Upload
hector-shields
View
213
Download
0
Tags:
Embed Size (px)
Citation preview
1
“Nightmares on Insurance Street” Presented by:
The self proclaimed “FAIA Dream Team”
David Thompson, CPCU, AAI aka “Dream Team 2”Jay Williams, CIC, AAI aka “Dream Team 1”
Housekeeping
• Class times– 1:30 p.m. to 4:30 p.m.
• Break– One break – 13 minutes
• DFS rules– Phones, newspapers, etc
2
3
Unauthorized Entity Issues
Verify with the DFS:–www.myfloridacfo.com–1-800-342-2762 / 1-877-MY-FL-CFO
The Important Stuff
The Dream Team Dilemma
Is our greatest asset…–Our intelligence–Our fantastic teaching ability–Our amazing good looks–Or….–Our humility!
5
6
Our Web Site
7
8
9
Stump the Nerds
10
BAP Temporary Substitutes
11
BAP Temporary Substitutes
BAP works just like a PAP All the same coverages follow over to a
temporary substitute Symbol used isn’t a factor
12
BAP Temporary Substitutes
Symbol 1 Any Auto Symbol 2 Owned Autos Symbol 7 Specifically Described Autos Symbol 8 Hired Autos Symbol 9 Non-owned autos
13
From the Policy (Liability)
14
15
Regardless of symbol, liability coverage for temporary substitutes is provided in the form.
From the Policy (Physical Damage)
SECTION III – PHYSICAL DAMAGE COVERAGE
A. Coverage 1. We will pay for "loss" to a covered "auto"
or its equipment…
16
17
Temporary Substitute
Problem:–Liability coverage automatically provided–Physical damage coverage not provided
Solution?
18
Symbol 8
Always add it to every BAP Is there a limit per vehicle? Solution for:
–Temporary substitutes– “Regular” business rentals for traveling
employeesAlso add CA 20 54 – Employee Hired
Autos
19
20
Temporary Substitutes
21
Coverage B - Homeowners
Short version:–10% of Coverage A–Covers structures worldwide–The 10% is part of Coverage A, and is not
additional insurance
22
Coverage B - Homeowners
What is an “Other Structure”?–Set apart by clear space–On “residence premises”–Limit is 10% of Coverage A
23
24
25
Coverage B - Homeowners
Important definition: "Residence premises" means: a. The one family dwelling where you reside; b. The two, three or four family dwelling where
you reside in at least one of the family units; or c. That part of any other building where you
reside; and which is shown as the "residence premises" in the
Declarations. "Residence premises" also includes other structures and
grounds at that location.
26
Coverage B - Homeowners Important exclusions: We do not cover: a. Land, including land on which the other structures are
located; b. Other structures rented or held for rental to any person
not a tenant of the dwelling, unless used solely as a private garage;
c. Other structures from which any "business" is
conducted; or d. Other structures used to store "business" property.
However, we do cover a structure that contains "business" property solely owned by an "insured" or a tenant of the dwelling provided that "business" property does not include gaseous or liquid fuel, other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.
27
Coverage B - Homeowners
Endorsements:–HO 04 40 Structures Rented to Others
Used as a private residenceExtends liability and med pay
28
Coverage B - Homeowners
Endorsements:–HO 04 42 Permitted Incidental
OccupanciesLimit applies separately from Coverage
BContents that are described are now
covered under Coverage C
29
Coverage B - Homeowners
Endorsements:–HO 04 48 Other Structures – Increased
Limits Increases the Coverage B limitApplies only to the structure described
in the endorsement
30
Coverage B - Homeowners
Endorsements:–H0 04 91:
Extends coverage to other structures not located on the “residence premises”
Cannot be used for a dwelling, rental, business, or business property storage
31
Coverage B - Homeowners
Endorsements:–H0 04 92:
Similar to HO 04 91 but allows for location schedule/amount of coverage
Cannot be used for a dwelling, rental, business, or business property storage
32
Coverage B – Swimming Pools
33
34
Coverage A or B?
