markets available.

The structure has trade-offs. A captive agent knows one carrier's underwriting rules, appetite and claims people in depth, which helps with small accounts that fit the carrier's programs. The insurer usually owns the customer relationship and the renewal rights, and compensation comes from that carrier's commission schedule. The drawback is access: if the carrier declines your risk, raises your rate sharply or lacks a product, the agent cannot shop other insurers for you.

An independent agent or broker can approach several carriers and compare quotes, and owns the book of business in most arrangements. Neither model is better for every buyer. Ask captive agents which coverages they can place and where they would send you if the carrier declined you, and ask independent agents which carriers they actually use. The guide on agent vs broker vs direct covers how each is paid and when each fits. Don't confuse a captive agent with a captive insurance company.