Louisiana Agent

Independent Insurance Agents & Brokers of Louisiana
May 2014
Louisiana Agent
AAA Insurance Company Withdraws from
Independent Agent Channel
AAA Insurance Company recently notified
its independent agents that it would be
terminating relationships with
independent agents and returning to their
roots as a direct / exclusive distribution
system. For years, AAA was a direct /
exclusive writer of insurance primarily
west of the Mississippi River. When the
company decided to go nationwide, they
decided that the fastest way to become a
national insurer was to utilize established
independent agents.
A year or two ago, AAA withdrew from the
homeowners market in Louisiana, citing
poor loss ratios and underpricing. The
company continued to write automobile
insurance for their independent agents
until their recent announcement.
A number of IIABL members who
represent AAA Insurance Company
contacted IIABL to see what if anything
could be done to prevent the termination,
provide more time to replace business, or
otherwise protect these AAA policyholders
and agents. IIABL immediately contacted
Insurance Commissioner Jim Donelon to
See AAA Insurance page 2
Just Among Us Girls
I was in Baton Rouge
recently for a meeting with
one of our board committees.
I used the meeting as an
excuse to take the staff of
the IIABL office to lunch.
This is something I have
wanted to do for the past few
months but calendars and
schedules conspired against
me. At any rate, I had the
pleasure of going to lunch
with staff members Francine
Berendson, Karen Kuylen,
Jamie Newchurch, Rhonda
Martinez and Kim Jackson.
Unfortunately Lisa Young-
Crooks was not able to join
us as she was proudly
attending her daughter’s
graduation at which she
received her master’s degree
in Medicine – (congrats Lisa).
We talked about a lot of
things over our lunch – some
of it business, some of it not
– and had a great time. I
came away from that hour
and half incredibly impressed
with our “team”. My first
impression is that these folks
genuinely like each other
both personally and
See Just Among Us Girls page 3
Inside this issue:
AAA Insurance
Company Withdraws...
1-2
Just Among Us Girls
1-3
Ask Mike: Subject: :
“House sharing” and
“car sharing”: Is it
“sharing” or is it
“renting” – and is it
covered?
4-36
Reagan Consulting:
Agent/Broker
Organic Growth Levels
Out in Q1 2014
8-9
Commissioner’s
Corner:
10-12
Walmart Selling
Insurance
17-22
IIABL 2014
CONVENTION
29-30
1
AAA Insurance Co. Withdraws from Independent Agent Channel—from page 1
see what could be done. Commissioner
Donelon quickly arranged a conference call
which included IIABL CEO Jeff Albright and
executives and attorneys from AAA
Insurance. Commissioner Donelon
explained to AAA that although there was
no statutory authority to allow him to stop
AAA from withdrawing from their
independent agents, he would appreciate
any help AAA could provide those agents.
Jeff Albright urged AAA to delay their
nonrenewal schedule to allow agents more
time to replace the AAA policies with other
insurers. As a result of the efforts of
Commissioner Donelon and IIABL, AAA
agreed to delay the nonrenewal process
until January 1, 2015.
The other concern that agents expressed
to IIABL was the potential that AAA
Insurance may try to solicit their agency
business direct. In 1999, IIABL lobbied
the legislature to pass R.S. 22:23 Agent
Exclusive Use of Expirations. This
important statute protects independent
agents and prohibits insurance companies
and brokers from soliciting agent business
directly.
How Project CAP Can
Help Consumers Find
Your Agency
If you were unable to attend the
webinar earlier this month you may view
the recorded webinar by clicking here.
Learn how Louisiana Trusted Choice
agencies can improve their visibility to
consumers at TrustedChoice.com and
through their own digital marketing
efforts.
2
Just Among US Girls—————————————————————from page 1
professionally. There is a strong sense of
humor mixed with a strong sense of
purpose and pride. There was clearly a
mutual respect around the table. When we
were just shooting the breeze you could
just tell. They laughed with each other,
complimented each other, and the sense
that I got was that they shared the same
values. There were even some of those
“what happens at Ruffino’s stays at
Ruffino’s” comments as we confided in
each other.
agents in attendance. What do you want
them to know?” The answer was along
the lines of “we want the membership to
understand that we are here as their best
resource for so many things and yet they
just don’t fully understand the range of
services available”. And really that is the
essence of the sentiment that existed
around that lunch table. The staff is here
to serve us. To make us better.
Someone at the table noted that if we, as
members, would really take a look at the
newly designed website we would have
When I took the conversation over to the
business side of the IIABL, I was taken by such a clear picture of what our association
can really do. So I did exactly that over
the sincere and passionate nature of the
this holiday weekend. As I Board Member
conversation. I was surrounded by
experience – 20 years, 18 years, 15 years, for the past 12 years even I am blown
away by what is available to us. Wander
10 years… - that spoke to the depth of
around that website for a while. You will
mission that each of these ladies feel in
come away impressed. The staff is very
their work for our association. I asked
proud of the website – not only because of
them the question – “If it were you
standing at the podium at this conference its new look and feel but because of the
incredible array of services that they are
in San Destin, what would you say to the
proud to present to you for the taking.
The other take away that I had from lunch
was that our team truly likes what they do.
Those years of experience on the staff of
the IIABL do not happen by accident. You
have to like where you work, who you
work with and what you do. I think each
of these ladies feels proud of what they do
and feel proud of each other. They clearly
want to do well for those whom they serve
– the members. That is their guiding
principal – does it help the agents? How
lucky are we to have that on our side? We
talked about that fact that sometimes what
drives us is our strong desire to never
disappoint those who rely on us. If that is
so, then I say to the staff of IIABL –
mission accomplished. You are
professional, caring, passionate and very
good at what you do. On behalf of the
membership I thank you. And thank you
for a great time at lunch.
3
Ask Mike Edwards
IIABL Director of Education, Mike Edwards
is available to answer technical questions
from IIABL members. To submit a
technical question, contact Mike Edwards,
CPCU, AAI, at medwards65@aol.com or
call (678) 513-4390.
Subject: : “House sharing” and “car
sharing”: Is it “sharing” or is it
“renting” – and is it covered?
Q. I have an insured that is planning to
sign up as a host with a service called
“Airbnb,” which he says arranges “house
sharing” between owners and people who
are traveling and need a place to stay. He
stayed as a guest in several homes
through Airbnb during a trip to London last
Christmas, was very pleased, and found
staying in a home much preferable to a
hotel room.
Several of his friends are already signed up
as hosts with Airbnb, and they highly
recommend the arrangement. They told
him that Airbnb provides $1,000,000
insurance for the host. Also, they have told
him how much they like having the extra
income. Well, “income” sent up a red flag
to my insurance antenna! Do you know
how this arrangement works, and is it
“sharing” or “renting,” and what are the
coverage implications?
A. Here’s the short answer: Sometimes
“sharing” is sharing, and sometimes
“sharing” is renting. And your insurance
antenna was correct to pick up on the fact
that your insured’s friends, who “share”
their homes with travelers, receive money.
In our insurance world, that’s called
“renting.”