35
Coverage A or B?
36
Coverage A or B?
37
Coverage A or B?
Coverage B - Homeowners
Flood Insurance Issues:–Coverage for detached garages only–10% of coverage limit (not an additional
amount)–Separate policy needed for other
structures
38
Coverage B - Homeowners
Questions?
39
Kid’s Cars
Best advice:–Title car to kid–Put on kid’s PAP–That way, parents can’t be sued–Saves everyone money
40
41
“The insurance went up HOW much?”
“It’s party time!”
QUESTION Who is This?
43
Kid’s Cars
No matter how you slice the banana, it’s going to cost you a ton to insure kids.
To quote a student:– “When my customers complain
about the cost to insure kids I tell them they should have considered that in the heat of passion 16 years earlier.”
Before we go any further, how will this affect our
insurance in 16 years?
44
Kid’s Cars – The Cost
Pre-kid, two cars, high limits:–$750
Kid turns 16:–$1,250
Kid gets boring car:–$1,850
Situation
Parents: –Assets to protect–PAP with high limits and umbrella
Kid:–Excited to drive–Cool car–Low limits
Tragedy: Kid hits car, serious injuries45
Avenues To Mom/Dad’s Wallet
1. Car registered to Mom/Dad 2. Child under age (Statutory, state specific) 3. Vicarious … “On a mission”
46
Avenues To Mom/Dad’s Wallet
1. Car registered to Mom/Dad
47
If your name is here…You’re gonna get sued!
2. Child Under Age -Statutory
48
49
FS 322.09
(1)(a) The application of any person under the age of 18 years for a driver's license must be signed and verified before a person authorized to administer oaths by the father, mother, or guardian….
50
(2) Any negligence or willful misconduct of a minor under the age of 18 years when driving a motor vehicle upon a highway shall be imputed to the person who has signed the application of such minor for a permit or license, which person shall be jointly and severally liable with such minor for any damages caused by such negligence or willful misconduct.
What About Age 18 & Older?Car in Child’s Sole Name
Situation:– Child is age 22, in college. Rents apartment.– Mom/Dad support child.– Mom/Dad claim child on taxes– Child has bedroom at house, stays there from
time to time– Child has no assets; parents have money– Child has wreck, kills someone. Would you try
to chase Mom & Dad for the money?
51
Would YOU sue?
3. Vicarious – “On a Mission”
Analogy:–Producer uses his car to visit clients.
Agency sued. “Respondeat superior.” Situation:
–Dad gives kid list of eight places to go; post office, grocery store, Sonny’s, etc
–Child has wreck. Parent’s sued: “Child on a mission for parents.”
Or, changing tire52
Discussion Based on ISO Forms
53
Main focus today is on liability coverage.
54
Kid’s Cars – The Options
1. No car– Good risk management
2. Car in parents’ name, driven by kid– Generally the least expensive way; no coverage
gaps 3. Car in kid’s name
– Disaster waiting to happen
55
1. Kid’s Cars – No Car
List the kid as a driver for rating and underwriting reasons–QUESTION: How does listing the kid as a
driver affect coverage?
No ca
r, so
rry!
56
1. Kid’s Cars – No Car
List the kid as a driver for rating and underwriting reasons–QUESTION: How does listing the kid as a
driver affect coverage? As long as the kid is a resident family
member, he/she has all policy coverages Separate policy needed once the kid is no
longer a resident What is “resident?”
57
58
59
2. Car in Parents’ Name
List kid as driver – underwriting & rating Least expensive choice No coverage gaps Kid’s wreck = parents’ problem
60
3. Car in Kid’s Name
Huge potential problem What limits do parents often want to carry
on the kid’s car? Why?
