What it does
CAR's Rule 7 (Premium Computation) requires the annual premium to be computed at the rates in effect at policy inception. "If the premium is calculated using rates that are in effect when the policy is prepared and that differs from the rates that will apply at policy inception, the premium should be recalculated as of the effective date." The insurer uses MM 99 68 to make that adjustment. The current edition is 03 24.
Who sees it
Massachusetts commercial auto policies issued in advance of a rate change, such as renewals prepared before new CAR rates take effect.
Key points
- It adjusts premium; coverage terms are otherwise unchanged except as the endorsement states.
- For policies shorter than one year, CAR pro-rates the annual premium using rates at inception.
Quoting notes
Warn clients when a renewal is issued near a rate change that the premium may be adjusted by this endorsement after binding.
