What’s the difference between State Farm” agency versus a local independent insurance agency?

Let’s start from the beginning.  State Farm is a captive insurance company that uses captive agencies.  A captive agency can generally represent only one insurance company. 

Who are some captive insurance companies? 

Allstate, State Farm, Farmers, American Family, and 800-number companies like GEICO are a few examples. 

Why captive agents? 

Captives have pretty awesome TV commercials and ads.  Billions of dollars (yes, billions of dollars) are spent by Captives to gain your trust and branding recognition.  Seriously, peace of mind is a big deal and when we see and hear their commercials all-the-time we tend to believe it. 

How can a local independent insurance agency create more value? 

  • Options – Captives have their cookie cutter policies which may limit the coverage you want or need.  An independent can seek out multiple carriers to find one that best fits you in cost and coverage. 
  • Relationship – A good independent agency will put you with a quality carrier, but if something happens and you need an alternative an independent can help you in-house.  The legwork is on your agent to get another quality carrier lined up.  
  • Your interest – An independent agency has experience with multiple carriers giving you a better grasp of what your choices are in billing, claims, and coverage.  A captive agent must spout the corporate line. 
  • Local presence – They know your neighborhood.  Local contractors.  Local auto bodyshops.  Local churches.  Local charities.  Local businesses.  An 800 number does not know where your zip code is let alone where Fort Wayne, Indiana is.  Locality is important in a time of trouble.
  • Simplification – Insurance can be a very simple subject if you never have a claim.  Being in the industry for over a decade I personally know that it can get very complicated very fast.  A good independent will be a teacher at heart, be available for you, and be your advocate. 

Which independent agency can I trust? 

  • Find an agent that will empower you
  • Ask – who they are? Ask – why them? Ask – who they represent? 
  • If they don’t ask about you, find a better one

Jeremy Hyde | Colligan & Company

Independent Insurance