Agency trouble Unpaid Policy?

bodd

New Member
3
Our agency does 99% Auto. We did one commercial property " Church " The insured asked to bind a policy, so it was binded. The policy ran for a little bit but insured never paid anything. Turns out apparently insured went elsewhere, but the insurance company started the policy anyway even though they never got a down payment or anything

The insurance company is now asked for money from my agency and has already sent some law firm emailing us and threatening collections etc. Why is it that my agency is getting penalized when the church is the insured and the one who did not pay? Why are they not going after the insured / The church?

Is this even legal? Is there some organization that can help with unfair cases like this?
 
Sounds like this policy was issued as Agency Billed by the Carrier, and you probably used an MGA to place this. For agency billed policy's, it is the responsiblity of the agency to collect the full premium and pay the carrier, minus the commissions. There is usually 30 days provided between effective date and premium due date. Once you sent in the bind request, the agency must hold up their end.

When the insured went elsewhere, didn't you have them sign an LPR? You can still send the carrier a signed LPR and if the date is same as effective date, then you have to request for a 'flat' cancellation. You will have to provide proof of the replaced coverage.

The carrier has no clue of the cancellation and they are owed the due premium.
 
The insured asked to bind a policy, so it was binded. (Bound)
If the insured asked to bind the policy and did not tell you to cancel when they went elsewhere, the onus is on them to pay for the period during which the policy was in force. If they can show duplicate coverage by date then you should be off the hook.
 
One of the first things I was taught at my first agency job was not to ever, EVER, bind an E&S/Agency Billed policy with out the premium (or signed PFC contract) in hand. Somewhere in the quote package it should state any Minimum Earned Premium requirements, and many say "No Flat Cancellations".
 
Sounds like this policy was issued as Agency Billed by the Carrier, and you probably used an MGA to place this. For agency billed policy's, it is the responsiblity of the agency to collect the full premium and pay the carrier, minus the commissions. There is usually 30 days provided between effective date and premium due date. Once you sent in the bind request, the agency must hold up their end.

in the quote package it should state any Minimum Earned Premium requirements, and many say "No Flat Cancellations".

This. It's usually at least 25% minimum earned premium these days. Even if you do premium financing, they will put the full 25% + taxes and fees into the down payment amount
 

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