See ASK MIKE page 5
4
ASK MIKE ———————————————————————————————from page 4
“House sharing,” “car sharing,” and
numerous other forms of “sharing” are
examples of an arrangement (some would
say “movement”) called the “sharing
economy,” or “collaborative consumption.”
My Internet search of those terms
produced over 69,000,000 hits. One
source often cited as a seminal work on
the subject is the book: What’s Mine Is
Yours: The Rise of Collaborative
Consumption.
ey, two roommates bought some air mattresses and rented out space in their
apartment. They created a website with
the full name, but later shortened it to
simply “Airbnb.”
“HOUSE SHARING”
Assume the following: (1) Jack owns a
home, which is insured with an ISO HO 00
03 05 11. (2) He signs up as a “host”
through one of the “home sharing” websites that facilitate the arrangement beAccording to Airbnb’s website (click here), tween a “host” and a “guest” – such as
they have over 600,000 listings worldwide, Airbnb, etc. (3) Jack posts his available
including 34,000 cities spread across 192
dates, and his rental rate. (4) Jill signs up
countries. The company was founded in
as a “guest” at the website. (5) Jill search2008 in San Francisco, and was originally
es the available rentals, and then contacts
called Air Bed and Breakfast. The name
Jack through the website to make a resercame about because at a time when they
were unemployed and desperate for mon- vation to stay in his home as a “guest.”
See ASK MIKE page 6
5
ASK MIKE ———————————————————————————————from page 5
Jack’s Insurance – Property Coverages (2) However, the ISO Homeowners Policy
does not define “guest,” which can be conHO 00 03 05 11
fusing, since many of the house-sharing
websites use the terms “host” and “guest.”
Section I – Property
(3) But since these “guests” pay rent, the
C. Coverage C – Personal Property
outside world – including insurance –
1. Covered Property
would consider them “roomers, boarders
We cover personal property owned or tenants” – see following.
or used by an "insured" while it is
anywhere in the world. After a loss
C. Coverage C – Personal Property
and at your request, we will cover
4. Property Not Covered
personal property owned by:
We do not cover:
a. Others while the property is on
the part of the "residence premisf. Property of roomers, boarders
es" occupied by an "insured"; or
and other tenants, except property
b. A guest or a "residence employof roomers and boarders related to
ee", while the property is in any
an "insured";
residence occupied by an "insured".
g. Property in an apartment regularly rented or held for rental to
Comments:
others by an "insured", except as
(1) Jack’s Coverage C applies to property
provided in E.10. Landlord's Furof “guests” while the property is located at
nishings under Section I – Property
his house [C.1.b.].
Coverages;
See ASK MIKE page 13
6
7
Reagan Consulting: Agent/Broker
Organic Growth Levels Out in Q1 2014
Survey Measures Large & Mid-Size Private Agencies & Brokerage Firms
Independent insurance agents and brokers
posted an all-time high for first-quarter
profitability in the first quarter of 2014, as
measured by the Reagan Consulting
Organic Growth and Profitability (OGP)
survey.
 Benefits growth, at 5.0 percent, was up
significantly from the 3.7 percent growth
rate of Q1 2013.
 Commercial property and casualty
growth led the way for the third
consecutive year, with a Q1 growth rate of
8.4 percent, up from last year's 6.8
percent.

Other key findings of the quarterly survey
of 140 mid-size and large agencies and
brokerage firms were:
Contingent income jumped by a
surprisingly strong 15.2 percent.
"Although still relatively strong by recent
standards, broker organic growth rates
were largely unchanged for the first
quarter of 2014 from the prior-year first
quarter," stated Kevin Stipe, president of
Reagan Consulting, a management
consulting and merger-and-acquisition
See Agent/Broker Organic Growth page 9
8
Agent/Broker Organic Growth ———————————————–——from page 8
advisory firm for the insurance distribution
system. He noted that some in the industry
are voicing concerns that slowing
commercial lines premium growth might
mean that broker growth rates have
peaked. "But brokers in our OGP survey
generally seem to remain optimistic,
despite some of the recent troubling
signs," Stipe said. The OGP survey found a
median growth projection for 2014 of 7.0
percent.
27.9 percent in Q1 2013. Despite the fact
that EBITDA hit an all-time high for firstquarter profitability in 2014, Reagan
Consulting pointed out that EBITDA
margins are inflated by cash-basis
contingent income and tend to decline
throughout the year.
Reagan Consulting has conducted its
quarterly survey of agency growth and
profitability since 2008, using confidential
submissions from approximately 140 mid"In addition to their confidence in
size and large agencies and brokerage
continued growth, brokers also believe
firms. Roughly half of the industry's 100
profit levels will remain strong, or perhaps largest firms participated in the most
even stronger than, those in recent years," recent survey. Median revenue of the firms
commented Stipe.
completing the survey is approximately
$15 million.
Profitability as measured by pro forma
EBITDA (earnings before interest, taxes,
For further information and commentary,
depreciation and amortization) margins
contact Kevin Stipe of Reagan Consulting
jumped 200 basis points to a first-quarter at (404) 869-2532 /
record of 29.9 percent in Q1 2014 from
kevin@ReaganConsulting.com.
SAVE THE DATE!
YOUNG AGENTS CONFERENCE
AUGUST 7-10, 2014
RITZ CARLTON, NEW ORLEANS
Click here for additional information
or to register!
9
The Commissioner’s Corner
Overview of FEMA’s Flood Insurance Rate Mapping Process
Concerns regarding the
correlation between FEMA flood
maps and flood insurance rates as well as
concerns over how flood maps will impact
current real estate values and future growth in
the housing sector have the attention of property
owners, realtors and planners in our state. Some
of these concerns were addressed with the
recent passage of the Homeowner Flood
Insurance Affordability Act which removed or
revised many of the mandates of the BiggertWaters Flood Insurance Reform and
Modernization Act of 2012.
The Act did not nullify the role of updated flood
insurance rate maps on flood insurance
premiums. Policyholders will experience rate
increases when properties are outside the flood
protection system or when homes and
businesses are determined to be below base
flood elevation. The only exception under the
Homeowner Flood Insurance Affordability Act is
the grandfathered properties allowance for
homes that complied with previous flood maps
and after remapping are determined to be at
greater risk of flooding. Flood insurance rates for
such homes will not be increased for existing
policyholders at this time. When a home with a
grandfathered policy is sold, the new homeowner
will no longer be subject to an immediate rate
hike to actuarial levels; instead increases will be
phased in over many years. For homes that are
not grandfathered, if the updated maps result in
an increase in risk premium, that increase will be
phased in over a five-year period at a rate of up
to 18 percent per year.
In its mapping process, FEMA conducts a largescale series of studies to re-examine flood
hazards in the coastal and river communities. A
study does not always result in an updated map,
but can also result in technical assistance,
training, or the development of non-regulatory
flood risk products to communicate risk.
