RMIN 5100S Chapter 1 Test 2 Review

Common Policy Conditions

6 conditions must be attached to every CPP or monoline policy

A. Cancellation

B. Changes

C. Examination of Your Books and Records

D. Inspections and Surveys

E. Premiums

F. Transfer of Your Rights and Duties Under This Policy

Cancellation

The first Named Insured may cancel at any time

Insurer may cancel with

10 days written notice for non-payment of premium

30 days written notice for any other reason

If cancelled by insurer

refund will be pro-rata

If cancelled by insured

refund may be short rate aka “less than pro-rata”

Pro-Rata

Full return of unearned premiums

Short Rate

Typically 90% of unearned premiums

Percentage will be stated within policy

Changes

The first Named Insured is authorized to make changes with insurer consent

Terms can only be amended by

endorsement issued by the insurer

Examination of Books and Records

Insurer reserves the right to examine and audit the insured’s books and records related to the policy at any time during the policy and for up to three years after the policy’s termination.

Inspections and Surveys

The insurer has the right, but not the obligation to inspect the insured’s premises at any reasonable time during the policy period.
The insurer may inform the insured of the inspection results, but is not obligated to do so.

Premiums

The first Named Insured is responsible for paying the premium

The first Named Insured will be the payee for any return premiums

Transfer of Rights and Duties Under This Policy

The insured cannot transfer any rights or duties under the policy to any other person or organization without the insurer’s consent

In the event of an individual named insured, policy rights/duties automatically transfer to

legal representative

If the annual premium is $1,000 and the insured cancels the policy after 3 months, how much premium would be returned on a pro-rata basis?

$750

(9/12 * $1,000 = $750)

If the annual premium is $1,000 and the insured cancels the policy after 3 months, how much premium would be returned on a short rate basis, assuming 90%?

$675

($750 × 0.90= $675)