Friday, August 27, 2010
Tague Alliance Partnership Agency Uses Facebook
Tague Insurance, the partnership agency of Tague Alliance, began fully engaging clients and prospects through the use Facebook. The concept is to reach out to clients and prospects in a way that brings a personality to the agency and that builds relationships. See a sampling of what Tague Insurance has been doing recently:
Wednesday, August 18, 2010
WCIRB Proposes Huge Rate Increase
Read the article below....
WCIRB Says 29.6% Rate Increase
As we reported last week, Workers' Compensation Insurance Rating Bureau of California decided to file its largest ever recommended increase in the workers' comp pure premium rate. It is 29.6%. It was decided on a “party-line” vote that divided the 8 carrier members from the 3 public members.
Public members of the Governing Board all voted to oppose the filing, but in the deciding count it was carriers 7 and the public 3. One labor representative who voted last go around with her fellow public members was absent, but her vote wouldn't have changed the outcome.
Public members were also rebuffed in attempts to get the committee to recommend a more moderate increase in the pure premium rate. Public member Bruce Wick, director of risk management for the California Professional Association of Specialty Contractors, urged the committee to exclude the loss adjustment expenses (LAE) reported by the State Compensation Insurance Fund which is the approach that the Department has taken in past decisions.
State Fund's expenses are out of line with the rest of the industry and ultimately inflate the LAE ratio used in the pure premium rate calculation. WCIRB has attempted to deal with this anomaly in the past by tempering the State Fund's data by 50%, which the committee voted to do so again. BY including State Fund’s results the increase is considerably larger. The tally on that vote was also 7 to 3.
State Fund's unallocated loss adjustment expense ratio was a whopping 51.4% last year compared to 8.9% for private carriers, while State Funds allocated loss adjustment expenses were 9.8% compared to the industry’s 13.8% respectively.
CDI has regularly rejected the WCIRB’s approach in the past and is expected to do so again. The change is not insignificant. According to data presented by WCIRB, the LAE ratio for private insurers is 19.8% but this ratio balloons to 22.5% when State Fund's data is included in its entirety. Under WCIRB's methodology the LAE ratio comes in at 21.1%, which is what will be in the filing.
Employers in the construction industry did catch a break in that WCIRB's final recommendation will not include a $1 per hour increase in the dual-wage classification rate. WCIRB proposed the increase to account for wage inflation in the sector, but even carrier representatives had a hard time believing that wages for California's construction workers were actually going up. The vote rejecting the increase was unanimous.
Stay tuned for additional coverage and analysis in the premium edition of Workers' Comp Executive.
-30-
Copyright 2010 Providence Publications, LLC. All Rights Reserved.
WCIRB Says 29.6% Rate Increase
As we reported last week, Workers' Compensation Insurance Rating Bureau of California decided to file its largest ever recommended increase in the workers' comp pure premium rate. It is 29.6%. It was decided on a “party-line” vote that divided the 8 carrier members from the 3 public members.
Public members of the Governing Board all voted to oppose the filing, but in the deciding count it was carriers 7 and the public 3. One labor representative who voted last go around with her fellow public members was absent, but her vote wouldn't have changed the outcome.
Public members were also rebuffed in attempts to get the committee to recommend a more moderate increase in the pure premium rate. Public member Bruce Wick, director of risk management for the California Professional Association of Specialty Contractors, urged the committee to exclude the loss adjustment expenses (LAE) reported by the State Compensation Insurance Fund which is the approach that the Department has taken in past decisions.
State Fund's expenses are out of line with the rest of the industry and ultimately inflate the LAE ratio used in the pure premium rate calculation. WCIRB has attempted to deal with this anomaly in the past by tempering the State Fund's data by 50%, which the committee voted to do so again. BY including State Fund’s results the increase is considerably larger. The tally on that vote was also 7 to 3.
State Fund's unallocated loss adjustment expense ratio was a whopping 51.4% last year compared to 8.9% for private carriers, while State Funds allocated loss adjustment expenses were 9.8% compared to the industry’s 13.8% respectively.
CDI has regularly rejected the WCIRB’s approach in the past and is expected to do so again. The change is not insignificant. According to data presented by WCIRB, the LAE ratio for private insurers is 19.8% but this ratio balloons to 22.5% when State Fund's data is included in its entirety. Under WCIRB's methodology the LAE ratio comes in at 21.1%, which is what will be in the filing.
Employers in the construction industry did catch a break in that WCIRB's final recommendation will not include a $1 per hour increase in the dual-wage classification rate. WCIRB proposed the increase to account for wage inflation in the sector, but even carrier representatives had a hard time believing that wages for California's construction workers were actually going up. The vote rejecting the increase was unanimous.
Stay tuned for additional coverage and analysis in the premium edition of Workers' Comp Executive.
-30-
Copyright 2010 Providence Publications, LLC. All Rights Reserved.