According to FEMA, there are currently 36
projects in some stage of a study in
Louisiana. Some of these are watersheds, some
are parish-wide updates, and some affect
smaller areas. The process for developing and
updating flood maps is called Risk Mapping and
usually takes from three to five years. One of the
resulting products is new Flood Insurance Rate
Maps (FIRMs), as well as Digital Flood Insurance
Rate Maps (DFIRMs) reflecting up-to-date
coastal flood hazard information. These maps
contribute to the establishment of flood risk
zones and the calculation of flood insurance
premiums.
There have been concerns over the
implementation of new flood elevation maps. For
See COMMISSIONER’S CORNER page 12
10
11
The Commissioner’s Corner ———————————————from page 10
example, recently FEMA announced a two-year
delay in implementing 2013 Flood Insurance Rate
Maps in Jefferson Parish. According to FEMA this
will allow the incorporation of recently available
data that more accurately reflects the actual
ground elevation within the levee system. In
January the Army Corp of Engineers released
new ground elevation data that is critical to the
production of accurate Flood Insurance Rate
Maps. The delay will also give FEMA time to
consider property owners’ earlier extensive
comments on 2013 proposed maps that relied on
2001 elevation data.
FEMA’s mapping process is also something
Congress is keeping a close eye on. Earlier this
month the U.S. Senate Homeland Security and
Government Affairs Subcommittee on Emergency
Management held an oversight hearing on
FEMA’s mapping process. The concern over
accuracy of mapping in the coastal areas and the
consideration of locally built flood control systems
in rural areas was discussed.
FEMA is currently conducting a new pilot
program that will allow for recognition of non-
accredited levees that were not considered in
previous flood maps. Of the 25 Levee Analysis
and Mapping Procedures (LAMP) pilot projects
FEMA is conducting across the country, five of
those projects are in coastal Louisiana parishes Plaquemines, Lafourche, Terrebonne, St.
Tammany and St. Charles. FEMA has said the
pilot program locations were selected based on
areas with higher population and property values.
Results from the LAMP pilot program may be the
basis for new procedures that allow a more
precise level of modeling by analyzing the level of
protection each levee reach can provide, allowing
for better accuracy in reflecting the actual flood
hazard areas for communities with levees.
You can search online at FEMA’s Map Service
Center (www.msc.fema.gov) and find resources
related to FEMA mapping. I encourage you and
your community to become involved in the study
process when FEMA goes to your locality.The
more communities and homeowners know about
this process, the better we can work together to
make sure we build safely and resiliently and are
adequately prepared for flooding and other
natural disasters.
12
ASK MIKE ———————————————————————————————from page 6
Comments:
(1) Under C.4.f., none of Jill’s property
could be covered by Jack’s policy. Note
the discussion above about Jack’s Coverage C broadly applying to the property of a
“guest.” Item C.4.f. addresses the property of a person who is not a “guest,” but is
a “roomer, boarder or tenant.” The ISO
Homeowners Policy provides no definition
of any of these terms, but in general usage, most experts hold that the distinction
which separates a guest from roomers,
boarders and tenants is that a guest pays
no rent, and the others do. Recall also
that much of the “house-sharing” literature
and websites apply the terms “host” and
“guest,” which is not really applicable to
the pertinent insurance issues at hand.
Specifically, the intent of C.4.f. seems
clearly to exclude the personal property of
anyone who is paying to stay at Jack’s
house, whether in a room, or where they
rent the entire house.
(2) Under C.4.g., Jack’s property which is
located in the area where Jill is staying is
also excluded, IF that area is “regularly
rented or held for rental.” If the rental is
other than on a “regular” basis (which essentially means “occasional), Jack’s policy
still covers his property in the rental area.
“Regular” is not defined in the policy, but if
Jack is signed up as a “host” on a housesharing service such as Airbnb, it’s quite
possible Jack’s insurer will argue that this
implies regularity of rental.
(3) However, if rental does occur on a
“regular” basis, there is some limited coverage for certain “landlord furnishings” of
Jack, as provided by the Additional Coverage E.10., which is referenced in C.4.g.
Section I – Property
E. Additional Coverages
See ASK MIKE page 14
13
ASK MIKE ———————————————————————————————from page 13
10. Landlord's Furnishings
We will pay up to $2,500 for your
appliances, carpeting and other
household furnishings, in each
apartment on the "residence premises" regularly rented or held for
rental to others by an "insured",
for loss caused by a Peril Insured
Against in Coverage C, other than
Theft.
(a) limited coverage ($2,500) for Jack’s
appliances, carpeting and other household
furnishings in an area that is regularly
rented or held for rental; and
(b) for damage caused by Coverage C perils, excluding theft to such property.
(5) Theft coverage for occasional rentals
can be provided by endorsement HO 05 41
– see discussion under Theft in the next
This limit is the most we will pay in section below.
any one loss regardless of the
number of appliances, carpeting or
other household furnishings inSection I – Perils Insured Against
volved in the loss.
B. Coverage C – Personal Property
This coverage does not increase
We insure for direct physical loss to
the limit of liability applying to the
the property described in Coverage C
damaged property.
caused by any of the following perils
unless the loss is excluded in Section
(4) This Additional Coverage provides:
I – Exclusions.
9. Theft
See ASK MIKE page 15
14
ASK MIKE ———————————————————————————————from page 14
a. This peril includes attempted
theft and loss of property from a
known place when it is likely that
the property has been stolen.
b. This peril does not include loss
caused by theft:
(3) From that part of a
"residence premises" rented by
an "insured" to someone other
than another "insured";
HO 05 41 10 00 Extended Theft Coverage
for Residence Premises Occasionally Rented To Others. Theft coverage is provided
“while the residence premises is rented in
whole or in part on an occasional basis,”
and applies to the part occupied by the occasional tenant, roomer, or boarder. However, three broad classes of property are
not included in the coverage, including: (a)
money, goldware, silverware, etc.; (b) seComments:
curities, accounts, personal records, etc.,
(1) Jack’s policy does not cover theft by
and (c) jewelry, watches, furs, etc. The enJill from the part of his house which is
dorsement amends part 9.b.(3) of the
rented - whether on an occasional or regu- theft peril (see above) as follows:
lar basis. This theft exclusion applies to
HO 05 41 10 00
the rental of a room, or the entire house.
Under Peril Insured Against 9. Theft,
Paragraph b. (3) is deleted and re(2) A partial buyback for theft coverage is
placed by the following:
available by attachment of endorsement
See ASK MIKE page 24
15
Trusted Choice Chopper - FOR SALE!!!
The Trusted Choice Chopper - built by Paul
Teutel Sr of Orange County Choppers and
aired on American Choppers TV show in
September 2012 is up for sale. Some of
you may have seen the TV show and
many of you likely saw the bike on display
at one of your state conferences or meetings. We've had the motorcycle on tour
for more than a year and we've gotten a
great deal of consumer exposure because
of it.
bid to Trusted Choice member agents.
If you, or someone you know, are interested in making an offer for the motorcycle - please let us know. You can reply to
this discussion post or you can email me
directly at kevin.brandt@iiaba.net.
Serious offers only - please.
