Kentucky IA - November December

November/December 2016

Happy Holidays from IIAK

Together...

We’re making a difference to our members, to our agents, and in our community.

200 Executive Park, Louisville, KY 40207 502.894.8484 | 800.367.5372 | www.kesa.org

Inside

What's

Page 9

Contents

9 How to Guarantee a Bright Future for Your Independent Agency

14 Convention Memories 20 Honoring Our Past Presidents & Chairs

Page 14

21 How the Insurance Grinch Stole Christmas 29 How Big Data is Changing the Future of Insurance 34 Can Two Houses Be One Household?

In Every Issue Page 29 The Kentucky IA is the official magazine of the Independent Insurance Agents of Kentucky, and is published bi-monthly.

Editorial offices are located at 13265 O’Bannon Station Way, Louisville, Kentucky 40223.

Telephone:(502) 245-5432 Email: iiak@iiak.org Fax: (502) 245-5750 The Kentucky IA welcomes all advertising and editorial submissions. Inquiries for advertising, news releases and editorial contributions can be directed to Nikki Robins at the editorial office address or via email at nrobins@iiak.org

4 From the Chair

13 Industry Partners

5 DOI News

38 Advertiser Index

6 Education Calendar

38 Classified Ads

13 Upcoming Events

38 Social Media Links

13 Holiday Closings

38 There’s an APP for that

Mission Statement The mission of the Independent Insurance Agents of Kentucky is to be the preeminent advocate for Kentucky Independent Agents and support their business and professional development needs.

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Chair

Officers

From the

George L. “Chip” Atkins

Chair, Louisville 502.585.3600 Michael G. Johnson, CIC

Chair-Elect, Lexington 859.233.1461 Aaron LaRue

Vice Chair, Bardstown 502.348.0050 James D. England, AAI

Treasurer, Pikeville 606.437.7361 Stephen R. Kinkade, CPCU, AAI

National Director, Leitchfield 270.259.5465 David M. Houk

Immediate Past Chair, Horse Cave 270.786.2724

Directors Allen J. Crawford, CIC, CSRM

Somerset, 606.679.6311 Kevin T. Desmond

Bellevue, 859.491.5100 Eric S. Harden

Young Agent Chair, Louisville 502.459.7500 Sharon B. Hill

Jamestown, 270.343.3144 Skip McGaw, CIC

Madisonville, 270.821.3122 Crystal Reid, CIC

Paducah, 270.442.3533 Ray A. Robertson, CIC

Mt. Sterling, 859.498.3410 Laura Yount, CIC, CISR

London, 606.878.0100

Staff Peggy P. Porter

President & CEO

First, I would like to thank everyone who attended our 120th Annual Convention & Trade Show. I believe it was one of the greatest we’ve had to date and know that trend will only continue in 2017. (See page 13 for Upcoming Events near you.)

As I mentioned during Convention, one of the greatest challenges our industry faces is drawing more young professionals into the industry. Insurance is not viewed as a “sexy” industry. Many young people view it as “old” and “stale”. We must work to change the image within our industry in order to attract new, young talent. I’m sure I don’t have to tell you the many challenges we’re facing. Over 60% of the industry is over the age of 45 (me included.) This leaves us with a void of talent that needs to be replaced as well as diminishes perpetuation options for our agencies.

Over 65% of millennials polled have a poor perception of our industry. However, 55% of those surveyed indicated that they would consider a career in the insurance industry.

That tells me that the interest is there and we need to work to change the perception, we can start to turn a corner in this long-standing dilemma.

We must respond to the workplace preferences of the new generation and strive to make insurance a first career choice, not a fallback option.

While we have experienced significant growth in young agent involvement, we need to work to continue this trend. In the upcoming year, I plan to work closely with the Young Agents Committee to find new ways to perpetuate our industry. The future of the industry relies on attracting and retaining a younger generation.

Many of you may not know that my father, George Atkins was the first Young Agent Chair in 1972. I appreciate the commitment and dedication that he, Mike Hepp, Bill Greenwood, Martin Koetters, Allen Whitenack, Roger Kephart and others expressed so many years ago. They obviously understood the importance of the role of young agents in the industry.

I would like to encourage all of you to get involved in the association is some capacity.

Whether it be board related, or on a committee. If any agency principals have a young agent in their office, I strongly encourage them to get involved.

I would like to close with a comment from past IIABA Chair David Walker. His statement could not be more true. “Building great friendships is an unintended consequence of our service”.

Katie M. Freshley

Education & Events Director Tara T. Purvis

Marketing Director

Thanks again for allowing me the opportunity to help lead this great association. I look forward to the year ahead.

Sincerely,

Nikki S. Robins

Communications Director Kristie Weyer, CISR

Insurance Services Director

4 | www.iiak.org | November/December 2016

Chip Atkins

DOI News

By: Brian Maynard

It’s that time of year again. The holidays are rushing by, and 2017 will be here soon. As I look back on 2016, it is hard to believe I have been Insurance Commissioner for almost a year.

2016 has been eventful, and I am certain we will continue to face challenges and opportunities in 2017. The upcoming legislative session will be a busy one, and we continue important debate on insurance issues at the state and national levels.

As we move forward, I think it is helpful to see where we were even a few years ago. I was interested to see the insurance resources report from the National Association of Insurance Commissioners (NAIC), which captures data from insurance regulators across the country. It is good to see how Kentucky ranks among the other states and jurisdictions, but also how things have changed over the years just in the commonwealth.

According to the report, the Department’s budget has remained fairly steady over the past five years. In 2013, the budget was $20 million. In 2017, it will be $19.5 million. When looking at budgets across the country, Kentucky is 19th. To compare, California has the largest budget at $203.8 million in 2017.

At the end of 2015, we had 182,931 individual licensees. Of that number, 25,628 had resident licenses while 157,303 had a nonresident license. Kentucky had 9,481 business entity licenses with 2,235 being resident and 7,246 being non-resident. That put the total number of licensees at the end of 2015 at 192,412. That number has grown to more than 200,000 at this point in 2016.

Premium volume in Kentucky was just over $26 billion in 2015, ranking us at 26th in the NAIC report. Overall premium volume for all NAIC members is over $2 trillion.

All those factors combine to point to a robust insurance marketplace in the state. We appreciate your efforts on behalf of the industry and remind you that we are here if you need assistance or have ideas on how to streamline processes or how to provide better service to the citizens of Kentucky.

I am excited to tell you about one area where we have been able to provide better service to the consumers we serve. The national life insurance policy locator was officially launched on Nov. 22. You will find a link to this service on our website (http://insurance.ky.gov). Because of the need for such a search feature, we had begun internal discussions on how to set up a

system on our own. However, we were fortunate that the NAIC stepped up with plans for a national policy locator system. This was a savings to all the states, both financially and in staffing costs.

Consumers who are beneficiaries, executors or legal representatives of a deceased person may submit basic information. Companies will respond directly to the requestor if that person is the beneficiary or is authorized to receive the information. If no relevant information is found, the consumer will not be contacted. The NAIC estimates it will take 90 business days for companies to complete the search.

We hope you will share this information with your clients and would appreciate any feedback you could offer on the process.

