When it comes to insurance policies, an insurance agent or broker has a fiduciary duty to act in the best interest of the insured. This means that they must accept the premium payment when it is in the insured's best interest. Under the New York Auto Insurance Plan Rules, an insurance agent is responsible for representing the insured and acting as an insurance broker. An insurance agent cannot accept a premium payment, except when acting as a producer of an assigned risk auto insurance policy.
In this case, they must do so in accordance with N. Y. Ins. Law § 2120 (McKinney 2000).
The Office of General Counsel issued an informal opinion on 4 January 2002, which addressed questions about the agency's practices. This included whether the agency can use a credit to resend payment of the premium to an insurance company, instead of forwarding the payment by means of a check drawn up in the agency's premium account. In order for the insurance agent or broker to pay the credit card company by check, they must deposit the withdrawn funds into their own operating account and issue the check to the credit card company from that account. An insurance agent has apparent authority to collect a policyholder's premium payment on behalf of the insurer they represent.
If the insurance agent or broker deposits the premium payment into your premium account, when the deposit (if made by check or money order) has been settled and the insurer has received the credit card payment, they can make a withdrawal from your premium account to pay the card company of credit. The principal stated that the credit card, which will name the agency as the cardholder, will be used only for paying insured premiums to their insurers. However, there is one exception to this general rule: policies placed in the New York Auto Insurance Plan. When using a credit card makes an insurance agent or broker qualify for certain benefits provided by the credit card issuer, such as free air mileage, they can take advantage of those benefits because they are derived from a separate agreement between the issuer of the credit card and them as the cardholder.