Now, it's time for the Chopper to move into the next phase of it's life - to raise
money for Make-A-Wish. It was built with
this intention and 100% of the proceeds
will be donated to Make-A-Wish. Before
we open this opportunity up to the general
public - we are offering the first rights to
16
Walmart Selling Insurance?
News broke recently that Walmart is working with Autoinsurance.com to sell insurance. So, is Walmart selling insurance?
Not exactly. Following is information
provided by Autoinsurance.com on their
marketing agreement with Walmart.
Background
In 2012; Tranzutary Insurance
Solutions LLC (d.b.a.
Autoinsurance.com), a nationally
licensed insurance agency, approached
Walmart regarding a program to
market automobile insurance in
Walmart stores and through related
Walmart retail channels. Walmart
agreed to have Autolnsurance.com test
the proposed program in two states,
Illinois and Pennsylvania.
Autolnsurance.com and Walmart met
with Illinois and Pennsylvania insurance
regulators to describe the proposed
program and to obtain any required
authorization. Autolnsurance.com and
Walmart then launched a six-month
test for two different automobile
insurance-related offerings. The first
was a single carrier automobile
insurance product offered by Esurance
in Walmart stores in Illinois. The
second was a price-comparison
platform that featured six nationallyrecognized automobile insurance
carriers offered by Autoinsurance.com
in Walmart stores and in Sam's Clubs
in Pennsylvania.
Following evaluation of the results of
the six-month pilot programs for each
See Walmart page 18
17
Walmart Selling Insurance? ——————————————from page 17
of these offerings, and based on the
positive feedback we received from
customers who took advantage of the
offerings, particularly in Pennsylvania,
Walmart and Autoinsurance.com wish to
move forward with a national roll-out of
the multi-carrier price-comparison
platform in all Walmart stores
nationwide.
In Pennsylvania, the
Autoinsurance.com platform achieved
Walmart's key goals of providing
value, clarity of choice, quality and a
positive customer service experience.
Importantly, in addition to customers
rep01ting substantial savings on their
automobile insurance premiums,
Walmart and Autoinsurance.com found
that 32% of the customers who
purchased insurance through the
Autoinsurance.com platform were
currently uninsured or had no prior
insurance at the time of purchase. The
Autoinsurance.com platform enables
Walmart customers to select from
quality carriers, to customize
insurance solutions that meet their
individual needs, to save money and to
obtain important protection for them
and their families, achieving Walmart’s
goals of helping its customers to "Save
Money and Live Better". Given these
favorable results, Autoinsurance.com
and Walmart are proposing to expand
their partnership and proceed with a
national roll-out of
Autoinsurance.com's multi-carrier
price-comparison platform beginning
early 2014.
Together, Autoinsurance.com and
See Walmart page 19
18
Walmart Selling Insurance? ——————————————————from page 18
Walmart identified eight states for Phase I
of the national roll-out: Texas, Oklahoma,
Missouri, Mississippi, New Mexico,
Arkansas, Tennessee and Louisiana. Upon
receiving any required regulatory
approvals, including a determination
whether or not the Department views the
price-comparison platfo1m as an insurance
product (several states have shared our
view that the price-comparison platform is
not an insurance product per se),
Autoinsurance.com intends to make
available the price-comparison platform in
all Walmart stores in the states identified
as Phase I states beginning in April 2014.
Autoinsurance.com and Walmart expect to
complete the national roll-out over a
period of 15 months and to be fully operational nationwide by Mid-year 2015.
Who is Autoinsurance.com?
Autoinsurance.com is a new internet
website that uses an aggregator platform
to compare automobile insurance rates
from several high-quality insurance
carriers, including:

Progressive

Esurance

21st Century

The General

Travelers

Safeco
Autoinsurance.com is the named d.b.a. for
Tranzutary Insurance Solutions, LLC an
insurance agency licensed to sell property
and casualty insurance products in all 50
states.
How do es the Autolnsurance.com
p r i c e -comparison p l a t f o r m work?
Walmart customers can take an
Autoinsurance.com savings card from
displays found in strategically placed areas
in Walmart stores, visit Walmart.com to be
linked to Autoinsurance.com or visit
Autoinsurance.com directly to initiate their
automobile quote "compare and save"
experience.
The in-store savings card is completely
free of charge and provides customers with
a toll free telephone number to call to
speak to a licensed agent or directs them
See Walmart page 22
19
Travelers Invests in Project CAP
Carrier Reinforces Commitment to Independent Agency Channel
Project CAP today announced that
Travelers (NYSE: TRV) has signed on as an
investor, as well as a listed carrier on
www.trustedchoice.com. Travelers is one
of the largest property casualty companies
in the U.S. and works with more than
13,000 independent agents.
Travelers involvement will help aid in the
ongoing development of Project CAP,
which offers a broad selection of digital
marketing services to independent
insurance agencies, including
TrustedChoice.com. In addition, Greg
Toczydlowski, President of Personal
Insurance at Travelers, will serve on the
Project CAP Board of Directors.
of Project CAP. "Their leadership, support
and active participation on
TrustedChoice.com will be critical as we
move forward, building the online marketing platform of the future for independent
agents and brokers."
TrustedChoice.com is a compelling online
resource for insurance shoppers because of
its rich content of insurance information
and the unique comparative rating feature
that allows consumers to get a live quote
from multiple insurance carriers.
The site has reached record traffic levels in
nine consecutive months, and is driving
consumers to agencies in all 50 states,
with home and auto quoting available in 40
"We are very excited to have Travelers on states. More than 1,700 agencies have
board," said Charles "Chip" Bacciocco, CEO signed up for Advantage profiles, which
offer preferred placement in search results
and unlimited leads to the agencies across
more than 20 lines of business.
"We couldn't be more pleased to invest in
Project CAP and help our agents compete
more effectively in the digital space," said
Toczydlowski. "This partnership further
demonstrates our commitment to the
independent agent channel."
"This is an exciting time for the
independent agent channel," says Robert
Rusbuldt, Big "I" president and CEO.
"TrustedChoice.com has enjoyed
tremendous growth, and we're happy to
have Travelers as a partner to help us
better position agents to compete in a
digital world."
For a complete list of investor carriers,
visit: projectcapmarketing.com/about-ourpartners.
20
21
Walmart Selling Insurance? ——————————————————from page 19
to the Autoinsurance.com website where
they can access free automobile insurance
quotes online. In less than five minutes,
the customer provides some basic
personal information and answers a series
of quick, coverage-related questions,
selects coverage options and then is able
to choose from quotes that are displayed
from the participating carriers. There is no
obligation to buy. Customers who choose
to bind their policy call a special toll-free
number to finalize coverage by speaking
with one of Autolnsurance.com's licensed
agents or if they prefer, they can complete
their purchase online.
What is Walmart’s role?
Walmart will provide Autoinsurance.com
with in-store kiosks or displays arid
signage as well as access to its other
IIABL New Members
May 2014
CSP Insurance
Bogalusa
Lemico, Inc.
retail and media channels (on-line, direct
mail; email, etc.). Walmart receives a
per store lease fee from
AutoInsurance.com in the form of a fixed
monthly rental payment that is not linked
in any way to sales volume, commissions
or traffic in addition to negotiated fees for
placement in other retail channels (like
Walmart.com). Walmart will receive no
other remuneration from
Autoinsurance.com.
