Whatcha think...Whatcha think…. Covered or not Miscellaneous Personal Lines issues 1 with Irene...

Whatcha think….

Covered or not

Miscellaneous Personal Lines

issues

1

with

Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CPIW Vice President of Technical Affairs

Massachusetts Association of Insurance Agents

This program is designed to provide accurate and authoritative information in regard to the

subject matter covered. It is provided with the understanding that the publisher is not engaged in

rendering legal, accounting, or other professional service. If legal advice or other expert

assistance is required, the services of a competent professional person should be sought.

With special thanks to the Insurance Services Office, Inc. for advance information, continued

support, and permission to use their forms and information.

Cancelling the HO policy

I was wondering if you would be able to give me a definite answer about LPR’s. I was taught that when we took over business from another agent, we are to mail an LPR to the agent and they are responsible for cancelling the insurance with the carrier. I am now being told that I send them direct to the company, even if we did not write the coverage before. Is one way the correct way or can it be done either way? I am looking for clarification.


Or …. I had talked to you previously regarding some insurance matters and you have always been a great help! Hoping you can help answer a quick question regarding the attached LPR. Who signs the bottom of the LPR -- the prior agent or the new agent taking over the business? Thank you so much for helping clear this up!


ACORD has created a complete set of instructions for compiling EVERY form …this one too. If the policy that is being cancelled is with a direct writer ...then it would be sent to the company. If the policy is through an agent the form should be sent to the agent. TECHNICALLY the agent of record(the one LOSING the client) is responsible for completing the LPR and getting client signature and signing it as that agent is the one with the contract with the company.


As a professional courtesy ...the agent taking the client completes as much of the LPR as possible ... typing in old agent information, policy information and obtaining client signature ...since you have them with you at time. You send this with a "dear john" letter to the agent stating you're the new agent, blah, blah, blah.


You want to do as much to keep the "old agent" from talking to to YOUR client as you can :) ... but technically the old agent needs to make sure the LPR is obtained and the old agent signs it and sends it to the company.

Cancelling the HO policy ACORD LPR


ACORD instructions: The producers signature necessary on the LPR is the producer/agent representing the policy being cancelled

Dwelling Policy and personal injury

If an insured has a homeowner policy with

personal injury

and also

owns a rented dwelling fire with it's own liability

(liability is not extended from the homeowner

policy)

do they need to add personal injury to the dwelling

fire policy?

10

Good morning, question do I need to add Personal injury protection to a fire policy in order to have coverage for a claim like wrongful eviction? If insured has it on a homeowners policy would that respond?

Personal injury and rental property


ABSOLUTELY YES ...

If the HO 24 70 Additional Residence Rented To

Others(extending liability to the rental property)

was on the HO policy

and the HO 24 82 personal injury endorsement was also

on the HO ..then all is well ...

otherwise the HO 24 82 does NOT apply to the dwelling

policy


Is personal injury coverage NECESSARY on a rental risk

…

Absolutely yes …

BI is defined as:


Personal injury is defined as under HO-2000/2011:


Personal injury is defined as under HO-91:


Personal injury coverage HO 24 82 under any of the ISO

HO editions EXCLUDES

“business” conducted or engaged in by an insured

unless on an “insured location”

Adding the HO 24 70 Additional Residence Rented to

Others to HO policy makes the rental property an

“insured location”


If liability coverage for the rental property is NOT achieved

through the HO 24 70 …but by adding liability coverage

TO the Dwelling policy

then one must ALSO add Personal Injury coverage

TO the Dwelling policy with DL 24 82


Could a tenant being evicted sue for “wrongful eviction”

Sure …good to have FREE defense

Could the tenant sue for wrongful entry or evasion of

privacy if landlord entered rented premises or sent

repairman into premises without express permission of

tenant?

Sure …good to have free defense

If I have a rental

property then

Need DL 24 82

on dwelling policy

Since HO

endorsement N/A

unless rental

property is an

“insured location”

on that HO

Personal Injury

Business

exclusion

unless rental

property added

to HO policy by

HO 24 70 Other

Residence

Rented to

Others making

it an “insured

location”

Personal Injury

20

Tenant Relocation and the HO & DP policy

On a Dwelling Fire Policy for a single-family home, is the Tenants Relocation Expense Endorsement DP 0497 included or does it need to be added and at what cost? We are confused when we are to add Tenant Relocation coverage. Do you know if single family homes are required to have this coverage?

