Also known as: insurance brokers · insurance brokering · broker
Written by attorneys · grounded in primary & secondary sources — see below
An intermediary who acts primarily on behalf of a purchaser in obtaining insurance coverage from one or more insurers. The broker is compensated by commission from the insurer yet owes primary allegiance to the insured in selecting and placing the policy.
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Israel Irving, an art collector, retained an insurance broker to procure coverage for a shipment of paintings. The broker's specialized knowledge of fine-art underwriting practices was attributed to Irving under the merchant definition, allowing the insurer to treat Irving as a merchant in the transaction.
Indigo Textiles hired an insurance broker to obtain property coverage on its warehouse. The broker produced a carrier ready to issue the policy on the quoted terms. When Indigo later refused to pay the premium in bad faith, the broker remained entitled to its commission.
Iain Irons orally retained an insurance broker to place a $600,000 cargo policy. The broker sent a signed binder confirming the essential terms to the carrier. The signed binder satisfied the statute of frauds requirement against Iain.
Infinity Bank used an insurance broker to secure a multi-state liability policy. When coverage litigation arose across jurisdictions, the broker's placement activities were examined to determine whether the transaction constituted interstate commerce subject to federal antitrust scrutiny.
Interlink Communications engaged an out-of-state insurance broker to obtain a group health policy. State officials challenged the broker's authority to place the coverage, testing whether insurance brokerage constituted local business subject to state licensing rather than interstate commerce.
An insurance broker is characterized as acting primarily on behalf of the purchaser even though compensation typically arrives by commission from the insurer.
Supporting sources
An insurance agent is expressly authorized to sell the insurance of a specific company while a broker is an independent contractor who may place coverage with various insurers.
Supporting sources
A broker earns the commission by producing a carrier ready to issue coverage on the quoted terms. Bad-faith refusal by the insured does not defeat the broker's right to payment.
…notes are as necessary to the commerce of a State as foreign bills to the commerce of the Union. And if a tax on an exchange broker who deals in foreign bills be a regulation of foreign commerce, or commerce among the States, much more would a tax upon State-paper, by Congress, be a tax on the commerce of a State.” If…