Big I Washington Summer 2017 by PHCC-WI

SUMMER 2017

Big I Washington is a publication of the Independent Insurance Agents & Brokers of Washington

BUILDERS 5

Risk

Common Coverage Exclusions & Clauses

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Official publication of Independent Insurance Agents & Brokers of Washington 11911 NE 1st St., Suite B103, Bellevue, WA 98005 Ph. (425) 649-0102 Fax: (425) 649-8573 Web: www.wainsurance.org Officers of IIABW President: Lori Reed, Mitchell Reed & Schmitten Insurance, Inc., Wenatchee President-elect:Rob Tripple, Tripple Tripple & Tripple, Edmonds Secretary: Dave Merrill, Merrill & Merrill, Seattle Treasurer: Melissa Power, ACSR, CIC, Homestreet Insurance, Spokane IIABA Director: Sue Knobeloch, CIC, CPIW, Association of Risk Managers NW, Tacoma Executive VP: Daniel Holst, IIABW, Bellevue Board of Directors Rob Bush, (King), Valley Insurance, Kirkland Craig Field (Chelan/Douglas), Mitchell Reed & Schmitten Insurance, Inc., Wenatchee Matt Henderson (At Large) PayneWest, Richland Duane Henson, LUTCF (Skagit/Island), WAFD Insurance Group, Mt. Vernon Kim Krogh, ARM, (Past President) Hub International Northwest, Spokane Mary Lemon (Spokane), Hub International Northwest, Spokane Amberlyn McQuary Buratto, CIC (At Large), Stonebraker McQuary, Spokane Dave Merrill (At Large), Merrill & Merrill Insurance, Seattle Melissa Power, ACSR, CIC (At Large), Homestreet Insurance, Spokane Nick Stay (Pierce) American Underwriters Insurance, Tacoma Dave Street (Grant), Martin-Morris Agency, Wenatchee Rob Tripple (Snohomish), Tripple Tripple & Tripple, Edmonds Carissa Veltri (Benton-Franklin), Conover, Tri Cities Dan Wareham (At-Large), Blasingame Insurance, Spokane Staff Daniel Holst, Executive V.P. - dholst@wainsurance.org Suzanne Arnett, Sr. V.P. of Education - sarnett@wainsurance.org Kimberly Ostling, Director of Member Programs - kostling@wainsurance.org Kathy Gardner, Administrative Assistant - kgardner@wainsurance.org Bill Stauffacher, Stauffacher Communications, Contract Lobbyist - gocougs@billstauffacher.com Big I Washington is the official magazine of the Independent Insurance Agents & Brokers of Washington and is published quarterly. News items from IIABW members are requested. IIABW does not necessarily endorse any of the companies advertising in this publication or the views of its writers. IIABW reserves the right in its sole discretion to reject advertising that does not meet IIABW qualiﬁcations or which may detract from its business, professional or ethical standards.

Advertising For more information on advertising, contact Eric Johnson Blue Water Publishers, LLC phone: 414.708.2059 • fax: 414.354.5317 eric@bluewaterpublishers.com

The publisher cannot assume responsibility for claims made by advertisers, content provided by the editor, or for the opinions expressed by contributing authors.

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Risk Placement Services

Western National Insurance

Table of Contents 6 A Message from Lori Reed, IIABW President

18 When Sweet FiFi Bites

8 Builders Risk — 5 Common Coverage Exclusions & Clauses

20 Mark Your Calendar: IIABW/PIA Joint Conference

12 Washington State Insurance Commissioner Mike Kreidler

20 IIABW Webinar Series

14 IIABW Lobbies Congress

21 IIABW Associate Members

16 How Many Clients and Policies Should a Personal Lines

22 E&O Coverage That’s Right for Your Business

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IIABW President

Lori Reed

Why Is Your IIABW Membership So Important?

n a rapidly changing insurance landscape where pressure is coming at agents from all sides, IIABW membership is more important now than ever. IIABW defends and advances your interests while providing the services you need to stay competitive. You are all so busy running your business and taking care of our customers it is hard to keep up with all the resources available at your association. Borrowing from David Letterman, here is my top ten list of Big I benefits that you may not be taking advantage of. Markets: Access to insurance markets is a critical part of success for independent agents. Fortunately, your IIABW membership gives you access to a number of markets for sale to your customers. You have access to dozens of niche markets like habitational and affluent homeowners/ auto through Big I Markets; direct appointments through Eagle Agency; personal umbrella, in-home business, homeowners DIC, flood, etc. Advocacy: IIABW is in Olympia and Washington, D.C., 24/7 looking out for independent agents. We are constantly fighting bills which increase paperwork, record keeping, and legal work. IIABW is there to fight against B & O and capital gains tax increases and for rational regulations. Education: IIABW offers high quality education options for continuing education for your staff. Our most recent addition to our offerings has received rave reviews from members. Our new webinar series give you the choice of a dozen live, interactive webinars each month taught by nationally recognized industry leaders. See page 20 for a listing of the upcoming courses. Branding: Members have access to the consumertested Trusted Choice brand which has professionally produced TV, radio, and print ads as well as a host of other marketing and branding tools. Digital Marketing & Referrals: IIABW members get a free listing and referrals on TrustedChoice.com, which gets over a half million visitors a month. Additional subscription options on our customer portal are available 6

