Are insurance brokers allowed to bind coverage on behalf of an insurer?

Insurance brokers are indeed allowed to bind coverage on behalf of an insurer, provided they have the appropriate authority from that insurer. This ability to bind coverage means that brokers can enter into contracts on behalf of their clients and ensure that the insurance coverage takes effect immediately, thus providing a critical service in the insurance process.

When a broker has binding authority, it signifies that the insurance company has delegated certain powers to the broker, allowing them to enter into agreements without needing to seek further approval from the insurer every time. This practice facilitates a smoother and more efficient transaction for clients seeking immediate coverage.

The other options do not reflect the correct understanding of a broker's role. The assertion that brokers can only offer recommendations ignores the operational capacity they have when authorized by an insurer. Stating that binding authority is limited to personal insurance policies misrepresents the scope of coverage types brokers can manage. Lastly, indicating that binding coverage is illegal under the RIBO Act is inaccurate, as the Act does not prohibit brokers from binding coverage when they possess the necessary authority from the insurance companies.