Over the next few weeks, Tuscano will be running a series of articles intended to help producers navigate certain insurance rules and regulations that you might not come across all that often. Our goal is to prevent a situation where you or the policyholder suffer from unintended consequences. According to Warren Buffett, “Risk comes from not knowing what you're doing”, in which case, that is not the risk business we want to be in! Read on for the first in this series of short articles.
When a trucking risk has certain operating authorities, their insurance carrier is obligated to provide the state and/or federal regulatory bodies who grant those authorities with proof of insurance. This proof of insurance is commonly referred to as a filing. The policy must contain specific endorsements that are included to protect the ‘motoring’ public. Essentially, the policy becomes a financial responsibility guaranty. Those endorsements also change the terms for cancelling the policy! The policyholder, insurance carrier, or finance company is not at liberty to simply cancel the policy without giving the government a minimum of 35 days’ notice. That means their premium will continue to ‘earn’ for a minimum of 35 more days.
Always be sure to make the policyholder aware that as soon as the filing is made, the policy will remain in force until notice to the government can be made. Needless to say, proactively making the policyholder aware of the special cancellation terms is important as well as collecting premium at the time of binding.