–Cost–“My neighbor said…”–“An attorney said…”–“A guy in the bar told me…”
61
Car in Kid’s Name -- Dangers
Exclusion in parents’ policy voids coverage for claims resulting from use of the kid’s car–Liability–Med-pay–Physical damage
UM and PIP
The Exclusion
3. Any vehicle, other than "your covered auto", which is:
a. Owned by any "family member"; or
b. Furnished or available for the regular use of any "family member".
However, this Exclusion (B.3.) does not apply to you while you are maintaining or "occupying" any vehicle which is:
a. Owned by a "family member"; or
b. Furnished or available for the regular use of a "family member". 62
Examples – Under Mom/Dad’s PAP
Mom/Dad Get Sued Kid driving kid’s car
Sibling driving kid’s car
Friend driving kid’s car
Mom/Dad driving kid’s car
63
Examples – Under Kid’s PAPMom/Dad Get Sued
Kid driving kid’s car
Sibling driving kid’s car
Friend driving kid’s car
Mom/Dad driving kid’s car
Limits? $$$$ 64
65
Car in Kid’s Name
QUESTION: If this option is selected what recommendation is there to the parents?
66
Kid’s Cars – Bottom Line
If the car and policy are in the kid’s name, assume the parents’ policy is worthless.
Parents depend on kid’s limits if they are sued.
Other Coverages Med-pay
–Same exclusions PIP
– If car in kid’s name, kid gets his/her PIP UM
–Save the debate…clone limits and stack it Physical damage:
–Kid’s policy covers kid’s car67
Other Thoughts…
The moral issue of low limits for the kid Future wage garnishments How would Mom/Dad feel if THEY were hit
and hurt bad by a kid with 10/20/10?
68
Kid’s Cars
69
Drive Other Car (DOC) Coverage
70
Drive Other Car (DOC) Coverage
Recent change…only liability coverage available under DOC
Huge new gap created
71
Drive Other Car (DOC) Coverage
Coverages Provided:–Liability–Med Pay–Uninsured Motorist–Physical Damage
72
Drive Other Car (DOC) Coverage
Coverage NOT Provided:–Personal Injury Protection
Broadened PIP for Named IndividualsA MUST in FL and other no-fault states
73
Drive Other Car (DOC) Coverage
Who is an Insured:–Med Pay and Uninsured Motorist
Named insured and family–Liability and Physical Damage
Named insured and resident spouse–Gaps for family members other than the
spouse
74
Drive Other Car (DOC) Coverage
Comparison to Personal Auto Policy–Who is an insured–Endorsements available
75
Drive Other Car (DOC) Coverage
76
NFIP: RCBAP vs. CPP
Residential Condominium Building Association Policy
Commercial Property Policy Both policies cover building items the same
way Typically, coverages match
77
NFIP: RCBAP vs. CPP
RCBAP – Property covered–The whole dang building!
FoundationsPaint, carpet, tile, cabinets, etcAdditions and alterations made at the
sole expense of the unit owner Compared to CPP
78
NFIP: RCBAP vs. CPP
RCBAP – Unit owners make significant improvements/additions– Is RCBAP now under-insured?– Is there now a potential coinsurance
problem?
79
NFIP: RCBAP vs. CPP
Replacement cost for flood is greater than replacement cost for property…always!
