Is a broker fee legal?

In most states yes, within conditions, and the conditions are the point. Rules vary by state and by license type. Some permit a fee with written disclosure and the insured’s signed agreement, some cap it, and some restrict it on certain lines. Where it goes wrong is almost never legality and almost always process, meaning a fee that was not disclosed before binding or that nobody can explain. Your state insurance department will tell you the rule for your state, and asking is reasonable.

What else is on the invoice that is not premium?

On a surplus lines placement, usually surplus lines tax and a stamping fee, both set by the state and collected on its behalf rather than kept by anybody in the chain. There may also be a policy fee or inspection fee charged by the carrier. Those are different from a broker fee, which is the agency’s own charge. A good invoice separates them and a good agent will walk you down it line by line.

Can I ask for the fee to be removed?

You can ask, and the answer tells you something either way. On a placement that genuinely took a lot of work for a small commission, an agency that removes it is working at a loss and may reasonably decline. On a routine renewal, a fee that cannot be justified is one that should not be there. Either way the conversation should be straightforward, and an agent who becomes defensive about a charge on your invoice has answered a different question.

Do you charge broker fees?

On some placements, and never without saying so first. The ones that carry a fee are the hard small accounts where the commission does not cover the hours. Monoline surplus lines policies, distressed risks that go to many markets, and small placements in classes almost nobody writes. It is disclosed and agreed before anything is bound, and it appears as its own line rather than buried in the premium. If you are quoted by us and there is a fee, you will know before you decide.

An itemised insurance invoice on a desk with a separate fee line highlighted, a pen and a chequebook beside it

Why is my agent charging a broker fee, and should I sign the surplus lines disclosure?

A broker fee is a charge for the agency’s work, separate from the commission the carrier pays, and it is legitimate where your state permits it, it was disclosed before you agreed, and you know what it buys. The surplus lines disclosure is a different thing entirely and is not optional, because it is a state-required acknowledgement that your policy sits with a non-admitted carrier outside the guaranty fund. Signing it is normally the only way the placement can go ahead.

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The line that is not premium.It should have been disclosed before anything was bound, not after.

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Your current policy paperwork, a renewal notice, or nothing at all. A licensed agent reads it and replies the same business day.

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The detail

Broker fee rules are set by state and vary widely. Some states permit a fee with written disclosure and the insured’s agreement, some cap the amount, and some restrict or prohibit fees on particular lines or by license type.
State insurance regulation, varies by jurisdiction
Most states require the insured to sign a surplus lines disclosure acknowledging that the insurer is not licensed in the state and that the policy is not protected by the state guaranty fund.
National Association of Insurance Commissioners

What this means for you

A fee and a commission are different money. Commission is paid by the carrier out of your premium and costs you nothing extra. A broker fee is charged by the agency on top, so it is the one line on the invoice that is genuinely additional.
It should never be a surprise. Where a fee is allowed at all, the state generally requires it to be disclosed and agreed before the policy is bound. A fee that first appears on the invoice is a conversation to have, not a charge to swallow.
Ask what it is for and expect a specific answer. Fees are most defensible on placements that took real work for little commission, such as a small hard-to-place account, a monoline surplus lines policy, or a submission that went to fifteen markets. "The carrier requires it" is not an answer, because carriers do not charge broker fees.
The amount should bear some relation to the work. A few hundred dollars on a difficult small placement is ordinary. A four-figure fee on a routine renewal is worth questioning, and you are entitled to question it.
The surplus lines disclosure is not the same conversation. It is a state form, your agent did not write it, and refusing to sign it usually means the policy cannot be issued. The thing to actually read is what it says you are giving up, which is the guaranty fund.
Fees are not evidence of a bad agent. Plenty of good agencies charge them on the placements that would otherwise lose money, and plenty of poor ones charge them on everything. What separates the two is disclosure and a straight answer.

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Need this handled?

Reading about it and having it handled are different jobs, and the second one is ours. We place the accounts other brokers decline — claims history, a cancellation, an unusual operation, a business nobody wants to underwrite twice — and we will tell you when the policy you already have is the right one. Tell us the situation and a licensed human replies the same business day.