http://bmrealtypro.com/images/multifamilyhome_fallriverma_7sgu.jpg

http://www.google.com/imgres?imgurl=http://www.revealty.com/Img/ContentImg/ML Single Family Rockwell Way.jpg&imgrefurl=http://www.revealty.com/15150.cfm&usg=__ijN8A36o9ZEvC1mTIqAyQIG9IwY=&h=480&w=640&sz=52&hl=en&start=28&itbs=1&tbnid=NFC4InBIBtP76M:&tbnh=103&tbnw=137&prev=/images?q=single+family+home&start=20&hl=en&sa=N&gbv=2&ndsp=20&tbs=isch:1

21


Some of our insurance carriers state the coverage can not be added to a single family home. MPIUA has added to a single Family DP3? Do you recommend all rental policies regardless of the number of units have the Tenant Relocation coverage?



22


M.G.L. Chapter 175, Section 99 states that every policy which insures multi-unit residential property against loss or damage by fire shall provide additional benefits up to a limit of $750 without deductible to cover the actual costs of relocation of any tenant or lawful occupant displaced by fire or damage resulting from fire.



23


Fifteenth A, Every policy which insures multi-unit residential property against loss or damage by fire shall provide additional benefits, by endorsement attached to the policy, up to a limit of seven hundred and fifty dollars, without deductible, for each rental unit to cover the actual costs of relocation of any tenant or lawful occupant displaced by fire or by damage resulting from fire. The actual costs of relocation shall include, but not be limited to, hotel room rental, a security deposit and first month’s rent for a new rental unit if the security deposit or last month’s rent is not already due and owing from the landlord to the tenant, clothing replacement, furniture replacement and other reasonable costs and living expenses as a result of being displaced or damaged by fire. Benefits under this clause shall be paid by the insurer to the tenant or lawful occupant after taking into account benefits available under any other policy. The terms and conditions of such clause shall be approved or prescribed by the commissioner. The landlord or lessor of the property shall notify each tenant or lawful occupant in writing of the benefits payable under this clause at the beginning of the lease or tenancy period. A waiver of this provision in any lease or other rental agreement shall be void and unenforceable.

24


If the building is a multiple unit building … whether or not the tenant relocation endorsement is ON the policy The coverage IS there … by law

25


The law states that the policy will provide each UNIT with a whopping $750. for 1. Hotel room rental, a security deposit and first month’s rent for a new rental unit if the security deposit or last month’s rent is not already due 2. Clothing replacement, furniture replacement and other reasonable costs and living expenses as a result of being displaced or damaged by fire.

26


DP and condo risk

Why would I use a DP policy to cover the condo being rented out …instead of the HO-6

Condo rented out …too much

Exclusion re: rental of "insured location" HO 17 33 Unit Owners Rental to Others Provide coverage when rent "insured location“ on more than occasional basis

UNIT = “residence premises” = insured location

Some carriers prefer you use Dwelling Fire

DP and condo risk

HO-6 definition – residence premises

11. "Residence premises" means the unit where you reside shown as the "residence premises" in the Declarations.

Cheap premium – 25% condo base

Is endorsement REALLY intended for year round rental???

DP and condo risk

STEP ONE DP-2 issued for insureds contents values

Condominium policy uses CONTENTS for “base premium” Building can be ADDED … In Dwelling policies DP 1 or DP-2 are chosen for contents coverage – named perils coverage

DP and condo risk

DP and condo risk

STEP TWO Add DP 17 66 for Unit Owners building coverage

Covers whatever building value insured needs Almost identical to HO-6 Coverage A language Loss settlement clause identical to HO-6 (repair cost) Amends Fair rental value clause of DP-2 Amends Additional Living Clause in DP form, if necessary Buy in increments of $1,000 – there is NO free coverage -

DP and condo risk

DP and condo risk

STEP THREE Add DP 04 65 for Special Form coverage

Amends building items to "covered unless excluded" peril coverage Will also enhance the ability to activate Fair rental value option Additional Living Expense option Loss Assessment coverage (if purchased) Endorsement will apply to Improvements, alterations, additions and other Unit owners building items

DP and condo risk

DP and condo risk

STEP FOUR

Add Loss Assessment Endorsement

Property DP 04 63 Earthquake peril only DP 04 68

DP and condo risk

DP and condo risk

DP and condo risk

STEP FIVE Consider BUYING Fair Rental Value for adequate loss of rental income if renting condo

STEP SIX

Consider BUYING Additional Living Expense if living in condo and can't have HO-6

DP and condo risk

STEP seven Remember LIABILITY COVERAGE - Can you extend from a HO policy or must you add the DL liability endorsements DL 24 01 Personal Liability (long form providing coverage, definitions, exclusions, etc. Similar to HO liability) DL 24 11 Premises Liability (endorsement to restrict Personal Liability coverage to JUST premises liability when non- owner occupied)

DP and condo risk

STEP eight

Add Loss Assessment Endorsement - Liability

Liability DL 24 14

DP and condo risk

DP and condo risk

Operator exclusion…coverage or not

Will the operator exclusion endorsement remove

coverage for the named individual when he/she rents a

car on vacation?

