Question

An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy?

1) Contract bond
2) Errors and omissions insurance
3) Deposit premium audit
4) Excess liability coverage

Answer 1

A Deposit premium audit is the condition in a casualty insurance policy allowing the insurer to inspect the insured's books to verify the collected premium matches the covered risk.

Step-by-step explanation:

The condition in question that is part of the insured's policy is known as a Deposit premium audit. In casualty insurance, an insurer may include a provision that allows them to inspect the insured's books at the end of the policy term. This is to ensure that the insurance premium collected matches the risk or exposure that was covered. The insurance premium is the payment made by the policyholder to the insurance company in exchange for coverage. It's not to be confused with a Contract bond, Errors and omissions insurance, or Excess liability coverage, which are different types of insurance products or additional coverages.