Enjoy the holidays! We look forward to working with you in 2017.

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Upcoming Education Classes CRM: Principles of Risk Management - ON-SITE COURSE February 22-27, 2017 • Hilton Garden Inn Louisville Northeast Agency Management Based E&O and Ethics 3 hours C.E. January 3 @ 10 am

Annuity Basics and Where They Fit 1 hour C.E. January 10 @ 12 am February 13 @ 3 pm

Business Auto Claims That Cause Problems Protection 2 hours C.E. January 17 @ 12 pm February 8 @ 2 pm

Business Fraud Protection 1 hour C.E. January 17 @ 12 pm February 8 @ 2 pm

Certificates of Insurance - Emerging Issues and Other Stuff that May Scare You! 3 hours C.E. January 27 @ 11 am February 16 @ 11 am

Data Privacy Insurance 2 hours C.E. January 9 @ 1 pm February 3 @ 3 pm

Directors and Officers Liability Insurance 2 hours C.E. January 9 @ 11 am February 3 @ 10 am

Double Trouble - Certificates of Insurance & Business Auto Endorsements 2 hours C.E. January 9 @ 1 pm

E&O Risk Management - Meeting the Challenge of Change 6 hours C.E. January 5 @ 9 am January 19 @ 10 am

Ethics and Business

3 hours C.E. January 17 @ 1 pm

Commercial Lines Claims That Cause Problems

Estate Planning Basics

Commercial Property Endorsements That Can Make You Money!

Home Based Business Exposures

2 hours C.E. January 6 @ 9 am

2 hours C.E. January 17 @ 2 pm

COPE - Property Underwriting and Effective Loss Control 2 hours C.E. January 3 @ 2 pm

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2 hours C.E. January 17 @ 12 pm February 8 @ 2 pm

2 hours C.E. February 28 @ 2 pm

Hot Topics in Personal Lines 2 hours C.E. January 20 @ 11:30 am February 15 @ 2:30 pm

Liability Issues to Worry About - Indemnity Agreements and Additional Insureds

Property & Liability Concepts

Long Term Care Insurance

Rental Cars – More Than Meets The Eye

National Flood Insurance Program Basic Course 2016 (includes 2015 updates)

Shake, Rattle & Roll With It – Earthquake Basics

Personal Fraud Protection

Those Kids and Their Cars!

2 hours C.E. February 1 @ 2 pm 2 hours C.E. January 6 @ 9 am

3 hours C.E. January 20 @ 2:30 pm February 15 @ 11:30 am 1 hour C.E. January 23 @ 11 am February 10 @ 3 pm

Personal Lines Claims That Cause Problems 2 hours C.E. February 15 @ 9 am

Professional Ethics in the Insurance Industry 3 hours C.E. January 25 @ 1 pm February 24 @ 3 pm

2 hours C.E. January 4 @ 2 pm February 1 @ 2 pm

2 hours C.E. January 12 @ 10 am February 9 @ 10 am

1 hour C.E. January 10 @ 3 pm February 8 @ 1:30 pm 2 hours C.E. February 21 @ 10 am

Top 5 Life Insurance Uses 2 hours C.E. January 24 @ 1 pm

What You Need to Know About Employment Law & Coverage 2 hour C.E. January 3 @ 2:30 pm February 2 @ 11:30 am

Workers Compensation Beyond the Basics 3 hour C.E. February 23 @ 9 am

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www.iiak.org | November/December 2016 | 7

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How to Guarantee a Bright Future for Your Independent Agency By: Matt Warye, CPCU Over the past several years, we have all heard and read dire predictions about the future of the independent agent.

Most of those predictions were based on assumptions about the fearsome technological and financial power of huge, highly competitive companies who use their might to target consumers directly. But the IA is still here, still relevant, and still a force to be reckoned with. This is particularly true in Kentucky, where the J.D. Power 2015 Insurance Shopping Study revealed that customers who used a local agent for auto insurance were more likely than people in other states to choose an independent agent (67% vs 52%).

In a recent internal research study, Safeco Insurance found that the distribution of auto insurance, by channel, was virtually unchanged from 2010 to 2015. That’s a huge accomplishment when you consider what we were up against during each of those five years. As widely reported, the big-brand captives and direct-to-consumer carriers spent a combined total of about $6 billion on consumer advertising.

This massive spend, particularly from directs, is designed to commoditize the product and compete on the strength of web sites and mobile apps.

And yet they gained virtually no ground from the independent agent — not even enough to register outside the margin of error. At the same time, Google — one of the largest and most powerful companies on the planet — entered and then quickly withdrew from the market, having made little to no progress toward its early ambitions.

We can all relax now, right?

Not so fast. There is still plenty of risk for the independent agent to be disrupted by increasing competition. Our study also indicates that 60% of customers would consider leaving their independent or exclusive agent and going direct the next time they shop for auto insurance. Meanwhile, 40% of direct customers would consider an IA the next time they decide to change insurance plans. That’s a lot of potential movement, enough to change the complexion of the market if it ever becomes a reality.

So what’s the upshot? How do independent agents remain competitive and thrive in a market where the landscape is fluid and threats seem to grow and multiply? By doing what we do best, and learning a few new tricks. Where did the IA channel get the strength to resist a $30 billion attack for five years? From decades of building relationships, providing value beyond price and running smart, disciplined businesses. In order to weather tomorrow’s storm, we must start preparing today.

Only this time, we don’t have decades to do it.

LOCAL IS A STRENGTH

In our study, the number of consumers who selected “company is local” as an important factor when shopping for auto insurance grew a whopping 72% from 2010 to 2015. So we know that “local” is a selling point of growing importance. We also know that taking advantage of that fact remains a huge, upside opportunity for most of us.

Showing your face regularly at community events will remind people that you’re a living, breathing member of the local business community. Getting involved in local causes (beyond donations and sponsorships) will show them that you’re a caring one.

Maintaining the local connection is paramount to Ross Richey, owner and president of Lawton Insurance in Kentucky. C.A. Lawton founded the company in 1899 and Ross purchased the agency in 2009. Over the past several years, the company has acquired nine other local agencies and has gone to great lengths to preserve their individual identities.

Ross told me, “It’s our goal to be the local, main street independent agency as we have been for more than 100 years now. We’ve made significant investments to bring the best technology and marketing resources to the entire organization, but we’ve also kept the individual, local identity of each office. Granted, it’s hard enough to update one website, much less six, but I think it’s been worth the extra effort to maintain that local brand, that local personal touch and relationship.” www.iiak.org | November/December 2016 | 9

“LEAN IN” ON DIGITAL

The new rules and tools of engagement no longer apply exclusively to millennials. The rest of us have caught up — social media, email drip campaigns, mobile apps and 24x7 access to digital tools are markers of the “new normal” in business, even small business.

“I’ve heard stories of when Mr. C.A. Lawton first started the agency in 1899, he was delivering policies in a horse and buggy,” Ross told me. “Technology allows us to engage with current and prospective customers very efficiently. When you think of all the different ways we can communicate today it certainly can be overwhelming both from a personal and professional level. You’ve got your phone, fax, email, text, Facebook, twitter, Snapchat, Instagram. It’s a lot, but it does allow us to get so much more done than what we could have done from a horse and buggy as the importance of personal relationships with our customers remains unchanged.”