So…
80
NFIP: RCBAP vs. CPP
Your answer is:–A. The RCBAP always has more
coverage than the CPP–B. The RCBAP and CPP are always
equal–C. The CPP always has more coverage
than the RCBAP–D. Not enough information to answer
81
Condos – How We Can Help
I need:–Copy of RCBAP dec page–Copy of appraisal
Must include foundation and all building items
–Letter from lender with client name and loan number
83
84
NFIP
85
Employees As Insureds – Business Auto Policy – CA 99 33 Employees are “an insured” under BAP
using any auto Employee is covered under BAP using
his/her own auto for business BAP is primary in all instances
86
Employees As Insureds – Business Auto Policy – CA 99 33 Who is an Insured in the BAC
–Person or entity named–Permissive users–Exceptions/Exclusions
87
Employees As Insureds – Business Auto Policy – CA 99 33 Coverage Provided by Endorsement:
–Liability–Physical Damage
88
Employees As Insureds – Business Auto Policy – CA 99 33 Uses:
–Employees driving autos owned by themPrimary/excess issuesPAP/BAP analysis
–Traveling employees – rental carsLiabilityPhysical Damage
89
Employees As Insureds – Business Auto Policy – CA 99 33
90
Uninsured Motorists (UM) on Motorcycles
91
Uninsured Motorists (UM) on Motorcycles
Cost for UM on cycles is very expensive Remember, the PAP excludes UM on
vehicles with less than four wheels UM must be purchased on a cycle policy for
coverage to apply
92
93
UM on Motorcycles
FS 627.727 (1) No motor vehicle liability insurance policy
which provides bodily injury liability coverage shall be delivered or issued for delivery in this state with respect to any specifically insured or identified motor vehicle registered
94
The Statute - 627.727
(1) No motor vehicle liability insurance policy which…–PAP–BAP–Motorhome policy–Motorcycle policy
95
The Policy
INSURING AGREEMENT A. We will pay compensatory damages
which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury":
1. Sustained by an "insured"; and 2. Caused by an accident.
96
Compensatory Damages
97
What are “compensatory
damages?”
Compensatory Damages
Summary:–Whatever the court awards!
Medical billsLost wagesLoss of limbsLoss of enjoyment of lifePain & suffering
–UM Covers a lot more than medical bills!98
99
100
Will PIP, med-pay, or health insurance
cover these?
Stacked vs. Non-Stacked
Stacked
Dollar difference– More cars equals
more money Also, a coverage
difference
Non-stacked
Dollar difference– Same dollars,
regardless of number of cars
Coverage difference– Excludes some
claims that stacked covers.
101
Stacked Exclusions A. We do not provide Uninsured Motorists Coverage for "bodily injury" sustained by any
"insured": 1. If that "insured" or the legal representative settles the "bodily injury" claim and such
settlement prejudices our right to recover payment. However, this Exclusion (A.1.) does not apply to a settlement made with the insurer of a vehicle described in Section 2. of the definition of "uninsured motor vehicle".
2. While "occupying" "your covered auto" when it is being used as a public or livery conveyance. This Exclusion (A.2.) does not apply to a share-the-expense car pool.
3. Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (A.3.) does not apply to a "family member" using your "covered auto" which is owned by you.
4. With respect to damages for pain, suffering, mental anguish or inconvenience unless the "bodily injury" consists in whole or in part of:
a. Significant and permanent loss of an important bodily function; b. Permanent injury within a reasonable degree of medical probability, other than scarring
or disfigurement; c. Significant and permanent scarring or disfigurement; or d. Death.
102
Non-Stacked Exclusions
103
Non-Stacked Exclusions A. We do not provide Uninsured Motorists Coverage for "bodily injury" sustained: 1. By an "insured" while "occupying" any motor vehicle owned by that "insured" which is not insured for this coverage
under this policy. This includes a trailer of any type used with that vehicle. 2. By any "family member" while "occupying" any motor vehicle you own which is insured for this coverage on a
primary basis under any other policy. B. We do not provide Uninsured Motorists Coverage for "bodily injury" sustained by any "insured": 1. If that "insured" or the legal representative settles the "bodily injury" claim and such settlement prejudices our right
to recover payment. However, this Exclusion (B.1.) does not apply to a settlement made with the insurer of a vehicle described in Section
2. of the definition of "uninsured motor vehicle". 2. While "occupying" "your covered auto" when it is being used as a public or livery conveyance. This Exclusion (B.2.)
does not apply to a share-the-expense car pool. 3. Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (B.3.) does not
apply to a "family member" using "your covered auto" which is owned by you. 4. With respect to damages for pain, suffering, mental anguish or inconvenience unless the "bodily injury" consists in
whole or in part of: a. Significant and permanent loss of an important bodily function; b. Permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement; c. Significant and permanent scarring or disfigurement; or d. Death.