What are the future plans?
Future plans depend on a number of
variables including the financial viability
of the program following Phase I and at
scale. In addition to completion of the
national roll- out, Autoinsurance.com will
further enhance its bind on-line
technology capability, which allows
customers who choose to, to complete
their purchase of automobile insurance
on the Autoinsurance.com website (with
access to a "Click to Chat" and the ability
to call to speak with a licensed agent).
Further, Autoinsurance.com and Walmart
envision introduction of homeowners,
renters and/or bundled automobile and
homeowners/renters offerings and other
related insurance products if customer
demands for these products warrants.
Over the next several months, Autoinsurance.com and Walmart will jointly determine the feasibility of roll-out in Sam's
Clubs in additional states and potentially
nationwide. Finally, it is anticipated that
Walmart in the future will acquire a passive minority equity stake in Autoinsurance.com in lieu of or in addition to its
current lease fee arrangement.
Alexandria
22
23
ASK MIKE ———————————————————————————————from page 15
b. (3) From that part of a "residence
premises" regularly rented by an
"insured" to someone other than another "insured", roomer or boarder.
already included in all-risk forms.
Jack’s Insurance – Liability Coverages
The primary issue to address is whether or
(3) Note that under ISO Rule 517, ennot “house sharing” a “business.”
dorsement HO 05 41 can only be used with
Excerpts from Jack’s policy:
coverage forms which provide named perils
HO 00 03 05 11
coverage for Coverage C. The endorsement cannot be used with those HomeownDefinitions
ers forms which provide special coverage
3. "Business" means:
(all-risk) coverage for Coverage C, including HO 00 05, or HO 00 04 with HO 05 24,
a. A trade, profession or occupation
engaged in on a full-time, part-time
or HO 00 06 with HO 17 31. The reason
or occasional basis; or
for this is that the forms which provide allb. Any other activity engaged in for
risk coverage for Coverage C property do
money or other compensation,
not exclude theft from a part of the resiexcept the following:
dence premises which is occasionally rent(1) One or more activities, not
ed. In other words, with those forms, the
described in (2) through (4)
coverage provided under HO 05 41 is
below, for which no "insured"
receives more than $2,000 in
total compensation for the 12
months before the beginning
of the policy period
Section II – Exclusions
E. Coverage E – Personal Liability
And Coverage F – Medical Payments To Others
Coverages E and F do not apply to
the following:
2. "Business"
a. "Bodily injury" or "property damage" arising out of or in connection
with a "business" conducted from an
"insured location" or engaged in by
an "insured", whether or not the
"business" is owned or operated by
an "insured" or employs an
See ASK MIKE page 25
24
ASK MIKE ———————————————————————————————from page 24
"insured".
b. This Exclusion E.2. does not apply
to:
(1) The rental or holding for
rental of an "insured location";
(a) On an occasional basis if
used only as a residence;
(b) In part for use only as a
residence, unless a singlefamily unit is intended for use
by the occupying family to
lodge more than two roomers
or boarders; or
(c) In part, as an office,
school, studio or private garage;
Comments:
(1) In general, the business exclusion
would only come into play if Jack receives
more than $2,000 in the year prior to the
inception of his current policy (see 3.b.(1)
in the definition of “business”). Many experts have questioned the rationale for this
timeframe guideline. The deciding factor
in whether or not renting (“sharing”) his
house (in whole or in part) is a “business”
is based on how much money he made in
the 12 months prior to his current policy
term. Nonetheless, the amount of revenue
Jack receives is one of the key factors
which play a role in determining whether
or not the business exclusion applies.
(2) Assuming Jack has exceeded the income threshold, the next issue in the business exclusion is the extent and frequency
of rental. There are three exceptions to
the business exclusion on this point. First,
if a rental is “occasional,” the exclusion
does not apply (see Exclusion E.2.b.(1)
(a)). Note that “occasional” is not defined,
and this has resulted in confusion, uncertainty, and litigation. Second, under E.2.b.
(1)(b), if Jack rents only a part of his residence, the exclusion does not apply, even
if the rental is on a regular basis, which is
probably common for many who participate
as hosts in “house sharing” arrangements
such as Airbnb. However, if Jill brings
more than two people with her (as
“roomers or boarders”), this would probably trigger the exclusion. Third, under
E.2.b.(1)(c), Jack could rent a part of his
house as an office, school, studio or private
garage on an occasional or regular basis
without triggering the exclusion.
Interestingly, on May 21, 2014, the Wall
See ASK MIKE page 26
25
ASK MIKE ———————————————————————————————from page 25
Street Journal reported that Airbnb had
reached a settlement with New York Attorney General Eric Schneiderman, to turn
over information about its approximately
15,000 hosts in New York City. The dispute between the two parties has been
ongoing for months, with AG Schneiderman alleging that the city and state have
lost millions of dollars in uncollected hotelrelated taxes. Schneiderman has said
that “We are going to pursue anyone
who’s running illegal hotels.”
Insurance provided to hosts by the
facilitator.
Using Airbnb as just one example of a
“house sharing” facilitator, their website
indicates that they provide a “$1,000,000
Host Guaranty.” This coverage applies to
“damages to covered property in the rare
event of guest damages.” However,
among the exposures not covered are
“personal liability, cash and securities, collectibles, rare artwork, jewelry, and pets.”
Other types of “house sharing.”
As noted earlier, the participants in the
“sharing economy” use the word “sharing”
in much broader terms than much of the
business world would, including insurance.
An Internet search will produce many other types of living arrangements that are
consider as “house sharing.” Here are
just a few examples.
Example #1. National Shared Housing
Resource Center. http://
nationalsharedhousing.org/
Description from their website:
Home Sharing is a simple idea: a
homeowner offers accommodation to
a homesharer in exchange for an
agreed level of support in the form
of financial exchange, assistance
with household tasks, or both.
The community is also a beneficiary
of Home Sharing. Shared living
makes efficient use of existing housing stock, helps preserve the fabric
of the neighborhood and, in certain
cases, helps to lessen the need for
costly chore/care services and long
term institutional care.
A home sharer might be a senior citizen, a person with disabilities, a
working professional, someone atrisk of homelessness, a single parent, or simply a person wishing to
share his or her life and home with
others. For
See ASK MIKE page 27
26
ASK MIKE ——————————————————————————————— from page 26
these people, shared housing offers
companionship, affordable housing,
security, mutual support and much
more.
Home Sharing programs can offer a
more secure alternative to other
roommate options. Many programs
have staff who are trained to carefully screen each program applicant
through interviewing, background
checking, and personal references.
