Social Media Business Opportunities and the personal lines client

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2 Social Media Business Opportunities and the personal lines client 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.

3 Air bnb and the HO policy One agent just asked We have been asked by a number of clients who are participating with the airbnb program if their homeowners policy provides coverage. Does the ISO homeowners policy provide coverage if you rent your primary residence out on a temporary basis and if so how many days per year is allowable. If it does where can we find the specific language.

4 Air bnb and the HO policy Another agent asked Question for you, do you know anything about the sites that you can rent out a room, your home etc sites like airbnb? It is similar to the Uber process you have a room you advertise it on airbnb and people book your room for their vacations etc. I know recently there has been an exclusion added to the auto policy excluding coverage for when people rent themselves out like a taxi but I wasn t sure if the insurance companies had plans to do something similar on the home side.

5 Air bnb and the HO policy AIRbnb and other ways your insured can MAKE money by renting all or parts of their home First a little about Airbnb. This is a format merely to hook up people who want to rent out a portion or all of their property to those who want to rent it. The guest looks for cheap vacation and the host looks for a little extra money. If your insured puts their home online with Airbnb, they (Airbnb) do NOT provide liability or first party property coverage to your client.

6 Air bnb and the HO policy Host Guarantee coverage $1,000,000. It states it is NOT insurance (kind of like what auto rental companies provide ). It does NOT provide personal liability coverage unlike UBER advertises for those involved in their personal taxi service arrangement.

7 Air bnb and the HO policy Host Guarantee coverage $1,000,000. If the renter does damage the rented premises, Airbnb suggests that host and guest try to iron out the problem first. Airbnb suggests that host buy his/her own insurance.

8 Air bnb and the HO policy Gotta love this website Horror stories of Airbnb accommodations

9 Air bnb and the HO policy Will the homeowner s HO coverage respond to damage to rented premises or liability incidents arising out of renting situations? Well, what s the standard answer? It depends. Is this a business as defined by the HO policy? I can only talk to ISO policies We just looked at the definition of business in the HO policies

10 Air bnb and the HO policy How is business defined under the HO policy?? HO-91 court cases continuity chance for profit

11 Air bnb and the HO policy How is business defined under the HO policy?? HO-2000/2011 (I think so) trade/occupation? or you made more than $2000 last year

12 Air bnb and the HO policy Airbnb is the booking agent and collects fees So, it CAN be determined how often and how much very easily! The terms and conditions of Airbnb state they collect the booking fee. Also, the potential guest guarantees that credit card can be attached for Damage To Accommodations.

13 Air bnb and the HO policy Airbnb is the booking agent and collects fees Airbnb reminds the host that he/she is responsible for taxes city/state/federal. Airbnb also reminds the host to determine whether zoning laws; the building owner if tenant in apartment; or condo association if condo owner allows this rental activity.

14 Air bnb and the HO policy Eligibility issue in all ISO HO editions remember the 2 roomers or boarders issue

15 Air bnb and the HO policy HO policy coverage and business activity The ACORD HO application (as well as specific carrier applications, I imagine) asks:

16 Air bnb and the HO policy The MA MPIUA application asks:

17 Air bnb and the HO policy Concealment/misrepresentation and fraud can always be an issue.if lie HO-2000/2011 Section I Conditions HO-2000/2011 HO-91 Section I & II Condition Section II Condition

18 Air bnb and the HO policy It is IMPERATIVE that we communicate the full extent of what business means to the client. Depending on the extent of rental activity the hosting homeowner COULD be considered a business.

19 Air bnb and the HO policy HO policy coverage and business activity Coverage A is not affected to extent the insured did not lie about what they were doing if asked. There is no business exclusion under Coverage A. As long as get past concealment, misrepresentation and fraud

20 Air bnb and the HO policy Coverage B Other Structures and business The ISO HO policy all editions exclude business use of Other Structures. HO-91 HO-2000 HO-2011

21 Air bnb and the HO policy We must remember Coverage C IF this is considered a business activity then the maximum amount of contents provided on the premises is $2500 under ALL the ISO HO editions. The following is the HO-2000/2011 language:

22 Air bnb and the HO policy We must remember Coverage C The HO-2000 and HO-2011 language is more forgiving as the exclusion states the restriction applies for items used primarily for business. Is there a separate room or area in the house designated for guest rental? The remainder of the household contents should NOT be restricted by this language.

