Texas connection october 2015

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TEXAS CONNECTION TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

OCTOBER 2015

In This Issue   

Guns & Your Homeowners Policy Overlooked Policy Risks Insuring Employees Who Drive Their Own Cars

Shirley Almany This is my first “President’s Corner”.

Presidents Corner ………………….………

Page 3

….…

Classifieds ………………………..…………

Overlooked Property Risks ……………..…

TDI Enforcement Actions …….……..…….

Page 6

Guns and Your Homeowners Policy

Page 8 Page 10 Page 12

Insuring Employees Who Drive Their Own Cars …………………….……..…………....

Page 16

By The Numbers …….….…..………..……

Page 17

……...….…………...……

Our Partners ……..…………….....………

The Last Word ………………………………

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Word Scramble

Page 21 Page 27

Former president Tony Harper passing the gavel to the incoming president, Shirley Almany.

We appreciate Tony’s years of dedicated service and look forward to Shirley’s endless enthusiam and and “can do” attitude!

This association exists solely to support and serve professional member agents and the Independent Agency System in Texas.

Each month in this column I will share with you our goals and the progress we are making. If you have suggestions, comments, even criticism, email me at: pia@piatx.org I promise that you will get my response. Here are some of our goals: 1. Quarterly meetings in Houston, Dallas, and San Antonio with CE classes and new marketing techniques. (See Page ??)

2. Semi-Annual meetings in El Paso and the Rio Grande Valley 3. On Line CE @ minimal cost 4. Expand our on-line Knowledge Base “ASK PIA” with combined experience of 416 years to quickly get you the answers you need.

There will be more. I’m serious about asking for suggestions… Help us make this association the best it can be!

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

Shirley

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Texas Insurance Professional Services

Ray Reyes

or

Bob Dixon

(214) 618-2365

(832) 375-0787

ray@piatx.org

bdixon@piatx.org

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THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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A recent article in the ABA Journal reported that at least six states have proposed laws that would require gun owners to buy special liability coverage. Whether you own a gun for protection, hunting or target practice, what does this mean for your homeowners coverage?

Although fewer than one out of 100,000 people die from accidental discharge of a firearm, it happens. Suicide (6.3 in 100,000) and homicide by firearm (5.1 in 100,000) also happen. If they happen on your property or with your gun, you could be liable.

A homeowners policy will cover you for liability to a third party who suffers bodily injury due to your negligence. The policy will pay for compensatory damages, along with your legal defense costs, if needed. It does NOT cover intentional acts; whether your policy will cover you if someone is injured when you are defending your home might depend on state law.

Because guns can be rare, collectible and prone to theft, most homeowners policies place lower limits on property coverage for guns and firearms than for other types of personal property. For example, your policy might have limits of $100,000 or more on contents, but it will include a separate, lower limit — such as $5,000 — on coverage for firearms. This means if your guns are stolen or lost or damaged by an “insured peril,” such as fire, your policy will pay no more than $5,000 to reimburse you. Some policies have even lower limits for firearms, so if you have valuable guns, you may want to buy additional coverage through a policy rider. Make sure to document your collection with photographs and information on make, model, serial number and value.

A homeowners insurer might not ask applicants whether they have firearms in the house, but if it does, you will want to disclose this fact. Failing to do so could negate coverage if one of your firearms causes injury, or if they are stolen or damaged.

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Welcome to a new market in Texas

Texas PIA Offers Members Satisfying E&O Solutions Fifteen minutes could save you 15%....

Everyone knows that… but did you know that not all E&O policies are the same?

This space is dedicated to all Member Agents or Companies.

It’s FREE!

Look for employees buy & sell agencies

Sell your mother-in-law’s cat Sell your mother-in-law!

E&O is like other types of insurance… you buy it hoping you’ll never need it… but if you do… E&O can be the difference in whether you stay in business or not.

How about it? Do you know what your policy covers…. And more importantly, what it doesn’t?

Texas PIA offers members, quality E&O markets and coverage.

And members say they have saved as much as 40% when they switch to exclusive PIA programs.

Call Today: Ray Reyes (214) 618-2365 ray@piatx.org

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

or

Bob Dixon (832) 375-0787 bdixon@piatx.org

Page 7

New Orleans, LA—September 18, 2015

PIA National President Richie Clements presented the PIA National 2015 Company Rep of the Year Award to Ed Lack of Empower Insurance Group.