Comments:
(1) Assume that Jack was a senior citizen
homeowner, for example, and Jill agreed
to live in his house as a “homesharer,” in
exchange for “an agreed level of support
in the form of financial exchange, assistance with household tasks, or both,” as
outlined in the NSHRC description. Note
that the definition of “business” in Jack’s
Homeowners Policy includes “Any other
activity engaged in for money or other
compensation.” Therefore, if Jack’s total
compensation exceeds $2,000 annually,
the threshold might be met. However,
since Jill most likely has a designated
room to live in, this would be within the
exception to the business exclusion, since
Jack rents his house “in part.” And, of
course, Jill needs an HO-4 Tenant’s Policy,
since she is not an “insured” in Jack’s HO.
Example #2. CoAbode – Single Mothers
House Sharing.
http://www.co-abode.com/
Description from their website:
CoAbode’s mission is to provide support and services that connect women raising children alone. Thru this
connection, single parent women
families pool their finances and resources to improve their living conditions for themselves and their children by sharing a home. CoAbode
was founded on the principle that two
single moms raising children together
can achieve more than one struggling
alone. Through a variety of community based programs CoAbode provides
single mothers with affordable housing opportunities, specialized support
groups, educational scholarships,
community outreach and involvement
as well as referrals to vital resources
designed to make parenting a child
alone easier, healthier and more secure.
See ASK MIKE page 32
27
The Louisiana Department of Insurance-Rate and Rule Filings-SUBMITTED
Company
Coverage Type
% of Impact
$ of Impact
# of Policyholders
American Fire and Casualty Company
Ohio Casualty Insurance Company
Ohio Security Insurance Company
West American Insurance Company
Safeco Insurance Company of Oregon
16 - Workers Compensation
3.5
$68039
304
New: 08/01/2014
Renewal: 08/01/2014
3514
Hanover American Insurance Company
4 - Homeowners
Liberty Insurance Underwriters Inc.
19 - Commercial Automobile
4 - Homeowners
10.0
$350656
5.2
$735515
19.2
$859962
11.5
$2055722
New: 06/26/2014
Renewal: 08/05/2014
New: 07/24/2014
Renewal: 07/24/2014
Not provided
9834
New: 06/01/2014
Renewal: 06/01/2014
2411
New: 07/01/2014
Renewal: 07/01/2014
New: 06/01/2014
Renewal: 06/01/2014
New: 11/18/2014
Renewal: 11/24/2014
New: 09/01/2014
Renewal: 09/01/2014
4670
Bankers Specialty Insurance Company
RLI Insurance Company
1 - Property
American Interstate Insurance Company
16 - Workers Compensation
55.810
$904631
29.900
$69284
8.24
$528805
-3.7
$-1740209
Hartford Casualty Insurance Company
Hartford Insurance Co. of the Midwest
Hartford Insurance Co. of the Southwest
Hartford Underwriters Insurance Co.
Property and Casualty Insurance Co. of
Hartford
Sentinel Insurance Company Ltd.
Twin City Fire Insurance Company
Hartford Accident & Indemnity Insurance Co
Hartford Fire Insurance Company
16 - Workers Compensation
-5.1
$-844227
American Automobile Insurance Company
American Modern Home Insurance Co.
19 - Private Passenger Automobile
19 - Commercial Automobile
1 - Property
6365
381
15
6322
1580
Requested
Effective Date
New: 07/01/2014
Renewal: 07/01/2014
Additional rate filling information can be found on the Louisiana Department of Insurance website by
clicking here. If you have questions, you may contact the Office of Property and Casualty Insurance Rating
and Policy Forms Division at: (800) 259-5300 Toll free or (225) 342-5203 Louisiana.
112th IIABL Convention & Exposition
June 29—July 2, 2014
Destin, Florida
Click here to register or go to www.iiabl.com
28
IIABL 2014 CONVENTION
AN INSIDER'S PERSPECTIVE
By Parke Ellis, IIABL President
Until I became an officer and President of
IIABL, I did not really understand everything that goes into planning and running
the IIABL Convention, and what a great
opportunity the convention is for our
members. Many IIABL members assume
that the convention is just a big party at
the beach. Well, it is a great time at the
beach…but it is so much more than that!
The convention is a good education opportunity, but more than anything… it is all
about the networking. Where else can you
visit with all the major insurance companies, brokers, and vendors in one place
and share ideas with other outstanding
agents?
This year’s convention has an outstanding
lineup of speakers. Lord knows I have
been to enough seminars over the years
to know which ones are more engaging
than others, and we have been very careful to pick speakers that will hold your interest, provide you with valuable
knowledge, and have a good sense of humor.
We then pass the torch to Roger Sitkins
who has been a good friend of my agency
for many years. Roger is going to talk
about what the future of the agency business looks like ten years from now. I can
tell you from personal experience that we
sat in such a seminar with Roger Sitkins
ten years ago and it changed the direction
of our agency completely. This is one that
you do not want to miss.
While Tuesday, July 1st, will be filled with
a lot of activities including the golf tournament, the fishing trip, etc. those of you
looking for a great educational seminar
will not want to miss Tyrone Bennett from
Chubb Insurance talking about executive
risk Insurance coverages, including D&O,
EPL and Cyber Liability. Tyrone is a fantastic teacher and teaches by way of citing
claims examples from several different areas of executive coverages.
On Wednesday we will hear from Insurance Commissioner Jim Donelon as well as
Dave Thomas from Louisiana Citizens.
This will be a great way to keep up with
Charles Symington is Senior Vice President the" State of the Union" in Louisiana insurof the national Big I. Charles is a dynamic ance.
young speaker who is as involved in the
Last year, the staff "knocked it out of the
political arena with regards to insurance
park" with their selection of Bag of Donuts
issues as anybody in our business. You
for the entertainment on Tuesday night. If
will find him very interesting as he disit ain't broke, don't fix it. Bag of Donuts
cusses many important insurance issues
will be back for an encore performance
now in Congress.
this year. It was an absolute blast last
See IIABL Convention page 30
29
The Louisiana Department of Insurance-Rate and Rule Filings ACTED UPON
Company
Coverage Type
ASI Lloyds
4 - Homeowners
Farmington Casualty Company
Fidelity & Guaranty Insurance Company
Fidelity & Guaranty Insurance Underwriters
Nipponkoa Insurance Company, Limited
Charter Oak Fire Insurance Company
Phoenix Insurance Company
Standard Fire Insurance Company
Travelers Indemnity Company
Travelers Indemnity Company of America
Travelers Indemnity Company of Conn.
Travelers Casualty & Surety Company
Travelers Property Casualty Co. of America
United States Fidelity & Guaranty Co.
Ace American Insurance Company
Ace Fire Underwriters Insurance Co.
Ace Property & Casualty Insurance Co.
