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Tag Archives: Financial Services

Insurance Q & A – Answers from Insurance Professional

Question 1 – Workers Comp
If an employer no longer has any employees is it necessary to maintain a WC policy if the amount of time they will be without employees is unknown? If so why?

Answer by Casey Roberts, ACSR, AFIS, CIC – Laurus Insurance Consulting
As you have probably figured out by now (even though you say you are a newbie) there are very few “yes” or “no” answers in the business of insurance. Let’s say the insured is a sole proprietor and no longer has any employees. In California I would not have a problem with canceling their Workers’ Compensation policy. Note that I would be 100% CERTAIN that they have no employees. Sometimes employers work with “independent contractors” who may or may not be considered as such should a claim occur. If this is the circumstance then I would be loathe to cancel their policy.

If the insured were a Corporation or similar ownership, I would want to make certain that ALL of the officers that have the ability to select to be covered or not to be have selected to NOT be covered. I would want this in writing from the individuals. Far be it from me to cancel a policy without the knowledge of one of those that could potentially be injured and have a claim.

Another consideration is that oftentimes insurers are willing for a minimum premium charge to continue to carry coverage just in case the insured suddenly and without telling you (trust me, this happens a fair amount of the time) hires a new employee. Consider that your insured just got a job and needs someone for two or three days…are they always going to remember to call you? Unfortunately the insurance agent or broker is not always the first person they think to call.

 

 

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Being “Nice” To Your Kids Can Get You in a Lot of Trouble

Family Portrait - Montreal 1963

 

The kids finally turned 18, out of the house off to school or their first real job and you have done what you have waited to do for years—re-decorate their room! But, this economy has changed that dream in a lot of different ways.  The kids are back, or if not physically moving back into “your” home they are back on the household payroll.  The good news is you talk to them more…th

 

 

e bad news is that they are calling for a transfer into their account.

 

I hear these stories all the time, and I, too, have become much closer to my kids! This economically driven dependence has created some very interesting insurance questions. The fact is that as the helpful parent we are creating some serious personal liability and taking insurance risk.  Here are a couple of true examples (fictitious names are used to save my friendships):

 

“Can you lease a car for me—I cannot qualify with my credit rating”

 

Sandy is a 40 year old who not a member of his mother’s household and needs to lease a new car.   He cannot qualify for the lease, so he asks his mother to lease the car in her name.

 

They have considered two ways to handle the insurance on the leased vehicle:

 

I.    Mom insures the car on her personal auto policy; give the car to him to drive; and, he will reimburse her for the payments and monthly insurance bill.  

 

When mom called her insurance agent, the agent told her that she could insure “Sandy’s Car” since she is the registered owner and the only person on the lease. The problem here is that it is just not right to do this. It is misrepresentation to the insurance company. While a small claim may not highlight this fraud to the company—when Sandy gets into a significant accident the truth will come out. The insurance company has the right to rescind coverage under such circumstances and their agent will face the consequences of bad advice. Even if they do get away with it, many insurance carriers have restrictive language in their policies regarding permissive use.

In particular, California law generally requires that automobile insurance policies cover permissive drivers under the owner’s liability policy [Insurance Code§11580.1(b)(4)] but the insurer can limit permissive user coverage by use of clear and conspicuous language to $15,000/$30,000/$5,000 [Vehicle Code §16056; Haynes v. Farmers Insurance Exchange (2004) 32 Cal.4th 1198, 1205 (finding that to be enforceable, a limitation of limits for permissive use must be conspicuous, plain and clear)].

However, if a motor vehicle owner gives express or implied permission to a person to use a motor vehicle, and that driver wrongfully (negligently or intentionally) causes injury or death to a person or damage to property, the vehicle owner is also vicariously liable [Vehicle Code §17150 ]. In fact, Owner liability under Vehicle Code §17150 generally has a maximum dollar limit of $15,000 per injured person but $30,000 per occurrence even if more than two people are injured, and $5,000 for property damage [Vehicle Code §17151; see also Vehicle Code§17155].

The permissive use statute does not limit the liability amount owed by the owner based on another viable legal theory (other than permissive use) such as, for examples, negligent entrustment to an “incompetent, reckless, or inexperienced driver” (Syah v. Johnson (1966) 247 Cal.App.2d 534, 538), and failure to properly maintain brakes (Fremont Compensation Ins. Co. v. Hartnett (1993) 19 Cal.App.4th 669). As such, an injured or damaged party will file suit against both the owner and driver for the permissive use statutes to apply [Vehicle Code§17152].

If we strictly interpret the PAP, we know that anyone can drive our vehicle with our permission and there is no time frame for the permissive use. The PAP does not say it MUST be garaged at the owner’s home although that was the address the insurance company used for rating purposes as well as the mom’s driving record.

