Insurance Agents (Use of)

NOTICE:  The information below was obtained directly from Florida Statutes and the Office of Insurance Regulation. Links are provided so you may access the statute.

FAST FACTS

Dealers are responsible for ensuring that customers have the necessary insurance before they may drive off your lots. That insurance is either state required (PIP and PDL) or lender required (comp and collision).

But if dealers do anything more than introduce customers to the agent, they may be violating Florida law. Specifically, dealers are prohibited from:

  • Assisting customers in completing the application for insurance;
  • Advertising in any way as a place that transacts insurance business;
  • Counseling or advising customers in any way with regard to the type of policy or the type of coverage they should obtain;
  • Collecting money from the customer to give to the insurance agent; or
  • Receiving a fee or commission for the policy written to your customers. (NOTE: You may receive a fee for each referral you make to an agent but the fee cannot be paid only when a sale of an insurance product is made.)

Doing any of the above is considered “the unlicensed transaction of general lines insurance.” This prohibition is addressed in section 626.7315, Florida Statutes.


If You Assist Your Customers with Obtaining Insurance, You May Be Violating Florida Law

Dealers are responsible for ensuring that customers have the necessary insurance before they may drive off your lots. The insurance required by the state (PIP and PDL) for registration purposes is one of them. The other type of insurance (e.g., comp and collision) is required by lienholders who want to be listed as “loss payees” in the event the customer is in an accident. This you already know.

But what about those customers who do not have insurance – what do you do about them? Many dealers have established relationships with insurance agents whom they can call at any time, including evenings and weekends. Those agents speak with the customers, prepare the policies, obtain necessary signatures and collect the money. So far so good.

But what role do you play in this process? Basically, if you do anything more than introduce your customer to the agent, you may be violating Florida law. Specifically, you are prohibited from:

  • Assisting customers in completing the application for insurance;
  • Advertising in any way as a place that transacts insurance business;
  • Counseling or advising customers in any way with regard to the type of policy or the type of coverage they should obtain;
  • Collecting money from the customer to give to the insurance agent; or
  • Receiving a fee or commission for the policy written to your customers. (NOTE: You may receive a fee for each referral you make to an agent but the fee cannot be paid only when a sale of an insurance product is made.)

Doing any of the above is considered “the unlicensed transaction of general lines insurance.” This prohibition is addressed in section 626.7315, Florida Statutes.

If you have a great need for getting customers insured, you may consider having a licensed insurance agent located within your dealership. However, the agent must meet all licensing requirements including establishing an agency which is advertised and accessible to the general public pursuant to sections 626.172, and 626.749, Florida Statutes.

When your customers need insurance and they do not have an insurance company or agent that they deal with, you may recommend an agent to them. Be sure to recommendonly licensed and appointed reputable agents who conduct the entire transaction with the customer and keep you, the dealer, at arm’s length.

 

 

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