Property and Casualty Insurance Practice Exam

Who does a Broker represent during an insurance transaction?

1. The insurance company

2. The insured

3. The agent

4. The state

The correct answer is: The insured

In an insurance transaction, a broker represents the insured, which means they act as an intermediary between the buyer of insurance (the insured) and the insurance companies. Brokers have a fiduciary responsibility to their clients, ensuring that they advocate for the insured's best interests. Their role includes helping clients assess their insurance needs, finding suitable coverage options, negotiating terms, and providing advice on various policies. Unlike an agent, who typically represents a specific insurance company and aims to sell its products, a broker operates independently. This independence allows brokers to offer a wider choice of insurance products from different insurers, ensuring that they can tailor solutions to best meet the unique needs of the clients. The relationship built on trust and impartiality enables brokers to deliver personalized service, making them valuable advocates in the insurance market. In contrast, options that involve the insurance company, the agent, or the state do not align with the broker's role, as these entities typically represent their own interests rather than those of the insured.