to give agencies a more detailed agency profile and preferred placement in agency search results. Timely News: IIABW keeps you informed about the issues that most affect the American Agency System, from legislation to licensing, industry trends to legal precedents. If it’s happening in the world of insurance, you will hear about it in our IIABW Bulletin e-newsletter, website and Facebook page. Virtual University: Our online education resource gives you access to leading technical insurance and agency management information, including our Ask an Expert and access to an extensive research library. E&O: We offer great E&O products and our dedicated professional staff brings experience, market knowledge, and a commitment to customer service to ensure you receive the attention you deserve for this important protection. Young Agents: IIABW is striving to bring more people into the industry as we develop education programs in community colleges. Once in the industry, IIABW’s Young Agents gives new producers and CSRs the education, networking and leadership training to be success in our industry. Technology/Workflow: The Big I’s Agents Council for Technology (ACT) shares the most effective business processes, practices and technologies in order to enhance productivity, service, marketing, sales and security. We appreciate your involvement in the Big I. We are stronger together than we are on our own against the national companies who are spending billions of dollars on advertising each year. For more information on all of these resources, go to www.wainsurance.org. Lori Reed IIABW President Mitchell Reed & Schmitten Wenatchee

BUILDERS 5

Risk

Common Coverage Exclusions & Clauses By Jacquelyn Connelly

BETWEEN RAPIDLY CHANGING CONSTRUCTION TRENDS AND INCREASINGLY SOPHISTICATED RISK MITIGATION TACTICS, PROPERTY OWNERS AND CONTRACTORS HAVE A DELUGE OF DETAILS TO KEEP IN MIND WHEN THEY’RE WORKING TO COMPLETE A PROJECT. THESE INDIVIDUALS TRUST YOU TO HELP THEM SECURE EFFECTIVE BUILDERS RISK COVERAGE FOR THEIR VARIOUS EXPOSURES – AND THAT MEANS YOU NEED TO HONE AN EXPERT UNDERSTANDING OF POLICY LANGUAGE. HERE ARE FIVE BUILDERS RISK COVERAGE EXCLUSIONS AND CLAUSES THAT COULD HAVE A SIGNIFICANT IMPACT ON A CLIENT’S ABILITY TO RECOVER FROM A LOSS.

EXCLUSIONS TO ADDRESS

Faulty design, materials and workmanship: Almost all builders risk policies contain exclusions for faulty design, materials and workmanship. However, most also include an ensuing loss exception, “which basically says if the loss is caused by an otherwise insured peril, the resulting loss will be covered,” says Steve Coombs, president of Risk Resources, a risk management and insurance consulting firm. Consider a project that involves constructing a concrete parking garage. The contractors install a faulty beam, and 80% of the way through construction, everything collapses. “Under most policies in the U.S., what’s excluded is the faulty beam. But if collapse is an otherwise insured peril, the resulting loss should be covered,” Coombs explains. “Many carriers have developed coverage terms to broaden how a builders risk policy could potentially respond to a loss resulting from faulty workmanship,” agrees Sharon Primerano, chief underwriting officer for The Hartford’s marine practice. “Typically, the broadened coverage is available with a higher deductible and additional premium, and can also be sub-limited.” Another option is using one of three standardized exclusions developed by the London Engineering Group (LEG), which limit the exclusionary scope. LEG 1, a total exclusion, provides no coverage – period – in the event of a loss caused by faulty design, materials or workmanship. LEG 2, however, excludes only rectification costs for preventing damage. “Let’s say there’s faulty electrical equipment at a construction site that causes a fire—this would exclude the cost of replacing and installing that faulty component, but the rest of the loss is covered,” Coombs explains. LEG 3 provides the broadest coverage by excluding only improvements to the original material, design or specification. In the same example as above, “let’s say we should have never used that component – we should have used a totally different component that costs 10 times as much,” Coombs says. “What LEG 3 excludes is the cost of the upgrade.”

Already prevalent in Europe and Canada, LEG endorsements are now becoming “fairly common on large construction projects in the U.S.,” Coombs observes. “Three years ago, I would have said $100-million projects only. But now I’m seeing some of these endorsements on projects $50 million and up. As time goes on, you’re going to see them being introduced in projects that are smaller and smaller, because they bring some certainty.” Concurrent causation: Coombs calls these exclusions, which cropped up in the 1980s to protect insurers against losses with multiple causes, the “broadest yet.” Although the terms vary greatly between forms, concurrent causation exclusions deny coverage for loss or damage caused directly or indirectly by any number of specific, listed perils— regardless of any other cause or event that contributes concurrently or in sequence to the loss. Consider a beachside hotel construction project that sustains $10 million worth of damage after a hurricane. “Let’s say $9 million of that is caused by wind and $1 million is caused by flood, and in the builders risk policy, they have coverage for wind but they don’t have coverage for flood,” Coombs says. “An unsophisticated consumer might think they’d at least get $9 million. Depending on the actual wording of the exclusion and applicable insurance laws, they may get nothing.” Coombs, who co-wrote “The Builders Risk Book” with Don Malecki, says concurrent causation exclusions are becoming more extensive in builders risk policies. “It’s something agents need to be very careful about when reviewing proposals from different insurance companies,” he warns. “Nearly all of them have some sort of concurrent causation language, but if you have a list of 10 [excluded perils] vs. a list of only four, there’s going to be a big difference in coverage.” Partial occupancy exclusions: As renovations continue to pick up steam in the construction industry, many buildings are occupied before construction is complete, says Christie Lucas, vice president of commercial product management at Erie Insurance. “The owners want to start generating revenue as soon as possible, so perhaps they will fill the first space and then continue with the remaining space to start getting some revenue in,” she explains.