INDEPENDENT BUT NOT ALONE

Even though IAs are “independent” by definition — and there are many strengths that come with independence — the truth is, we’re all part of a community with shared interests and shared risks. If a customer has a bad experience with one IA, the reputation of every IA suffers a tiny bit. Likewise, every time an independent agent delivers ease, choice and advice (a combination that no other distribution channel can match) to a customer, it’s a small victory for all of us.

Sharing ideas that work and stories that inspire is to everyone’s advantage. There are so many opportunities to teach and learn from each other — from the Independent Insurance Agents of Kentucky to online communities like the Independent Agent Community by Safeco on Facebook.

If everyone contributed just a fraction of the ideas they consume, the entire community would grow stronger.

By playing to the unique strengths of an IA, developing our digital muscles and creating a shared sense of “brand” we can guarantee a bright future for the independent agent… no matter what challenges lie ahead.

Matt Warye, CPCU is Vice President and General Manager for the Mid-Atlantic Region of Safeco Insurance.

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When you partner with SECURA, you’re family.

Watch: secura.net/partners

www.iiak.org | November/December 2016 | 11

It’s simple, trust matters.

Reliability. Experience. Stability.

These are the qualities clients look for in an agent. Shouldn’t they be the same qualities you look for in a carrier?

When you’re choosing a business to partner with, look for one ranked by your peers for those very values. United Fire Group (UFG) was named a Five Star Carrier in four categories by Insurance Business America: ■■ ■■ ■■ ■■

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To learn more about UFG, visit www.UFGSolutions.com

simple solutions for complex times ® 12 | www.iiak.org | November/December 2016

Happy Holidays!

Thank You 2016 Industry Partners (as of 11/30/16) Premier

The IIAK staff wishes you Happy Holidays and a safe and prosperous New Year.

The association office will be closed on the following days during the holiday season: Friday, December 23 Monday, December 26 Friday, December 30 Monday, January 2

Diamond

Platinum

Frankfort

Gold Acuity Bolton & Company Grange Insurance Company KEMI MAPFRE Insurance Risk Placement Services, Inc.

CRM: Principles of Risk Management

Silver

Upcoming Events Agents Legislative Day

February 15, 2017 (date tentative)

February 22-25, 2017

Hilton Garden Inn, Louisville

Road Shows May 2017

NKY, Owensboro, Kentucky Dam Village, Bowling Green, Louisville

Big “I� Sales & Leadership Conference June 14 & 15, 2017

Marriott Griffin Gate, Lexington

121st Annual Convention & Trade Show November 8-10, 2017

The Brown Hotel, Lousiville

AFCO Amerisafe, Inc. Kentucky National Insurance Co Keystone Insurers Group Motorists Insurers Group Secura Insurance State Auto Insurance Company

Bronze Alexander J. Wayne & Associates Anthem Blue Cross & Blue Shield Auto-Owners Insurance Company BITCO Insurance Companies Columbia Insurance Group Countryway Insurance Company FCCI Insurance Group FFVA Mutual Insurance Company InsurBanc

J.M. Wilson KESA KY Associated General Contractors Market Finders Insurance Corporation Midwestern Insurance Alliance Prime Insurance Companies Summit Swiss Re Corporate Solutions Westfield Insurance

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More than 270 attendees joined IIAK at The Brown Hotel for the 120th Annual Convention and Trade Show in Louisville November 9-11.

we also had General Counsel, Rick Pitts, follow with with important information regarding the Fair Labor Standards Act and how it will affect our industry.

Many agents and company representatives began their convention festivities with an afternoon of horse racing at historic Churchill Downs. The 4th race was the Kentucky Trusted Choice Classic and IIABA Chair-Elect, Vaughn Graham, was on-hand to present the trophy.

Convention officially kicked off Wednesday evening at the Opening Reception and Trade Show in the Crystal Ballroom where exhibitors and attendees alike enjoyed their time as well as the turnout. After a break for dinner in downtown Louisville, the evening concluded with a dessert reception sponsored by Liberty Mutual.

Thursday started bright and early at the Welcome Breakfast and General Session. Chair David Houk introduced your leadership for 2015-2016 and recognized two members who finished their terms on the Board of Directors: Michelle Love (pictured middle) and Neel Ford (pictured left). Vaughn Graham followed, first, with a birthday message to David Houk, who was celebrating his 60th birthday, and then informed us of the newest happenings with IIABA. As we always try to give you, our members, the timeliest information possible, 14 | www.iiak.org | November/December 2016

A very special award is given to the person working in an IIAK member agency as a customer service representative who typifies the ideals of service. The person’s experience, education, community service and attitude are taken into consideration in the judging of this award. The well-deserved 2016 CSR of the Year award went to Shelly Browning, ACSR, KACSR, AAI, AINS of Van Meter Insurance in Bowling Green.

The next presentation was from Make-A-Wish®, the chosen philanthropy for Trusted Choice. This year Trusted Choice has committed more than $450,000 to the foundation and more specifically $10,000 for the Kentucky Chapter. Kentucky Regional Director and “wish dad”, Kevin Lerme shared the story of his daughter, Brianna. An association high of $1,082 was raised that morning for the charity, and as with all the money raised in Kentucky, it will stay in the state to grant more wishes.

If you would like to donate to the Kentucky chapter of Make-A-Wish, please contact Lisa Reeves at lisar@makeawishky.org After breakfast, keynote speaker Michael Bazzell presented “Protecting Your Organization from Computer Crime”. His presentation had attendees buzzing throughout the rest of Convention about cyber security and steps they could take in their personal and professional life to prevent themselves from becoming a victim.

By: Nikki Robins

As with all Conventions, we never leave our guests and spouses without something to do. This year, 12 people enjoyed a private cooking lesson at Cooking at the Cottage and were then able to dine on their hard work.

the agency. Richard Lund, Vice President of Westport Insurance Corporation, served as the judge and led the discussions following the trial. He was joined by IIAK’s General CounselRick Pitts, Westport Underwriter from Kentucky, Louise Barron and Susan Maines of Casey, Bailey & Maines law firm in Lexington, KY. That evening, everyone gathered back in the Crystal Ballroom for a cocktail reception and silent auction to support Kentucky Agents Foundation (KAF). More than 41 items were up for bid.

Next was the Leadership Dinner where David Houk presented Chair Awards to Phillip D. Hunt, CIC, (pictured left, below), Andrew Houk (pictured right, below) and Jaime Dennison for their help during his year as Chair.

Meanwhile, back at The Brown, the Conferment Lunch followed our keynote presentation. Danielle Janecka, Senior Vice President of Relationship Development/ Management for The National Alliance spoke about the CRM designation and what it entails. She, along with Ray Robertson, CIC of Limestone Agency, LLC in Mt. Sterling and Diana Hunt, CIC of Mountain Valley Insurance in Barbourville awarded conferee Evan Watkins, CRM of Erie Insurance Co. (pictured left, above) with his certificate and completion pin.

