In the event an unauthorized insurer fails to pay a claim, to whom is the person aiding in the procurement of the insurance contract liable?

In the context of surplus lines insurance, if an unauthorized insurer fails to pay a claim, the person who aided in procuring the insurance contract, typically a broker or agent, is liable to the insured for the full amount of the claim. This liability arises because the broker or agent has a duty to ensure that the insurance they are placing is with a legitimate and authorized insurer. When they place coverage with an unauthorized insurer, they put the insured at risk for non-payment of claims, and thus the broker can be held responsible.

This concept emphasizes the importance of due diligence on the part of brokers or agents when placing insurance. They are expected to verify that the insurer is authorized to operate within the state and capable of fulfilling its obligations. If a claim is not honored because the insurer is unauthorized, the liability falls on the professional who facilitated that contract, hence the broker is required to compensate the insured for the total amount of the claim that remains unpaid due to the insurer's insolvency or lack of authorization.