Bankers Standard Fire & Marine Company
Indemnity Insurance Company of N. America
Insurance Company of North America
Pacific Employers Insurance Company
Westchester Fire Insurance Company
Foremost Insurance Company
Progressive Security Insurance Company
American Interstate Insurance Company
% of Impact
$ of Impact
# of Policyholders
12.3
$55,445
1589
New: 05/31/2014
Renewal: 07/31/2014
16 - Workers Compensation
-2.7
$-1,098,850
6450
New: 06/01/2014
Renewal: 06/01/2014
16 - Workers Compensation
-5.90
$-1,546,726
643
New: 05/01/2014
Renewal: 05/01/2014
19 - Private Passenger Automobile
17 - Other Liability
7.500
$659,628
40.700
$356,624
-3.7
$-1,740,209
3646
New: 05/08/2014
Renewal: 06/12/2014
New: 06/06/2014
Renewal: 09/06/2014
New: 09/01/2014
Renewal: 09/01/2014
16 - Workers Compensation
1721
1580
Requested
Effective Date
IIABL 2014 Convention———–———————————————————— from page 29
year.
sisting member agents. I thought that
comment spoke volumes and told Francine
Just a quick word on this year's theme.
that she had just tripped upon this year's
When I sat down with Francine Berendson conference theme. Not only does the staff
to talk about possible themes for this year, go "above and beyond" in their efforts, but
we got off track and started discussing as- I truly believe that we, as independent
sociation issues and the roll of the staff in agents, are above and beyond any other
providing services to our membership.
distribution system in the insurance indusDuring this discussion, Francine stated
try. The opportunities for networking and
that one of the great things about the
education at this year's convention only
IIABL staff is that everyone is willing to go help to strengthen that position. We look
"above and beyond" in their pursuit of as- forward to seeing you there.
30
31
ASK MIKE ———————————————————————————————from page 27
Comments:
Women Who Would Rather Not Live
Alone.” This is the title of an article on
(1) CoAbode’s website describes their serthe AARP website, and includes examples
vice as “mom-matching,” which facilitates of various forms of “house sharing.” [
connecting single moms who own a home click here ] In some of the examples, the
“home sharers” actually jointly purchase a
with single moms who are looking for a
home. Bottom line for the insurance proplace to rent. In cases where neither
owns a home, CoAbode seeks to connect fessional: Be aware that the term “house
sharing” can mean many different things.
single moms who wish to pool their financial resources in order to afford a home or
“CAR SHARING”
apartment to rent.
(2) Where one of the moms owns the
home and the other will live there as a
tenant, the insurance exposures are the
same as the arrangement discussed for
the National Shared Housing Resource
Center.
Example #3. “House Sharing for Boomer
“Car sharing” (also known as “ride sharing”), operates in many forms. And much
like “house sharing,” few of the “ride
sharing” arrangements are actually
“sharing,” in the everyday use of the
term. Here are three of the most common types of “car sharing.” In the discussion below, assume the following: (1) Jill
owns an auto; (2) her auto is insured under an ISO PAP PP 00 01 01 05; (3) she is
the only named insured, with no family
members in her household.
“Car Sharing” Type #1: Jill uses her
auto to run errands for people, for a
fee.
Two of the best-known examples of this
type of “car sharing” are Uber (uber.com)
and Lyft (lyft.com). These and similar
businesses provide what is essentially a
taxi service. They serve as the facilitator
between vehicle owners and passengers
who need a ride. Both have sophisticated
websites and mobile apps. However, their
growing popularity has caught the
attention (and ire) of the taxi industry and
regulators.
Another form of this type of arrangement
See ASK MIKE page 33
32
ASK MIKE ———————————————————————————————from page 32
is for vehicle owners to connect with
people who need errands run, such as
picking up groceries, dry cleaning, and so
forth. One of the most successful of this
type of business is probably TaskRabbit
(taskrabbit.com). The firm was started in
2008 when a woman realized one cold
night in Boston that she was out of dog
food, and thought that if there was a way
to connect with friends who might already
be at the store, it would save her a trip,
and also provide a little extra income for
people who were willing to run errands for
others.
Assuming Jill decides to use her car by
signing up with Uber, Lyft, or TaskRabbit,
here are some coverage issues she should
consider.
Jill’s PAP
PP 00 01 01 05
Part A – Liability Coverage
Exclusions
A. We do not provide Liability
Coverage for any "insured":
5. For that "insured's" liability arising
out of the ownership or operation of
a vehicle while it is being used as a
public or livery conveyance. This
Exclusion (A.5.) does not apply to a
share-the-expense car pool.
Comments:
(1) In the opinion of most experts, using
one’s auto as a public taxi or delivery
service is clearly within exclusion A.5. At
the same time, picking up and delivering
someone’s groceries, dry cleaning, etc. for
a fee is generally considered different from
delivering items for one’s employer, such
as pizza, or taking the money bag to the
bank for deposit, etc. Here is a detailed
article on the scope of exclusion A.5.
"The Public or Livery Conveyance
Exclusion"
Situation #2: Jill rents her car to Jack
for a few hours.
A very different form of “car sharing” is
when individuals rent their autos to others
for a short time. There are numerous
platforms for this activity, and two of the
most widely known are RelayRides
(relayrides.com) and GetAround
(getaround.com). This type of
arrangement is often referred to as “Peerto-Peer sharing” or “P2P sharing.” Despite
the moniker, this is clearly an auto rental
endeavor, and the websites and blogs
emphasize both the lucrative income
opportunities for vehicle owners, and the
convenience for renters.
As to coverage in Jill’s PAP, many experts
hold the view that the exclusion for a
vehicle “while being used as a public or
livery conveyance” (see A.5. above),
would apply to Jill’s auto while Jack is
driving it. Since she advertises the auto
for rent on a public forum, this seems a
reasonable view of the exclusion.
However, while there is not unanimity on
the issue, and sparse case law, the safe
assumption for Jill is that her PAP in all
likelihood would not apply during the time
Jack was driving her car. At the same
See ASK MIKE page 34
33
ASK MIKE ———————————————————————————————from page 33
time, most facilitators such as RelayRides
and Get Around do provide insurance
during the rental period, although the
coverage details have not been reviewed
for this article.
Many experienced insurance practitioners
have considerable reservations about the
wisdom of renting one’s auto to virtual
strangers. And as one example validating
this reluctance to embrace such new ideas,
“Exhibit One” would be the “car sharing”
firm HiGear. They were a facilitator
between owners and short-term renters of
luxury, high-end cars such as Lamborghini,
Aston Martin, Mercedes, BMW and others.
HiGear began in 2011, but after only a few
months, they ceased operation. A criminal
ring stole 4 autos totaling over $400,000,
by using fake identifications and stolen
credit cards. In a letter to HiGear
members, the company acknowledged the
difficulty of eliminating fraud in this type of
endeavor, and felt it best not to risk any
future losses to members’ high-value
autos.
Situation #3: Jill rents a car for 3
hours for her own personal use.
Micro-rentals have proven to be
enormously popular, primarily in urban
areas, and near college campuses. Easily
the best-known among the many microrental firms is Zipcar
(http://www.zipcar.com/). And owing to
the success of firms like Zipcar, the big
national car-rental firms have also added
micro-rental operations to their brand.
Two of the biggest players are Enterprise
Car Share
http://www.enterprisecarshare.com/ and
Hertz24/7
http://www.hertz247.com/Lowes/enUS/Home. In addition, local brands
proliferate in many regions across the
country, one example being CityCarShare
https://www.citycarshare.org/, a non-profit
organization in the San Francisco Bay area.
