BROKERS, insurance or policy, are agents who transact the business of insurance, between the merchant or party insured and the underwriters or insurers. These insurance brokers, from the nature of their employment, ought to be, and in deed generally are, persons of respecta bility and honour, in whom unlimited confidence may be reposed. To the broker the merchant looks for the regu larity of the contract, and a proper selec tion of responsible underwriters : and to him also the underwriters look for a fair and candid disclosure of all material cir cumstances affecting the risk, and for the payment of their premiums. There is usually an open account between each brokerand every underwriter with whom he has much dealing. In this account the broker makes himself debtor to the underwriter for all premiums, and takes credit for all losses to which the under writer is liable, and which the broker is authorised to receive. Indeed, it is ge nerally understood, that by the usage of trade in London, the underwriters give credit only to the broker for their pre miums, and can resort only to him for payment, and that he alone, and not the underwriters, can recover the premiums from the insured. This point, however, has never been settled by any judicial determination. But though the under writer thus looks to the broker for his premium, and though the broker, in his account with the underwriter, takes cre dit for the losses and returns for premi ums, which lie is authorised to receive from the underwriter, yet such losses are not to be regarded as a debt from the un derwriter to the broker. Where the merchant happens to reside at a distance from the place where he means to be in sured, the policy is usually effected by the mediation of his agent or corres pondent there, who, if he be not a bro ker, employs one, and gives him all ne cessary instructions. In order to his be ing an agent in such a case, he must either have express directions from the principal to cause the insurance to be made, or else it must be a duty arising from the nature of his correspondence with the principal. And no general au thority which he may have, in relation to a ship or goods, will make him an agent for the purpose of insuring, on behalf of the parties interested. However, though one man cannot, in general, compel ano ther against his consent to become an agent for procuring an insurance to be effected for him, there are three cases in which an order to insure must be com plied with : as, first, where an agent has effects of his principal in his hands; se condly, where he has been in the prac tice of making insurances, and has given no notice to discontinue ; and, thirdly, where he accepts bills of lading sent him on condition to insure. To the office of agent or broker, great responsibility at taches; and, in the execution of it, it is the duty of each to conduct himself with the greatest fidelity, punctuality, and cir cumspection. For in this, as in all other cases, where a man, either by an express or implied undertaking, engagesto do an act for another, and he either wholly ne glects to do it, or does it improperly or unskilfully, an action on the case will lie against him, to recover a satisfaction for the loss or damage resulting from his negligence or want of skill. Hence, if a
merchant here accept an order from his correspondent abroad to cause an insur ance to be made, but limits the broker to too small a premium, in consequence of which no insurance can be effected, he is liahle to make good the loss to his cor respondent ; for though it is his duty to get the insurance done at as low a pre mium as possible, yet he has no right so to limit the premium, as to prevent the insurance from being effected. And even a voluntary agent, who has no prospect of remuneration for his trouble, is liable, provided that he takes any step in the business. It is not only the duty of the agent, in transacting the business of in surances, to conduct himself with fideli ty and punctuality towards his employer, but he is also bound to observe the strict est veracity and candour towards the in surer : for any fraud or concealment on his part will make void the policy, even though the insured be altogether igno rant and innocent respecting it. In an action against an agent or broker, whe ther for negligence or unskilfulness in effi eting an insurance, the plaintiff is en titled to recover to the same amount as he might have recovered against the un derwriters, if the policy had been pro perly effected. But he can only recover what, in point of law, he might have re covered on the policy ; and not What the indulgence or liberality of the under writers might probably have induced them to pay. In such an action, the agent may avail himself of every defence, such as fraud, deviation, non-compliance with warranties, &c. which the under writers might have set up in an action on the policy : but if the agent act in the usual manner, it will be deemed suffi cient. There are many reasons why an agent or broker ought not to be an in surer. He becomes too much interested to settle with fairness the rate of pre mium, the amount of partial losses, &c.; and though he should not himself occa sion any unnecessary delay or obstacle to the payment of a loss, he will not be over anxious to remove the doubts of others : besides, he ought not, by underwriting the policy, to deprive the parties of his unbiassed testimony in case of dispute. Han agent or broker, meaning to appro priate the premium to himself, and take the chance of a safe arrival, represent to his employer, that insurance has been effected agreeably to his instructions, the principal may maintain trover for the po licy against the agent or broker ; and, upon proof of a loss, he shall recover to the same amount as he would have been entitled to recover against the underwri ters, if a policy had been effected.