Understanding Insurance Options and Brokers

Published Date: 11/17/2023

Understanding How to Buy Insurance: Choosing Between Direct, Captive, and Independent Options

Buying insurance can feel deceptively simple — until you realize just how many ways there are to do it. From online forms to local agents and independent brokers, the choices can be confusing. Each option comes with its own pros and cons, and making the wrong choice could mean overpaying, being underinsured, or having no advocate when you need help the most.

In a recent episode of Insurance Hour, host Karl Susman — a 30-year insurance veteran — broke down the three main ways to purchase insurance and what consumers should know before making that decision. His insights highlight the nuances of each path and remind us that the right choice isn’t always the cheapest one, but the one that fits your situation best.

The Three Ways to Buy Insurance

Susman begins with a simple framework: there are three primary methods of buying an insurance policy:

1. Buying directly from the insurance company
2. Working with a captive agent
3. Working with an independent broker

Each of these options can lead to the same end result — an active policy — but the experience, cost structure, and level of advocacy differ dramatically.

1. Buying Directly from the Insurance Company

In the digital age, more consumers are going straight to insurers’ websites or call centers to buy coverage. It’s fast, convenient, and appeals to those who prefer handling their own finances. But, as Susman points out, “direct” doesn’t always mean “better.”

How it works:
You contact the insurance company directly — typically online or over the phone — to get a quote and purchase your policy. In the old days, Susman jokes, “you’d even get a quote form in the mail, fill it out, check a few boxes, send a check, and wait for the policy to come back.” Those days are gone, but the idea remains the same: you’re dealing one-on-one with the company itself.

Advantages:

• No middleman: You’re dealing directly with the insurer, which can simplify communication and minimize misunderstandings.
• Speed: The process is usually fast and efficient, especially for standardized products like auto or renters insurance.

Disadvantages:

• No advocate: You’re alone. If there’s a dispute, a coverage issue, or a claim you feel is mishandled, you have no intermediary to help.
• Limited guidance: You may not know whether you’ve selected the right coverage or limits until it’s too late.
• No real price advantage: Despite common assumptions, buying directly from the insurer doesn’t usually save money. As Susman notes, “99.9% of the time, you’ll pay the same rate as you would through a broker.”

That last point surprises many consumers. The idea that “cutting out the middleman” saves money doesn’t hold true in insurance because rates are typically state-regulated. Unless you’re dealing with a company that exclusively sells direct-to-consumer, there’s no built-in discount for doing the legwork yourself.

2. The Captive Agent: One Brand, One Product

Next, Susman explores the captive agent model — a traditional route that remains popular among major carriers like State Farm, Farmers, or Allstate.

A captive agent works exclusively for one insurance company (or occasionally two), meaning they can only sell products from that brand.

Advantages:

• Deep product expertise: A captive agent knows their company’s offerings inside and out. They can answer questions quickly and are often well-trained in specific coverage options, discounts, and underwriting rules.
• Simplified experience: For customers loyal to a single brand, working with a dedicated agent can create a sense of consistency and trust.

Disadvantages:

• Limited choice: As Susman puts it, this is a “one-size-fits-all paradigm.” If your risk profile doesn’t fit neatly into that company’s underwriting box, the agent may still try to make it work — because it’s their only option.
• Potential bias: Captive agents are incentivized to keep business with their company, which can make objective comparison difficult.

Susman, who once worked as a captive agent himself, admits he understands the struggle. “You want to help people,” he explains, “but you only have one set of tools to work with.”

That doesn’t make captive agents bad or dishonest — far from it. It simply means that if your needs are unique, your agent’s hands may be tied.

3. The Independent Broker: Choice and Customization

Finally, Susman turns to the independent insurance broker, the option that provides the most flexibility and advocacy for consumers.

An independent broker isn’t tied to any single insurance company. Instead, they work with multiple carriers — sometimes dozens — to find the best fit for their client’s specific needs.

Advantages:

• Choice: A broker can compare policies and pricing from many companies, helping clients find the right balance of coverage and cost.
• Customization: Brokers can tailor solutions for complex risks (like businesses, high-value homes, or specialty vehicles) that captive agents or direct channels might not cover.
• Advocacy: A broker represents you — not the insurer. If there’s a claim or dispute, your broker can step in to help navigate the process.

Susman likens brokers to “managers” for the insured. “They represent you to the insurance company,” he says. “You’re hiring them to be your advocate.”

Disadvantages:

• Broker fees: Some brokers charge an additional fee — typically between $50 and $100 annually — for their services. These are usually negotiable, but consumers should always ask upfront.
• No binding authority: Brokers often need the insurer’s approval before officially activating coverage. While this usually causes only minor delays, it’s worth noting for time-sensitive situations.

Despite these caveats, brokers provide tremendous value for most consumers, especially those seeking expert guidance, multiple options, and someone in their corner when issues arise.

What Most People Don’t Realize: Price Is the Same, Service Is Not

A recurring theme throughout Susman’s discussion is that price is rarely the differentiator between these options.

Insurance rates are filed and regulated at the state level, meaning that whether you buy through a broker, an agent, or directly from the company, the premium is usually identical for the same policy.

What differs is the service model — who represents you, who answers your questions, and who advocates for you when things go wrong.

In Susman’s words:

“It’s not about paying less — it’s about getting more of the right kind of help.”

For this reason, he advises consumers to look beyond the quote and think carefully about what kind of support they want over the lifetime of the policy.

So, Which Is Best?

When pressed for a recommendation, Susman doesn’t play favorites. “One size does not fit all,” he says plainly.

Each option has its ideal use case:

• Direct insurance might work best for simple needs (like renters or auto insurance) and tech-savvy consumers who prefer to self-manage.
• Captive agents can be great for customers who trust a particular brand and value a long-term relationship with a single point of contact.
• Independent brokers are often the best choice for consumers seeking variety, customized coverage, and personal advocacy — especially in complex or high-risk situations.

The right path depends on your comfort level, the complexity of your coverage needs, and how much you value personalized guidance versus speed and convenience.

A Smart Consumer’s Checklist

Whether you buy insurance online, through a captive agent, or via a broker, here are some of Susman’s best-practice tips to make sure you’re protected:

1. Ask who represents whom. Does your agent or broker work for the insurance company or for you? The answer determines where their loyalty lies.
2. Understand the fees. Brokers may charge a service fee; agents typically don’t. Always ask before signing.
3. Verify credentials. Make sure the professional you’re working with is properly licensed in your state.
4. Review annually. Your coverage needs and market conditions change. Make annual reviews part of your financial routine.
5. Seek advice. Insurance can be complex. A qualified professional can save you thousands by catching gaps or overlaps in coverage.

Final Thoughts: Knowledge Is Your Best Policy

Insurance is one of those products you hope you never need but can’t afford to be without. The key is not just having coverage — it’s understanding how you bought it and who is standing behind you.

As Susman concludes, “Unless you’re an expert, find someone who is. Insurance is too important to leave to chance.”

Whether that expert is a broker, a captive agent, or a trusted representative from your insurer, the goal remains the same: peace of mind through proper protection.

In the end, the best policy isn’t just the one you buy — it’s the one that’s been built, reviewed, and supported by someone who truly understands your needs.