When purchasing, or considering the purchase of, large deductible (LD) workers’ compensation, auto, and other policies, insurance companies often require the policyholder to post collateral to secure the risk. This collateral will often be governed by a separate “collateral agreement.” Included below are a few important tips to consider when entering into, and negotiating the terms of, any such collateral agreement:
- Make sure to request a copy of the insurer’s proposed collateral agreement early on in the process of negotiating the underlying LD policy. The policyholder should have ample time to review, analyze, and negotiate the terms of the collateral agreement in conjunction with the purchase of the policy itself.
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