Sunday, August 1, 2010
Tague Alliance - Collapse Coverage Definition & Overview
The overview and descriptions below are provided by Rough Notes and they do a very good job of outlining the many considerations when it comes to Collapse coverage. Tague Alliance wants to help our SIAA member agencies stay informed. As an SIAA Master agency in California we see earthquake as a form of collapse...but generally not a frequent cause of collapse. It is important that insurance agents understand the nuances of coverage and we hope this overview of Collapse sheds more light on this intricate subject.
Direct loss to covered property that involves either total or partial collapse of a building is insured by most "broad" and "special" commercial and personal property forms. However, the coverage only applies if the loss is caused by a hazard (peril) listed in the policy. "Collapse" has been removed from the Perils Insured Against section of such forms and is included under the Additional Coverage section. (Please refer to the form used.) However, two issues that make consideration of collapse coverage so difficult are the facts that collapse is often created by sources of loss that are, by themselves, ineligible for coverage (such as construction problems, acts of insects, rotting, etc.) and that collapse is typically gradual rather than sudden. Therefore, the peril’s dependent nature makes its handling significantly different from other perils.
COLLAPSE AND COMMERCIAL PROPERTY
Generally, collapse is covered for commercial property when caused by:
· any one of the specified causes of loss: fire; lightning; explosion, windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage
· breakage of building glass
· hidden decay
· hidden insect or vermin damage
· weight of people or personal property
· weight of rain that collects on a roof
· use of defective material or methods in construction, remodeling or renovation, but only if the collapse occurs during the course of the construction, remodeling or renovation
· if collapse occurs after construction, remodeling or renovation is complete and is caused in part by one of the causes listed above, the loss or damage is covered even if defective material or methods used during construction, remodeling or renovation, contributes to the collapse
For direct losses that do not involve collapse of the building or any part of the building but rather from some other type of collapse, there is coverage for otherwise covered personal property if:
1. the personal property that has collapsed is located inside an insured building and
2. the collapse was the result of an otherwise covered cause of loss
Example: A fire occurs in one section of Consumerland’s warehouse. The fire is put out, but it severely damaged the base of a 50 foot length of heavy duty shelving. The shelving collapses, destroying thousands of dollars worth of office equipment. Since fire caused the collapse, the damaged equipment is eligible for coverage.
Other types of property are covered for collapse if it is due to a covered cause of loss as listed above, but only if the damage or loss is a direct result of the collapse of a building covered by the policy form and the property damaged is also insured in policy. The other types of property are:
· outdoor radio or television antennas, satellite dishes, and their lead-in wiring, masts or towers
· awnings, gutters and downspouts
· yard fixtures
· outdoor swimming pools
· fences
· piers, wharves and docks
· beach or diving platforms or appurtenances
· retaining walls
· walks, roadways and other paved surfaces
Collapse is considered to be a sudden event; therefore, incidents involving settling, cracking, shrinkage, bulging, or expansion do not qualify.
The Additional Coverage for collapse does not in any way increase the limit of insurance provided in policy.
Example: Heavy monsoon-type rains pelted a covered building for more than two weeks. The weight of accumulated rain on the roof caused the building to collapse. As the building collapsed, it pulled down the satellite dish and several other antennas attached by lead-in wires, along with awnings, several outdoor light fixtures in close proximity, and portions of a fence. Further, the impact of the collapse damaged the adjacent sidewalk and parking areas. This all would be covered by the definition of collapse.
Example: However, there is no coverage when, as a result of the same monsoon, a mudslide occurred. The mudslide damaged the walls and lining of a swimming pool, filling it with mud, damaging pool equipment and fixtures. This would not be covered because the damage caused by a mudslide is not a covered cause of loss nor was the damage caused directly by the collapsed building.
COLLAPSE AND PERSONAL PROPERTY
There is coverage for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:
1. Perils insured against in personal property (Coverage C). These perils apply to covered buildings and personal property for loss insured by this additional coverage;
2. Hidden decay;
3. Hidden insect or vermin damage;
4. Weight of contents, equipment, animals, or people;
5. Weight of rain which collects on a roof; or,
6. Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.
Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf, or dock is not included under items b through f above unless the loss is a direct result of the collapse of a building.
The same as with commercial property, collapse does not include:
· settling
· cracking
· shrinking
· bulging
· expansion
Example: After being built, a restaurant starts to settle and this causes cracks in the walls and foundation. Damage of this type would not be covered in the policy.
Also, just like commercial property, the personal property coverage does not increase the insurance limit that applies to the damaged covered property.
WHEN DOES "COLLAPSE" OCCUR?
"Collapse," as specifically covered under Additional Coverage in the various standard provisions of property insurance forms, does not include "settling, cracking, shrinkage (or shrinking), bulging or expansion." With this in mind, we may look to dictionary definitions and significant court rulings for guidelines in determining if a structure has "collapsed." Webster’s International Unabridged Dictionary defines collapse as follows:
"To fall or shrink together abruptly, as the sides of a hollow vessel; to cave in; to fall into a flattened state; often, with the idea of design, to fall into, or to be reduced to, a more compact form (this table collapses) .”
"To break down or fail abruptly and utterly; to go to pieces; as, his health and plans collapsed together.”
