If an insurance broker sells a policy from an unlicensed insurer, who is personally liable for the coverage limits?

When an insurance broker sells a policy from an unlicensed insurer, the broker is personally liable for the coverage limits. In many jurisdictions, including South Carolina, there are regulations in place that require brokers to ensure that the insurers they work with are properly licensed. Selling policies from unlicensed insurers can put the broker at risk of disciplinary action and legal liability, as they have not followed the necessary legal and regulatory frameworks.

This liability arises because the broker is acting in a professional capacity and is responsible for providing consumers with valid insurance coverage. If the insurer is unlicensed, the policy may not be enforceable, leaving the broker open to claims of negligence or misconduct. Therefore, the correct answer reflects the broker’s responsibility in this situation. The other parties mentioned, such as the insurer or the policyholder, may not bear the same level of responsibility in this context, particularly because the broker should have verified the insurer's licensing status before selling the policy.