That’s a problem for your contractor clients, because most builders risk policies contain some kind of partial occupancy exclusion. “Agents need to have that removed if the building’s going to be occupied at any time during construction,” Lucas says. “For an individual building, you can purchase a partial occupancy endorsement that’s basically like a permit. If the agent fails to do that, it could be a costly E&O issue.”

CLAUSES TO WATCH

Separation of insureds: Nearly all builders risk policies insure multiple parties—the owner, the general contractor and the subcontractors. But most don’t contain a separation of insureds clause, which protects each insured individually. “What that means is if one insured violates a policy warranty or condition, that impacts all insureds,” Coombs explains. For example, a builders risk policy may require the general contractor to keep the entire construction site lit and surrounded by an eight foot-tall fence. “Let’s say that the owner secured that policy and the general contractor doesn’t get a copy of it, so they don’t even realize this warranty is in the policy,” Coombs says. “And it turns out that there was no eight-foot 3285 Big I Washington fencing around 7.675X4.9 the entire site, and then there’s a loss—there’s no coverage for anybody.” Gen Umbrella

Coombs notes that in Europe and in Canada, separation of insureds clauses are “standard stuff,” but the U.S. insurance industry has been “slow to catch on.” Other insurance: Many builders risk policies contain this baffling clause, which states that in the event that any other insurance applies to a construction project, the builders risk policy is excess. “If someone buys a builders risk policy, they intend for that builders risk to be primary insurance – that’s the reason they’re buying it,” Coombs says. “They understand the contractor may have separate liability insurance or something, but the purpose of a builders risk policy is to provide funding for repairs or reconstruction so that the parties don’t sit there and spend years litigating.” Slowly but surely, the industry is developing endorsements to confirm that their policies are primary. “But it’s real slow,” Coombs says. “Agents and brokers should be careful to ask for an endorsement which confirms primary coverage, just for contract certainty.” Jacquelyn Connelly is IA senior editor. Reprinted with permission of IIABA.

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WASHINGTON STATE INSURANCE COMMISSIONER

Mike Kreidler

OIC Criminal Investigations Unit

s many as 10 percent of all insurance claims are fraudulent, according to the National Insurance Crime Bureau (NICB), costing the average family up to $700 per year in increased premiums.

Insurance Commissioner Mike Kreidler’s office has a Criminal Investigations Unit that investigates insurance fraud cases in Washington state. The unit includes a director, two prosecutors, one detective sergeant, five detectives, one NICB agent, two criminal analysts and one administrative assistant/accreditation manager. The unit is overseen by an advisory board of representatives from the insurance industry, consumers, the National Insurance Crime Bureau, county prosecutors, and law enforcement. The board oversees the unit’s and advises the insurance commissioner about insurance fraud. The fraud unit gets an average of 200 referrals per month from insurance companies, law enforcement agencies, NICB, OIC staff, and the state Attorney General’s Office (AG). CIU received 3,571 referrals in 2015 and 2016.

Referrals to CIU 01/01/15 to 12/31/16

1,692

1,879 2016

2015

After CIU investigates fraud cases, it works with state and local prosecutors to bring charges against people suspected of violating state laws. The majority of cases are prosecuted in King, Snohomish, Pierce and Thurston counties. CIU CASES Here’s a look at CIU’s cases in 2015 and 2016: Opened criminal cases 150 Criminal cases submitted to prosecutor 52 Criminal cases charged 40 Closed criminal cases 132 Criminal cases declined by prosecutor 9 Criminal cases adjudicated 37 Working criminal cases 202 Sometimes people who are charged in connection with insurance fraud cases don’t appear in court. CIU maintains an insurance 12

fraud most wanted webpage with their information. People can report their whereabouts to CIU or to local law enforcement. The bulk of the cases CIU investigates –73 percent-- involve personal property or property damage, such as vehicles or homes. Many cases each year involve what are called “pay as you crash.” This is when someone is in an auto accident and purchases insurance after the fact. This is a common type of insurance fraud, and it sometimes involves people increasing their coverage after a collision to cover the damage they’ve incurred. About 11 percent of cases involve personal injuries. For example, a Puyallup woman was charged with filing a false insurance claim after she submitted $12,600 in falsified hospital bills for herself and her three children after an auto collision. About 6 percent of cases are insurance producer fraud, commonly writing fake policies to collect commissions. In March 2017, an insurance producer was charged after collecting $49,000 in unearned commissions from Farmers Insurance. He wrote 41 fake auto insurance policies for 11 consumers without their knowledge, and wrote some for himself for cars he did not own. Farmers was able to collect $32,000 from him before firing him. Commissioner Kreidler revoked his producer license in January 2015. EDUCATION AND OUTREACH CIU’s director, Mark Couey, a former officer in the Washington State Patrol, speaks to organizations and the public about fraud education and awareness. CIU provides information for consumers on how to avoid becoming a victim of insurance fraud, and red flags for when others may be committing insurance fraud. In 2016, the CIU earned law enforcement accreditation from the Washington Association of Sheriffs and Police Chiefs, joining 20 percent of Washington state law enforcement agencies to earn it. Earning accreditation was a two-year process during which examiners looked at 133 standards in 29 areas including use of force, health and safety, training, evidence control, and code of conduct. Learn more about Kreidler’s CIU and sign up to receive OIC news and information at https://public.govdelivery.com/accounts/ WAOIC/subscriber/new.

