What Is a Captive Insurance Agent?

Captive Agents Explained in Less Than 5 Minutes

Insurance advisor having a meeting with clients at a desk, looking at a laptop

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A captive insurance agent sells coverage from a single insurance company.

A captive insurance agent sells coverage from a single insurance company. A captive agent may own their local agency and may work as either an independent contractor or employee. 

Should you buy insurance from a captive agent? Before doing so, it’s important to understand how they work, potential advantages or disadvantages, and the differences between a captive agent and other types of insurance salespeople. 

What Is a Captive Agent?

A captive agent agrees to sell policies from only one insurance company, and potentially its partners. However, it’s unlikely that you’ll hear the term “captive agent” when looking over an agent’s website. In everyday language, they may be agency owners or be referred to as “local agents.” 

Captive agents are usually independent contractors, although some may be employees with medical and dental benefits. A captive agent typically earns a commission for every new or renewal policy they sell, and some may also earn bonuses.

  • Alternate names: Local agent, exclusive agent

How Does a Captive Agent Work?

A captive agent can offer quotes on coverage from their carrier, but they can’t get you a quote from another insurance company. However, they typically have in-depth knowledge of what their insurance coverage can—and cannot—provide, so they can make sure the policy is a good fit for your needs.

Often, these agents have a brick-and-mortar business that customers can visit or call to buy insurance. Customers might be pointed toward these captive agents through the insurer’s website, or find it on their own through advertising or by driving past the office. 


Captive agents are often expected to hit specific quotas set by the insurers. 

What's the Difference Between Captive, Direct, and Independent Insurance Agents?

In general, there are three types of insurance agents: independent insurance agents, captive agents, and agents who work directly for a particular insurance company. Here’s a look at the differences between them.

  Independent Insurance Agent Company or Direct Insurance Agent Captive Agent
Definition An insurance agent approved to represent and sell an insurance company’s products An employee of the insurance company who sells its policies  An insurance agent who exclusively sells one company’s policies. Usually an independent contractor, but may be an employee
What they sell Policies from multiple insurance companies  Policies from the insurance company that employs them (and sometimes affiliates) Policies from one insurance company (and perhaps affiliates) 
How they’re paid Receives a commission from the insurance company Receives a base wage or salary and may also receive a commission or bonuses Receives a commission from the insurance company
Insurers that use this approach Progressive, Erie Insurance Amica, USAA State Farm, GEICO

In general, the primary difference between independent agents and captive agents is the number of companies they represent. The difference between a direct agent and a captive agent is that the direct agent is likely an employee who works in a call center or remotely for the insurance company. In contrast, a captive agent often runs their own business through a brick-and-mortar office, though they may also work remotely. 

Pros and Cons of Captive Agents

  • Represent name-brand recognized companies

  • Local knowledge and support 

  • Personalized service

  • Limited coverage options

  • Customers are tied to the insurer, not the agent

  • May not be able to provide specialized coverage

Pros Explained

  • Represent name-brand recognized companies: Major insurers like GEICO, State Farm, and Allstate use captive agents, so you’ll be insured by an established company. Of course, you should also research online reviews before choosing an insurance company. 
  • Local knowledge and support: A captive agent is often part of your community, so they are likely familiar with your area and any local needs or potential hazards. Connecting with a captive agent near you is also a good choice if you wish to support a local business and establish a relationship you can rely on as your insurance needs evolve. 
  • Personalized service: A captive agent should ask you questions to discover your potential risks, discounts, and coverage needs to make sure they tailor your policy to fit your situation. However, remember that they can only offer policies from a single insurer. 

Cons Explained

  • Limited coverage options: Captive agents only represent a single carrier and can’t give you quotes for coverage from other insurance companies, so you’ll have to shop around on your own. 
  • Customers are tied to the insurer, not the agent: Your captive or local agent may leave the insurance company to start their own independent business or go to a competing insurance company. In this case, you’ll likely remain a customer of the original insurance company unless you change insurers because your captive agent doesn’t own their “book” of customers. In contrast, an independent agent works with you no matter which insurer you end up selecting from their represented carriers. 
  • May not be able to provide specialized coverage: A captive agent may not offer specialized coverage if you have a unique situation—for example, a DUI on your record. If you require a type of insurance (such as health or business) that’s not provided by their insurer, the captive agent can’t offer it. 

Key Takeaways

  • Captive insurance agents represent a single insurance company and can only provide customers with coverage from that company.
  • Captive insurance agents may be known as local agents or agency owners, and often have brick-and-mortar locations.
  • Captive agents may include the insurance company’s name as part of their business name.

Frequently Asked Questions

Which insurance companies have captive agents?

Some insurance companies sell only through captive agents and direct sales, while others also sell their products through independent agents. Examples of insurance companies with captive agents include Allstate, GEICO, and State Farm.

Who has ownership of renewals, the insurance company or the captive agent?

In most cases, the insurance company owns the right to your policy. This means if your captive agent leaves the insurer or closes their exclusive agency, you can’t continue working with them—you’ll likely be assigned to another agent. If you hope to follow your agent to a new insurance company or their own independent insurance business, you’ll need to choose a new insurance policy and change insurers, and then cancel your current policy.

How do I become a captive agent?

To become a captive agent, you typically need to:

  • Have access to enough funds to start a business.
  • Become licensed to work as an insurance agent.
  • Take training with the insurance carrier. 
  • Pass a financial and background check screening.

How can I tell if an agent is captive or independent?

Often, a direct agent will have the insurance company's name in their business title, such as "Jane Doe—(Insurance Company Name) Insurance Agent.” You can also research an agent on state licensing websites to see which companies they represent. An agent who is appointed to provide insurance through only one carrier is usually a captive agent.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. StateFarm. "Process to Become An Agent." Accessed Oct. 11, 2021.

  2. Geico. "Frequently Asked Questions." Accessed Oct. 11, 2021.

  3. Allstate. "FAQs." Accessed Oct. 11, 2021.

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