Property & Casualty Insurance Procurement & Litigation (2 of 10 Reoccurring Themes Every Lawyer Should Know)
The first trigger to an insurance contract - Premium Payment
Premium payment is the basis of which all other obligations follow. Paying premiums to an agent of an insurance company is ordinarily the same as paying the insurance company. Is the person for whom your client is buying the insurance an agent or a broker?
This information is usually not on the proposal. An insurance buyer needs to be sure the premium is paid to the insurance company or the company’s authorized representative (i.e., Agent) and not to a broker, who is not an authorized representative of the insurance company.
The cases of brokers taking premiums from their clients and not conveying the money to the insurance company is, unfortunately, more common than one might expect and for this reason, payment to the insurance company is preferred.
Lesson #2: Your client (the Insurance buyer) knows they have purchased insurance if they have paid for it – so the buyer needs to make sure the premiums are paid to the insurance company.
ABOUT THE AUTHOR: David L. Stegall, Principal Consultant, Risk Consulting & Expert Services
David Stegall is the Principal Consultant at Risk Consulting & Expert. Mr. Stegall holds a B.A. in Communication from Auburn University and is a Chartered Property and Casualty Underwriter, an Associate in Risk Management and an Associate in Reinsurance, all awarded by The Institutes in Malvern, PA. He is also a Director of the Society of Risk Management Consultants.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.