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IIABW Lobbies Congress A team of IIABW members lobbied our Congressional delegation in Washington, D.C., in May 2017. Our group included IIABW President Lori Reed, President Elect Rob Tripple, Sue Tripple, National Director Sue Knobeloch, Treasurer Melissa Power, Young Agent Committee Chair Ryan Porter, Past President John McDonald, Sandy McDonald, Pauline Black and IIABW Executive VP Dan Holst. We met with Representatives Derek Kilmer, Adam Smith and Denny Heck. We also met with the staff from Senators Cantwell and Murray as well as Representatives Jayapal, Reichert, Newhouse, and McMorris Rodgers. We discussed the following issues with our Congressional delegation. Flood Insurance We lobbied for a 10-year reauthorization of a reformed National Flood Insurance Program before it expires on September 30. Some of the reforms that are being considered include increased use of mitigation practices, updated mapping technologies and the purchase of reinsurance to spread taxpayer risk. We also

shared our support for a bill that would allow private flood policies to satisfy the mandatory purchase requirement for flood insurance. The NFIP has a debt of over $24 billion, largely due to Hurricane Katrina and Superstorm Sandy. For more than two decades, up until the 2005 hurricane season, no taxpayer money had been used to support this program. There has been considerable discussion in Congress on the role of agents and their compensation levels. We explained how time intensive and complicated the program is to sell and how critical agents are in the process.

Top Left From left: Ryan Porter, Daniel Holst, Pauline Black, Sue Knobeloch, Rep. Derek Kilmer, John McDonald, Lori Reed, Sandy McDonald, Melissa Power, Sue Tripple, Rob Tripple. Top Right Sandy and John McDonald, Rep. Adam Smith, and Sue Knobeloch Bottom Left From left, Ryan Porter, Rob Tripple, Daniel Holst, Pauline Black, Sue Knobeloch, Lori Reed, Rep. Denny Heck, Sandy McDonald, Melissa Power, John McDonald, and Sue Tripple.

Health Insurance On the day that we met with our Congressional delegation, the U.S. House passed the American Health Care Act. In fact, we were not able to meet with many of our legislators because they were on the House floor voting on this bill. We urged Congress to protect the employer sponsored health care system in any reforms being considered. We asked them to support and co-sponsor the ‘Cadillac tax’ repeal bill (S. 58/H.R. 173). The ‘Cadillac tax’ assesses a damaging 40% tax on health plans that exceed a fixed annual cost which is expected to be less than $11,000 per year for an individual when the law goes into effect on 2020. We lobbied against the idea that is being considered in Congress to tax employees on the now tax exempt cost of their health benefits if the benefits exceed a certain threshold. This proposal would have a similar effect as the ‘Cadillac tax’ to discourage employers to offer health plans to their employees.

Come Grow with Us!

Taxes We urged our legislators to reform small business and individual rates along with corporate rates in tax reform efforts. Since the majority of independent agencies are small business pass-through entities (subchapter S corporations, partnerships, sole proprietorships) that file at individual rates, by reforming only corporate rates would further create an uneven playing field for our members. Insurance Regulatory Reform We shared how the Big I remains dedicated to preserving the state-based system of insurance regulation. We asked our Congressional delegation to significantly restrict or eliminate the Federal Insurance Office which was created by the DoddFrank financial services reform law. FIO has proven to have questionable value for the insurance market and consumers and could evolve into a regulatory force on the federal level. Crop Insurance IIABW continued to lobby our Congressional delegation against any attempts to cut or cap premium incentives on the Crop Insurance Program in the 2018 Farm bill. We also advocated for assurances that the private sector will remain the primary distribution force of the flood program.

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Question: How many clients and policies should a personal lines CSR handle? By Big I Virtual University Faculty

Response 1: “Unfortunately, there is no easy answer to this question. It depends on the types of clients and policies the CSR is handling. If they are largely direct-bill, automaticrenewal policies, then the CSR could probably handle a substantial number and commission amount. But if they’re working with a lot of complex, agencybill policies, then the number should probably be much smaller—and even lower if a lot of renewal remarketing is involved. I recommend checking out the latest Big “I” Best Practices Study as a starting point. The study provides averages by agency size, so it’s a good way to open the discussion before getting down to the specifics.” 16

Response 2: “Because fewer agencies are participating in surveys, such specific metrics are no longer readily available. One helpful survey might be the Growth and Performance Standards Study by The National Alliance for Insurance Education & Research. However, keep in mind that no survey shows what a CSR should be able to handle. All such surveys are simply averages—the answer isn’t black and white.” Response 3: “Personal lines productivity depends on the level of automation in an agency. We have CSRs in fully automated agencies with no files that handle 1,500 customers with an average of 1.3 policies per account. We also have manually driven agencies in which personal lines CSRs can handle only 800 clients.

Another issue is whether the CSR handles quotes or claims, or if another department or person handles these tasks, which would further enhance productivity. The best measure is not industry averages, but information about the historical performance of an agency, with goals of 5% annual productivity increases through more effective procedures and processes.” Response 4: “There’s no magic number. It’s undeniably easier to benchmark personal lines CSRs than commercial ones, since personal lines accounts are typically more similar in size and amount of service required.