After lunch, attendees met back in the Gallery Ballroom for an entertaining and informative way to earn 3 hours of continuing education credit: an E&O Mock Trial.

The worlds of insurance litigation and Caddy Shack collided for the case of Bushwood Country Club v. Danny Noonan’s No Risk Insurance Agency. Each table served as a separate jury and shared which side they favored as well as the amount of damages, if any, owed by

The night carried on with the Passing of the Gavel, which recognizes past association Presidents and Chairs in attendance, and the swearing in of new leadership.

George L. “Chip” Atkins, III of R.H. Clarkson Insurance Agency, LLC in Louisville was inducted as our newest Chair. Installed alongside Atkins were Michael Johnson, CIC of Al Torstrick Insurance Agency in Lexington as Chair-Elect and Aaron LaRue of LaRue-Carey Insurance www.iiak.org | November/December 2016 | 15

The Young Agents Committee inducted their newest Chair, Eric Harden of Insuramax in Louisville. in Owensboro. Neel Ford, AU, CPIA from E.M. Ford & Co. in Owensboro was named 2016 Outstanding Young Agent of the Year.

Group in Bardstown as Vice Chair. Kevin T. Desmond of Desmond Brothers, Inc in Bellevue was also appointed as a member of the 2016-2017 Board of Directors.

After officially being handed the gavel, Atkins addressed attendees with his plans for his year as Chair. (Don’t miss our January/February issue featuring Chip’s interview!)

The dinner ended with a live auction where three of your fellow agents walked away with a rare, vintage bottle of bourbon, a Churchill Downs Suite and a trip to Costa Rica. (Time to make some phone calls and find out who the lucky winners were!)

To round out the night, many ventured out to the Sports and Social Club for a night of more fun and bowling.

Attendees gathered Friday morning for a special Veterans Day presentation from Sgt. Maj. Tony Rose (pictured, right). Rose was in the Pentagon on September 11, 2001 when American Airlines flight 77 slammed into the Pentagon just below his 2nd story office. His inspirational and humbling message touched everyone.

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Following Harden’s opening remarks, there was a surprise in store. The Young Agents Committee decided to give a second Young Agent of the Year Award for the first time to IIAK staff member Katie Freshley in recognition of her commitment and dedication to further the Young Agents program in Kentucky.

The conference wrapped up with Ron Smedley and his three hour Insurance Ethics course.

Of course, none of this would have been possible without the help and support of our Industry Partners. Thank you!

We hope to see you next year!

121st Annual Convention & Trade Show November 8-10, 2017 Brown Hotel • Louisville

Thank You Trade Show Exhibitors AFCO AHA & ANK Insurance Network Alexander J. Wayne & Associates Anthem Blue Cross Blue Shield Amerisafe, Inc. Arlington/Roe ARM of Kentucky Berkshire Hathaway Bolton & Company Burns & Wilcox Capital Premium Financing CCMSI/KRF-SIF CNA Insurance COIT Cleaning & Restoration EKU Encompass Insurance First Call Free Legal FrankCrum HIIG IDEAL A&M Insurance The Institutes

J.M. Wilson KEMI Markel Specialty Market Finders McNeil & Company Patriot National Pennsylvania Lumbermans Mutual Philadelphia Insurance Companies Premium Assignment Corp Prime Insurance Progressive Risk Placement Services Safeco Safelite Autoglass Seneca State Auto Travelers Trusted Choice/IIABA Voldico Insurance Westfield Insurance Westport/SwissRe Corp

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HONORING

Our Past Presidents & Chairs During the second night of the 120th Annual Convention & Trade Show IIAK hosted a reception to honor our Past Presidents and Chairs. These men and women represent 40 years of leadership and have a decades of experience in our industry from R.C. Riley who was president in 1978 to Immediate Past Chair Michelle Love. We are grateful for their service to our association and were to happy they were able to join us.

Front Row (L-R): Phillip Hunt, Steve Kinkade, Steve Ford, R.C. Riley, Bill Stiglitz, Bill Latta, Tim Conder Back Row (L-R): Keith Riley, Jim England, Sandra Blain, Tommy Adams, Dennis Desmond, Michelle Love, Michael Hepp, John Funkhouser

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How the Insurance Grinch Stole Christmas

By: Mike Edwards

If “Dr. Seuss” (Theodor Geisel) had been in insurance, he could have written a sequel to “How the Grinch Stole Christmas,” explaining to the merry residents of Whoville how insurance would cover their property stolen by the Grinch. And ironically, there are still many Grinches lurking about at each Christmas, looking to steal presents, gift cards and credit cards, yard decorations, and almost anything else they can get.

Another way Grinches steal Christmas is from injuries that happen from kids’ toys, especially motorized vehicles, which are so prevalent today. This includes small battery-powered vehicles such as “Barbie Cars,” “Razor Scooters,” and similar vehicles, as well as larger, gas-powered vehicles ranging from gocarts to ATVs. And while remote-controlled (“RC”) aircraft have long been a staple for Christmas, the advent of “drones” has opened a new chapter for Grinches to cause mischief.

In the following situations, the coverage form excerpts and commentary are based on ISO forms. Proprietary forms may be different.

visual or data signals; (2) Is designed to be operated by more than one power source, one of which is a “motor vehicle’s” electrical system; and (3) Is in or upon a “motor vehicle”. k. $250 for antennas, tapes, wires, records, disks or other media that are: (1) Used with electronic equipment that reproduces, receives or transmits audio, visual or data signals; and (2) In or upon a “motor vehicle”.

Coverage for personal property (Coverage C) is worldwide, theft is a named peril, and there is no blanket exclusion for theft from an auto. There are, however, some limitations. The following limitations If credit cards are stolen, there is no intrinsic value apply for theft, whether from an auto or elsewhere: in the physical card itself, but fraudulent use is the HO 00 03 05 11 obvious exposure. Here is the special provision for Section I – Property Coverages credit cards: C. Coverage C – Personal Property HO 00 03 05 11 3. Special Limits Of Liability Section I – Property Coverages The special limit for each category shown below is E. Additional Coverages the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability. e. $1,500 for loss by theft of jewelry, watches, furs, precious and semiprecious stones.

800-226-3224 f. $2,500 for loss by theft of firearms and www.fcci-group.com related equipment. g. $2,500 for loss by theft of silverware, silverplated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, trays and trophies made of or including silver, gold or pewter.

These limitations apply for any covered peril, to property that might be in an auto during the shopping season: HO 00 03 05 11 Section I – Property Coverages C. Coverage C – Personal Property 3. Special Limits Of Liability The special limit for each category shown below is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability. a. $200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards. j. $1,500 on portable electronic equipment that: (1) Reproduces, receives or transmits audio,

INDUSTRY EXPERTISE. PERSONAL SERVICE. “The FCCI Surety team excels at finding creative solutions to get bonds written.

One of the things I enjoy most is working along with an agent to help a contractor evolve from being unable to obtain bonds to being the type of contractor sought out by surety companies.”

Dan Pikar Senior Contract Surety Underwriter FCCI Insurance Group Midwest Region Now, let’s talk about your business.

