What is an Accommodation Line?

Insurance offered as an addition or modification to a standard insurance agreement is an accommodation line. Typically, an accommodation line on its own is not an insurance policy, it is written or attached to an existing standard policy. An accommodation line comes with greater coverage for the insured and higher commission for the broker or agent. An insured can request this modification to a standard insurance for personal benefits. An agent or a broker can also suggest it.

How is an Accommodation Line Used? 

Insurers do not grant an accommodation line to all insured persons, there are certain factors that influence this type of insurance. Typically, influential brokers or agents and highly valued customers (insured individuals) are granted accommodation line. Accommodation line is an addition to standard insurance such at business insurance, home insurance or life insurance. Oftentimes, insurers reward customers and brokers who have displayed a high level of loyalty to the company by granting them accommodation line. Both a customer and broker that are beneficiaries of accommodation line enjoy increase in coverage and a rise in commission respectively, while the insurer maintains the business the customer.

Example of an Accommodation Line

Bright is a customer to an insurance company and has a life insurance policy worth $1 million with the company. Bright desires to purchase an additional life insurance coverage as a modification to the existing policy but finds out that most insurance companies do not offer additional coverage to an existing policy. Bright the walks up to Lilian, a life insurance agent and makes his desire known. Because Bright is a valuable customer to the insurance company, an accommodation line is then added to his existing life insurance policy. This addition increases the coverage of the existing policy.

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