So the first question to answer is if Sandy gets into an accident, will Mom’s policy provide her coverage for the occurrence?

Mom’s AAA policy (insuring agreement) provides that the insurer “will pay damages for which any person insured is legally liable because of bodily injury or property damage caused by an occurrence arising out of the ownership, maintenance or use of an automobile…”

Further, Mom’s policy includes as an insured, “any person using an insured automobile with your permission…” So far, so good. Based upon the insuring agreement alone, it appears that Mom and Sandy will be covered. However, the policy also requires Mom to notify the carrier if there is a change in driver. The policy provides:
“You agree to pay the premium…resulting from changes made during the policy period. Changes include, but are not limited to…(c) a change in drivers…”

The policy also contains a “Misrepresentation or Fraud” section, which provides:
“This entire policy shall be void from its inception if any person insured has misrepresented or omitted any fact or circumstance which was material to our issuance or renewal of this policy. Any statements in the application or in any documents provided to us by any insured in connection with the issuance of renewal of the policy shall be deemed material to the acceptance of the risk assumed by us under this policy, and this policy is issued in reliance upon the truth of such representations. If any person insured intentionally makes a false statement or conceals or misrepresents a material fact or circumstance that relates to an accident, occurrence or loss, or to our investigation thereof, we may elect not to provide coverage for that accident, occurrence or loss. We also may elect to cancel or nonrenewal the entire policy as permitted by law.”

Based upon the initial and continued misrepresentation as to “who” is driving the car, the insurer has a clear basis to void Mom’s ENTIRE policy from its inception. Thereby jeopardizing not only coverage for “Sandy’s Car”, but for any other vehicles insured on the policy in question.

Assuming the insurer does not find out about the misrepresentation or agrees not to void the policy upon making that determination, the next question becomes:

Does Mom’s policy cover Sandy, if Sandy gets into an accident?
To qualify as an insured under the policy, with respect to an insured vehicle, a relative must be a resident of the same household in which the named insured resides. So, should Sandy get into an accident, he will not qualify as an insured on Mom’s policy.
If Sandy has his own auto policy of insurance (say for a different auto) will Mom’s car be considered an “Additional Insured Automobile”? To be an additional insured automobile, Sandy cannot own the car (check) and it cannot be “available for regular use” by Sandy. Under the strict definition, Sandy’s own policy won’t cover him.

II. Sandy is going to insure the car on his personal auto policy.

This approach is even worse than the first scheme. Mom may think this gets her off the hook but she, and she alone, is the registered owner and subject to liability as the owner. Mom has no insurance on the car because she did not add it to her policy.

Further, Sandy has no insurable interest in the car; he is neither the lessee nor co-lessee. There would be no coverage under his auto policy or her policy for the leased vehicle.

 

Advice to Mom
1. Have your 40 year old kid move back home because he will then be a member of the household and the PAP would have a better chance of extending coverage.
2. Do not lease a car for your children in your name whether they live at home or not but especially if they are not in residence.
3. Have them get a jalopy or take the bus.

Footnote [1] “Every owner of a motor vehicle is liable and responsible for death or injury to person or property resulting from a negligent or wrongful act or omission in the operation of the motor vehicle, in the business of the owner or otherwise, by any person using or operating the same with the permission, express or implied, of the owner.” California Vehicle Code § 17150.

Next case

 

I am moving home (with the kids) so that I can start my own business

Your perfect home, since you kicked out your husband has been infiltrated by your son, wife and two children under the age of 8.  We have some significant issues to resolve and I am not talking about the play dough in the carpeting here, which is a given. The bigger concern is the fact that your son is going to start his own internet company.  He was the victim of layoffs in the industry and is striking out on his own.

 

The Homeowners is clear in its definition that an “insured” means You and residents of your household who are your relatives…  Good so far, the family is all covered on the mom’s Homeowners Liability Policy.

 

The business takes a while to get going and as soon as the big break is becoming a reality, the son decides to file a DBA and form an LLC.  He has to buy a substantial amount of computer equipment through his new company all of which is kept in the home or more often in the detached garage.

 

The insurance problems are now mounting.  We have a business operating out of the home; the business is operating in a name other than the resident relative on the policy; and a lot of expensive equipment owned by the company maintained in residence.  Hopefully you are saying to yourself NO coverage or at best very limited coverage.  Mom’s Homeowners Liability policy had problems before the son formed a company—specifically all of the business exclusions.  When he formed the company, even the limited coverage that was part of the policy was removed.  In terms of all the computer equipment, it too is not owned by the relative in residence—it is owned now by his company.  Even if you could put a claim in for loss under the Homeowners policy it would be limited for both coverage on and off the premises.  The fact that it is stored primarily in the garage brings up the very strong language that a detached garage cannot be used in whole or in part of business purposes.