23 Air bnb and the HO policy We must remember Coverage C The ISO HO-91 language is stronger: Used at ANY time or ANY manner for a business purpose wow! So, if the paying guest is also allowed throughout the whole house and sits on the family couch to watch TV with the host hmmmmmm

24 Air bnb and the HO policy What about the landlord furnishings coverage? NO theft any HO edition HO-2000/2011 allows purchase of more HO Landlord s Furnishings Additional Coverage Endorsement.

25 Air bnb and the HO policy Coverage C will NOT provide any contents coverage FOR these guests if this is considered a business and they are roomers or boarders. The following exclusion applies under Coverage C Personal Property in ALL HO editions:

26 Air bnb and the HO policy We must remember Peril restriction for theft of Personal Property Under named perils, the theft peril excludes:

27 Air bnb and the HO policy We must remember whether this activity is considered a business OR a landlord furnishings issue I wouldn t put anything valuable in the area rented to guests! If they decide to bring it home your homeowner client host will see how well that million dollars of Host Guarantee Protection coverage provided by Airbnb works!

28 Air bnb and the HO policy What about injury to guests or because of guests and your Host HO client gets sued? The ISO HO policy any edition excludes business and rental but allows There is an exclusion for renting to more than 2 roomers or boarders.

29 Air bnb and the HO policy Does home still qualify as residence premises If rents whole house how often If it is NOT a residence premises then you have NO Coverage A, B, D, E

30 Air bnb and the HO policy Be proactive.talk to your HO carriers BEFORE your insured asks the question. ASK their feeling on rental activities of all or part of the house such as Airbnb is. what they consider business ; what they consider occasional ;

31 Air bnb and the HO policy ASK what they will do with the clause regarding roomers or boarders or the definition of residence premises. Will the insurance company consider Airbnb a form of rooming and boarding house potential? what their appetite is for this activity under the HO policy BEFORE your clients ask about it.

32 Air bnb and the HO policy Airbnb terms and conditions are a trip these terms and conditions were in bold type and capitalized: IF YOU CHOOSE TO USE THE SITE, APPLICATION, SERVICES OR COLLECTIVE CONTENT AND PARTICIPATE IN THE REFERRAL PROGRAM, YOU DO SO AT YOUR SOLE RISK. YOU ACKNOWLEDGE AND AGREE THAT AIRBNB DOES NOT HAVE AN OBLIGATION TO CONDUCT BACKGROUND CHECKS ON ANY MEMBER, INCLUDING, BUT NOT LIMITED TO, GUESTS AND HOSTS, BUT MAY CONDUCT SUCH BACKGROUND CHECKS IN ITS SOLE DISCRETION.

33 Air bnb and the HO policy Airbnb terms and conditions are a trip NO responsibility for me as a guest or host: YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF THE SITE, APPLICATION, SERVICES AND COLLECTIVE CONTENT, YOUR LISTING OR BOOKING OF ANY ACCOMMODATIONS VIA THE SITE, APPLICATION AND SERVICES, YOUR PARTICIPATION IN THE REFERRAL PROGRAM, AND ANY CONTACT YOU HAVE WITH OTHER USERS OF AIRBNB WHETHER IN PERSON OR ONLINE REMAINS WITH YOU.

34 Air bnb and the HO policy Airbnb terms and conditions are a trip Also the taking NO responsibility for me as a guest or host: NEITHER AIRBNB NOR ANY OTHER PARTY INVOLVED IN CREATING, PRODUCING, OR DELIVERING THE SITE, APPLICATION, SERVICES, COLLECTIVE CONTENT OR THE REFERRAL PROGRAM WILL BE LIABLE FOR ANY INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOSS OF DATA OR LOSS OF GOODWILL, SERVICE INTERRUPTION, COMPUTER DAMAGE OR SYSTEM FAILURE OR THE COST OF SUBSTITUTE PRODUCTS OR SERVICES, OR FOR ANY DAMAGES FOR PERSONAL OR BODILY INJURY OR EMOTIONAL DISTRESS ARISING OUT OF OR IN CONNECTION WITH THESE TERMS,

