Why in the World Does an Insured Need an Umbrella Policy For and Why Should We Sell One

Transcription

1 Why in the World Does an Insured Need an Umbrella Policy For and Why Should We Sell One Sponsored By:

2 Why in the World Does an Insured Need an Umbrella Policy For and Why Should We Sell One Please turn off cell phones and stow away. Thanks Disclaimer The information in this outline is to be used as a guide only. Neither the author, M.A.I.A., affiliates, or any other organizations associated with this are liable for misprints, typos, interpretations held different from any person or organization. Riders, endorsements, coverage, and any policies not being able to cover exposures are the agent and company responsibilities. Timeline: 3:45-4:15 What is the rational for buying an umbrella policy Reviewing accounts for the "free umbrella" policy Examples for having one Why the agency should offer an umbrella policy to everyone Marshall Katz MS, LUTC, CIC, LIA, AAI 1

3 Timeline: 4:15-4:45 What are underlying policies What is a "true umbrella" What is a "following form umbrella" What is a "hybrid umbrella" The numbers game Which carrier form does the agency offer Monday morning quarterbacking Has anyone here have an insured that needed to use their umbrella policy form to protect them? Marshall Katz MS, LUTC, CIC, LIA, AAI 2

4 What is the rational for buying an umbrella policy Peace of mind Marshall Katz MS, LUTC, CIC, LIA, AAI 3

5 What is and how does an Umbrella Liability policy work and why should it be purchased? An Umbrella Liability policy can help protect; 1. Assets owned now and in the future from lawsuit 2. Income now and in the future from lawsuit 3. Moral obligations due others from our families actions 4. Low cost 5. Keeps the insurer defending longer 6. Peace of mind HO SECTION II LIABILITY COVERAGES A. Coverage E Personal Liability 2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the "occurrence has been exhausted by payment of a judgment or settlement. Marshall Katz MS, LUTC, CIC, LIA, AAI 4

6 What can happen when we look at accounts? At a recent tutoring session; New person with auto only at old agency When done with the practice rating session The new person bought with the new agency; Auto policy with much higher limits Tenants policy where none existed previously Umbrella liability policy For only $20 more per year!! Do all my insured s need to buy one? Yes, for all the above reasons Assume they only purchase $100,000 on Part 4 Property Damage on the auto policy. Assume further they hit and total a $150,000 car. The company insuring the $150,000 car wants the money back. If the insured only has $100,000 in coverage, they may find themselves with a $50,000 loan to pay the company back or their paycheck attached. Marshall Katz MS, LUTC, CIC, LIA, AAI 5

7 Reviewing accounts for the "free umbrella" policy How can an insured purchase an umbrella policy with limited funds? Remove low affordable out of pocket coverage; Rental reimbursement Refrigerated products coverage Raise deductibles on all property coverage like the HO, DP, Auto and Flood policies Write all coverage with one company to take advantage of account credits Look at lower cost carriers with as good or better coverage High priced umbrellas are not necessarily better Marshall Katz MS, LUTC, CIC, LIA, AAI 6

8 Examples for having one. Bodily injury claim caused by a car accident; Named insured Family member Permissive user Our friend is walking our dog that bites someone very bad and they end up with permanent nerve damage, psychological issue and can t work Examples for having one. ISO s HO 2000 and 2011 forms remove children while living away from home in college from coverage once 24 years old ISO s brings in others for vicarious liability The HO policy may not cover Personal Injury coverage by form or endorsement May have broader language for Personal Injury coverage than HO policy? Marshall Katz MS, LUTC, CIC, LIA, AAI 7

9 DL J. "Insured" means: 1. You. 2. A "family member". 3. Any person using an "auto", "recreational motor vehicle", or watercraft, which is owned by you and covered under this Policy. Any person using a temporary substitute for such "auto" or "recreational motor vehicle" is also an "insured". DL J. "Insured" means: 4. Any other person or organization but only with respect to the legal responsibility for acts or omissions of you or any "family member" while you or any "family member" is using an "auto" or "recreational motor vehicle" covered under this Policy. However, the owner or lessor of an "auto" or "recreational motor vehicle" loaned to or hired for use by an "insured" or on an "insured's" behalf, is not an "insured". Marshall Katz MS, LUTC, CIC, LIA, AAI 8

10 DL J. "Insured" means: 5. With respect to animals owned by you or any "family member", any person or organization legally responsible for such animals. However, a person or organization using or having custody of such animals in the course of any "business" or without the consent of the owner is not an "insured". DL L. "Personal injury" means injury arising out of one or more of the following offenses, but only if the offense was committed during the policy period: 1. False arrest, detention or imprisonment; 2. Malicious prosecution; 3. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor; 4. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or 5. Oral or written publication, in any manner, of material that violates a person's right of privacy. Marshall Katz MS, LUTC, CIC, LIA, AAI 9

11 Why an agency should offer all insureds an Umbrella Policy? Asset protection Income protection Litigious society Low cost Keeps the carrier defending longer Peace of mind for E & O defense Added commission revenue Increases persistency and helps keep customers longer when online folks may not offer one What are underlying policies Marshall Katz MS, LUTC, CIC, LIA, AAI 10