"Our honoree‌ is extremely knowledgeable in all the product lines his company sells," said Clements, in presenting the award. "He is a vocal and outspoken supporter of independent agents and the agency system. His company does business with more than 2000 independent agents."

"When his nomination was announced, we were inundated with testimonials from agents singing Ed's praises," Clements said. "One quote summed them up: 'Ed has shown that not only does he care about the success of Empower, but he really cares about the success of the agencies that represent Empower, and how we look in front of our customers.'"

The Texas contingent congratulates Ed for this well deserved honor. Thanks for your faithful support of the mission of Texas PIA!

Ed with Empower President Don Owens and Texas PIA President Tony Harper

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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You sell homeowners insurance to protect your customer’s homes from damage or loss due to fire, theft, vandalism and more. But without certain important coverages, the policy could leave them short of the funds needed to rebuild and recover.

The Problem of Increased Construction Costs Smart consumers usually will pay a bit extra to buy replacement cost homeowners coverage, rather than actual cash value coverage, on their home. They know that the replacement cost policy will replace lost or damaged home and personal property with materials of similar kind and quality, rather than just reimbursing them for current value…which might be much less.

However, even homeowners with replacement cost coverage could find themselves short of funds if a serious loss forced a major remodel or rebuild.

Building codes are constantly evolving to make buildings safer and better able to withstand natural disasters, such as storm, earthquake and fire. Any building more than a few years old might not comply with current building codes. When property damage forces you to rebuild or remodel your home, you most likely will have to bring your construction up to current codes. Depending on your locale, this could mean thousands of extra dollars for additional structural supports, earthquake protections, fire protection, electrical system upgrades and more.

To make matters worse, after a portion of your home is damaged, local authorities will likely require you to repair undamaged portions of your building to bring them up to current codes. And since remodeling usually costs more on a square-foot basis than new construction, these repairs can be costly. Unfortunately, standard property policies exclude coverage for loss or damage resulting from “operation of ordinance or law” that increases construction costs.

A policy endorsement, or addition, called “ordinance or law coverage” or “increased cost of construction coverage” can help you cover some of the unexpected costs of disaster recovery. This (continued on page 12) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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TEXAS DEPARTMENT OF INSURANCE ACTIONS Sylmond, Tonya Date of Action: 5/6/2015 Location: Dallas Action Taken: Sentenced to 3 years deferred adjudication, 120 hours community service, fined $1,500.00 and ordered to pay $4,013.00 in restitution.

Violation: Insurance Fraud, State Jail Felony Olivas, Miguel Date of Action: 5/5/2015 Location: San Antonio Action Taken: Sentenced to 1 day deferred adjudication and fined $250.00.

Violation: Securing Execution of a Document by Deception, Class A misdemeanor

Contact Us Need more information on the benefits of membership?

Have a question about member services? Give us a call: Texas PIA & Young Insurance Professionals 3632 Frankford Rd 200B Dallas, Texas 75287 (972) 862.3333 joe@piatx.org www.piatx.org

Shook, Melissa K Date of Action: 4/30/2015 Location: Dallas Action Taken: Sentenced to 10 years deferred adjudication, 240 hours community service, fined $2,000.00 and ordered to pay $65,583.74 in restitution.

Violation: Fraud Use/Possession of ID Info, 2nd degree felony Chiappini, Lisa A Date of Action: 4/29/2015 Location: Dallas Action Taken: Sentenced to 6 months deferred adjudication and fined $1,500.00 Violation: Insurance Fraud, Class A misdemeanor Flores, Pauline M Date of Action: 4/28/2015 Location: Dallas Action Taken: Sentenced to 8 years deferred adjudication, 160 hours community service, fined $2,000.00 and ordered to pay $8,500.00 in restitution.

Violation: Organized Criminal Activity, 3rd degree felony Riddles, Lance F Date of Action: 4/28/2015 Location: Dallas Action Taken: Sentenced to 6 months deferred adjudication.Violation: Attempt to Commit Theft, Class A Misdemeanor

Never approach a bull

from the front, a horse from the rear, or a fool from any direction.

- The Insurance Sage

: https:// wwwapps.tdi.state.tx.us/inter/asproot/fraud/indictments/clips.asp

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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endorsement provides three types of coverage when laws or ordinances require you to spend more on reconstruction:  the cost of making required repairs to the undamaged portion of a building.  the costs of demolition and debris removal.  increased costs of construction, or actual costs of bringing the damaged portions of your home up to current codes.

