Captive Agencies with Non-Compete Agreements

[AgencyEquity]

Many producer agreements come with some sort of a non-compete clauses and nearly all captive agency contracts have non-compete clauses written into these agreements. Such clauses may or may not be valid depending on the state laws as well as a number of other factors. Nearly all non-compete clauses have some sort of a time limitations to it, often a year or a couple of years. Non-Complete can cover various items after a contract is terminated (by either side), including:

Ability to do compete for a client
Ability to locate within a certain radius or territory
Ability to compete in a certain time frame
Who owns the phone number

Some state prohibit non-compete agreements to a certain extent, also a client is not bound to the non-compete agreement and cannot be prohibited from choosing who to do business with. Nevertheless, those looking to transition to their own agency should proceed with caution regardless to how their state law reads and consult with a attorney who is familiar with non-compete agreements in the state(s) you do business in.

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