35 Other organizations There is also Vacation Rentals By Owner Flipkey.com

36 ISO advisory ISO has created an advisory filing to be issued with their HO policy

37 ISO advisory Caution to homeowner

38 Vehicle sharing/renting/charging for rides UBER (LYFT) (SIDECAR) I have a customer who is thinking of driving for UBER in Boston. He is currently on a Mass personal auto policy with Company X. I was thinking he would need to insure his vehicle on a comm l policy? UBER sent him information. Please advise if his personal auto policy is ok or does he need a comm l auto policy

39 Vehicle sharing/renting/charging for rides My client is being told by UBER that he can operate his UBER business under a personal policy with no risk of loss. I told him we will not write a personal policy knowing that he works for Uber. He states that the doc provides most if not all of the coverage a personal lines policy would exclude while operating under UBER s direction. If I am reading this correctly, and without a policy this is just a casual comment, the coverage looks very good.

40 Vehicle sharing/renting/charging for rides Have you seen this? Do we know how a Mass. auto policy would respond to a claim under UBER? Would you write a personal policy if presented with this? Any advice you can offer would be appreciated?

41 Vehicle sharing/renting/charging for rides So what is UBER? UBER has a few variations but if your client is at least 23, has a mid-size car with personal auto insurance, a good driving record, and a smart phone that will download the UBER app then he/she qualifies under UBERX.

42 Vehicle sharing/renting/charging for rides So what is UBER? Fares are set and the driver supposedly receives 80-85% of the stated fare. Strangers enrolled in UBER will contact those UBER drivers who have identified their availability. If your client is one of the available drivers then he/she will provide the transportation for hire. The further your insured drives the more it costs. Hmmmmm doesn t this sound like a public or livery conveyance?

43 Vehicle sharing/renting/charging for rides UBER advertises that the drivers have their own personal insurance. UBER provides $1million liability coverage as excess over the driver s insurance. UBER does state that if the primary insurance is not available then their policy covers from the first dollar. This is a good thing because the MAP has a public or livery conveyance exclusion applicable to Part 4 and ALL optional coverages (Parts 5-12).

44 But if it smells like a duck and quacks like a duck it s a duck. Vehicle sharing/renting/charging for rides The LYFT option The LYFT Website advertises Your friend with a car. However, this friend is NOT providing free rides! Again, a mobile phone app allows potential riders to be hooked up with potential drivers for a fee. Drivers get 80% of the ride fee. There is a background process for being a driver or a rider.

45 Vehicle sharing/renting/charging for rides The LYFT option This ridesharing seems to be a public or livery conveyance type situation to me! LYFT advertises that a million dollars of excess liability coverage is available. I would hope that it will drop down when the driver s personal auto policy denies the claim.

46 Vehicle sharing/renting/charging for rides SideCar more of the same rideshare (public or livery conveyance) Again, an organization allowing an individual to find, fetch, and pay for a ride with just a few touches on their smartphones. SideCar advertises that they provide peer-to-peer ridesharing. But, someone pays the driver for a ride. Hmmmmm sounds like public or livery conveyance to me.

47 Vehicle sharing/renting/charging for rides Public or livery conveyance IS and has ALWAYS been excluded under the MAP (or PAP) Courts have defined this as The term public or livery conveyance means a vehicle used indiscriminately in conveying the public, and not limited to certain persons and particular occasions or governed by special terms. The words "public conveyance" imply the holding out of the vehicle to the general public for carrying passengers for hire. The words livery conveyance have about the same meaning. Sounds like UBER, LYFT, SIDECAR.