104
Non-Stacked Exclusions A. We do not provide Uninsured Motorists Coverage for "bodily injury" sustained: 1. By an "insured" while "occupying" any motor vehicle owned by that "insured" which is not insured for this
coverage under this policy. This includes a trailer of any type used with that vehicle. 2. By any "family member" while "occupying" any motor vehicle you own which is insured for this coverage on a
primary basis under any other policy. B. We do not provide Uninsured Motorists Coverage for "bodily injury" sustained by any "insured": 1. If that "insured" or the legal representative settles the "bodily injury" claim and such settlement prejudices our right
to recover payment. However, this Exclusion (B.1.) does not apply to a settlement made with the insurer of a vehicle described in Section
2. of the definition of "uninsured motor vehicle". 2. While "occupying" "your covered auto" when it is being used as a public or livery conveyance. This Exclusion (B.2.)
does not apply to a share-the-expense car pool. 3. Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (B.3.) does not
apply to a "family member" using "your covered auto" which is owned by you. 4. With respect to damages for pain, suffering, mental anguish or inconvenience unless the "bodily injury" consists in
whole or in part of: a. Significant and permanent loss of an important bodily function; b. Permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement; c. Significant and permanent scarring or disfigurement; or d. Death.
105
So……
This exclusion is in the non-stacked form, but not in the stacked form:– A. We do not provide Uninsured Motorists
Coverage for "bodily injury" sustained:– 1. By an "insured" while "occupying" any
motor vehicle owned by that "insured" which is not insured for this coverage under this policy…”
106
It’s the “owned but not insured” exclusion.No coverage with non-stacked.
Coverage does apply with stacked.
Owned Motorcycle
107
300/500 Non-Stacked PAP UM$116 for six months
(Stacked $155)
$300K Cycle UM - $1451/year(Liability $119)
Broward County Zip Code
UM REJECTED!
Stacked PAP UM will respondon the motorcycle. (300/500)
Alabama Car
108
Two Cars250/500 Non-Stacked
One CarUM Rejected!
Stacked PAP UM will respondon the Alabama car. (500/1,000)
109
UM On Motorcycles
110
PEO (Professional Employer Organization) Tricks & Traps
When a “client company” uses a PEO:–No need for WC–No need for CGL–No need for any other policies–PEO provides all coverages for client
company–Great benefit for client company
111
PEO (Professional Employer Organization) Tricks & Traps
Co-employment Relationship:–Primary employer (PEO)
Pays employeesPays taxesPays SUTA & FUTAOffers Benefits
112
PEO (Professional Employer Organization) Tricks & Traps
Co-employment Relationship:–Worksite Employer
Hires/firesSalary determinationSupervisesOffers benefits
113
PEO (Professional Employer Organization) Tricks & Traps
Co-employment Relationship:–Contractual relationship
Client Services Agreement (CSA)Defines the exact relationship and who
is responsible for what
114
PEO (Professional Employer Organization) Tricks & Traps
Gaps Created by the CSA:–Newly hired employees
Client (WSE) must notify the PEONew employee not covered until
received AND approved–Uninsured sub-contractors
CSA does not recognize these as employees
Client is “naked”115
PEO (Professional Employer Organization) Tricks & Traps
Other PEO “tricks”:–Can be “hidden” costs in the CSA
Set up and change feesWC claim feesGarnishment feesOther administration fees
116
PEO (Professional Employer Organization) Tricks & Traps
Other PEO “tricks”:–State Unemployment Tax (SUTA)
Tax “cutoffs” not honoredRates increased without notice
–High administration feesLead with WC – low pricing for high risk Increase admin to cover WC costsRates for master health plan
manipulated 117
PEO (Professional Employer Organization) Tricks & Traps
118
Fair Credit Reporting Act (FCRA)
119
Fair Credit Reporting Act (FCRA)
FCRA was renamed FACTA When renamed, there was no longer any
impact on insurance agencies and the MVR issue.–Agents can now supply MVRs to
commercial customers
120
Fair Credit Reporting Act (FCRA)
Key terms–Consumer report–Consumer reporting agency–Permissible purpose–Employment purposes–Adverse action– Insurance underwriting
121
Fair Credit Reporting Act (FCRA)
Consumer report: The term “consumer report” means any written, oral, or other
communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for:– (A) credit or insurance to be used primarily for personal,
family, or household purposes;– (B) employment purposes; or– (C) any other purpose authorized under section 604 [§ 1681b].