"To cave in; crumble suddenly"
"To suffer a physical collapse; to fall suddenly helpless."
COURT DECISIONS
A major problem throughout the years has been the determination of the nature or degree of structural damage that must occur before a structure can be considered to have "collapsed" per a policy’s definition. Various courts have contributed much to our present understanding and determination of when coverage is applicable.
Courts have relied heavily on dictionary definitions, those meaningful and acceptable to the average person, in deciding cases involving application of insurance policies to losses. Though now more than 40 years have passed, it was a 1964 decision that substantially influenced how courts and insurers continue to handle this issue. What the courts said about "collapse" was more important than the cases’ particulars.
Graffeo et al. v. United States Fidelity & Guaranty Co., N. Y. Supreme Court, Appellate Division, decided January 6, 1964, was concerned with an "all risks" Homeowners policy. The court said:
"It is our conclusion that there was not a ‘collapse’ of the premises within the intendment of the policy (see Gage v. Union Mutual Fire Insurance Co., 122 Vt. 246; Employers Mutual Fire Ins. Co. v. Nelson, 361 S.W. 2d 704 Tex.). The Appellate Division in the Third Department has interpreted the ‘collapse’ of a building as used in an insurance policy to include ‘an element of suddenness, a falling in, and total or near total destruction.’ (Weiss v. Home Insurance Co., 9 A D 2d 598.). It is true that there is a minority view which construes ‘collapse’ as a ‘sinking, bulging, cracking, pulling away of the wall’ (Travelers Fire Insurance Co. v. Wahley, 272 F. 2d 288, applying Kansas law). The latter construction, however, if applied to the instant case, would do violence to other provisions of the policy, particularly the basic exclusionary clause with respect to settling, etc. Only recently the principle has been reaffirmed that courts cannot construe a particular provision of an insurance policy in such a way as to emasculate the clear intent of its other provisions. (Walters vs. Great American Indemnity Company, 12 N. Y. 2d 967.)”
"Since we find that there was no collapse within the purview of the policy, its basic exclusionary clause with respect to settling is applicable."
COLORADO CASE
Sherman v. Safeco Insurance Company of America, Colorado Court of Appeals, No. 82CA-1311, June 16, 1983, confirmed that "collapse" need not be total. Judgment denying an insured’s claim for the collapse of a residence under Homeowners insurance, which provided coverage for "collapse of buildings or any part thereof," was reversed. The trial court had construed the term "collapse" to mean a complete falling down of the building, and since the insured’s residence did not completely fall down, concluded that a collapse did not occur. The appellate court, however, construed "collapse" as not necessarily involving a complete falling down, and also stated that the policy provided for collapse not only of the entire building but also of "any part thereof."
MISSOURI CASE
Eaglestein v. Pacific National Fire Insurance Co., Kansas City Court of Appeals, Missouri, February 3, 1964, also involved "all risk" coverage on a dwelling and comparable cracking of walls, etc. The court said:
"14 C.J.S., p. 1316, defines ‘collapse’ as follows: ‘To break down or fail abruptly and utterly, to cave in; to close by falling or shrinking together, to fall together, or into an irregular mass or flattened form, through loss of connection or rigidity and support of the parts or loss of the contents, as a building through the falling in of its sides.’”
"The policy on which this suit was brought did not insure against ‘collapse’ and stop. It carried a plain exclusion of ‘settling, cracking, shrinkage or expansion of pavements, foundations, walls, floor or ceilings’ from coverage.”
"We believe that the policy provisions are not ambiguous, certainly not under the factual situation before us. In our opinion, the phraseology used has a clear and commonly understood meaning and hence needs no construction over, above and beyond its plain meaning. We regard the opinions of those appellate courts denying coverage under a `collapse clause’ in those instances where the walls cracked or settled as being better reasoned and as having reached more logical results. We concur with the conclusion of the trial judge that plaintiff’s casualty, as shown by the evidence, is not covered by the policy."
OHIO CASE
The Ohio Supreme Court asserted, in the case of Olmstead, Trustee, v. Lumbermens Mutual, that there is no ambiguity in the word "collapse." The case was decided May 27, 1970 on appeal from the Hamilton County (Ohio) Court of Appeals. In summary, the court stated that, "The word, in its plain, common and ordinary sense, means a falling down, falling together, or caving into an unorganized mass."
Let’s look at one final court case regarding collapse:
"COLLAPSE" HELD COVERED ONLY ACCORDING TO ITS POPULAR MEANING
A "broad form" homeowner’s policy contained the following insuring provision: "We cover direct loss to the property owner insured under the Dwelling and Personal Property Coverage caused by ...13. Collapse of buildings or any part of a building....Collapse does not include settling, cracking, shrinkage, bulging or expansion...."
The insured filed a claim when large cracks and bulges were observed in the living room ceiling after he and his wife had lived in the house for nine years. A contractor he hired to inspect the damage reported that the sheetrock had separated from the truss or rafter, but could not determine the cause of the separation. The insurer denied the claim on the basis of "no coverage." In the course of litigation, the insured appealed a trial court judgment in favor of the insurance company.