To obtain ordinance or law coverage, your property policy must be written on a replacement cost basis, rather than actual cash value basis. If you decide to relocate rather than rebuild after a total loss, your replacement cost homeowners policy would pay the replacement cost of your home, but the increased cost of construction coverage would not apply, since no reconstruction actually occurred.

Debris Removal If a covered peril damages your home, or any part of it, you’ll probably have some trash and debris to remove before repairs can begin. Will your insurance policy cover these costs?

In some cases, debris removal costs could greatly exceed the cost of the direct property damage.

Debris removal can cost more than you might think. If your building is older, it could contain lead paint, asbestos and other contaminants that require special handling and disposal. Only specially licensed contractors can handle these materials, which can be costly.

You could even have debris removal costs even without any covered property damage. For example, a flood or windstorm could deposit debris from another property onto yours. In that case, the debris does not come from “covered property” under the policy, which would not cover removal costs. Exceptions might exist when the debris itself is causing damage to covered property.

The typical homeowners policy provides debris removal coverage as an “additional coverage” over and above your policy’s limits. It will pay the cost of removing debris of “covered property” resulting from a “covered cause of loss.” It usually limits coverage to 25 percent of the amount of the covered direct property loss, less 25 percent of the policy deductible. So, if windstorm (a covered cause of loss) causes $50,000 worth of damage to your house, your policy would pay an additional $12,500 minus 25 percent, or a maximum of $9,375.

Talk to your customers about additional debris removal coverage through a policy addendum, or endorsement.

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Just because an employee uses a personal auto does not relieve the employer of liability if he or she injures someone while on the job.

In many companies, employees who drive during the course of their jobs—whether for deliveries, calling on clients or picking up supplies—use their personal car rather than company cars. This has several advantages for the employer—it does not have to maintain a fleet, it does not have to worry about non-employees driving the car, and the employee’s personal auto liability policy provides the first layer of coverage. Accounting is also simpler—the employer does not have to account for an employee’s personal vs. business use of the car—all the employer has to do is reimburse employees for their mileage at the current IRS rate.

However, just because an employee uses a personal auto does not relieve the employer of liability if he or she injures someone while on the job. An employer would become “vicariously liable” for any injuries an employee caused to a third party during the course of work. (Time spent commuting to and from work is NOT considered work time; therefore, an employer has no liability for an accident that occurs during an employee’s commute.)

An employer can do a couple of things to protect itself from liability when employees drive (continued on page 21) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Once again, it’s time for hunting season and many PIA members will be participating this year. Any time you mix wild animals and firearms, there is a potential for accidents. Let’s be careful this year, and to help you, let’s look at some numbers. 

Approximate number of White-tailed and Mule deer harvested in Texas annually is 500,000.



Approximate number of Javelina and Feral Hogs harvested in Texas annually is 280,000.



Approximate of White Winged, White Tipped and Morning Doves harvested in Texas annually is 10,000,000.



Approximate of Bobwhite and Scaled Quail harvested in Texas annually is 680,000.



Approximate of Wild Turkey harvested in Texas annually is 40,000.



Approximate of Ducks (all species) harvested in Texas annually is 1,500,000.

As the numbers show, hunting is dangerous if you’re an animal. Let’s see how the humans faired: 

Since the state began keeping records in 1966, 553 people have died in 2,759 hunting accidents in Texas.



Each year, there are fewer than three accidents per 100,000 hunters--and Texas has more than a million hunters. Experts credit hunter education programs for this relatively low number.



Swinging on game outside a safe fire zone remains the number one cause of hunting accidents in Texas.



Among 28 recreational activities, hunting ranks third in safety behind camping and billiards, The National Shooting Sports Foundation found.



Childhood gun and shooting accidents are not rare. They are one of the top ten leading causes of accidental death for all age groups outside of newborns and infants.

Hunting is clearly an important hobby in Texas with hunters and anglers spending $4.1 billion annually and supporting 65,993 jobs but safety is the most important thing. Let’s be careful out there.

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Enroll with our new partner, Secure 24/ADT and: 

Show your homeowners customers how to lower their insurance rates with a monitored security system.



Secure 24 offers your customer a special installation pricing.



Secure 24 pays you $200. when they install a system you refer.



