Legal Question in Insurance Law in California

Re: Insurance

In you are an independent agent, the insurance contract is between the client and insurer. Unless you have some express indemnity or guaranty agreement in favor of insurer, the client should be the one responsible for additional premium.

If the insured failed to accurately represent its operations, the carrier is entitled to charge an additional premium or to rescind the policy, refunding the balance of pre-paid premium (if any).

The only viable theory of liability against you, the agent, is that you actually knew or should have known of the added risk when you solicited quotes from various insurers. Typically the question of agent liability arises when there has been significant, non-covered loss. Here you are only talking about a premium recalculation. If he gets cancelled, I doubt that the insured will be able to prove any actual damages against you.

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Re: Insurance

You state you are an agent, so there must be something in your agency agreement with the insurer authorizing this practice. Your solution lies with them; have them credit this sum and notify the insured that the policy will be cancelled for nonpayment of premium. If the insured wishes, he may cancel flat and then you will have to return the commission. Maybe you can replace the coverage with another insurer at a lower price. But before doing this, I would go meet with the insured, explain just how this occurred, and face to face try to solve it with him/her.