What Is The Difference Between A Captive And An Independent Insurance Agency?

September 16, 2014
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First, let's define the two. A captive insurance agency primarily writes various insurance products through its brand while an independent insurance agency write through multiple carriers. So which one is better?

Let's take a look at Homeowners Insurance as an example to review further. Most captive carriers specialize in writing home policies that fit in a box if you will. If everything falls into the parameters of their box or guidelines that will be able to offer you a competitive quote.

On the other hand, if it does not fit within the captive carrier guidelines, then they will either not offer coverage or offer it at a surcharge to their in the box guidelines. What are some of these possible out of the box items that could cause this to happen?

Here is a list of a few items that could do so:

  • Having over 5 acres
  • Having a home older than 30 years of age.
  • Owning certain types of dogs or animals.
  • Your home being owned by a trust or LLC.
  • Having a roof over 15 years of age.
  • Having a lapse in coverage.
  • Restrictive territories throughout the state.

Now let's review how an independent insurance agency would quote your home insurance policy. With Southern Insurance Group, we offer homeowners insurance through 30 preferred home carriers in FL. Some of our carriers specialize in different risks therefore giving the consumer a greater outcome for the carrier's rate being in their normal preferred scope of doing business. So when we evaluate a risk, we automatically shop through all of our carriers at once and then fine tune with the most competitive carrier that will accept the particulars of the risk.

This in turn will greatly improve the outcome of you not only receiving a quote, but receiving a quote through the most competitive carrier in the marketplace. Here is a quick example of how this works.

Let's say someone has a home that was built in 1925 with a crawl space and they own a pit bull. On the captive side, they most likely won't consider the risk at all due to the particulars mentioned. On the independent side, we systematically determine who can write older home first. Then we narrow it down further by seeing who can accept a crawl space with animal liability. In some cases, you may have a carrier that can write the first two but not the pit bull. Maybe this carrier will offer a great rate but may have to exclude the dog. This may be a great option as the consumer can obtain a standalone liability policy just for the animal liability if this is a great concern. The bottom line is you have more options for coverage at the most competitive rate because of the number of carriers represented by the independent agency.

Another great feature that independent agencies offer is they can switch you to various carriers to maximize your savings while you will end up leaving your captive agency to accomplish the same thing.

Thanks for reading!

Tom Johnson-Owner

Southern Insurance Group

[email protected]

352-243-9000 Ex.1011