48 Vehicle sharing/renting/charging for rides UBER/LYFT use is EXCLUDED under the MAP It IS public or livery conveyance and doesn t NEED another exclusion Part 4 exclusion Optional Parts exclusion 5,6,7,8,9,10,11,12

49 Vehicle sharing/renting/charging for rides The AIB 2016 MAP will also exclude coverage under parts 2 and 3 PIP Part 3

50 Vehicle sharing/renting/charging for rides The AIB 2016 MAP new exclusionary language 4-12

51 Vehicle sharing/renting/charging for rides I don t CARE HOW UBER/Lyft advertises That activity is NOT allowed under the MAP whether or not there is an exclusion vehicle is not eligible

52 Vehicle sharing/renting/charging for rides The insured has an obligation to inform the carrier when they start this activity so carrier can set up for non-renewal

53 Vehicle sharing/renting/charging for rides And the insured IS obligated to inform carrier DURING the policy period

54 Vehicle sharing/renting/charging for rides There was a court case in California involving an UBER transportation provider and the UBER organization. UBER has settled it and fighting with insurance carrier for reimbursement A driver who was logged in to UBER as available to drive struck and killed a 6 year-old girl in a crosswalk. Is being logged in use as public or livery conveyance???

55 Vehicle sharing/renting/charging for rides UBER stated it was not liable because there was not an active trip at the time of the incident. UBER did pay victim s family The personal auto carrier is arguing that since their insured was driving around logged in to the ridesharing app that he/she was providing a livery service at the time of the incident. What a mess!

56 Vehicle sharing/renting/charging for rides Because of that court case UBER has changed their insurance offering. They now provide 50/100/25 for the time the individual has signed in until get call to pick up passenger But it will ONLY pay if MAP doesn t then the big bucks click in What about MAP limits HIGHER than 50/100/25????

57 Vehicle sharing/renting/charging for rides MA law Oops, new MA law requires 50/100 BI $30,000 PD When signed in new MA law requires the $1 million when on way to or when have customer

58 Vehicle sharing/renting/charging for rides Once GET call now all UBER/LFYT coverages apply but client is relying on someone else s insurance Hope it is there And the sign in coverage doesn t meet MA law.

59 Vehicle sharing/renting/charging for rides UBER advertises contingent collision and contingent comprehensive coverage Must have collision on MAP/PAP $2500 deductible and $50,000 maximum payable Applicable During the time actually on way to or have PAYING customer

60 Vehicle sharing/renting/charging for rides What IS UBER

61 Vehicle sharing/renting/charging for rides What IS LYFT

62 Vehicle sharing/renting/charging for rides I know that if my client asked me if this was covered under the personal auto policy I would suggest that a BAP does cover such an activity. Donna McKenna, VP Communications created this chart

63 Vehicle sharing/renting/charging for rides New ISO TNC endorsements Expansive Public or Livery Conveyance Endorsement PP Limited Transportation Network Driver Coverage PP ( no passenger only when signed in but not summoned) PP Transportation Network Driver Coverage No passenger but will cover on the way to passenger

64 Vehicle sharing/renting/charging for rides Expansive Public or Livery Conveyance Endorsement PP complete exclusionary language leaving NO doubt the second sign in no coverage

65 Vehicle sharing/renting/charging for rides Limited Transportation Network Driver Coverage PP ( no passenger only when signed in but not summoned) 1) new rating classification.$$$$ 2) add l charge as WILL cover when sign in until GET call then must rely on UBER

66 Vehicle sharing/renting/charging for rides PP Transportation Network Driver Coverage No passenger but will cover on the way to passenger 1) new rating classification.$$$$ 2) add l charge as WILL cover when sign in when get call until passenger touches door handle! Primary coverage and can have UBER/LYFT as contingent coverage

67 Vehicle sharing/renting/charging for rides Vehicle sharing for hire opportunities and the MAP There are other methods of making money through the ownership of a automobile. If one doesn t want to be paid for providing rides, one can be paid for allowing the use of one s vehicle. An innocent sounding means of renting your vehicle to someone else.

68 Vehicle sharing/renting/charging for rides Relay Rides and FlightCar businesses Over the last couple years I have written Techtalks regarding the MAP and organizations that allow the insured to rent his/her car to others. The insured is not the driver and is not acting as a taxi the insured is Hertz/Avis in disguise! Someone pays to use their car.

69 Vehicle sharing/renting/charging for rides MAIP eligibility states as does most voluntary company manuals:

70 Vehicle sharing/renting/charging for rides Most voluntary carriers have filed their own vehicle sharing exclusion counterpart

71 Thank you for attending Social Media Business Opportunities and the personal lines client