What Is A Policy Fee On Renters Insurance?
We were asked by an insured who has Glendale, CA Renters Insurance what a policy fee is on renters insurance, and why it might be there. That’s actually an excellent question. They’re not common, but they’re not exactly rare, either.
A policy fee on renters insurance may or may not be present based on the state you live in. Some states allow them in many circumstances, some states allow them in more narrow circumstances, and some states regulate them even further. In a nutshell, it’s a payment that you make to someone for work which is otherwise uncompensated with regards to your renters insurance policy.
But how could it not be compensated, if your agent or company is writing the policy? There are often a number of layers in between you and the insurance company that make it possible for the policy to be sold to you. For instance, if you have a significant claims history, your policy could in theory be placed with a surplus, or non-admitted carrier.
The way those policies are compensated is rather different from a typical renters insurance policy. Not only are you dealing with an insurance company that’s not admitted in your state, but there might be a broker or wholesaler in between you and the insurance company. Those people all get their cut.
In addition, some insurance carriers are structured (we’ll spare you the details) in such a way that they don’t sell policies directly to the insured… or through agents! That’s done for specific regulatory reasons having to do with the way the company is set up in many cases, but what it means to you is that there’s what’s called a managing general agency (often owned by the carrier) in between you and the company. That MGA has to be compensated so that it can afford to exist. In that instance, they would charge a policy fee. But they won’t sell directly to you, either, in many cases, so you’ll still have to go through an agency or other company.
A policy fee on your renters insurance is just part of the cost of the policy, and it’s rarely charged by the agency that sells you the policy. It’s most often used to compensate someone along the way who has a crucial hand in getting the policy to you. That policy fee pays for someone’s work along the way, it’s not just a profit center. To find out more about your renters insurance, just call (800)892-4308 or click to get covered - whether you need Glendale renters insurance quotes online or coverage anywhere else!
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