Does an insurance agency have to return an unused portion of the primium back to the buyer?
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Does an insurance agency have to return an unused portion of the primium back to the buyer?
If I pay an annual premium for a policy to cover a house I have purchased to fix-up and flip and sell the house within 1 month of purchasing the policy, will I get a portion of the premium returned to me? I am being told that I have to pay an annual premium and that there will be no portion of that premium returned to me if I cancel the policy prior to the expiration of the policy.
Asked on September 13, 2010 under Insurance Law, Texas
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
The best place to ask this question is your state Department of Insurance. It does not seem legal that policies are non-refundable. Look at it another way. You need to have what is known as an insurable interest in a home in order to obtain insurance on it. The insurable interest must exist at the time that the policy is purchased and that the loss was incurred. If the house burnt down after it was sold - but within your policy term - would you have a right to obtain the insurance money? Under the reasoning of the insurance company yes, as the policy was still in force. Would they pay you? Not a chance. So then they are unjustly enriched and you are ripped off. Further, the new owners would have also placed insurance on the home. Now the house was insured twice. Makes no sense. Constatc a new insurance company. Good luck.
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