Agency Agreement
What Does Agency Agreement Mean?
An agency agreement is a legally binding contract between a person or organization (the principal) and another person or organization (the agent), in which the principal authorizes the agent to act on their behalf.
Insuranceopedia Explains Agency Agreement
Agency agreements occur when someone hires an agent to make decisions on their behalf. The person hiring the agent specifies the agent’s responsibilities and payment, which are outlined in a contract. This can include situations such as hiring a lawyer or a businessperson hiring an accountant.
In the context of insurance, an insurance company may hire an insurance agent or agency in a specific area to sell and market its products. The company will define key details in the contract, such as which products to sell and the commission paid for each product sold.