 

Advice to Mom:

 

1.    While you are now the proud mother of a budding entrepreneur, have him buy a business policy to cover his liability and property.
2.    Remove the play dough with hot water and salt

 

 

 

Written By:
Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President, Insurance Community Center, Insight Insurance Consulting

 

 

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Let’s Sell Life Insurance in 2013 Improving our Bottom Line

 

As we round the corner to 2013, we are all in the budget process and hopeful that our profitability will improve next year. We have already learned to work lean and mean by decreasing our work staff but now we have to look to new ways to make money WITHOUT adding overhead.

The Insurance Community Center and University has a solution for you.

Our world has changed. Ten years ago or more, our property and casualty insurance companies were begging us to sell their life products offering us special trips and prizes tied into life sales. That just is not happening anymore, few property and casualty companies are pushing the life sales with the exception of many of the direct writers. So it amounts to us not having pro-active markets; not being enthused by the sale and passing up the sale—missing the revenue that would be a natural add on to our book of business.

Over the past 30 years, I have talked to many Property and Casualty brokers about adding life Insurance products to their product offerings, rounding out their own accounts. Depending on the size of the agency, we have heard a lot of reasons why they are NOT selling life insurance or how they are attempting to create that sale such as:

We do not want to sell life insurance because:
1. We are a P & C shop and don’t want to get into the life area
2. We are a P & C shop and have no one that knows anything about life
3. We don’t have the time!

We would like to make money selling life insurance, but:
1. We would have to add a life producer to our agency
2. We would have to cross train one of our over-worked P & C people to sell and handle life insurance
3. We would have to refer the life client to the one branch office that handles life insurance
4. We have a relationship with a life agent that gives us a split on the commission
All of these excuses or solutions amount either to lost revenue (premium leakage) or incurring additional overhead expense.

For those P & C agents that have attempted to enter the life industry, many of them have crashed and burned in the process: For those P & C agents that have adopted the procedure of referring their trusted clients to an outside entity, not only are they losing control and revenue but also putting that customer in contact with a firm that is not branded as part of our operation. Whether it is a life wholesaler from one of your carriers, or a firm that you are collaborating with, you still have the issues of trust and access.
We have to approach this New Year with a new directive—to increase our revenue in writing life insurance WITHOUT overburdening our staff or add more overhead cost. By every study that LIMRA has published over the last 20 years the Life Insurance market is under served, fewer people than ever are being contacted about Life Insurance and by all accounts there are fewer agents selling the product. With the contraction of the retail distribution system selling Life Insurance over the past 20 years there are fewer agents being trained to sell the Life Insurance products – so competition, especially for the more complex and lucrative sales is getting lighter and lighters spelling out opportunity for producers.

By partnering with Quick life, you can remove the barriers and expense to writing life insurance. The Quick Life platform solves the structural problems.

Quick Life creates an immediate back office support system, which eliminates the overhead needed to create a life and annuity department. Quick Life is a delivery system that produces consistent results.

Quick Life Structure:
• Provides online quoting of competitive carriers
• Factors in health issues before underwriting
• Allows application taking from all carriers over the phone
• Takes over all parts of the underwriting process, including examinations and signatures
• Facilitates appointments with needed carriers
• Has concierge service which eliminates any producer time
• Will assist in the servicing of in force policies.
• Provides street compensation to the producer

Quick Life Delivery:
• Is structured to allow greater capacity
• Utilizes existing staff
• Integrates internal social media and technology based marketing systems to existing and new clients
• Allows for involvement and control by broker, without commensurate time commitment
I have been using this platform myself for the past 4 years and it has allowed me to create a structure that historically would have required time and capital. Quick Life is working together with the Insurance Community Center to make this platform available to all of its members. For details, please visit – http://www.iccquicklife.com or contact Insurance Community Center Attend our seminar on October 11th titled Sales Opportunities in Life & Annuities—An Introduction to Quick Life taught by George Fraser, Director of Marketing for Quick Life.
This could be the most valuable hour you spend preparing to succeed in 2013.

Written by:
Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President, Insurance Community Center
and
George C. Fraser III,
Director of Marketing
Quick Life

 

 

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Farm Lecture Series for Insurance Professionals

The Insurance Community/University is pleased to announce the beginning for their agricultural insurance series of continuing education classes.  This series is brought to you by the Community and the Co-Founders of the AFIS Designation: Laurie Infantino and Marjorie Segale.  Courses are approved for 2 hours of CE credits in some states—refer to the state listing on the class calendar.  Update your knowledge in agricultural insurance and farm changes by attending this series.

To register for any of these subjects, click here!