General liability • Auto • Property • Crime Workers’ compensation • Umbrella Inland marine • Agribusiness • Surety Coverage available in 18 states. © 2016 FCCI

22 | www.iiak.org | November/December 2016

6. Credit Card, Electronic Fund Transfer Card Or Access Device, Forgery And Counterfeit Money a. We will pay up to $500 for: (1) The legal obligation of an “insured” to pay because of the theft or unauthorized use of credit cards issued to or registered in an “insured’s” name; (2) Loss resulting from theft or unauthorized use of an electronic fund transfer card or access device used for deposit, withdrawal or transfer of funds, issued to or registered in an “insured’s” name; (3) Loss to an “insured” caused by forgery or alteration of any check or negotiable instrument; and (4) Loss to an “insured” through acceptance in good faith of counterfeit United States or Canadian paper currency.

All loss resulting from a series of acts committed by any one person or in which any one person is concerned or implicated is considered to be one loss This coverage is additional insurance. No deductible applies to this coverage. b. We do not cover: (1) Use of a credit card, electronic fund transfer card or access device: (a) By a resident of your household; (b) By a person who has been entrusted with either type of card or access device; or (c) If an “insured” has not complied with all terms and conditions under which the cards are issued or the devices accessed; or (2) Loss arising out of “business” use or dishonesty of an “insured”. c. If the coverage in a. above applies, the following defense provisions also apply: (1) We may investigate and settle any claim or suit that we decide is appropriate. Our duty to defend a claim or suit ends when the amount we pay for the loss equals our limit of liability.

(2) If a suit is brought against an “insured” for liability under a.(1) or (2) above, we will provide a defense at our expense by counsel of our choice.

(3) We have the option to defend at our expense an “insured” or an “insured’s” bank against any suit for the enforcement of payment under a.(3) above.

Whether it’s Callie the Curious Cat, or Klutz the St. Bernard, animals and Christmas trees just don’t seem to get along. There have actually been cases where a pet knocked over the tree, sparking a fire. There was also a recent case where a large pet Iguana knocked over the heating lamp he was resting under, and the ensuing fire did major damage to the house. Luckily, the family rescued the iguana.

In such cases, does the Homeowners Policy cover the fire damage? At first glance, there is an exclusion for Coverages A and B for damage caused by “Animals owned or kept by an insured.” [See 2.c.(6)(i) below.]

However, immediately following the reference to the animal exclusion is a give-back for any ensuing loss caused by the animal. Therefore, the exclusion would apply only to the damage done to the tree and ornaments (or to the heat lamp, in the case of the Iguana), while the fire damage to the house would be covered. And any personal property (Coverage C) that was damaged by the fire would be covered as a named peril. [See B.1. below.]

In contrast, if Klutz got accidentally closed up in a room, and scratched the hardwood floor trying to get out, that direct damage is excluded. But if he clawed through the drywall and tore a water pipe loose, causing major leak, the clawing damage to the drywall would be excluded, but the ensuing water damage to any part of the home (under Coverage A) would be covered.

HO 00 03 05 11 Section I – Perils Insured Against A. Coverage A – Dwelling and Coverage B – Other Structures 1. We insure against direct physical loss to property described in Coverages A and B. 2. We do not insure, however, for loss: c. Caused by: (6) Any of the following: (i) Animals owned or kept by an “insured”.

Under 2.b. and c. above, any ensuing loss to property described in Coverages A and B not www.iiak.org | November/December 2016 | 23

precluded by any other provision in this policy is covered.

B. Coverage C – Personal Property We insure for direct physical loss to the property described in Coverage C caused by any of the following perils unless the loss is excluded in Section I – Exclusions.

1. Fire Or Lightning

There is a mind-boggling array of both batterypowered and gas-powered vehicles designed for kids. And a few days after Christmas, many parents wonder, “What were we thinking?” or “It seemed like a good idea at the time.” All these vehicles make any insurance person cringe.

Originally made popular by the Barbie Car, battery-powered vehicles today come in every conceivable model, from a little one-seat Disney Frozen Convertible, to two-seat models of the Dodge Viper, Dune Racer, Hummer, and so on. There are also battery-powered motorcycles, scooters and skateboards. For older kids, gas-powered vehicles include models based on famous autos, as well as choppers, scooters, street-legal trikes, utility vehicles, and the traditional go-cart.

One fundamental question about how the Homeowners Policy treats coverage issues for these vehicles is whether or not they are considered “motor vehicles” under the policy, for both personal property (Coverage C) and liability and medical payments (Coverages E&F) losses. Here is the definition: HO 00 03 05 11 Definitions “Motor vehicle” means: a. A self-propelled land or amphibious vehicle; This broad definition essentially puts all these motorized vehicles in the same category as the family car. However, there are some exceptions for property coverage.

HO 00 03 05 11 Section I – Property Coverages C. Coverage C – Personal Property 24 | www.iiak.org | November/December 2016

4. Property Not Covered c. “Motor vehicles”.

This includes a “motor vehicle’s” equipment and parts. However, this Paragraph 4.c. does not apply to: (2) “Motor vehicles” not required to be registered for use on public roads or property which are: a) Used solely to service a residence; or (b) Designed to assist the handicapped; Since the only two exceptions are for service vehicles and handicap-assist vehicles, a literal reading of the coverage form indicates that none of the motorized vehicles for kids would be eligible for Coverage C. However, some courts have recognized specific cases where the vehicle in question was deemed to be a “toy,” and not subject to the restriction in the Homeowners Policy. This may not be particularly significant, since the price of these tyke-size battery-powered vehicles is often less that the Homeowners Policy deductible.

The definition of “motor vehicles” applies throughout the Homeowners Policy, including both property (Section I – Coverage C) and liability and medical payments (Section II – Coverages E&F). Therefore, the liability and medical payments exclusion for “motor vehicles” applies to these motorized vehicles the same as it does for personal property (see above). However, there are some additional exceptions to the exclusion in Section II, which provide some limited coverage.

HO 00 03 05 11 Section II – Exclusions A. “Motor Vehicle Liability” 1. Coverages E and F do not apply to any “motor vehicle liability” if, at the time and place of an “occurrence”, the involved “motor vehicle”: a. Is registered for use on public roads or property; b. Is not registered for use on public roads or property, but such registration is required by a law, or regulation issued by a government agency, for it to be used at the place of the “occurrence”; 2. If Exclusion A.1. does not apply, there is still no coverage for “motor vehicle liability”, unless the “motor vehicle” is: d. Designed for recreational use off public roads and: (1) Not owned by an “insured”; or (2) Owned by an “insured” provided the “occurrence” takes place: (a) On an “insured location” as defined in Definition B.6.a., b., d., e. or h.; or (b) Off an “insured location” and the “motor

vehicle” is: (i) Designed as a toy vehicle for use by children under seven years of age; (ii) Powered by one or more batteries; and (iii) Not built or modified after manufacture to exceed a speed of five miles per hour on level ground; Under Exclusion A.1.a.-b., local or state laws may require the registration of certain types of gas-powered vehicles that are designed for older kids, even if operated on the streets of a subdivision. In such case, there would be no Section II coverage.

