How to book policy cancellation fees
Recording administrative fees charged by a broker or MGA to an insured for the early termination or cancellation of a policy.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Fiduciary Trust Cash | Asset | 75.00 | - |
| Policy Cancellation Fee Revenue | Revenue | - | 75.00 |
💡 Accountant's Note
Unlike return premiums, cancellation fees are earned by the broker for the administrative effort of processing a cancellation and are typically non-refundable.
Practitioner & Systems Framework
💻 ERP Architecture
Configure the fee as a non-premium charge item in the billing module to ensure it doesn't affect the carrier payable.
⚠️ Audit Flags
Charging cancellation fees in states where such fees are prohibited or capped by insurance regulations.
📄 Required Documentation
Signed cancellation request and agency fee disclosure form.
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Related Journal Entries
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Premium Trust Account — Client Premium Received (Not Broker Revenue — Fiduciary Obligation)
Discussion & Community Questions
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