What's the Difference Between a State Farm Agent and an Independent Agent?

WV & OH ONLY

"I've always heard about State Farm agents and independent agents. What's actually the difference between the two when I'm buying car insurance?"

With all the insurance ads out there, I can see how this gets confusing.

The main difference is how many insurance companies the agent can sell for: a captive agent sells for one company, and an independent agent can sell for many. State Farm agents are generally described as captive agents. We're an independent agency, and we are not affiliated with State Farm.

Picking insurance shouldn't be this confusing. All we're after is the best rate for every client who walks in.

We quote with 13 companies, so one conversation gets your information in front of a lot of them. No two companies price you the same, and that's the whole reason we work the way we do.

Let's be honest, I'm hoping this ends with a phone call. I'm an independent agent, so of course I like how we do it. I'll still give you the definitions straight.

WV & OH ONLY

It isn't an insult. It's the industry's word. The National Association of Insurance Commissioners says an independent agent may sell policies from many different companies and a captive agent sells insurance for only one company. It also calls them "captive (or direct)" agents. The Texas Department of Insurance draws the same line.

Yes, and I can see why that's confusing. "Independent contractor" describes the business arrangement between an agent and a company. In a 2011 federal appeals court opinion, for example, a State Farm agent's contract was described as an agreement to solicit State Farm applications as an independent contractor and not an employee.

"Independent agent" is about something else. It means the agency can sell for several insurance companies. The two phrases sound alike and answer different questions.

Generally, by commission. The NAIC says both independent and captive agents represent insurance companies and receive a commission from the company for selling a policy. You don't write a separate check to the agent for that.

Our own commission arrangements differ from one company to another, and you're welcome to ask me about them.

I'll be careful here, because the honest answer matters. An independent agent still represents insurance companies. The NAIC says so, and I'm not going to pretend otherwise. What's different is that I can take your information to more than one of them.

It means I can look at more than one answer. If one company doesn't want your situation this year, I can try another. If your rate jumps at renewal, I can check whether a different company would treat you better, and if we move you, you keep working with the same office.

It's also why I'll sometimes tell you to stay where you are. If what you have is the best deal I can find, I'll say so.

Yes. Being with any company today doesn't stop you from getting a quote from us. Bring your declarations page so we can compare the same coverage, limit for limit.

This isn't a comment on State Farm's prices or service. I'm not making any claim about either. I just want you to know what the words mean, and what we can do for you. If you've been wondering what insurance ads leave out, that's worth a read too.

• Your current declarations page
• Driver's license information for everyone in the house who drives
• The VINs for your vehicles

No. Keep your current policy in force. Don't cancel anything until a new policy is actually in place and you've decided you want it.

Want to see what more than one company will do for you? That's the whole job. Call me.

WV & OH ONLY

Next in the series: Part 25, My Car Just Sits. Can I Drop the Coverage?