The basic distinction between insurance agents and brokers is that agents usually act on behalf of the policyholder. The insurance broker is the middleman between the policyholder and the insurance company. An insurance agent is authorized by the insurance company to act on its behalf to transact all classes of insurance other than life, disability, or health insurance. An insurance agent has the authority to bind the insurance company on coverage, compared to a broker that does not have authority to bind the insurance company.
Insurance Companies may give its agent authority to collect premiums and forward them to the carrier. Provisions of the insurance policy may provide that notice of claims be provided to the insurance agent. Sometimes agents have the authority to adjust claims.
In California in order to act as an insurance agent you must be licensed by the insurance commissioner. This includes persons employed by the insurance agent to assist in servicing policyholders. Insurance brokers are a person for compensation and on behalf of the policyholder transacts insurance other than life, disability, or health insurance. The brokers function is to negotiate with the insurance companies on rates, premiums and terms of coverage. The broker only acts on behalf of the policyholder, not the insurance company.
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