1. Home
  2. Taxes General Forum
  3. "Agency fee" for business and personal insurance policies

"Agency fee" for business and personal insurance policies

I recently changed insurers (and insurance agent) for 2 policies. One of the policies is a "landlord" homeowners policy on a rental property; the other policy is a personal auto policy. The landlord policy is a Schedule E expense; the auto policy premium is obviously not deductible.

I just discovered today that a portion of the premium that I was quoted for the landlord policy is actually an "agency fee." According to the agent, "It is just a one time fee regardless of how many policies you have with us or if we re-shop you at a later date for any reason."

My current thinking is to pro-rate the fee based on the annual premiums (premia?) of the two policies. Does that sound like the correct tax treatment?

Reply to
Ian Pilcher
Loading thread data ...

It's "premiums"....

It seems a reasonable treatment, but consider the hypothetical where there ends up being no insurance (due to a processing error), and the amount of premium refunded does not match the amount paid; so you have a net payment of 1 cent for business purposes, -1 cent for personal purposes, and $50 for the agency fee.

I think the allocation should be based on gross insurance premiums allocated to the various policies, not net. It doesn't affect your circumstances (this year), but it's something to keep in mind.

-- Arthur Rubin, CRTP, AFSP Brea, CA

Reply to
Arthur Rubin

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.