PLMIhard
A Michigan personal lines producer collects \$1,800 in homeowners premium from a client on Monday but the carrier's net premium statement is not due for 25 days. Which practice complies with MCL 500.1207 fiduciary duties?
ADeposit the $1,800 into the producer's general operating account and remit later
BHold the funds in the producer's personal savings account until the carrier's net premium statement becomes due in 25 days
Deposit the $1,800 into a separately titled premium trust account and remit per the carrier's accounting cycle
DSend the funds directly to the producer's personal credit card account
Why this is the answer
Under MCL 500.1207, premium funds are fiduciary in nature. Best practice — and the DIFS examination standard — is a separately titled premium trust account used solely for premiums. Holding funds in the operating account, a personal savings account, or a personal credit account constitutes commingling and supports license action under MCL 500.1239(1)(d) for improper handling of premium.
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