The Broker of Record (BOR) letter is one of the most powerful documents in the insurance industry. Unfortunately, it can also be used by some less than scrupulous brokers to convince insurance buyers to sign this document without explaining exactly what it accomplishes.
What exactly is a Broker of Record letter and why is it necessary?
- When you sign the Broker of Record letter you are essentially firing your current broker and hiring the broker listed on the Broker of Record Letter.This allows the new broker to negotiate on your behalf.
- Affirms the appointment of a new broker by giving that broker the sole ability to negotiate with the insurance company on your behalf. It also grants the broker access to any underwriting information or proposals that are currently “on the table.” If there is no significant change in the basic underwriting information and the insurance company has already made a firm commitment to the first broker to either decline or provide a quote, the new broker “inherits” that decision – whether it is a declination or a specific premium proposal.
- Provides a relief mechanism or transition period from one broker to another, expressed in number of days, by providing a letter to all parties involved. This allows the former broker the opportunity to review the implications of the letter with you and to confirm your desire to change brokers.
Why might you decide to sign a broker of record letter?
- You are simply unhappy with the service or performance of your current agent / broker.
- The competing broker convinces you they bring more benefits to the table including possible expertise in areas such as experience in your class of business, claims, or loss control unique to your risk.
Make sure you understand anything you sign. If you have questions or would like additional information, email AssuredPartners Aerospace, AOPA’s partner for aviation insurance, visit ap-aerospace.com or call 800.622.2672. — Summarized, with permission, from article written by Stuart Hope
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