One source of information is publications from the National Alliance for Insurance Education & Research. Two books may be helpful: ‘CSR Profile and Growth’ and ‘Performance Standards.’ The authors break down this question by geography and agency size. Another source is independent consultants, such as MarshBerry or others that work on benchmarking. A free benchmarking tool is available through Agency Consulting Group. That said, here is my personal opinion: What CSRs do can varies dramatically from one agency to the next. Most benchmarking tools do not weigh all the variables, including: • Are the CSRs required to do all new business sales? Or are there separate personal lines producers? • Are CSRs required to cross sell and meet account rounding goals? • Is any of the book serviced by a carrier service center? A&M Assoc Ad WA PRINT.pdf

10/20/15

• Are CSRs involved in taking, reporting or following up on claims? Or are customers encouraged to report claims directly to the carrier? • Does the agency use a dependable comparative rating system? • Does the department still maintain customer files? • Does the department maximize downloading and real-time capabilities? • Are the accounts rounded with three or more policies per account? • Is the book of business somewhat standard? Or does the agency specialize, such as in high net-worth clients? When I consult with agency clients, I apply some benchmarking—and some common sense. Many years ago, when I was a personal lines manager, my selling CSRs were required to sell, handle claims, keep paper files up to date, keep the agency management system up to

date and keep the carrier’s system up to date. In other words, they’d do the work three times because there were no downloading or real time capabilities. Each CSR handled approximately 1,000 accounts. That makes most current benchmarking standards look pretty conservative. Remember: You might be looking for an average number, but do you really want your staff to be just average? My rule of thumb: A personal lines CSR should be able to handle 1,000 average accounts or more, depending on the aforementioned variables.” This question was originally submitted by an agent through the Big “I” Virtual University’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. This article was reprinted with permission from IIABA’s Virtual University.

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When Sweet FiFi BITES By Chris Boggs

NATURE VS. NURTURE: BREED VS. TRAINING

More than one-third of homeowners’ insurance liability claims are attributable to dog bites according to a 2016 Insurance Information Institute (III) report. III reported that the average cost of a dog-bite claim in 2015 was $37,214 - a 94 percent increase since 2003. Where do most dog bites occur and who gets bit most often? Statistically, 61 percent of dog bites occur at the owner’s home; and 77 percent of victims are bitten by a dog owned by a family member or family friend. 18

Animals 24-7 editor, Merritt Clifton, conducted a long-term study of dog bite fatalities to determine if breed mattered. His study covered the period September 1982 to May 2016. During that period 658 documented cases of dog-attack deaths were reviewed. Seventy-eight percent of fatalities were attributable to five breeds, and pit bulls accounted for more than half the fatalities: 1. Pit bull / pit bull mix – 53.5 percent of the fatalities; 2. Rottweiler / Rottweiler mix – 14 percent of the fatalities; 3. Husky / husky mix – 4.3 percent of the fatalities; 4. German shepherd / German shepherd mix – 4 percent of the fatalities; and 5. Bull mastiff / bull mastiff mix – 3 percent of the fatalities.

DOG OWNER LIABILITY

States treat dog bites differently, applying one of three concepts to govern the liability or responsibility imposed on dog owners:

• Strict Liability (“Dog Bite Statute”): Thirty-four states and the District of Columbia apply a “Dog Bite Statute.” Dog owners in 31 of these states (and DC) are strictly liable for any injury or property damage caused by the dog (a trespasser, someone committing a crime or the victim harassing or teasing the dog may be exceptions). Three “Dog Bite Statute” states do not apply strict liability; rather these states apply the concept of negligence. These jurisdictions are discussed below. • “One-bite” rule: Sixteen states do not have “Dog Bite Statutes.” These states apply the “one-bite” rule. In “one-bite” states, the owner is not held liable for the dog’s first bite. But once an animal has demonstrated vicious behavior, such as biting or otherwise displayed a “vicious propensity,” the owner can be held liable for future bites. Some states have moved away from the absolute application of the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone, if the dog is of a known dangerous breed (based on nature). These are known as “mixed dog bite statute states” as they apply a mixture of the “one-bite” rule and the strict liability rule based on the breed. • Negligence laws: Several “one-bite” states apply the concept of negligence in determining the liability of the owner. Essentially, the dog owner is liable if the injury occurred because the dog owner was unreasonably careless (negligent) in controlling the dog. Four requirements must be met to prove the owner was negligent: 1) the dog’s owner had a duty to use reasonable care in handling or controlling the dog; 2) the duty was breached; 3) an injury was inflicted; and 4) the injury was a direct result of the breach of duty. Three “Dog Bite Statute” states apply negligence laws rather than strict liability within their dog-bite statutes. In general, these statutes mandate that the owner has a duty to keep the dog under control and failure to do so could result in civil liability. These states are: • Georgia: if the dog is “vicious or dangerous;” • Hawaii (applies a mixture of strict liability and negligence): Strictly liable if dog is known to be dangerous; but can be found negligent regardless of the “propensity” of the dog to violent behavior; and • Tennessee: regardless of the propensity of the dog to violence. • Regardless of the law or concept applied, most states do not hold dog owners liable for injury to trespassers. If a dog owner is statutorily held or judged to be legally

responsible for injury or damage, he may be required to pay the injured person’s: 1) medical bills; 2) lost wages; 3) pain and suffering; and 4) property damage (if any). Here is Washington State’s RCW 16.08.040:

DOG BITES - LIABILITY

(1) The owner of any dog which shall bite any person while such person is in or on a public place or lawfully in or on a private place including the property of the owner of such dog, shall be liable for such damages as may be suffered by the person bitten, regardless of the former viciousness of such dog or the owner’s knowledge of such viciousness. (2) This section does not apply to the lawful application of a police dog, as defined in RCW 4.24.410.

