Also known as: what does rebating mean · insurance rebate · anti-rebating law
Rebating is the largely illegal practice of an agent or broker giving a customer cash, gifts, or part of their commission as an inducement to buy or renew a policy.
Rebating happens when an insurance producer offers a client something of value that is not stated in the policy, such as cash, a gift, or a share of their commission, to win the sale. Most states prohibit it under anti-rebating and unfair trade practice laws, because coverage should be placed on fit and price the carrier actually filed, not on side payments. For a founder shopping D&O, cyber, or tech E&O coverage, a broker dangling a kickback is breaking the law and risking their license, which is a red flag about how they will handle your account.
Rebating means an agent or broker gives a customer something of value that is not written into the policy, such as cash, a gift card, or part of their commission, to persuade them to buy or renew. Because the inducement is outside the filed, approved terms, most states treat it as an illegal practice.
In most states, yes. Rebating is banned under anti-rebating statutes and unfair trade practice laws, and a producer caught doing it can face fines, penalties, and loss of their license. A handful of states have loosened the rules within strict limits, but you should assume it is prohibited unless a licensed broker confirms otherwise.
No. Rate credits, multi-policy discounts, and other price breaks that the carrier has filed and the state has approved are legal parts of the premium. Rebating is specifically an off-book inducement the producer gives out of their own pocket or commission.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.