12 9/26/2017 True Umbrella Drop Down Coverage Other covered umbrella items Minus S.I.R. (deductible) Required 1. Policies 2. Limits Marshall Katz True Umbrella Auto 250/500/250 HO 500,000 $1,000,000 Catches losses falling from the underlying when limits are lower than the loss Drop Down Coverage Other covered umbrella items Not covered on underlying Minus S.I.R. (deductible) Marshall Katz MS, LUTC, CIC, LIA, AAI Required 1. Policies 2. Limits 11

13 Key terms to review Underlying coverage and company rating Non-standard policies amongst companies (read all you sell) Underlying coverage means the Umbrella policy dictates the policies you have to have and the coverage on them usually stated on the Umbrella policy declarations page. Auto $250/500/100 Homeowner $300,000 Watercraft (if own one) $100,000 ATV s (if own one) $100,000 The Umbrella Liability policy also usually dictates the rating a company must be such as nothing less than an A- from A M Best for example. Drop down coverage issues This is coverage for losses not covered elsewhere, such as; Auto accidents abroad Personal injury claims Read the policies you sell Marshall Katz MS, LUTC, CIC, LIA, AAI 12

14 Self insured retention and retained limits Applies to drop down coverage only Acts like a deductible Amount varies by company How do my carriers differ and what endorsements might they offer? Read the underwriting rules Read the policies Do your due diligence Marshall Katz MS, LUTC, CIC, LIA, AAI 13

15 1. True Umbrella Liability Policy A policy that provides excess limits over required underlying limits and Some broader coverage not provided in the underlying policy. 2. Following Form Personal Liability Policy A policy that provides excess limits over the required underlying limits without Broadening covered exposures. Marshall Katz MS, LUTC, CIC, LIA, AAI 14

16 3. Excess Form Personal Liability Policy A policy that can provide higher limits over a mono-line policy. 4. Hybrid Personal Liability Policy Combination of 1-3 above. True Umbrella Umbrella Policy $1,000,000 Auto / Home Primary Policies $300,000 B r o a d e n i n g SIR Following Form Umbrella Umbrella Policy $1,000,000 Auto / Home Primary Policies $300,000 Marshall Katz MS, LUTC, CIC, LIA, AAI 15

17 Excess Policy Characteristics and Uses Higher limits only Buffer layers One line of coverage Auto E x c e s s HO Primary Policies The Numbers Game MAP required and carried $ 250,000 HO required and carried $ 500,000 Umbrella carried $1,000,000 SIR $ 250 Insured injures someone driving and a jury award against the insured of $1,000,000. How will their policies respond? MAP $250,000 pays 1st HO $0 not a HO loss Umbrella $750,000 pays after the MAP SIR $0 covered by auto policy Marshall Katz MS, LUTC, CIC, LIA, AAI 16

18 The Numbers Game MAP required and carried $ 250,000 HO required and carried $ 500,000 Umbrella carried $1,000,000 SIR $ 250 Insured s son call someone a bad name and a jury award against the insured of $1,000,000. How will their policies respond? MAP $0 not a MAP loss HO $0 not a HO loss Umbrella $999,750 after the insured pays the SIR SIR $250 not covered by MAP nor HO Someone has a primary umbrella policy for $1,000,000 with a $10,000 retention and an underlying policy for $1,000,000. If there is a total loss of $1,500,000, how much will the primary umbrella policy pay? A. $480,000 B. $490,000 C. $500,000 D. $510,000 The primary policy pays 1 st the $1,000,000 and Then the umbrella policy pays 2 nd the full $500,000 claim balance Marshall Katz, MS Marshall Katz MS, LUTC, CIC, LIA, AAI 17

19 Someone has a primary umbrella policy for $1,000,000 with a $10,000 retention and an underlying policy for $1,000,000. If there is a total loss of $1,500,000, how much will the primary umbrella policy pay if the underlying does not cover the loss? A. $1,440,000 B. $990,000 C. $1,000,000 D. $1,500,000 The primary policy does not pay and Then the umbrella policy pays $990,000 after The insured pays their $10,000 SIR Marshall Katz, MS Figuring out which company to offer? After reading the underwriting rules and the policies Rate some sample insured s A well made policy but double the price might not get sold or if sold, not last against competition unless sold correctly. Marshall Katz MS, LUTC, CIC, LIA, AAI 18

20 Homework for back at the office: 1. Prepare a cheat-sheet comparing different company Umbrella policies: Co. 1 Co. 2 Co. 7 Underlying Auto Homeowners Misc. Full 1 Mil yes/no S. I. R. Worldwide yes/no Personal Injury Assault Battery Libel Slander Defamation Wrong Entry False Arrest Excluded Occup. Lawyers Politicians Endorse on HO? insured receives. Maximums Tickets Losses Prepare something to look at the choices you have for Umbrella policies so that you know what you are selling and then you can understand what the Monday morning quarterbacking after an uninsured event and when do we bring our insurance policy into play? Dial the number Tell them what agency your calling from and Let your E & O carrier guide you through the process and Our limit per occurrence is only what Marshall Katz MS, LUTC, CIC, LIA, AAI 19

21 Questions Comments Suggestions? Thank you for sharing your hour with MAIA and myself! Enjoy the rest of the day. Marshall Katz MS, LUTC, CIC, LIA, AAI 20