INSURER RESPONSE

Homeowners’ insurers take dog bites very seriously. Both Insurance Services Office (ISO) and American Association of Insurance Services (AAIS) have promulgated dog-bite liability exclusions. And some carriers have developed proprietary dogbite exclusions (or limitations). However, some state’s Homeowners’ rules do not allow the use of a dog bite exclusion. Likewise, some states do not allow carriers to charge additional premiums for the dog bite exposure. Consequently, insurers in these states must underwrite around the exposure. This could mean not accepting risks where there is a known exposure, or nonrenewing insureds when the underwriter becomes aware of an exposure after initial acceptance – if this is even an acceptable reason in statute. Additionally, the law or concept applicable in the state plays a part in the underwriting decision. If the insured is in a “strict liability” state, the carrier is “on the hook” for any and all dog bites. Underwriters with insureds in “one bite” or “negligence law” states may have a bit of “wiggle room” (if the dog bites, the underwriter has a chance to “get off the risk” before another incident). Regardless of the state, the availability of exclusionary endorsements or the ability to charge a higher premium, insurers are attempting to underwrite the dog exposure by identifying the breed of the dog in question and assessing the extent to which the exposure is increased by that breed. From an underwriting perspective, statistics are more powerful evidence than how gentle and loving the owner claims his pit bull, Fifi, is. Reprinted with permission from IIABA’s Virtual University.

MARK YOUR CALENDAR!

IIABW/PIA JOINT CONFERENCE

September 20-22, 2017 Tulalip Resort, Marysville www.wajointconference.com IIABW and the PIA will join together again to give agents a great opportunity to earn CE and network at fun social functions. Register today!

IIABW WEBINAR SERIES IIABW has been receiving rave reviews from our new Webinar series which offers a dozen 3 CE seminars each month on timely topics taught by some of the industry’s premier instructors. All webinars are live and not pre-recorded so you can ask questions and no exam is required. Go our website (www.wainsurance.org) and click on the Education/Webinars tab.

7/20 - Commercial General Liability Coverages 7/20 - Additional Insureds and Certificates of Insurance 7/24 - 10 Things Every Commercial Lines Agent Ought to Know 7/25 - Ethics and Agent Liability 7/26 - Farm Property Coverages 7/27 - Homeowners Hot Topics ... What You Need to Know

We are offering our new seminar, “E&O: Roadmap to Policy Analysis” which is offered every month. It is broken down into two, three hours seminars and when both are taken they are eligible for the 10% Swiss Re loss control credit. JULY 7/12 - Business Auto Coverages 7/13 - E&O: Roadmap to Policy Analysis - Part One 7/13 - E&O: Roadmap to Policy Analysis - Part Two 7/17 - Insuring Toys and Collectibles 7/18 - Fiduciary Liability, ERISA Bonding, and Employee Benefits Liability 7/19 - It’s Not My Fault, or Is It? - Liability Issues in Personal Lines Policies

AUGUST 8/14 - Workers’ Compensation 8/15 - E&O: Roadmap to Policy Analysis - Part One 8/15 - E&O: Roadmap to Policy Analysis - Part Two 8/16 - Personal Auto Hot Topics ... What You Need to Know 8/17 - Cyber Liability 8/21 - Commercial Property Coverages 8/22 - When the Child Becomes the Parent - Aging Parents and Insurance Decisions 8/23 - Insuring Technology Exposures - Products, Property & Professional Liability 8/24 - An Agent’s Guide to Insuring Nonprofits 8/29 - Ethical Dilemmas ... Making the Right Choices 8/30 - Who Is An Insured

IIABW Associate Members The Independent Insurance Agents & Brokers of Washington would like to thank the following companies for their support of Your association. Adjusters International Rich Hallock 400 Oyster Pt. Blvd, #519 South San Francisco, CA 94080 (866) 331-4790 AFCO Premium Finance Taunya Koch 3400 188th St SW, Ste 630 Lynnwood, WA 98037 (425) 245-0008 Alaska National Insurance Scott Lincoln 1111 Third Avenue #2600 Seattle, WA 98101 (206) 515-1820 All Risks Ltd Corky Weber 11811 N Tatum Blvd, Ste 4010 Phoenix, AZ 85028 (425) 495-0242 American Modern John Gerhard 965 NW Baker Crest Ct. McMinnville, OR 97128 (503) 472-6354 AmTrust North America Jason Burns 5 Centerpointe Drive, #350 Lake Oswego, OR 97035 (503) 403-3030 AmWINS Brokerage Joe Constantine 600 University St, Ste 510 Seattle, WA 98101 (206) 922-1801 Anchor Bay Insurance William H. Tanner PO Box 2510 Silverdale, WA 98383 (360) 649-8969 BCE Consulting LLC Jeff Bronaugh 404 3rd Ave S, A-205 Edmonds, WA 98020 (520) 343-4394 Berkley North Pacific Mrs. Karmen Johnson 660 E Watertower St Meridian, ID 83642 (208) 898-5200 Brown & Riding Mark Heuer 901 5th Avenue, Ste 2300 Seattle, WA 98164 (206) 816-6767 Capital Insurance Group Bryan Stanwood 2300 Garden Road Monterey, CA 93940 (831) 233-5500

