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Question

Difficulty: EasyLicensing Requirements and Types

Sarah is a licensed professional who specializes in helping local business owners find the best commercial property coverage. Instead of being appointed by and representing a specific insurance company, Sarah legally represents the business owners (the insurance purchasers) and negotiates with multiple insurers on their behalf. Based on this scenario, which specific type of license role is Sarah exercising?

  1. A
    Captive insurance agent
  2. B
    Surplus lines broker
  3. Insurance brokerAnswer
  4. D
    Temporary insurance producer

Answer

The correct answer is Insurance broker, because this role specifically involves legally representing the purchaser of insurance rather than the insurance company.
An insurance broker is a licensed professional who legally represents the insured (the buyer) rather than the insurer. Because Sarah negotiates on behalf of the business owners and is not appointed as a legal representative of a specific insurance company, she is operating as a broker.

Step-by-Step Solution

1
Analyze the legal representation established in the scenario.
The scenario explicitly states that Sarah legally represents the business owners (the purchasers), not the insurance companies.
Identifying who the producer legally represents is the key to distinguishing between basic insurance license types.
2
Evaluate the standard license roles against the representation facts.
Agents represent the insurer. Brokers represent the insured. Surplus lines brokers handle non-admitted business. Temporary producers hold transitional licenses.
Matching the legal relationship described in the scenario to the correct statutory license type confirms the answer.

Key Concept

Insurance Broker vs. Agent Representation
Estimated Time:45s
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Topics

Licensing Requirements and Types

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