Will it remove coverage for the named individual when

he/she uses a roommates car?

I have heard agents say ...

“don't use the operator exclusion endorsement ...or the

parents policy won't cover the child when the use the

roommates car”

Or …

“If you use the operator exclusion endorsement, then

your son won’t be covered when he borrows an auto

or rents one on vacation”


Well.

Whether or not I list my child on an operator exclusion

endorsement or not …

If my child uses his/her roommates car "regularly" then

the MAP does NOT respond…

and it has nothing to do with the operator exclusion

endorsement.


Under Parts 4,5,6,7,8,9 if myself or a household member

use a particular vehicle "too much" then the MAP does

NOT follow us.

Part 4 exclusion

Part 5 exclusion


Under Parts 4,5,6,7,8,9 If myself or a household member

use a particular vehicle "too much" then the MAP does

NOT follow us.

Part 6 exclusion

Part 7 and 9 exclusion


In order for the MAP to cover the "regular use" of a non-

owned auto

by "you"

or

a "household member"

the Use of Other Auto Endorsement M-0051s must be

added to the policy naming that person – per previous

discussion


The Operator Exclusion endorsement ONLY excludes

a NAMED individual

from a SPECIFIC/SPECIFIED vehicle

It does NOT “expunge them” from the face of the universe


Named individual NOT use

specified vehicle

Under ANY circumstances

WHATSOEVER


Named individual NOT use

specified vehicle

Essentially GP 18 – failure to

furnish information

Provision of Parts 7 and 8

and MA law about listing

operators who would

increase premium



Named insured

and

Excluded operator

must sign


What if there is a PUP … will IT allow operator exclusion ….or

1) Will it cancel

Or

2) Issue OWN exclusion …

Operator exclusion…

coverage or not

To defer or not

Question on MA auto and listing operators.

With all of the new rating variables in play when we have a

driver w/ his own policy and defer other HH members the

pricing is 30% higher than if we list only the HH member

driving the car by himself.

What should we recommend to clients with this issue?

To defer or not

I know there’s some really funky stuff going on out there

with tiering and multi-variant rating.

I know someone that took her son off as a driver (seeing

how he got married last year and has a home of his own).

Much to her surprise, her premium increased by $50 (he

has points … she’s a 99).

To defer or not

Since he does once in a blue moon borrow her car to go

see his father in Maine because it’s cheaper to drive her car

than his truck,

she added him back on and the premium dropped.

HOWEVER, her son it not a household member.

To defer or not

The application and policy and coverage selection page

requires the identification of ALL household members ...

and not to list them will be horrific at the time of a claim ...

and certainly an EO claim if you

1) give this advice

2) don't caution against them doing this on their own ...

IN WRITING

To defer or not

MAP application …list ALL household members

AND

Customary operators

To defer or not

Then it says …bad things happen to people who don’t do

what they are told

To defer or not

Bottom of Coverage Selections Page which insured

receives every year

To defer or not

Back of Coverage Selections page …which insured

receives every year

To defer or not

In the policy …which reminds client to tell company about

ALL household members AND customary operators.

What’s the law - MAP

How often does the client give grief about listing household members Why do they have to … they want the “law” that requires this … So …give it to them… Knowing the facts can end arguments

64

What’s the law - MAP

MA laws requiring “full disclosure” on the application MGL Chapter 175: § 186. Misrepresentations by insured; effect.

No oral or written misrepresentation or warranty made in the negotiation of a policy of insurance by the insured or in his behalf shall be deemed material or defeat or avoid the policy or prevent its attaching unless such misrepresentation or warranty is made with actual intent to deceive, or unless the matter misrepresented or made a warranty increased the risk of loss 65

What’s the law- MAP

This law, MGL 175 sc.186… states information that could “increase the carrier’s risk of loss” has been interpreted as just involving $1.00 of premium.

66

What’s the law-MAP

SURELY the failure to list a household member who has been driving less than 6 years when the named insured has been driving for over 6 years would result in a premium increase. Failure to list a household member who has a worse driving record than the named insured would result in a premium increase.

