Sometimes a policy is canceled or non-renewed even though the agent was paid its commission. In these situations the agent will be requested to return the

Sometimes a policy is canceled or non-renewed even though the agent was paid its commission. In these situations the agent will be requested to return the

• A. Unearned premium
• B. Unearned commissions
• C. Premium tax
• D. Claims

Answer: (B)

When a policy ends before its term is up, commissions are considered earned only for the portion of the policy that actually covered the insured. The insurer will therefore require the agent to return the portion of the commission that corresponds to the unexpired term. This ensures the agent isn’t compensated for coverage that never existed for the full term. Unearned premium is money that should be refunded to the insured, not the agent. Premium tax is a tax on premiums, not something recovered from the agent. Claims relate to payments for losses, not compensation adjustments to the agent.

When a policy ends before its term is up, commissions are considered earned only for the portion of the policy that actually covered the insured. The insurer will therefore require the agent to return the portion of the commission that corresponds to the unexpired term. This ensures the agent isn’t compensated for coverage that never existed for the full term.

Unearned premium is money that should be refunded to the insured, not the agent. Premium tax is a tax on premiums, not something recovered from the agent. Claims relate to payments for losses, not compensation adjustments to the agent.