For vehicles not described in Exclusion A.1.a.-b above, the Motor Vehicle Exclusion still applies for all other “motor vehicles,” with exceptions for certain owned

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The only optional endorsement to the Homeowners Policy offered by ISO is the Incidental Low Power Recreational Motor Vehicle Liability Coverage Endorsement (HO 24 13 05 11). This endorsement broadens coverage to apply for vehicles not built or modified to exceed 15 mph, but does not include coverage for motorized bicycles, motorized scooters, mopeds, or motorized golf carts.

However, under the Personal Auto Policy, the Miscellaneous Type Vehicle Endorsement (PP 03 23 01 04) can add coverage for a wide variety of vehicles, including the following eligible types described in the ISO Personal Vehicle Manual.

Excerpt: ISO Personal Vehicle Manual Rule 19. Miscellaneous Types.

1. Motorcycles, Mopeds, Motorscooters, Motorbikes, Go-Carts and Any Other Similar Motor Vehicles Not Used For Business Purposes 2. Snowmobiles and All-Terrain Vehicles 3. Dune Buggies 4. Golf Carts 5. Low Speed Vehicles (A low speed vehicle is a motor vehicle that is designed for use on public roads, has a maximum speed of greater than 20 miles per hour but not greater than 25 miles per hour and complies with the safety standards established in NHTSA regulation 49 C.F.R. 571.500.)

In addition, some markets offer specialty policies for certain types of miscellaneous vehicles.

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recreational vehicles, as well as all non-owned vehicles.

[See A.2.d.(1)(2).] It is important to note that the exception for certain described battery-powered toy vehicles designed for children is newly added to the HO-2011 coverage forms, and does not appear in prior editions of the ISO Homeowners Policy.

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Under Section I and Section II, coverage is excluded for “aircraft,” which is defined as “any www.iiak.org | November/December 2016 | 25

contrivance used or designed for flight except model or hobby aircraft not used or designed to carry people or cargo.”

issue, drones are essentially another type of “rotary wing” hobby aircraft, in the same category as a traditional helicopter.

The exception for model or hobby aircraft is very broad, and includes remote-controlled (RC) aircraft of any size or type, including such models as the famous WW-II B-17 Memphis Belle with a 6-ft. wingspan, as well as jet-powered aircraft, and helicopters. Also included in the exception are hobby rockets – some of which are over 6 feet long and 4 inches in diameter, capable of flying thousands of feet into the air.

However, any business use of an aircraft, including a drone, would be excluded under the Homeowners Policy. And with the increasing use of drones in business, from farming to real estate sales, it is important to note that the CGL/BOP also exclude any type of aircraft (not defined), which is “owned or operated by or rented or loaned to any insured.” However, some commercial insurance markets are beginning to offer coverage for drones.

The growing popularity of “drones” raises new question regarding coverage. Since hobby aircraft are covered unless they are designed to carry people or cargo, the issue is whether or not a camera, GPS, or other detachable equipment would be considered “cargo.” Except for that

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What is Big Data?

Big data can be defined as extremely large sets of data that may be analyzed to reveal patterns, trends, and associations. It can be used to benefit numerous industries and sectors, but I’m going to focus on its influence on the Insurance industry at this time. Big data can provide an enormous amount of information to help insurers achieve many of their long term goals. The objective is to utilize the data collected to make the industry more efficient, lower risks and costs, and provide better access to information while creating innovation. When analyzing the insurance sector, Big Data can play a major part in Auto, Life & Health, and Property insurance. Using data properly can help companies use predictive analytics as a means to extend their product lines, reduce claim expenses, set better loss reserves, and cut operation costs. Let’s take a look at a few ways that Big Data can help change the insurance industry, analyze some of its issues, and discuss ways to implement its use to help benefit insurers.

Applying Big Data Fraud Protection Nearly 10% of insurance claims are fraudulent, causing over $25 billion a year to be lost due to fraud claims in just the P & C industry alone. Utilizing data from your company’s claim history, preventive analytics can assist in prioritizing claims. This is accomplished by recognizing when a submitted claim type has previously resulted in a higher payout amount. With the proper data, insurers can decrease their chances of fraud claims. They can mark their submitted claims by the estimated settlement size to determine which claims are higher priorities and which should be investigated further. By managing Big Data,

predictive analysis can properly notice fraud sooner and more effectively at each step in the claim cycle. Information such as demographics and examples of the more frequent types of fraud cases reported can be used to help recognize fraud during the claim process.

Claims Currently, most claim adjusters believe that their companies do not utilize the information that it collects from the claims department. The more insurers use more preventive analytics, the more breakthroughs that will be achieved.

Using Big Data as part of the claims process can be a resource that differentiates your company from others. It can also create a cost savings to the company’s bottom line. Just a 1% improvement in loss ratio for a billion dollar company can save 10’s of millions. Insurance companies that utilize this data will mean that insurers would be combing data that they already have access to such as MVRs, clue reports, and the company’s database. They will also access new resources for data such as security cameras, tracking sensors, utility records, and even social media. In addition, adding sources such as traffic and crime reports can give a company a great assessment of a claim risk. Analytics can also shorten the claim cycle and save on payout and operation costs. Loss reserves can be calculated more appropriately by comparing the reported loss with similarly filed claims. A system can be set up to reevaluate the reserves as the claim information is updated.

Analytics can also provide a chance for certain claim submissions to be marked for closer inspection and priority handling. This would allow more senior adjusters to handle certain files from the start more efficiently. This information can also help the insureds with risk management. Analytics

...continued on page 31 www.iiak.org | November/December 2016 | 29

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can predict the chances of a loss such as wind or theft, and help the insured take steps to avoid or decrease the chances of a loss.

Litigation A claim that has to go to litigation can cause a company to use a lot of their expenses. Insurers can utilize Big Data to calculate which claims are more likely to result in litigation. When recognized, these claims can then be assigned quicker to more experienced claim adjusters, who could potentially settle the claims faster and for a lower settlement amount Subrogation Utilizing data collected can assist in finding subrogation opportunities. Using processes such as text analytics can help find subrogation opportunities earlier in the claims process. This will help to minimize loss expenses and maximize subrogation collections. By recognizing these opportunities sooner, you can organize your information needed and start the subrogation process in a timelier manner.

Underwriting Data used for predictive analytics can allow the underwriter to sort out the normal submissions, and have the exceptions handled manually by more senior underwriters. This would allow the underwriters to spend less time screening lower risk applicants, and focus on the more unusual cases with higher risk factors. In areas such as homeowners insurance, carriers are utilizing data to make better predictions about vandalism, theft, and flood risks. The carriers that implement these practices in their process will be the competitive companies in the near future. Underwriters will also be able to properly locate potential problem risks upfront and decline to quote, or surcharge appropriately with exclusions or special deductibles.

Marketing Analyzing data correctly can lower your marketing expenses and improve your organization’s success. Helping to define your target audience and monitoring your current marketing plan for efficiency are just 2 examples of the benefits of data to your marketing needs. Information can also assist with your social media use, website, and mobile marketing strategies.

www.iiak.org | November/December 2016 | 31

Operations Big Data can also improve your company’s process to create better services, lower premiums, increase your sales, lower operation costs, improve loss ratios, increase customer retention, and return higher profits.