In all these micro-rental firms, the autos
are owned by the business, and differ from
traditional car rentals mostly in that the
term of rental can be hourly, vs. the
standard daily basis. So their inclusion in
the “car sharing” spectrum is perhaps in no
small part an effort to capture some of the
cache’ of the “sharing economy”
movement.
As to the insurance issues, the exposure
with a micro-rental arrangement should not
be any different than the traditional car
rental. While the micro-rental firms include
insurance for the renter, there is one
potential gap that renters need to be aware
of. Due to the concentration of microrental firms in areas where some people do
not own autos, there is a need for these
drivers to have some form of auto
insurance in situations where they are
involved in auto accidents as pedestrians,
or while driving a friend’s car, etc. One
common source of coverage, especially for
college students, is to be covered as family
members under the parents’ PAP.
Otherwise, a Named Non-Owner PAP would
be needed.
See ASK MIKE page 35
34
ASK MIKE ———————————————————————————————from page 34
ACTIONS BY REGULATORS,
LEGISLATORS, & INSURERS
Many state departments of insurance have
begun issuing bulletins about “car sharing,”
many of which advise insureds about
potential coverage gaps in their personal
auto insurance. In addition, a number of
state legislatures have passed bills related
to “car sharing.” Many deal with the
regulatory and mandatory insurance
requirements which govern the taxi
industry, and how these may or may not be
applied to individuals who use their
personally-owned autos to transport people
in the same manner that a standard taxi
does. (See discussion of Uber and Lyft in
“Situation #1” above.)
Another area of focus with regulators and
legislators is when individuals rent their
personally-owned autos to others (see
discussion on RelayRides and GetAround in
“Situation #2” above). In particular, some
states seek to restrict the legal liability of
the vehicle’s owner while their vehicle is
being used by a renter, by mandating that
the “car sharing” program (RelayRides,
GetAround, etc.) be legally responsible. In
addition, some laws also require the
vehicle’s insurer to indemnify the “car
sharing” program.
One potential problem for regulators and
legislators is that “car sharing” includes
very diverse exposures, as illustrated by
the three examples above. Legislation
which addresses the “car sharing”
arrangement in a generic form may not
have the intended result, given how varied
the exposures are.
The insurance industry has been reviewing
the growth of the various forms of “car
sharing.” In 2013, ISO introduced a PAP
endorsement on car sharing: PP 23 16 10
13.
Here are pertinent excerpts related to the
changes to Part A – Liability, and Part D –
Damage to Your Covered Auto , with a brief
commentary.
PP 23 16 10 13
Personal Vehicle Sharing
Program Exclusion Endorsement
I. Part A - Liability Coverage
Part A is amended as follows:
The following exclusion is added:
We do not provide Liability Coverage
for the ownership, maintenance or
use of:
"Your covered auto" while:
a. Enrolled in a personal vehicle
sharing program under the
terms of a written agreement;
and
b. Being used in connection
with such personal vehicle
sharing program by anyone
other than you or any "family
member".
Comments:
(1) If this endorsement is attached to Jill’s
PAP, her Part A – Liability Coverage does
not apply while Jack has rented and is
using her auto.
(2) However, if this endorsement is
See ASK MIKE page 36
35
ASK MIKE ———————————————————————————————from page 35
attached to Jack’s PAP, it would have no
applicability while he is driving Jill’s auto,
since her auto is not his “your covered
auto.”
(2) The second part of the exclusion would
apply to Jack’s PAP, where he has caused
damage to Jill’s auto during the term of his
rental. The exclusion would also apply to
IV. Part D - Coverage For Damage micro-rental vehicles such as Zipcars (see
“Situation #3” above.)
To Your Auto
Part D is amended as follows:
The following exclusions are added:
We will not pay for:
Loss to "your covered auto" which
occurs while:
ADDITIONAL REFERENCE/RESOURCE
INFORMATION
"Rent Your Home for the Super Bowl"
a. Enrolled in a personal vehicle
"Homeowners Coverage and Roomers &
sharing program under the terms of a Boarders"
written agreement; and
b. Being used in connection with such
personal vehicle sharing program by "The Insurance Implications of Car
anyone other than you or any "family Sharing"
member".
Loss to, or loss of use of, a "nonowned auto" used by:
"Zipcars"
a. You; or
"The Public or Livery Conveyance
Exclusion"
b. Any "family member"
in connection with a personal vehicle
sharing program if the provisions of
"Who's Liable in the Share-Economy?"
such a personal vehicle sharing
program preclude the recovery of
such loss or loss of use, from you or
that "family member", or if otherwise "House Sharing for Boomer Women Who
Would Rather Not Live Alone"
precluded by any state law.
Comments:
These materials are intended for
educational purposes only and should
(1) The PP 23 16 contains a two-part
not be relied upon as legal advice.
exclusion for physical damage. The first
Please consult a qualified attorney for
part excludes any physical damage
coverage to Jill’s “your covered auto” being legal advice.
used by anyone other than Jill, if the auto
is enrolled in a “vehicle sharing program.”
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May 2014
IIABL 2013-2014 BOARD OF DIRECTORS & OFFICERS
R. Parke Ellis, CPCU
President
Gillis, Ellis & Baker, Inc., New Orleans
Richard D. Jenkins
Moore & Jenkins Insurance Agency, Inc., Franklinton
Harry Kelleher, III
Mickey Bennett
Harry Kelleher & Company, Inc., Harahan
President-Elect
Bennett Seymour Insurance, Inc., Monroe
Philip McInnis
McInnis Insurance Agency, Inc., Minden
David Dethloff, CIC
Secretary/Treasurer
Dethloff & Associates, Shreveport
Philip McMahon
H. Lee Schilling, Jr.
State National Director
Schilling & Reid Insurance Agency, Amite
Joseph A. O’Connor, III
The O’Connor Insurance Group, Metairie
Barry O. Blumberg, CIC
Past-President
Blumberg & Associates, Inc., Baton Rouge
John L. Beckmann, III
Whitney Insurance Agency, New Orleans
Byram H. Carpenter, III
Moreman, Moore & Company, Shreveport
Brenda Case
Lowry-Dunham, Case & Vivien, Slidell
James Fontenot
Dwight Andrus Insurance Inc.
dba Fontenot Ins. Agency, Rayne
Morris Funderburg
Reeves, Coon & Funderburg, Monroe
Bret Hughes
Hughes Insurance Services, Inc., Gonzales
Paul’s Agency, L.L.C., Morgan City
David T. Perry, CIC, ARM
Arthur J. Gallagher Risk Management Services,
Baton Rouge
Neil Record, CIC
Record Agency, Inc., Clinton
Edwin S. Robinson, CPCU, CLU, ARM
Insurance Unlimited, Lake Charles
Armond Schwing
Schwing Insurance Agency, Inc., New Iberia
Michael D. Scriber
Scriber Insurance Services, Ruston
Donelson P. Stiel
David H. Stiel, Jr. Agency, Franklin
Elizabeth Treppendahl
Wright & Percy Insurance, a Division of Bancorp
South Insurance Services, Inc., Baton Rouge
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