Broker Clause
The broker clause designates the insurance broker instructed by the policyholder as the recipient of the insurer's communications and information, and sets out whose knowledge is attributed to the policyholder within the intermediation relationship.
- Clause type
- Condition
- Origin/Market
- DACH – statutory
- Favours
- Insured
- Negotiability
- Market standard
Purpose
Where a policyholder instructs an insurance broker to manage its policy, communication with the insurer should ordinarily run through that broker. The broker clause names the broker as the authorised recipient of notices, endorsements and information duties, ensuring the policyholder does not additionally have to handle every piece of administrative correspondence itself.
Effect and limits
Because an insurance broker, unlike a tied agent, is in principle regarded as the policyholder’s representative, the broker’s knowledge of risk-relevant facts does not automatically operate to the insurer’s disadvantage; the clause, however, frequently states expressly to whom the insurer may effectively serve terminations, premium invoices or reminders. A change of broker of record must be notified to the insurer for the clause to take effect for the new broker.
Negotiation and practice
The broker clause is standard in commercial insurance and is usually supplemented by a letter of authority setting out the scope of the broker’s mandate (collection, contract amendment, claims notification). On a broker-of-record change, insurers typically verify that a valid, current letter of authority is in place before releasing information to the new broker.
Legal basis
- DE: Section 59 VVG (insurance intermediaries, scope)