In the looking-glass world of professional liability claims against insurance agents and brokers, words that we take as clear can become unrecognizably twisted and fraught with ambiguity. Perhaps no word suffers this indignity more frequently than “agent.”

In the insurance industry, an “agent” is commonly understood to be a person who transacts insurance by the appointment of, and on behalf of, an insurance carrier. California law exempts from this definition life, health and disability insurance and “life agents,” a separately defined term. (Cal. Insurance Code ?? 1621 and 1622.) In contrast, “An insurance broker is a person who, for compensation and on behalf of another person, transacts insurance other than life insurance with, but not on behalf of, an admitted insurer.” (? 1623)

At this point the agents and brokers reading this column are groaning a collective, “Duh! You've practiced law for 28 years and that's all you learned?” But you'd be surprised at how complex the insurance-world term “Agent,” which I capitalize, becomes when its meaning gets mixed up with its Bizarro-world doppelganger, “agent,” in statutes and legal decisions: “An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.” (California Civil Code ?2295) Thus, an insurance broker is an “agent” of the policyholder, though he or she may or may not also be an agent or Agent for the insurer. In fact, for some limited purposes, such as transmission of the insurance premium, a broker is legally deemed to be an “agent” of the insurer.