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Why Do Some Policies Require 5-Day Pay Terms?
Bulletin – Friday, February 27, 2009
You may have been wondering why some policies require 5-day payment terms instead of your typical account current terms. We would love to explain.
As we write more and more brokerage business, we often go to brokerage markets that require specific payment terms from us, typically requiring payment from our office by a certain date. Since we cannot pay the carrier on an account basis, that means we cannot extend account current privileges to our customers (you).
Payment should be collected from the insured prior to paying our office, as some of these markets will not honor a request to cancel for non-payment once they are paid. Under these circumstances, we feel it is best to suspend payment to the carrier until we have received payment from you (that’s where the 5-day invoices come into play). If payment is not received by the due date of the invoice, cancellation for non-pay will be sent giving the client at least 15 days to get payment into us.
Because this is the exception not the rule, we always mark our quotes and binders when special payment terms apply. Please feel free to discuss this with your underwriter at the time of quoting so you can confidently communicate these terms to your client.
As we write more and more brokerage business, we often go to brokerage markets that require specific payment terms from us, typically requiring payment from our office by a certain date. Since we cannot pay the carrier on an account basis, that means we cannot extend account current privileges to our customers (you).
Payment should be collected from the insured prior to paying our office, as some of these markets will not honor a request to cancel for non-payment once they are paid. Under these circumstances, we feel it is best to suspend payment to the carrier until we have received payment from you (that’s where the 5-day invoices come into play). If payment is not received by the due date of the invoice, cancellation for non-pay will be sent giving the client at least 15 days to get payment into us.
Because this is the exception not the rule, we always mark our quotes and binders when special payment terms apply. Please feel free to discuss this with your underwriter at the time of quoting so you can confidently communicate these terms to your client.