Chris is insured through Binders Keepers Insurance Company and his policy period ends in 12 months. However, Chris has decided that he wants to cancel his policy in order to purchase another one from a company that advertises with cute commercials on tv. Chris calls his agent to cancel the policy & is informed that the unearned premium on the cancelled policy will be returned to him by mail in a couple of weeks. When Chris receives the check, he is surprised to find that it's made out for less than the amount of unearned premium he should have received. What is the most likely reason for this?
A. Chris' policy agent is a thief
B. Chris' policy had a provision stating that UEP must be returned on a short-rate basis
C. Chris' policy had a provision stating that UEP must be returned on a pro-rata basis.
D. Chris' policy had a provision stating that UEP must have a percentage subtracted for agent commissions before it can be returned.
Ans: B. Chris' policy had a provision stating that UEP must be returned on a short-rate basis
Business
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