Farm Bureau Mutual Insurance Company of Idaho
Policyholder Dividend
Frequently Asked Questions |
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| Q1. |
What is a policyholder dividend? |
| A. |
It is a partial return of the premium you paid on your Farm Bureau Mutual Insurance Company of Idaho (FBM) policy, to return a portion of the profit your policy contributed to FBM’s overall profitability. |
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| Q2. |
What qualified me to receive a dividend? |
| A. |
You had an eligible policy issued by FBM in effect for some or all of 2007. |
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| Q3. |
What is an eligible policy? |
| A. |
Policies in the following FBM programs are eligible:
- Farm and Ranch
- Crop Hail
- Country Squire
- Standard Fire
- City Squire
- Farmer’s Comprehensive Liability (FCL)
- Custom Auto
- Inland Marine
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| Q4. |
Who is receiving the dividend? |
| A. |
Eligible FBM policyholders that had small or no claims and enough premium to generate an indicated policyholder dividend of $5.00 or more qualified for the dividend. |
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| Q5. |
Will there be more policyholder dividends? |
| A. |
Policyholder dividends are not certain. After the company’s financial results are completed for a given year there are numerous factors that would need to be evaluated before a recommendation for a policyholder dividend would be presented to the FBM Board of Directors for consideration and approval. |
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| Q6. |
I received a check, but one of my relatives received a letter saying that their policyholder dividend had been applied to their policy. What is different? |
| A. |
It was determined that checks would be issued for policyholder dividends of $25.00 or more, and dividends less than $25.00 will be applied to the current policy. |
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| Q7. |
Do I have to pay taxes on my policyholder dividend? |
| A. |
A policyholder dividend is considered a partial return of the premium that you have paid. If you deducted some of your 2007 premium expense you should contact your tax advisor about your situation. |
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| Q8. |
Will I receive an IRS form 1099 for my policyholder dividend? |
| A. |
No – 1099s will not be issued. |
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| Q9. |
Do I need to claim my dividend on my taxes? |
| A. |
Our "dividend" is actually a refund on the premium you paid us (much like a refund you might receive on a product) and does not impact your taxes. You do not have to claim it as income.
An exception to this would be if you had deducted your insurance premium for business purposes (for example, a farmer whose insurance premium is a business expense).
A tax advisor would be able to provide a more thorough explanation and point out any additional exceptions. |
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| Q10. |
What was taken into consideration when the dividend was calculated? |
| A. |
The dividend allocation is based on a complex formula intended to:
- (1) Return dividends to those policyholders whose premiums exceeded the losses they incurred (a ratio of claims to premiums less than 75% was required), and
- (2) Return dividends in proportion to claims experience (a policy with no losses will receive a larger dividend than a similar policy with losses), and
- (3) Return dividends in proportion to premiums (a policy of $1,000 premium with no losses will receive a larger dividend than a policy of $500 premium with no losses).
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| Q11. |
I had more than one policy issued by Farm Bureau Mutual Insurance Company of Idaho in 2007. Will I receive a policyholder dividend for both of them? |
| A. |
Yes, if the policy was from one of the programs listed in Q3, if the policy had small or no losses, and if the indicated dividend was $5 or more. You will receive a policyholder dividend for all qualifying policies on a single check. |
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| Q12. |
I also have a policy issued by Western Community Insurance Company. Will I receive a policyholder dividend for that policy? |
| A. |
This policyholder dividend is only for qualifying policies issued by FBM. |
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| Q13. |
My neighbor cancelled his policy early in 2007. Will he receive a policyholder dividend? |
| A. |
Yes, if the policy was eligible, if it had small or no claims, and if he paid enough premium to generate an indicated policyholder dividend of $5.00 or more. |
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| Q14. |
Did all policyholders receive a dividend? |
| A. |
Nearly 90 percent of eligible FBM policies qualified for a policyholder dividend. Those policies who didn’t qualify either had a higher ratio of claims to premiums, or the premium amount paid was small enough that the potential dividend was less than $5.00. |
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| Q15. |
Why didn’t the company pay any policyholder dividends of less than $5.00? |
| A. |
The expense of paying small policyholder dividends exceeded the amount of the dividend. We thought that was not a wise use of company resources. |
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| Q16. |
What happens if I don’t cash this check right away? |
| A. |
Please help save the cost of following up with you, or replacing this check by cashing your policyholder dividend promptly. Ultimately, if you don’t cash your check we must turn those funds over to the State of Idaho as unclaimed property. |
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