Challenges of Using Big Data

There are currently a few challenges for implementing techniques of gathering and using Big Data. One of the main challenges is sorting out the irrelevant information to find the appropriate information that will provide the most benefits and competitive advantage. Once the information is gathered, you must then determine how to utilize it to save costs and increase revenues for your business. To properly gather and analyze Big Data, insurers will have to provide more funding to their IT Departments and make sure they have adequate cloud storage space for this data.

The availability of data and the ability to collect data from various sources into a meaningful format is the biggest area where companies fail in their effort of creating predictive models. This can cause inaccurate data, which can harm a company if applied incorrectly. Also, most insurers lack the ability to collect and analyze data, which can affect their decision-making, business growth, and delivery of great customer service. Collecting and analyzing lots of information can be complex and expensive. There is also the fact that most consumers do not like their personal information being obtained and used. But research has also shown that most individuals would not mind giving up some personal information if it can give them a savings on their premiums.

Implementation

With the current amount of technology available today, every industry has the potential to change the way that companies do business. Big Data is helping companies that are striving to be on the leading edge in their industry.

The volume of information that is becoming available is growing exponentially, and we are now creating the tools to be able to organize and manage this data. Unlike other sectors, the insurance industry has gotten off to a late start to utilizing Big Data, but they are now using it for methods of predictive sales models, marketing, customer service, as well as claims and underwriting. In order to remain competitive in the future, insurance companies will need to take advantage of Big Data. There will be few companies that will emerge and change the industry. These trendsetters will be the companies who embrace change

32 | www.iiak.org | November/December 2016

and adjust their processes around this abundance of information available.

You may be thinking, “Where do we start?” Currently your company may have access to large amounts of information from claims databases, company notes, and publications. Start by determining how analytics can bring value to your company. Become aware of the numerous resources available and how to integrate them to your operations, and improve the automation of your workflows and predictive models. Many insurance companies should reinvent their information management process to get the most value from the enormous amount of information they’ve been collecting for years. Companies’ constant interaction with insureds, agents, and brokers accumulate lots of information with few utilizing that data for external and internal gain. John Anderson, senior managing consultant in IBM’s North American Strategy and Analytics Practice says, “Insurers are sitting on a virtual gold mine of information. Claims activity, underwriting activity, sales and distribution activity. All of that information should be collected and compiled, and that’s beginning to happen as insurers go through transformational changes to their claim systems, underwriting platforms, and even to their distribution capabilities.”

There are no limits to the ways information can be captured for analyzing. Information can be gathered from satellites, fitness wearables, social media, construction plans, weather data, energy resources, traffic cameras, drain systems, Nest home thermostats, and more. Within your organization, you can gather data from your company reports from sales, marketing, distribution, and operations. You can then develop analytic tools to improve theses areas. Once the data is obtained, there are many ways to organize and analyze it. Information can be sorted by coverage lines, geography, industry, claim type, age of insured, amount of loss payouts, or premium amounts. Look for areas of growth, opportunity, and help evaluate performance and workload of individuals. Expand your company’s ability to implement new products, new markets, and new coverages.

Reprinted with permission. Garry Floyd, Senior Personal Lines Underwriter. https://www.linkedin.com/in/garryfloyd

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Can Two Houses Be One Household?

By: Rick Pitts

What do we mean when we use the word “household”? Set aside for a moment the adjective here, the usage of, “Peggy Porter’s so famous now she’s become a household name…”

2. The effective date of another policy listing the spouse as a named insured; or 3. The end of the policy period.

We’re just talking here about the noun, and it sounds like a really simple question, doesn’t it? In fact, the MerriamWebster dictionary definition of “household” is pretty doggone commonsensical. It says a “household” is, “the people in a family or other group that are living together in one house.”

Our industry also has the personal lines variation on the commercial law theme, that of not covering “insured versus insured” lawsuits or claims. In the personal lines arena, we call it the “household exclusion,” and it of course uses the word “household” often.

But that’s not the only definition, and it’s actually not the legal / insurance definition, either. Black’s Law Dictionary says that a household is “a family living together…” It also says that, for insurance purposes, a “household” is generally synonymous with “family” and “home.”

The use of a word like “household” in our standard forms will trigger coverage issues. Many times, as an FC&S Bulletin called “Resident Relatives: Coverage is Dependent on Various Factors” recently noted, these cases arise through the question of whether multiple relatives living in one housing unit (that is, “under one roof”) where actually operating one or multiple households.

Separate upstairs apartments or separate basement residences (even if occupied by a relative of the insured) can easily trigger the question of “one household or two?”

Those sorts of questions have been around for years with mixed results. Many times they are dependent on who’s arguing for one household or two, and whether it’s insured status or an exclusion’s applicability that is at stake.

Now things are starting to get a bit slippery, aren’t they?

“Family” and “home” are much more elusive and elastic concepts than the stuff of “…in one house” or “…under one roof.”

Our standard industry forms use the word “household” with surprising regularity to describe who qualifies as an “insured.” An example is definition 5 in the current ISO HO-3 form (HO 00 03 05 11). It says, 5. ‘Insured’ means: a. You and residents of your household who are: (1) Your relatives; or (2) Other persons under the age of 21 and in your care or the care of a resident of your household who is your relative; b. A student enrolled in school full-time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of: (1) 24 and your relative; or (2) 21 and in your care or the care of a resident of your household who is your relative….

Another example is definition A in the current Personal Auto form (PP 00 01 01 05), which says Throughout this policy, ‘you’ and ‘your’ refer to: 1. The ‘named insured’ shown in the Declarations; and 2. The spouse if a resident of the same household.

If the spouse ceases to be a resident of the same household during the policy period or prior to the inception of this policy, the spouse will be considered ‘you’ and ‘your’ under this policy but only until the earlier of: 1. The end of 90 days following the spouse’s change of residency;

34 | www.iiak.org | November/December 2016

However, a recent case in Indiana has been getting some attention because it asks a different question: can two houses (that is, “under two roofs”) actually still be just one household?

The answer is the legal equivalent of “we don’t know…yet.”

The case is Secura Insurance v. Johnson and it was decided by the Indiana Court of Appeals in February of 2016. The background facts are not terribly unusual. Tim and Sandra O’Brien were homeowners in Hobart in northwest Indiana. The O’Briens purchased a new home in Valparaiso. About a year later, the house in Hobart had not sold and the O’Briens rented the Valparaiso house to Sandra O’Brien’s sister. Both houses were insured under Secura’s policy.

Sandra O’Brien’s sister kept two dogs at the house in Valparaiso.

In May, 2010, one of the dogs escaped from underneath the fence and attacked a neighbor, causing serious injuries. A lawsuit was subsequently filed against the O’Briens and Sandra O’Brien’s sister. The claimant also attempted to establish that Sandra O’Brien’s sister qualified as an “insured” underneath the policy issued by Secura.

Secura’s policy contained an industry-standard definition of insured. Again, the core of this language says that an insured is someone who is named as an insured, of course. It also adds those people who are residents of the household who are relatives or other persons under the age of 21 and in the care of any person named on the policy.

