General Insurance PrinciplesQuestion 185 of 474
When coverage is placed by a broker rather than by an appointed agent, the broker legally represents:
a.both parties equally, owing each the same duty of loyalty
b.the insurer, and can bind coverage on the spot like an agent
c.the state, as a neutral referee between insurer and client
d.the client, and generally has no power to bind the insurer
Explanation
A broker is the buyer's representative and shops the market on the client's behalf, so the broker ordinarily cannot commit an insurer to a risk. An appointed agent is the insurer's representative and, within the authority granted, can bind coverage, which is why the answer giving the broker that power is wrong. A producer never acts as a neutral referee between the two sides.
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