The insurer contended that "collapse" means total destruction or caving in and further pointed to the specific policy language that, with respect to coverage provided, the named peril does not include "settling, cracking, shrinkage, bulging or expansion."
Citing various precedents and authorities, the appeal court said that the familiar rules of construction require the terms used in insurance policies "to be construed in their plain, ordinary and popular sense." Referring to Webster’s Third New International Dictionary 443 (1961) for such meaning, the court found "collapse" defined as follows:
"1: to break down completely: fall apart in confused disorganization: crumble into insignificance or nothingness: disintegrate ...2: to fall or shrink together abruptly and completely: fall into a jumbled or flattened mass through the force of external pressure: fall in... 3: to cave in, fall in, or give away: undergo ruin or destruction by or as if by falling down." Other definitions examined were similar.
The court said: "Applying the ordinary meaning of the word to the facts as found, the ceiling clearly has not ‘collapsed.’ Accordingly, there is no coverage under the policy, and the trial court is affirmed."
Editor’s Note: "Collapse" has been removed from the Perils Insured Against section and is included under the Additional Coverages section of policies used by numerous companies. The change is to make it clear that "collapse" is covered only when caused by specified perils enumerated with respect to Coverage C, plus several other stated causes.
(Owens et ux., Plaintiffs, Appellants v. Tennessee Farmers Mutual Insurance Company, Defendant, Appellee. Tennessee Court of Appeals, Eastern Section. C.A. No. 127. June 9, 1989. CCH 1989-90 Fire and Casualty Cases, Paragraph 1933.)
Direct loss to covered property that involves either total or partial collapse of a building is insured by most "broad" and "special" commercial and personal property forms. However, the coverage only applies if the loss is caused by a hazard (peril) listed in the policy. "Collapse" has been removed from the Perils Insured Against section of such forms and is included under the Additional Coverage section. (Please refer to the form used.) However, two issues that make consideration of collapse coverage so difficult are the facts that collapse is often created by sources of loss that are, by themselves, ineligible for coverage (such as construction problems, acts of insects, rotting, etc.) and that collapse is typically gradual rather than sudden. Therefore, the peril’s dependent nature makes its handling significantly different from other perils.
COLLAPSE AND COMMERCIAL PROPERTY
Generally, collapse is covered for commercial property when caused by:
· any one of the specified causes of loss: fire; lightning; explosion, windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage
· breakage of building glass
· hidden decay
· hidden insect or vermin damage
· weight of people or personal property
· weight of rain that collects on a roof
· use of defective material or methods in construction, remodeling or renovation, but only if the collapse occurs during the course of the construction, remodeling or renovation
· if collapse occurs after construction, remodeling or renovation is complete and is caused in part by one of the causes listed above, the loss or damage is covered even if defective material or methods used during construction, remodeling or renovation, contributes to the collapse
For direct losses that do not involve collapse of the building or any part of the building but rather from some other type of collapse, there is coverage for otherwise covered personal property if:
1. the personal property that has collapsed is located inside an insured building and
2. the collapse was the result of an otherwise covered cause of loss
Example: A fire occurs in one section of Consumerland’s warehouse. The fire is put out, but it severely damaged the base of a 50 foot length of heavy duty shelving. The shelving collapses, destroying thousands of dollars worth of office equipment. Since fire caused the collapse, the damaged equipment is eligible for coverage.
Other types of property are covered for collapse if it is due to a covered cause of loss as listed above, but only if the damage or loss is a direct result of the collapse of a building covered by the policy form and the property damaged is also insured in policy. The other types of property are:
· outdoor radio or television antennas, satellite dishes, and their lead-in wiring, masts or towers
· awnings, gutters and downspouts
· yard fixtures
· outdoor swimming pools
· fences
· piers, wharves and docks
· beach or diving platforms or appurtenances
· retaining walls
· walks, roadways and other paved surfaces
Collapse is considered to be a sudden event; therefore, incidents involving settling, cracking, shrinkage, bulging, or expansion do not qualify.
The Additional Coverage for collapse does not in any way increase the limit of insurance provided in policy.
Example: Heavy monsoon-type rains pelted a covered building for more than two weeks. The weight of accumulated rain on the roof caused the building to collapse. As the building collapsed, it pulled down the satellite dish and several other antennas attached by lead-in wires, along with awnings, several outdoor light fixtures in close proximity, and portions of a fence. Further, the impact of the collapse damaged the adjacent sidewalk and parking areas. This all would be covered by the definition of collapse.
Example: However, there is no coverage when, as a result of the same monsoon, a mudslide occurred. The mudslide damaged the walls and lining of a swimming pool, filling it with mud, damaging pool equipment and fixtures. This would not be covered because the damage caused by a mudslide is not a covered cause of loss nor was the damage caused directly by the collapsed building.
COLLAPSE AND PERSONAL PROPERTY
There is coverage for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:
1. Perils insured against in personal property (Coverage C). These perils apply to covered buildings and personal property for loss insured by this additional coverage;
2. Hidden decay;
3. Hidden insect or vermin damage;
4. Weight of contents, equipment, animals, or people;
5. Weight of rain which collects on a roof; or,
6. Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.
Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf, or dock is not included under items b through f above unless the loss is a direct result of the collapse of a building.
The same as with commercial property, collapse does not include:
· settling
· cracking
· shrinking
· bulging
· expansion
Example: After being built, a restaurant starts to settle and this causes cracks in the walls and foundation. Damage of this type would not be covered in the policy.
Also, just like commercial property, the personal property coverage does not increase the insurance limit that applies to the damaged covered property.
WHEN DOES "COLLAPSE" OCCUR?
"Collapse," as specifically covered under Additional Coverage in the various standard provisions of property insurance forms, does not include "settling, cracking, shrinkage (or shrinking), bulging or expansion." With this in mind, we may look to dictionary definitions and significant court rulings for guidelines in determining if a structure has "collapsed." Webster’s International Unabridged Dictionary defines collapse as follows:
"To fall or shrink together abruptly, as the sides of a hollow vessel; to cave in; to fall into a flattened state; often, with the idea of design, to fall into, or to be reduced to, a more compact form (this table collapses) .”
"To break down or fail abruptly and utterly; to go to pieces; as, his health and plans collapsed together.”
"To cave in; crumble suddenly"
"To suffer a physical collapse; to fall suddenly helpless."
COURT DECISIONS
A major problem throughout the years has been the determination of the nature or degree of structural damage that must occur before a structure can be considered to have "collapsed" per a policy’s definition. Various courts have contributed much to our present understanding and determination of when coverage is applicable.
Courts have relied heavily on dictionary definitions, those meaningful and acceptable to the average person, in deciding cases involving application of insurance policies to losses. Though now more than 40 years have passed, it was a 1964 decision that substantially influenced how courts and insurers continue to handle this issue. What the courts said about "collapse" was more important than the cases’ particulars.
Graffeo et al. v. United States Fidelity & Guaranty Co., N. Y. Supreme Court, Appellate Division, decided January 6, 1964, was concerned with an "all risks" Homeowners policy. The court said:
"It is our conclusion that there was not a ‘collapse’ of the premises within the intendment of the policy (see Gage v. Union Mutual Fire Insurance Co., 122 Vt. 246; Employers Mutual Fire Ins. Co. v. Nelson, 361 S.W. 2d 704 Tex.). The Appellate Division in the Third Department has interpreted the ‘collapse’ of a building as used in an insurance policy to include ‘an element of suddenness, a falling in, and total or near total destruction.’ (Weiss v. Home Insurance Co., 9 A D 2d 598.). It is true that there is a minority view which construes ‘collapse’ as a ‘sinking, bulging, cracking, pulling away of the wall’ (Travelers Fire Insurance Co. v. Wahley, 272 F. 2d 288, applying Kansas law). The latter construction, however, if applied to the instant case, would do violence to other provisions of the policy, particularly the basic exclusionary clause with respect to settling, etc. Only recently the principle has been reaffirmed that courts cannot construe a particular provision of an insurance policy in such a way as to emasculate the clear intent of its other provisions. (Walters vs. Great American Indemnity Company, 12 N. Y. 2d 967.)”
"Since we find that there was no collapse within the purview of the policy, its basic exclusionary clause with respect to settling is applicable."
COLORADO CASE
Sherman v. Safeco Insurance Company of America, Colorado Court of Appeals, No. 82CA-1311, June 16, 1983, confirmed that "collapse" need not be total. Judgment denying an insured’s claim for the collapse of a residence under Homeowners insurance, which provided coverage for "collapse of buildings or any part thereof," was reversed. The trial court had construed the term "collapse" to mean a complete falling down of the building, and since the insured’s residence did not completely fall down, concluded that a collapse did not occur. The appellate court, however, construed "collapse" as not necessarily involving a complete falling down, and also stated that the policy provided for collapse not only of the entire building but also of "any part thereof."
MISSOURI CASE
Eaglestein v. Pacific National Fire Insurance Co., Kansas City Court of Appeals, Missouri, February 3, 1964, also involved "all risk" coverage on a dwelling and comparable cracking of walls, etc. The court said:
"14 C.J.S., p. 1316, defines ‘collapse’ as follows: ‘To break down or fail abruptly and utterly, to cave in; to close by falling or shrinking together, to fall together, or into an irregular mass or flattened form, through loss of connection or rigidity and support of the parts or loss of the contents, as a building through the falling in of its sides.’”
"The policy on which this suit was brought did not insure against ‘collapse’ and stop. It carried a plain exclusion of ‘settling, cracking, shrinkage or expansion of pavements, foundations, walls, floor or ceilings’ from coverage.”
"We believe that the policy provisions are not ambiguous, certainly not under the factual situation before us. In our opinion, the phraseology used has a clear and commonly understood meaning and hence needs no construction over, above and beyond its plain meaning. We regard the opinions of those appellate courts denying coverage under a `collapse clause’ in those instances where the walls cracked or settled as being better reasoned and as having reached more logical results. We concur with the conclusion of the trial judge that plaintiff’s casualty, as shown by the evidence, is not covered by the policy."
