General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A captive insurance agent differs from an independent agent in that a captive agent:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A captive agent is contractually tied to a single insurer and sells that insurer's products exclusively. An independent agent, by contrast, represents multiple insurers and can place business with whichever company offers the best fit for the client. Distribution systems differ in how the agent is compensated, how much product choice is available to the consumer, and how much shopping the agent can do on the client's behalf, all of which matter to the consumer when choosing where to buy coverage. Both types of agents must be licensed.
Why the other options are wrong
- B) Representing multiple insurers describes an independent agent, not a captive agent. Shopping multiple companies for the client describes an independent agent, not one tied to a single insurer.
- C) Captive and independent both describe agency relationships. In either case the producer acts as an agent of insurers, not as a broker of the client. Both captive and independent producers act as agents of insurers; the broker label describes a different role.
- D) All insurance agents must be licensed regardless of whether they are captive or independent. Licensing is required for everyone. Licensing is required for every producer, so captive status never exempts an agent from holding a license.
Memory hook
Captive = one company on your badge. Independent = a shelf of companies to pick from.