Secura moved for an order that it did not have to provide coverage to Sandra O’Brien’s sister because she was a renter of the house. Secura said she did not qualify as a member of the “household.”

In response, the victim of the dog bite (the plaintiff seeking coverage for the loss) said that the definition was ambiguous and that it should therefore be strictly construed against Secura. The primary basis for the claim of ambiguity was the fact that the policy did not define the term “household.”

The Court of Appeals decided that it could neither rule in favor of Secura on the coverage question, nor could it rule in favor of the claimant/plaintiff. The Court did not say that the word “household” was ambiguous just because the policy didn’t contain a written definition. Instead, the Court found that the word or phrase “household” could be ambiguous when applied to the facts of that particular case. In other words, just because there were two physical residences did not mean that there were necessarily two separate “households.”

coverage to the Valparaiso home while keeping the Hobart home insured. The O’Briens had also used the Valparaiso house address to enroll their children in schools there, even though the house was being rented.

This, said the Court of Appeals, was enough to create a possibility that the single “household” could be in both physical homes at the same time. The Court said as well that the fact that the second house was being rented – a commercial transaction – could be determined to be incompatible with a dual house and single “household” status. The Court of Appeals therefore sent the case back to the trial court to determine which one of those facts mattered most.

How the case is ultimately resolved may ultimately provide guidance to producers on how to procure insurance for the possible “under two roofs” arrangement. Until then, the best advice may be FC&S’ conclusion in general: “Frequently, where a member of a family is living elsewhere or autonomously on the premises, separate insurance is desirable for many reasons, and may save much aggravation and possibly avoid a costly lawsuit.”

Richard S. Pitts, IIAK’s General Counsel is also part of our newest member benefit, First Call Free Legal. Members receive up to a 30minute phone consultation on an insurance or agency-related matter once a year at no charge. Contact IIAK for more information.

The O’Briens had designated the Valparaiso house as a secondary residence premises and had extended the liability

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Policies are underwritten by Bridgefield Casualty Insurance Company and Bridgefield Employers Insurance Company, authorized insurers in AL, AR, FL, GA, IN, KY, LA, MS, NC, SC, TN and TX; BusinessFirst Insurance Company, authorized in FL, GA, KY, NC, SC and TN. ©2016 Summit Consulting LLC | 2310 Commerce Point Drive, Lakeland, FL 33801

www.iiak.org | November/December 2016 | 35

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Big “I” Markets and Travelers Select Accounts are partnering to provide you a complete range of coverage solutions, services, competitive products and pricing that offer your insureds and you both value and flexibility. You can now write the Master Pac SM Business Owner’s Policy (BOP) starting with Office Pac SM and soon to be expanded to more than a dozen segments of the commercial marketplace.

As a registered user of Big “I” Markets you have access to Office Pac right now!

Office Pac is designed for a variety of firms providing including insurance offices, medical, legal, financial or other professional services for their clientele. Travelers’ proprietary BOP product, Master Pac, includes a broad array of industry-specific coverage options and coverage extensions that can be tailored to your clients’ needs.

Travelers’ exposure-based definition makes it easy for you to prequalify a risk, saving you time and increasing your revenue. Simply review the industry-specific exposure guidelines in the Product Resources section of the Office Pac product on Big “I” Markets to quickly determine accounts that are eligible for Master Pac. The time you save by pre-qualifying accounts can be allocated towards growing your business and servicing larger clients.

To review a complete listing of eligible classes or to retrieve your Big “I” Markets password, please visit www.bigimarkets.com.

P.S. Why not quote your own agency and see if you can save some money on your own business insurance while paying yourself commission to do so!

Doing The Right Thing Since 1964 Standing Tall

Mark Maucere, Andy Roe, Jim Roe, Chad Trainor, Janet Phillips and Jim Eades

Ready to stand out?

We’ll stand with you.

To keep your agency relevant, you need the right products, partners and people. Our team of dedicated and responsive professionals can help you fill the gaps in your insurance offerings, providing more unique opportunities for you to meet the needs of your clients. The more you get to know us, the more you’ll see the possibilities.

Let us help you find the right solutions. ®

800.878.9891 ArlingtonRoe.com Aviation | Bonds | Brokerage | Commercial Lines | Farm | Medical Professional Personal Lines | Professional Liability | Transportation | Workers’ Compensation

www.iiak.org | November/December 2016 | 37

Classifieds Acquisitions

Established Louisville agency interested in acquiring insurance agencies in Jefferson and surrounding counties. If you are interested in selling, merging, or need assistance with perpetuation, we would like to talk with you in confidence.

Call R. Alex Rankin, CPCU or Steve B. Thompson, CPCU, at Sterling G. Thompson, Co. at 502-585-3277

Looking for Producers

Independent with top best markets looking to expand presence in Jefferson, Oldham or Shelby counties.

Wanting Personal lines, Producer or book of business to move or purchase.

All arrangements possible, in strict confidence. Please send inquiries to Turner Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065 or call Kurt Turner, CPCU at 502-633-6060.

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Ad Index Acuity 39 Amerisafe 31 Arlington/Roe 37 Associated Risk Managers 7 Big “I” Markets 36 Bolton & Company OBC EMC Insurance 8 FCCI 22 Guard Insurance 26 J.M. Wilson 25 Kentucky Retail Federation 33 KEMI 19 KESA IFC RLI Personal Umbrella 27 Secura 11 Summit Consulting 35 Swiss Re Professional Liability 30 United Fire Group 12 West Bend Mutual Insurance 28 For classified ads or to advertise in the Kentucky IA, contact: Nikki Robins, Communications Director at 502-245-5432 or nrobins@iiak.org

MailChimp

Cost: Free Rating: ««««« Learn more: https://mailchimp.com/ “This email marketing tool helps you build and manage your mailing lists, and easily create and send newsletters. You can also build and customize email templates and view performance reports about your emails. This information can help you send your customers more relevant emails.

MailChimp’s pricing depends on the number of subscribers you have. It’s free to send up to 12,000 emails per month if you have up to 2,000 subscribers.” - Nerd Wallet

FREE AND EASY

CE Acuity U films are available 24/7.

With a multitude of course titles, we cover all your CE needs! Visit acuityu.com!

www.iiak.org | November/December 2016 | 39

Having trouble writing vacant homes?

Call us today!

If your clients are going on an extended vacation or have moved into a new house and still have the old one up for sale, vacant home insurance can be hard to get.

We have a program especially designed for this market.

Vacant homes are an easy target for thieves, vandals or even homeless people.

Great products, great rates, great service.

Don’t put your clients at risk. Vacant homes are a specialty at Bolton & Company.

• Coverage to $4,000,000 • Buildings undergoing improvements also eligible • Very competitive rates

Call us today and let your clients rest easy.

That’s our policy. It’s why we’ve been in business over 50 years.

• Policy terms of 3, 6 or 12 months available • Online rating at our website: www.boltonmga.com

BOLTON & COMPANY

2400 Waterfront Plaza • 325 West Main Street • Louisville, Kentucky 40202 Telephone 502.583.8361 • 800.292.6597 • Fax 502.584.6131 • www.boltonmga.com