State RegulationsNY specificDifficulty 3/5
A Manhattan small-business owner asks a producer licensed as a New York insurance broker: 'Whom do you legally represent when you place my coverage?' The correct answer is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §2101(c), a broker is one who, for compensation, acts on the insured's side of the transaction, and broker conduct is regulated under §2104. The customer - not the insurer - is the broker's principal; that is the classic agent-versus-broker distinction tested on the New York examination.
Why the other options are wrong
- A) Representing the insurer defines an agent under N.Y. Ins. Law §2101(a); a broker is not the insurer's representative.
- B) A broker's duties run to the insured; owing identical duties to both sides misstates the relationship.
- D) A broker is not neutral - actively serving the insured's interest is the broker's legal role.
Memory hook
Broker represents the buyer; agent represents the company - the examination's favorite distinction.