https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3APremium_finance_agreement 2026-05-05T17:46:01Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Premium_finance_agreement&diff=11620&oldid=prev 2026-03-12T00:19:39Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>📝 &#039;&#039;&#039;Premium finance agreement&#039;&#039;&#039; is a contract between a [[Definition:Policyholder | policyholder]] (or [[Definition:Named insured | named insured]]) and a [[Definition:Premium finance company | premium finance company]] under which the finance company advances funds to pay an [[Definition:Insurance premium | insurance premium]] in full, and the policyholder repays the advance in installments plus interest and fees. In the insurance industry, these agreements are distinct from generic consumer-lending instruments because they are governed by state [[Definition:Premium finance law | premium-finance statutes]] that regulate interest-rate caps, cancellation rights, disclosure requirements, and the security interest the lender holds in the [[Definition:Unearned premium | unearned premium]] of the financed policy.<br /> <br /> ⚙️ The mechanics begin when the [[Definition:Insurance agent | agent]] or [[Definition:Insurance broker | broker]] submits a finance application on behalf of the insured. Once approved, the premium finance company remits the full [[Definition:Premium | premium]] to the [[Definition:Insurance carrier | carrier]] or the agent&#039;s trust account, and the insured begins a monthly repayment schedule — typically spanning nine or ten months. To secure the obligation, the agreement assigns the right to any [[Definition:Return premium | return premium]] to the finance company and grants it the power to request [[Definition:Policy cancellation | cancellation]] of the policy if the insured defaults. Should cancellation occur, the carrier returns the [[Definition:Unearned premium | unearned premium]] to the finance company, which applies it against the outstanding balance. Any shortfall becomes a debt the insured still owes, while any surplus is refunded.<br /> <br /> 🛡️ Premium finance agreements serve a critical liquidity function for businesses and individuals who need immediate [[Definition:Insurance coverage | coverage]] but cannot fund a large lump-sum premium. This is especially common in [[Definition:Commercial lines | commercial lines]], where annual premiums for [[Definition:Property insurance | property]], [[Definition:Liability insurance | liability]], or [[Definition:Fleet insurance | fleet]] programs can run into hundreds of thousands of dollars. By enabling upfront payment to the carrier while spreading the cost to the insured, these agreements keep policies in force and maintain the carrier&#039;s [[Definition:Cash flow | cash-flow]] expectations. Agents and brokers often facilitate the process as a value-added service, and some [[Definition:Insurtech | insurtech]] platforms have begun embedding premium financing directly into the digital [[Definition:Quote-to-bind | quote-to-bind]] journey, reducing paperwork and accelerating funding.<br /> <br /> &#039;&#039;&#039;Related concepts:&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Premium financing]]<br /> * [[Definition:Unearned premium]]<br /> * [[Definition:Premium finance company]]<br /> * [[Definition:Policy cancellation]]<br /> * [[Definition:Return premium]]<br /> * [[Definition:Installment billing]]<br /> {{Div col end}}</div>

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