OHIO CASE
The Ohio Supreme Court asserted, in the case of Olmstead, Trustee, v. Lumbermens Mutual, that there is no ambiguity in the word "collapse." The case was decided May 27, 1970 on appeal from the Hamilton County (Ohio) Court of Appeals. In summary, the court stated that, "The word, in its plain, common and ordinary sense, means a falling down, falling together, or caving into an unorganized mass."
Let’s look at one final court case regarding collapse:
"COLLAPSE" HELD COVERED ONLY ACCORDING TO ITS POPULAR MEANING
A "broad form" homeowner’s policy contained the following insuring provision: "We cover direct loss to the property owner insured under the Dwelling and Personal Property Coverage caused by ...13. Collapse of buildings or any part of a building....Collapse does not include settling, cracking, shrinkage, bulging or expansion...."
The insured filed a claim when large cracks and bulges were observed in the living room ceiling after he and his wife had lived in the house for nine years. A contractor he hired to inspect the damage reported that the sheetrock had separated from the truss or rafter, but could not determine the cause of the separation. The insurer denied the claim on the basis of "no coverage." In the course of litigation, the insured appealed a trial court judgment in favor of the insurance company.
The insurer contended that "collapse" means total destruction or caving in and further pointed to the specific policy language that, with respect to coverage provided, the named peril does not include "settling, cracking, shrinkage, bulging or expansion."
Citing various precedents and authorities, the appeal court said that the familiar rules of construction require the terms used in insurance policies "to be construed in their plain, ordinary and popular sense." Referring to Webster’s Third New International Dictionary 443 (1961) for such meaning, the court found "collapse" defined as follows:
"1: to break down completely: fall apart in confused disorganization: crumble into insignificance or nothingness: disintegrate ...2: to fall or shrink together abruptly and completely: fall into a jumbled or flattened mass through the force of external pressure: fall in... 3: to cave in, fall in, or give away: undergo ruin or destruction by or as if by falling down." Other definitions examined were similar.
The court said: "Applying the ordinary meaning of the word to the facts as found, the ceiling clearly has not ‘collapsed.’ Accordingly, there is no coverage under the policy, and the trial court is affirmed."
Editor’s Note: "Collapse" has been removed from the Perils Insured Against section and is included under the Additional Coverages section of policies used by numerous companies. The change is to make it clear that "collapse" is covered only when caused by specified perils enumerated with respect to Coverage C, plus several other stated causes.
(Owens et ux., Plaintiffs, Appellants v. Tennessee Farmers Mutual Insurance Company, Defendant, Appellee. Tennessee Court of Appeals, Eastern Section. C.A. No. 127. June 9, 1989. CCH 1989-90 Fire and Casualty Cases, Paragraph 1933.)
Wednesday, July 14, 2010
Tague Alliance - Business Insurance
Business Insurance Costs
Besides worrying about the daily responsibility of running their business, commercial insureds may have other concerns such as rising insurance costs, reduced insurance availability, the impact on coverage due to experiencing recent losses, etc.
Businesses price their products to cover the costs of production as well as their sales and marketing expenses. Prices also reflect some post-sales costs such as repair or replacement under warranty. At one time many industries used a pricing strategy for their products that failed to reflect their true costs. They assumed that lower prices would promote increased sales and the higher sale volume would make up the cost difference. The strategy wasn’t successful. It hasn’t worked for the auto industry, the computer industry or the insurance industry.
The problems of the insurance industry became apparent within the turn of the century and were drastically exasperated by the events of September 11, 2001. That catastrophe substantially affected the insurance industry. Workers Compensation, a coverage that had never experienced a loss of that magnitude, was struck by a catastrophic loss. Property losses, business income losses, liability losses, life insurance claims, every category of insurance coverage affected by that man-made event.
The insurance industry’s beginning attempts to gradually correct their faulty pricing practices was replaced by the need for a sudden and violent change. For much of the current decade, insurance companies have had to handle many more claims being presented many years after their policies have expired. In the case of pollution, asbestos and employment practices, the industry is being asked to handle losses that policies weren’t designed to even cover.
Well, what can a business owner do to minimize their high insurance cost? Before considering sacrificing the amount of protection a business carries just to save money, consider alternatives. Some other solutions would be:
1. Review your coverage:
a. Take a close look at your insurance. Could you increase the deductibles to lower your premium?
b. Are you carrying physical damage coverage on commercial vehicles that aren’t worth it?
c. Are you insuring items you could replace out of pocket? Are there pieces of equipment that are insured when they could be replaced from operating funds without submitting a claim?
2. Review your exposures:
a. Could you reduce the premium by installing an alarm system or fire protection system? Would these premium savings offset the cost of the system?
b. Could you implement safety programs that would reduce the cost or make the insurance company more interested in providing coverage? For example: driver safety programs, back to work programs, safety training in proper use of equipment and job functions.
