Can a broker charge a fee for the services provided when placing surplus lines coverage?

In the context of surplus lines coverage, brokers are allowed to charge a fee for the services they provide, provided that they offer proper disclosure to the insured. This means that the broker must inform the client upfront about the fee structure and ensure the client understands what they are being charged for. Proper disclosure is essential to maintain transparency in the transaction and to uphold the integrity of the insurance process.

Surplus lines brokers often operate in a specialized market where access to certain types of insurance coverage may not be available from standard market carriers. As such, they may provide additional services that justify a fee beyond the traditional commission they earn from the placement of the insurance. This arrangement is typically governed by state regulations, which aim to protect consumers while allowing brokers to be compensated for their work.

Without proper disclosure, charging a fee could lead to misunderstandings or disputes with clients, hence the importance of transparency in these transactions.