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How Safe are Non-Compete Agreements?

Non-competition clauses in contracts between producers and agencies have long been a source of controversy and differing interpretations.

By Scott Robertson,CPCU,ARM | Updated on May 04, 2010

Non-competition clauses in contracts between producers and agencies have long been a source of controversy and differing interpretations. Many in California say they don’t hold up, while some agency owners want them signed to at least create the perception on the agent’s part that they cannot take their business with them if they leave the agency.

Such agreements have many names: covenants not to compete, anti-piracy clauses, infringement of trade secret clauses. However, all have the same objective: to prevent agents from taking their accounts with them when they leave an insurance agency. Many agents have been the targets of legal action because of these clauses. To avoid problems in the future, agents and their agency employers should make it clear at the time of hire about what will happen if their business relationship doesn’t work out.

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