What does it mean for a broker to have "non-binding authority"?

When a broker has "non-binding authority," it means that the broker does not have the final authority to issue policies independently. Instead, they must obtain approval from the insurer to finalize any coverage they propose. This reflects a level of oversight where the insurer retains control over policy issuance and the specific terms of coverage.

This authority limits the broker's ability to create binding agreements with clients without the consent or affirmation from the insurance company, which helps ensure that the insurer’s underwriting guidelines are followed closely. The need for insurer approval ensures that the policies align with the insurer's risk appetite and regulatory compliance considerations.

The other answers suggest situations that do not align with the definition of non-binding authority. For instance, having unlimited policy issuance or the ability to offer any coverage amount would confer binding authority, which is not the case here. Additionally, the ability or inability to cancel existing policies is unrelated to the concept of binding authority and does not reflect the broker's level of authority in issuing new policies.