3. Identify your insurance goals:
a. Do you need an insurance company that can provide loss control services?
b. Do you need an insurance company that can provide claim-handling services for your Workers Compensation insurance?
c. Do you need an insurance company that will allow you to make payments by phone or on-line 24/7?
d. Do you need an insurance company that has a local agent/representative that can assist you in your insurance solutions?
Shopping and price are not the only issues in insurance. What you don’t know can cost you more in the long run than you could ever save in premiums. Discuss your situation with an insurance professional and make the choice that works for you.
COPYRIGHT: Insurance Publishing Plus, Inc. 2003, 2008
Besides worrying about the daily responsibility of running their business, commercial insureds may have other concerns such as rising insurance costs, reduced insurance availability, the impact on coverage due to experiencing recent losses, etc.
Businesses price their products to cover the costs of production as well as their sales and marketing expenses. Prices also reflect some post-sales costs such as repair or replacement under warranty. At one time many industries used a pricing strategy for their products that failed to reflect their true costs. They assumed that lower prices would promote increased sales and the higher sale volume would make up the cost difference. The strategy wasn’t successful. It hasn’t worked for the auto industry, the computer industry or the insurance industry.
The problems of the insurance industry became apparent within the turn of the century and were drastically exasperated by the events of September 11, 2001. That catastrophe substantially affected the insurance industry. Workers Compensation, a coverage that had never experienced a loss of that magnitude, was struck by a catastrophic loss. Property losses, business income losses, liability losses, life insurance claims, every category of insurance coverage affected by that man-made event.
The insurance industry’s beginning attempts to gradually correct their faulty pricing practices was replaced by the need for a sudden and violent change. For much of the current decade, insurance companies have had to handle many more claims being presented many years after their policies have expired. In the case of pollution, asbestos and employment practices, the industry is being asked to handle losses that policies weren’t designed to even cover.
Well, what can a business owner do to minimize their high insurance cost? Before considering sacrificing the amount of protection a business carries just to save money, consider alternatives. Some other solutions would be:
1. Review your coverage:
a. Take a close look at your insurance. Could you increase the deductibles to lower your premium?
b. Are you carrying physical damage coverage on commercial vehicles that aren’t worth it?
c. Are you insuring items you could replace out of pocket? Are there pieces of equipment that are insured when they could be replaced from operating funds without submitting a claim?
2. Review your exposures:
a. Could you reduce the premium by installing an alarm system or fire protection system? Would these premium savings offset the cost of the system?
b. Could you implement safety programs that would reduce the cost or make the insurance company more interested in providing coverage? For example: driver safety programs, back to work programs, safety training in proper use of equipment and job functions.
3. Identify your insurance goals:
a. Do you need an insurance company that can provide loss control services?
b. Do you need an insurance company that can provide claim-handling services for your Workers Compensation insurance?
c. Do you need an insurance company that will allow you to make payments by phone or on-line 24/7?
d. Do you need an insurance company that has a local agent/representative that can assist you in your insurance solutions?
Shopping and price are not the only issues in insurance. What you don’t know can cost you more in the long run than you could ever save in premiums. Discuss your situation with an insurance professional and make the choice that works for you.
COPYRIGHT: Insurance Publishing Plus, Inc. 2003, 2008
Tuesday, June 29, 2010
Thursday, June 24, 2010
Tague Alliance - Don't Get Caught In The Price Trap
Here is a great article that was posted by Safeco Insurance. Our Tague Alliance members and independent insurance agents in general need to be more than "order takers". It is unacceptable that a teenager working the McDonald's drive-thru line can be more effective at selling value than licensed and educated insurance agents. Think about it...what questions are you asked every time you go through McDonald's? "Would you like to make that a large combo?" "Would you like to try our Mocha blah blah blah?" "Would you like an apple pie with that?" So as insurance agents we need to be sure that we are offering our clients all the protection they need. Just as McDonald's is "rounding out" your meal by offering you additional products; we need to be doing the same thing by offering to write the home/auto/umbrella, etc.
Remember one simple fact: Those who sell on price will die on price!
Selling value: Don't get caught in the price trap 6/24/2010
Insurance sales conversations frequently start with an apples-to-apples price comparison. If that describes the approach you take, Josh Stirpe, director of Safeco's Licensed Sales department, wants you to tip the proverbial cart over and use a more effective approach.
"Once you start a conversation with price as the focal point, it becomes difficult to engage the client in a conversation about the value of a particular insurance policy, even if it costs a little more than their current policy," explains Stirpe, whose background in the industry includes a stint as an agent. "It's imperative to present a total package of benefits to them. Agents first must sell value, explaining what coverages and services the client will get."
"Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection."
— Josh Stirpe, director of Safeco Licensed Sales
He recommends that you:
Avoid falling into the “price trap” by positioning yourself as a way to save the client money.
Find out why the client is shopping. Uncover the catalyst for the quote inquiry.
Take the time to understand all the risks in the household (not just those that are covered in the requested quote).
Tailor the presentation to the overall risk exposure.
Above all else, invest time in educating the client by providing examples he or she can relate to … Insurance is more than the lowest price; it is something that can protect the client's way of life in the event of a tragedy.