Capital Premium Financing Garn Kemp 12235 South 800 East Draper, UT 84020 (801) 244-2008

Hull & Co. Jenny Lupescu 950 Pacific Ave, Ste 725 Tacoma, WA 98402 (253) 857-1050

Chubb Group of Ins. Cos. Greg Monroe 701 Fifth Avenue, #2400 Seattle, WA 98104 (206) 224-4744

Imperial PFS Paul DeVenzio 22102 17th Ave SE, Ste 202 Bothell, WA 98021 (425) 951-7800

Cochrane & Company Brian Carney P.O. Box 19150 Spokane, WA 99219 (509) 838-0655

Insurance Producers’ Service Corp. Kimberly Ostling 11911 NE 1st St, Ste B103 Bellevue, WA 98005 (425) 649-0102

Encompass Insurance Maggie Cooper 18911 North Creek Parkway, Ste 200 Bothell, WA 98011 (425) 489-5583 First American P & C Ins. Linda Sanchez 1 First American Way Santa Ana, CA 92707 (714) 250-3000 FIRST Insurance Funding Steve Palmer 450 Skokie Blvd., #1000 Northbrook, IL 60062 (425) 238-1522 Foremost Insurance Group Lena Battraw PO Box 2450 Grand Rapids, MI 49501 (253) 350-7037 General Insurance Brokerage Rick Longo 5342 Clark Rd, #186 Sarasota, FL 34233 (941) 400-5202 Grange Insurance Assn. Steve Stogner PO Box 21089 Seattle, WA 98111 (206) 448-4911 Griffin Underwriting Van Griffin P.O. Box 3867 Bellevue, WA 98009 (425) 453-8599 Hagerty Insurance LLC Ashley Shoemaker 11200 Kirkland Way, Ste 200 Kirkland, WA 98033 (425) 736-7777 HCIT/Trustco, Inc Eric Kingdon 2735 East Parleys Way, Ste 303 Salt Lake City, UT 84109 (801) 278-5341

Just Right Cleaning & Construction Ben Justesen 6446 Rd 3 NE Moses Lake, WA 98837 (509) 765-4138 Liberty Mutual Business Ins, NW Reg Patricia Brown 1001 4th Ave, #1700 Seattle, WA 98154 (206) 473-3405 MAPFRE Insurance Rick Staten 3127 219th Pl SE Bothell, WA 98021 (206) 402-2604 McNeil & Co Bill Dixon 20 Church St Cortland, NY 13045 MetLife Auto & Home Chris Nachtsheim 15127 Main St E, Ste 104, #150 Sumner, WA 98390 (206) 295-3207 Mutual of Enumclaw Ins. Rich Hawkins 1460 Wells Street Enumclaw, WA 98022 (360) 825-2591 National General Insurance Robyn Christian PO Box 3199 Winston-Salem, NC 27102 (336) 435-2357 Nationwide Insurance Carol Miller 2251 Harvard St, #200 Sacramento, CA 95815 (916) 900-5600 NW Insurance Council Kenton Brine 200 Cedar St Seattle, WA 98121 (206) 624-3330

Oregon Mutual Insurance Co. Mary Emerson 11700 Mukilteo Speedway #201, #1239 Mukilteo, WA 98275 (206) 696-2746

Surplus Line Assoc. of WA Robert Hope 600 University St, Ste 1710 Seattle, WA 98101 (206) 682-3409

Pacific Internat’l Underwriters, Inc Randy Blanchard P.O. Box 2007 Edmonds, WA 98020 (425) 771-8988

Swett & Crawford Mike Hamby 720 Olive Way, 18th Floor Seattle, WA 98101 (206) 448-9400

Pacific Interstate Ins Brokers, Inc Ashley Bernardi PO Box 4529 El Dorado Hills, CA 95762 (916) 941-0518 Pemco Insurance Company Steve Milliren P O Box 778 Seattle, WA 98111 (206) 628-4080 Premium Assignment Corp Joseph Schofield 151 Kalmus Drive, Ste C220 Costa Mesa, CA 92626 (206) 552-1079 Progressive Insurance Shelley Rogers 19909 120th Ave NE, Suite 200 Bothell, WA 98011 (440) 910-3394 Red Shield Insurance Jim Brown 1411 SW Morrison St, Ste 400 Portland, OR 97205 (503)226-4146 RIC Insurance General Agency Mandie Strange PO Box 12279 Santa Rosa, CA 95406 (888) 693-7892 R-T Specialty LLC Ed Bukovinsky 601 Union St, 42nd Floor Seattle, WA 98101 (206)708-2000 Safeco Insurance Margaret Wiese 1001 4th Ave, Ste 1600 Seattle, WA 98154 (206) 473-5412

