If you have ever shopped for car insurance or a new life policy, you have likely met two types of people: the independent agents who seem to represent everyone, and the tied agents who stick to one brand. To the average consumer, they might look the same. They both hand you business cards and talk about premiums.

Since I have been observing how this field has changed over the last ten years I can assure you that there is a significant amount of discrepancy between these two fields. It will impact your finances, the coverage you will have and your level of frustration when filing your claim(s).

Let’s start breaking this information down to easy to understand English so that the next time you sit across the table from an insurance agent you will know what to expect from him or her.

The Tied Agent 

Let’s understand this by an example, you visit the Nike store. The salesperson knows everything about Nike. They know the cushioning of the Air Max and the grip on the running shoes. But if you ask them about Adidas or New Balance, they can’t help you. They are "tied" to the brand.

A tied insurance agent works the same way. They sign a contract with one specific insurance company. 

There is a significant benefit to this model: depth of knowledge. Because they only have to master one company’s rules, a tied agent usually knows that specific insurer inside and out. They know the underwriting quirks. If you want the absolute best product from, say, State Farm or Allstate, a tied agent is your go-to person.

However, the limitation is obvious. If that one company decides your teenager is too risky to insure, or if their rates skyrocket this year, the tied agent’s hands are tied. They cannot look elsewhere for you.

The Independent Agent

Now, let’s talk about independent agents. If a tied agent is a brand store, an independent agent is a farmer’s market. They set up shop and bring you products from dozens of different farms (or in this case, insurance carriers).

Independent Agents work for you. An Independent agent’s responsibility is to search the market, evaluate the pricing and coverage from a number of carriers, and recommend what is best for your individual needs.

This is where the magic begins because independent agents have access to multiple carrier’s products, therefore no single carrier may influence them to sell you a specific policy. When a carrier increases their rate as a result of a poor underwriting year, your independent agent can simply write your account with an alternative carrier who is offering a more competitive price.

The Key Differences 

To comprehend the differences well enough, you will need to also examine- how their interactions with each other can provide insight into the relationships they both develop. 

Loyalty: A tied agent's loyalty will lie with the insurance company, whereas an independent agent's loyalty is actually to the client. This small shift in way that a service provider views where their loyalty lies is enough to completely change the entire way that they provide service to those customers.

Choice: When you visit a tied agent's office, there will be only one option available; that being the insurance company's menu of policies. When you visit independent agents, you have choices to make from an entire buffet of options to choose from. Considering how bad the auto insurance market has changed every six months, the fact that there are agents that can actually provide their clients with competitive quotes has a very significant value.

The One Stop Shop Myth: People tend to think that in order to obtain insurance, you must have at least one of each kind of agent (auto, home, life). However, a skilled independent agent can put together several policies with many different companies giving you the lowest possible rates that would not otherwise be attainable using only one agent.

Which One to Choose?

This depends on your personality. If you are a "set it and forget it" person and you trust a big brand name implicitly, a tied agent might suit you fine. You will get great service from that specific company.

However, if you are a savvy shopper who wants options, if you want someone to fight for the lowest price and the broadest coverage, you need to seek out independent agents.

In a world where insurance companies are constantly changing their appetite for risk (sometimes they want homeowners, sometimes they don't), having an independent agent in your corner is like having a safety net. They do the legwork. They compare the fine print. They translate the confusing jargon.

At the end of the day, whether tied or independent, a good insurance agent is worth their weight in gold. But if you want choice, freedom, and a true advocate, the independent route is usually the smarter road to take.