Free upgrades to cellular module if there is no phone line to the house



Upgrades available to ADT Pulse (home automation and video)



ADT has a money back service guarantee as well as a movers package guarantee



ADT will pay $500 of the deductible in the case of burglary (certain restrictions apply)



Increase revenue - $200 paid for each installed unit to the referring agent



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

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ENROLL NOW: Call Brett Fallert Direct: 866-776-6574 refer@s24promos.com

Arrange each of the following anagrams to form a single insurance related word.

Keep in mind that the anagram is not a clue. It has nothing to do with the insurance related word. Send us your answers to be entered in a drawing to win a fabulous prize! Feel free to call us if you’re stuck.

972.965.2025 Email to: Joe@piatx.org or fax to 972. 307.7888

MINI COSMOS

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THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Here’s the answers to last month’s puzzle. Remember there’s a $50 prize for the first person to submit the correct answers. (before the answers are published obviously.)

PAPA RAILS

APPRAISAL

SIX COUNSEL

EXCLUSIONS

INCUR HARE

HURRICANE

PURER COD

PRODUCER

ENTER INTO

RETENTION

I SEE CITRUS

SECURITIES

SCREEN OCCUR

OCCURENCES

TEST ME LENT

SETTLEMENT

COY LIP

POLICY

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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For all positions that require driving, check applicants’ motor vehicle records (MVR) before making a final job offer. This will show any tickets they’ve received or accidents they have been involved in. Avoid hiring someone with multiple moving violations, especially for speeding or failing to obey signals. Studies have shown that these habitually careless drivers are more likely to become involved in accidents.

Require employees who drive for work to carry a personal auto policy with at least $500,000 in liability coverage. This will serve as your first layer of liability coverage, so be sure to notify employees that if they’re involved in a work-related accident, their policy will respond first.

Require employees to submit proof of insurance, and make continuing coverage a condition of the job.

Consider buying a business auto policy to cover auto-related liability exposures. The BAP can be written to cover any of an insured’s auto-related liability exposures, indicated by “symbols” on the policy’s schedule of coverages. To see whether your policy covers employee -owned vehicles, check for either Symbol 1 (which covers “any auto”) or Symbol 9 (nonowned autos only) in the schedule of coverages.

The BAP covers only the liability of the named insured—that is, the employer. The business auto policy (and your other liability policies) will not cover the employee’s own liability.

The BAP and other commercial liability policies also will not cover any injuries an employee causes to a fellow employee. Workers’ compensation protects the employer from this type of claim.

In some states, employees can sue their co-workers for work-related injuries under certain circumstances. The employer’s workers’ compensation insurance will not provide coverage for this kind of claim, making the employee personally liable. If you want to provide employees with liability protection for this and other situations, you can buy this additional coverage in an employees as insureds endorsement. The endorsement will provide employees with coverage under your BAP, secondary to the employee’s personal auto policy. Please note that if you have Symbol 9 coverage only (non-owned autos only), the BAP provides liability coverage only; it will not cover property damage to the employee’s car.

THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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the

Last word

Want to analyze your agency operation?

Try a S.W.O.T. Analysis.

This strategic planning tool was developed in the 60’s at Stanford University, and is still taught in just about every MBA program today. It is amazingly simple.

S.W.O.T. is an acronym for Strengths, Weaknesses, Opportunities, and Threats.

Strengths & Weaknesses are INTERNAL. Opportunities & Threats are EXTERNAL. Take a piece of blank paper and divide it into 4 areas. Write each word in one of the quadrants. Then ask yourself, ‘What are my agency’s STRENTTHS’ and write them down in that section… List every Strength you can think of. Then do the same in the Weaknesses Section. And the same with Opportunities and Threats. It may seem silly at first, but somehow this tool helps focus attention on the obvious and make us stop and analyze the matrix. You may want to make this a group exercise with your key employees. Have each one make the same sheet and compile a complete list of S.W.O.T. As an Example: STRENGTH: Our People… customers like them and return WEAKNESS: Training of CSRs on all lines and companies OPPORTUNITY: Expand operation, Buy other agencies THREAT: Big Agency moving in nearby Once the list is complete, number the items by importance. Then, begin your analysis: How can we capitalize on this STRENGTH? How can we reduce or eliminate this Weakness? What outside OPPORTUNITIES should we pursue?

How can we protect ourselves from outside THREATS? Then you set GOALS to help you accomplish those OBJECTIVES. This is just a brief overview. If you would like to use this tool, call me and I’ll send you the forms and more information about S.W.O.T.

Joe