67


There is also a law regarding “fraud” - MGL c. 266, § 111B Motor vehicle insurance policies; penalty for fraudulent claims

68

What’s the law-

MGL c. 266, § 111B or the “fraud” law requires full disclosure in completing an application – ASSUMING the application ASKS for the information …and guess what … it does!!! This law also applies to INSURANCE AGENTS who “help” the insured to falsify information presented to the insurance company. Prior to teaching the Fraud class I used to refer to this as “creative rating” …now I call it …DEFRAUDING the insurance company.

69


One last more specific law … regarding Part 7 Collision and Part 8 Limited Collision … MGL 90 Section 34O Compulsory Motor Vehicle Liability Insurance

70


So regarding Collision and Comprehensive there is a definite law that allows the insurance company to DENY claims if the named insured has not “fessed up” regarding household members who would increase premium. I believe this is just a more specific application of the “fraud” laws ….

71


Do these laws REALLY require the listing of household members? The insured might argue that these laws don’t apply to listing household members or drivers on an auto application …. we should encourage them that these laws DO require full disclosure of information. IF the application ASKS the question ….then the information MUST be provided. 72


The New Business application states:

73


WHAT is a “household member” …. Living with YOU And RELATED to you …. Or …legal involvement 74


WHAT is a customary operator…. Good question …not defined in policy in manual ask company

75


The application asks for “a household member” AS WELL AS others who customarily operator your vehicle. SO … even if the argument is that the household member does NOT operate the vehicle… that is NOT what is asked … it asks about household members … period.

76


We then discuss the usage …or not ….

And “ratability”

or not … for each listed operator

and/or household member.

Each operator will receive either a D, O, P, E. 77


D – Deferred (rated CORRECTLY elsewhere per rule 28) O – Occasional rate for particular operator listed P – Principal rate for particular operator listed E – Excluded …this household member is exclude per Rule 28 with M-0106S Operator Exclusion form/endorsement 78


AFTER the listed drivers we find the “NOTICE”… bad things happen to those people who fail to give us complete information

79


Every year your insured receives a “coverage selections page” … alias declarations page. The front shows the drivers listed …with the “appropriate letter” after their name.

80


The Back of the Coverage Selections page states (as designed by AIB):

81


The MAP itself … Under Parts 7 Collision and 8 Limited Collision we find the MGL 90 34O law language ….

82


The MAP policy states under General Provision 18

83


The MAP policy states under General Provision 19

84


Granted … one ONLY gets a MAP …ONCE … but every year one gets the Coverage Selections Page …

85


Renewal questionnaire …. It is NO longer required …but if it IS used …..you must warn client MAIP no longer requires

86


The renewal form states:

87


The renewal form ALSO states: AND

88


SO …there ARE laws…. And there are questions …. And those who “lie” ….cry

89

Bailment and the MAP

My insured’s vehicle was in an accident where the

driver of my insured’s vehicle was at fault.

My insured has waiver of deductible.

I was surprised to see his collision pay in full.

The waiver of deductible should NOT have applied.

Your insured’s vehicle might have been at fault ….

But your insured was not …he was the innocent

victim


Bailment - as relates to auto insurance

What states in our area utilize this concept?

What is "bailment"

1. Someone else is using your vehicle for his/her own

purpose

2. Example. I let you use my car at lunch so that you can

go to your dentist appointment

3. The person using your vehicle gets into an accident.


4. The person using your vehicle is no more than

99% at fault (i.e.. they can be at fault ... mostly

at fault. ..

but the other party in the accident must be at

least 1% at fault.

5. The insurance carrier of the other vehicle involved ...

the one that was only 1% at fault must pay for the

physical damage loss to my vehicle!


6. Concept of bailment ... someone else has

control of my car ... and when they screw

up ... I shouldn't "lose out"

7. My property damage coverage will pay

for the damage to the other vehicle (after

all my vehicle was 99% at fault!

8. The insurance carrier of the other vehicle

will pay for my vehicle's damage.

9. We never see this happen when the

vehicle has collision .... it is a "behind the

scenes" subrogation issue ... but you can

use it for your insured too!

Thanks to the following court case GERALDINE S. NASH vs. WILLIAM H. LANG. 268 Mass. 407 February 5, 1929 - September 10, 1929 Suffolk County Present: RUGG, C.J., PIERCE, CARROLL, WAIT, & FIELD, JJ

Thank you for attending…

Whatcha think

Miscellaneous personal lines

issues

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Whatcha think...Whatcha think…. Covered or not Miscellaneous Personal Lines issues 1 with Irene...

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