The series will include:

Farm Property August 22, 2012 Casey Roberts, CIC, AFIS, ACSR President Laurus Insurance Consulting
Agricultural Equipment Breakdown August 29, 2012 Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR President, Insurance Community Center, Insight Insurance Consulting

 

Sponsored by : The Hartford Steam Boiler Inspection and Insurance Company

Farm Liability September 19, 2012 Casey Roberts, CIC, AFIS, ACSR President Laurus Insurance Consulting
Crop Insurance November 28, 2012 Rita McMullan AFIS, CPCU, CPIW, AAI President, PDM Insurance Agency
Dairy  Farms December 12, 2012 Mike Sergeant AFIS Sales & Service Director, The Hartford Financial Services Livestock

Sponsored by Hartford Livestock

Livestock December 19, 2012 Mike Sergeant AFIS Sales & Service Director, The Hartford Financial Services Livestock

Sponsored by Hartford Livestock

 

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Interactive Insurance CE Webinar Tomorrow – Website Review 2 Credits

Most businesses today have a website. Agents and brokers need to review their insured’s website, recognize the risk exposures that can be determined by the information contained on that website. In tomorrow’s class we will spend two hours discussing the key areas that you need to know.  Click here to view more webinar information.

Join us!
Date: Tuesday, March 29
Time: 12pm EST
Cost: $50

Register Here!

This class reviews five key exposures and includes the following: 

1. Web site used for promotion only or includes sales on-line
2. Company profile – background information
3. Products and services, locations and territories
4. Employees: permanent and temporary locations, out of state, out of country
5. Dependency on other websites – frames and links

Our CE webinars are more than just CE classes, they are informative and interactive and important to both licensed and unlicensed insurance professionals.

For a complete listing of topics visit http://www.insurancecommunityuniversity.com. Questions? Contact us at amanda@insurancecommunitycenter.com.

 
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Posted by on March 26, 2012 in Uncategorized

 

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Education for Insurance Agents and Brokers

Education
Insurance training is about a lot MORE than just fulfilling your minimum state continuing education requirements. It is about learning about the insurance industry and the various types of insurance that you need to be offering your customers.

The Insurance Community University has set up learning tracks based on your specialty that are divided into five major categories: Commercial Lines; Personal Lines; Employee Benefits; Contractors; and Agriculture. Some classes are appropriate for more than one of the tracks such as Ethics. Get on Track today!

Coming March & April:
Commercial Lines:
Cyber Liability, Products Liability and Products Recall, Website Review, E & O, Manufacturers Insurance Coverages that are Unique & Essential to Consider
Personal Lines:
Website Review, E & O, Homeowners
Employee Benefits:
Integrated Disability, E & O
Contractors:
Installation and Equipment Floater, E & O, Construction Contracts
Agriculture:
E & O

Non Members: $50.00

Register Here


University Subscribers:
Free (Login Required)
Register Here
Join University

 
 

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Current State of Insurance Marketplace 2012

With worsening results of profitability in the P & C sector in the US insurance marketplace for the past several years the industry has been in what can be described as a state of suspended animation.

As of January this year, the majority of industry leaders believe that the market is now in the beginning stages of a hard market.  A survey conducted by the Insurance Information Institute (www.iii.org) at the 16th annual Property/Casualty Insurance Joint Industry Forum revealed the opinions of some 260 insurance executives regarding the following:

  • 63 percent of respondents believe there will be an improvement in personal auto and 67 percent expect an improvement in homeowners
  • 72 percent of respondents expect an improvement in commercial lines
  • 55 percent do not expect an improvement in workers compensation.
  • 67% believe that premium growth will be higher;
  • 78% expect an improvement in profitability in 2012

The majority of reinsurance treaties renewed January, 1st and in certain areas, such as catastrophic loss, those reinsurance rates increased significantly.  As often happens, those additional business expenses are slowly trickling down to the insurance buyer in some areas of the insurance market.  The market appears to be reacting as it often does with some fragmentation and volatility; some mid-market and large accounts are seeing property rate increases while the smaller accounts have seen only slight increases in pricing.  Poor returns on investments and continuing large catastrophic losses have also had their impact on the current market.

What is striking is that within three months, insurance executives opinions have changed from 87% believing that the market is soft or at the bottom of the cycle, to 78% today believing that we are at the point of price increases.

So the soft market cycle that we have been in since 2006 seems to shifting and entering a new phase.  Could it really be the return of a “hard market”?  As is often the case, you will know it when you see it, but all indications are present.

What does this mean to you and your client?  Well, more revenue for you, but your clients deserve a heads up, particularly if they are in the manufacturing, wholesale, retail or construction business as future contracts need to be written to include the higher cost of insurance.  The previous hard market came at a time when the overall economic outlook was not as grim, so this may be a very hard pill to swallow for some of your clients.

 

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