From time to time we get asked why it’s so hard to finance an audit or prior balance. The reason is collateral. When an existing policy is canceled the return premium normally covers the outstanding balance on the loan. With an audit or prior balance there is no current policy that provides the collateral to pay off the loan in the event of cancelation. As a result, the loan is not secured by the unearned premium. Effective strategies that allow us to get this transaction done for our clients include:

1. Financing an existing policy with the audit
2. Pledge of assets by the named insured
3. Personal guarantee
4. Agency guarantee