Value-selling policies results in loyal, long-term clients — boosting your retention. But that's not all your agency will gain.
"Producers also are more satisfied because they get away from being 'quote generators' and instead are doing what they got into this business for in the first place, to educate their clients and protect people," he says.
Benefits vs. price
While many consumers certainly look to save money wherever possible, research shows that price is seldom the primary reason people make a buying decision. According to comScore's Auto Insurance Survey, when offered a choice between low-cost/minimum coverage and high-cost/maximum coverage, the majority of consumers fall in the middle to upper-middle range. What that indicates is exactly what value-selling is all about: People are more interested in feeling protected than in saving a few dollars.
"Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection," Stirpe notes. "A high percentage of clients will go that road with their agents who value-sell the protection."
The value-sell approach involves bringing to the forefront what you as an independent agent can provide that insurance consumers can't get elsewhere:
Expert advice
The ability to identify coverage gaps and overlaps
A knowledge of industry trends that affect consumers
The ability to customize a plan that meets each individual's protection needs
A variety of policy choices
"When insurance consumers initially meet with an independent agent, they may start out with a desire to see how they can save money, but quickly become ecstatic if an agent first educates them on benefits," says Stirpe.
He says price should be the last resort in the sales process. At the point that price does enter the equation (and of course it will for many people), you can remind customers that Safeco offers a variety of cost-cutting solutions, such as discounts when they purchase multiple policies, including Home, Auto and Specialty policies. Eighty-five percent of insurance consumers will consider hearing how bundling their coverages can translate into a discount.
"Clients will be less likely to shop elsewhere – including online – when agents value-sell and show that they are looking out for their clients' future."
Remember one simple fact: Those who sell on price will die on price!
Selling value: Don't get caught in the price trap 6/24/2010
Insurance sales conversations frequently start with an apples-to-apples price comparison. If that describes the approach you take, Josh Stirpe, director of Safeco's Licensed Sales department, wants you to tip the proverbial cart over and use a more effective approach.
"Once you start a conversation with price as the focal point, it becomes difficult to engage the client in a conversation about the value of a particular insurance policy, even if it costs a little more than their current policy," explains Stirpe, whose background in the industry includes a stint as an agent. "It's imperative to present a total package of benefits to them. Agents first must sell value, explaining what coverages and services the client will get."
"Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection."
— Josh Stirpe, director of Safeco Licensed Sales
He recommends that you:
Avoid falling into the “price trap” by positioning yourself as a way to save the client money.
Find out why the client is shopping. Uncover the catalyst for the quote inquiry.
Take the time to understand all the risks in the household (not just those that are covered in the requested quote).
Tailor the presentation to the overall risk exposure.
Above all else, invest time in educating the client by providing examples he or she can relate to … Insurance is more than the lowest price; it is something that can protect the client's way of life in the event of a tragedy.
Value-selling policies results in loyal, long-term clients — boosting your retention. But that's not all your agency will gain.
"Producers also are more satisfied because they get away from being 'quote generators' and instead are doing what they got into this business for in the first place, to educate their clients and protect people," he says.
Benefits vs. price
While many consumers certainly look to save money wherever possible, research shows that price is seldom the primary reason people make a buying decision. According to comScore's Auto Insurance Survey, when offered a choice between low-cost/minimum coverage and high-cost/maximum coverage, the majority of consumers fall in the middle to upper-middle range. What that indicates is exactly what value-selling is all about: People are more interested in feeling protected than in saving a few dollars.
"Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection," Stirpe notes. "A high percentage of clients will go that road with their agents who value-sell the protection."
The value-sell approach involves bringing to the forefront what you as an independent agent can provide that insurance consumers can't get elsewhere:
Expert advice
The ability to identify coverage gaps and overlaps
A knowledge of industry trends that affect consumers
The ability to customize a plan that meets each individual's protection needs
A variety of policy choices
"When insurance consumers initially meet with an independent agent, they may start out with a desire to see how they can save money, but quickly become ecstatic if an agent first educates them on benefits," says Stirpe.
He says price should be the last resort in the sales process. At the point that price does enter the equation (and of course it will for many people), you can remind customers that Safeco offers a variety of cost-cutting solutions, such as discounts when they purchase multiple policies, including Home, Auto and Specialty policies. Eighty-five percent of insurance consumers will consider hearing how bundling their coverages can translate into a discount.
"Clients will be less likely to shop elsewhere – including online – when agents value-sell and show that they are looking out for their clients' future."
Friday, June 11, 2010
Tague Alliance - Inducted Into The Safeco Insurance H.K. Dent Society
Tague Alliance is excited and proud to have been inducted into the H.K. Dent Society. This is an elite group of independent insurance agencies who represent Safeco Insurance. Only 7% of Safeco's 12,000+ agents are part of the H.K. Dent Society.
Many thanks to all the members of Tague Alliance for their Safeco production over the years which has allowed us to qualify for this honor.
Many thanks to all the members of Tague Alliance for their Safeco production over the years which has allowed us to qualify for this honor.
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