California Insurance Code & EthicsQuestion 36 of 215
Which statement best describes the distinction between an insurance agent and a broker under California law?
a.An agent represents the insured; a broker represents the insurer
b.Only agents may charge a broker fee; brokers may not
c.An agent transacts insurance on behalf of an insurer; a broker transacts insurance on behalf of the insured
d.There is no legal distinction; the terms are interchangeable
Explanation
Section 31 defines an insurance agent as a person authorized to transact insurance on behalf of an insurer. Section 33 defines a broker as a person who, for compensation and on behalf of another, transacts insurance other than life with, but not on behalf of, an admitted insurer. So an agent represents the insurer, while a broker represents the insured. Only brokers may charge a broker fee, the opposite of choice (b).
Law Reference: Cal. Ins. Code §§31, 33, 1623Practice all 215 questions free — no signup required.
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