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Q: Paying the Insurance Premium on Behalf of a Customer If I pay the insurance premium on behalf of a customer and he does not pay me, can I order cancellation from the carrier for nonpayment?
A: No. The insured has the right to cancel the policy, not the agent. From the carrier’s standpoint, the premium has been paid. Fronting money for an insured is always a bad idea for the very thing you mentioned. It’s not a good business practice. You could try to take legal action. ---------That is the problem and issue with paying your customer’s bills. It shouldn’t be done. Better, take him to small claims court – and help the customer find a new agent. ---------I think you just learned a hard lesson – never advance payment. The carrier has been paid, unless you have an agreement (like those used by premium finance companies), you may not be able to force the carrier to do anything. ---------Absolutely the carrier should not and will not reimburse you. First of all, you simply gave an unsecured loan. The carrier has been paid so they cannot cancel for nonpayment. If a friend paid for the client and then didn’t get reimbursed, could the carrier cancel for non-pay? No, of course not. How is this any different? Secondly, and more importantly, you should not be paying premiums for your clients. That is an example of rebating and is illegal in any state I know. ---------Absolutely NOT!!!! ---------NO! NO! The policy clearly states that the only parties who can cancel the insurance are “you” (the named insured”) or the “we” (the insurance company).
---------I think the obvious response is, “why in the world would you do that?” In some states, if paid out of your trust account, you could create a problem since the uncollected money could leave you with an insufficient balance of all funds due your carriers and clients. This does not sound like a good business practice. ---------Since the parties to insurance contracts are the insurer and the insured, with producers as middlemen, if the premium is paid to the insurer and there are no other valid reasons for cancellation, I don’t believe that an agent can legitimately order a cancellation. We all like to trust others, but some sort of written finance agreement, involving a down payment, would be (have been) a much better option.
Q: Unlicensed Individuals Issuing COIs Can an unlicensed agent issue certificates of insurance? Is this permissible and/or advisable?
A: It is NEVER advisable to have the least experienced person issue COIs unless there is no wording required anywhere. If the agency is going to have an unlicensed person generate them for the agent to review and sign, that’s one thing (again, if there is no special wording). But if I’m the agent, I certainly don’t want anyone attaching my name to anything I don’t see and have the opportunity to approve.
Certificates require an “Authorized Representative” to sign, which I would take to mean that the person needs to be an agent. Plus, it is not advisable from an E&O standpoint and in my view would be indefensible in an E&O claim.
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This is a REALLY, REALLY bad idea!!!! Certificates are not a clerical function. A COI should be issued by a knowledgeable person. BTW - What is an “unlicensed agent”? An unlicensed person is not an agent.
No. Not only that, you’re likely in Breach of Contract with your insurance company.
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wisconsin INDEPENDENT AGENT
APRIL 2020
27