Tapco Underwriters Amanda Blankenship 3060 S. Church St Burlington, NC 27216 (336) 438-3410 Tepco Premium Finance Andy Hansen PO Box 19127 Spokane, WA 99219 (509) 624-5146 Travelers Mary Townsend 1501 4th Avenue, #1000 Seattle, WA 98101 (206) 464-5773 UCA General Ins. Svcs Laurie Eusebio 6363 Katella Ave Cypress, CA 90630 (800) 222-5582 Vertafore Marla Ni 11724 NE 195th St Bothell, WA 98011 (425) 354-6786 WA Surveying & Rating Bureau Tracy Skinner 2101 4th Ave, Ste 300 Seattle, WA 98121 (206) 273-7146 Western National Ins. Steve Richards 9706 4th Avenue NE, Ste 200 Seattle, WA 98115 (206)526-5900 Worldwide Facilities, LLC Michael Stutsman 601 Union St, Suite 1630 Seattle, WA 98101 (206)749-9151

Superior Underwriters Kristen Horlacher P.O. Box 97024 Redmond, WA 98073 (425) 643-5200

Insurance Agents Errors and Omissions Coverage That’s Right for Your Business

Why Big “I” Professional Liability and Swiss Re Corporate SoluƟons?

Swiss Re Corporate SoluƟons Policy Form Highlights

Prompt, Local Service – Superior customer service and exper�se by your Big “I” state associa�on, who serves as your agent with underwri�ng authority oﬀering prompt turn-around of quotes and policy delivery.

Big “I” Professional Liability program and Swiss Re Corporate Solu�ons pride ourselves on oﬀering the strongest coverage form in the marketplace that con�nues to evolve to meet the changing needs of agents. Review the preferred policy form and you will nd that these are just a few of the coverage benets:

More premium discounts – Qualifying agents can save over 50% in premium discounts including the loss control, claims free, agency opera�ons improvement review, efficiency, and carrier concentra�on credits. Deduc�ble Savings – Loss only deduc�ble available along with deduc�ble reduc�on feature offering up to 100% savings of deduc�ble per claim. Ease of Business – Our qualifying policyholders enjoy the benet of automa�c renewal available with no applica�ons along with online applica�ons when required. Claims Handling – Prompt and thorough claims handling by an experienced staff made up primarily of licensed a�orneys that stand ready to support policyholders with any poten�al incident or claim. Flexible Underwri�ng – Targe�ng agencies of all sizes and unique opera�ons including both P&C and L&H-only agencies. Capacity – Limits up to $25M with op�onal umbrella and excess quotes available over approved carriers. Risk Management Tools – Policyholders have FREE access to the exclusive website E&O Happens (www.iiaba.net/eohappens) and the E&O Claims Advisor Newsle�er.

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Stability - Na�onally endorsed program with over 25 years experience and the largest and most stable independent insurance agency E&O program in the country, rated “A+” (Excellent) by A.M. Best.

▪ ▪ ▪ ▪

Exclusive - A Big “I” member exclusive policy form and premium credits led on a Risk Purchasing Group basis give Big “I” members tailored coverage.

▪

Member Oversight - A Professional Liability Commi�ee, comprised of IIABA members, oversees and directly inuences the program. Our program was designed by agents for agents.

Rated A+ by A.M. Best State of the art coverage form exclusive to Big "I" Members Claims-made coverage with full prior acts Coverage for the sale of both Property/Casualty and Life/Health insurance products Limits of liability up to $25 million Broad deni�on of covered professional services and ac�vi�es Comprehensive deni�on of insured Aggregate deduc�bles Defense cost outside the limit $25,000 1st Party Personal Data Breach $1,000,000 3rd Party Personal Data Breach sublimit 60/40 consent to se�le clause Crisis Management coverage; up to $20,000 per policy period for fees, costs, and expenses incurred within 6 months of a crisis event Deduc�ble reduc�on up to $25,000 per claim with proper documenta�on, no limita�on on the number of claims Catastrophe Expense $25,000 per incident, $50,000 per policy period Regulatory defense $60,000 per policy period True worldwide protec�on 10% premium credit 3 years for a�ending an approved loss control program 10% premium Credit for 5 years for having an approved in-house E&O audit

If you have any ques�ons please contact your state administrator.

Agent Advocacy - Supports lobbying eﬀorts protec�ng your industry by contribu�ng a percentage of every premium dollar to the funding of important advocacy eﬀorts of the IIABA.

The informaƟon provided is for general informaƟonal purposes only and you should review the policy form and any applicable endorsements for complete policy language. Please note that all applicaƟons are subject to review, underwriƟng and approval by Westport Insurance CorporaƟon, a member of Swiss Re Corporate SoluƟons.

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Weâ&#x20AC;&#x2122;re proud to announce the Marketing Playbook, our latest innovation to help agents strengthen relationships with clients and prospects. An interactive hub, the Marketing Playbook contains our entire library of brochures, infographics, videos and more, in one organized, easy-to-use place. Giving agents what they need to be successful at helping others is how thoughtful insurance is done. Visit playbook.mutualofenumclaw.com to learn more.

You’re passionate about your clients. We’re passionate about protecting them. You have a passion for supporting your clients. Liberty Mutual has a passion for protecting them with coverages like commercial auto, workers compensation, and business owner’s policy (BOP). With regional offices, industry understanding, and comprehensive coverages for businesses of all sizes, we have the local knowledge and national resources to help your clients thrive. Talk to your territory manager today about Liberty Mutual Insurance, or go to libertymutualgroup.com/business. We are proud to support the Independent Insurance Agents & Brokers of Washington. @LibertyB2B