122
Fair Credit Reporting Act (FCRA)
Consumer reporting agency:– The term “consumer reporting agency” means any
person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
123
Fair Credit Reporting Act (FCRA)
Permissible purpose: In general. Subject to subsection (c), any consumer reporting agency may
furnish a consumer report under the following circumstances and no other: (2) In accordance with the written instructions of the consumer to whom it
relates. (3) To a person which it has reason to believe (A) intends to use the information in connection with a credit transaction
involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of the consumer; or
(B) intends to use the information for employment purposes; or (C) intends to use the information in connection with the underwriting of insurance involving the consumer; or
124
Fair Credit Reporting Act (FCRA)
Permissible purpose:– Before an employer can get a consumer report
for employment purposes, they must notify the individual in writing - in a document consisting solely of this notice - that a report may be used. They must also get the person's written authorization before asking the provider for the report.
125
Fair Credit Reporting Act (FCRA)
Employments purposes:–The term “employment purposes” when
used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.
126
Fair Credit Reporting Act (FCRA)
Adverse action:–Step 1: Before you take the adverse
action, the employer must give the individual a pre-adverse action disclosure that includes a copy of the individual's consumer report and a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act."
127
Fair Credit Reporting Act (FCRA)
Adverse action: Step 2: After you've taken an adverse action, the employer must give
the individual notice that the action has been taken in an adverse action notice. It must include:– The name, address and phone number of the CRA that supplied
the report;– A statement that the CRA who supplied the report did not make the
decision to take the adverse action and cannot give specific reasons for it; and
– A notice of the individual's right to dispute the accuracy or completeness of any information the agency furnished, and his or her right to an additional free consumer report from the agency directly upon request within 60 days.
128
129
Don’t mess with the feds!
130
Fair Credit Reporting Act (FCRA)
131
Business Income and Extra Expense
Coverage Options–Monthly limit: 1/3, 1/4, 1/6
Limits to 3, 4, or 6 months–Maximum period of indemnity
No time limit on recovery–Agreed value
Does not waive coinsurance
132
Business Income and Extra Expense
Coverage Options–Business Income WITH Extra Expense–Business Income WITHOUT Extra
Expense–Extra Expense Only
133
Business Income and Extra Expense
Coverage Options–Business Income WITH Extra Expense–Business Income WITHOUT Extra
Expense–Extra Expense Only
134
Business Income and Extra Expense
Methods to Provide Coverage:–Coinsurance method
Business Income Worksheet neededLong, tedious formEven accountants don’t understand it!
135
Business Income and Extra Expense
Methods to Provide Coverage:–Waiving coinsurance:
Maximum Period of Indemnity–Pays for a specific period of time–Ends when coverage runs out or $$
runs out…whichever comes FIRST
136
Business Income and Extra Expense
Methods to Provide Coverage:–Waiving coinsurance:
Monthly Limit of Indemnity–1/3, 1/4, or 1/6 of the limit per month–Limited to the maximum amount per
MONTH–Pays until the $$ runs out
137
Business Income and Extra Expense
Methods to Provide Coverage:–Waiving coinsurance:
Agreed Value–Worksheet needed–Insured and company agree on
values–Good for 1 year from the agreement
date
138
BBQ Joints
139
140
141
142
143
144
145
And The BBQ Winner Is…
146
147
148