Insurance carriers provide their agents with binding authority for the various lines of insurance written by the agents through these companies. With this capacity, agents are allowed to bind coverage for most home purchases, for mortgage refinancing, for new auto purchases or changes in auto loans, for new boats and motorcycles. This authority helps streamline the process of writing coverage for the various exposures presented to us by you.
When agents do not have binding authority
However, there are several instances where agents are not provided with binding authority and must solely rely on the carriers to place/bind the coverage. These instances include the issuance of a personal umbrella or excess liability policy. This coverage must be approved by the carrier and relies on driving records, underlying exposures, youthful operators, and if there are pending open claims. Agents do not have binding authority for any flood insurance, which means that you would need to apply for this coverage and pay in full in advance. The Fair Plan, or MPIUA, writes the various homeowner and dwelling fire forms, including primary homes, secondary homes, condominiums, renters or apartment insurance, and properties rented to others and they do not provide binding authority to agents. You need to apply for the coverage needed and MPIUA reviews the documentation provided and upon approval, will forward a proof of insurance to the agent thus binding the coverage requested. Oftentimes, MPIUA is placing the coverage as there may have been a lapse in coverage or if your previous policy had been non-renewed, or the residence is in close proximity to the coast and another carrier is unable to write the coverage. Excess markets who may also be willing to write the more difficult exposures, such as vacant dwellings, or coastal properties do not provide binding authority to their agents.
Another instance whereby agents do not have binding authority is during a hurricane or major storm when a moratorium may be declared by some or all of an agent’s carriers on placing new business.
If you have any other questions, feel free to contact us.