Insurance Advocate March 14, 2016 by C Acunto

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Serving New York, New Jersey, Connec cut, Eastern Pennsylvania and Washington, DC

JD POWER:

So Market Drives HO Claimant Sa sfac on Down Vol. 127 No. 5 | March 14, 2016

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Contents [COVER STORY]

JD Power: Soft Market Drives HO Claimant Satisfaction Down

March 14, 2016 | Volume 127 Number 5

On My Radar: Insured’s Work on Property Was Clearly Excluded Barry Zalma

Looking Back: February, 1991

Courtside: Abutting Owner and Next Door Owner May Be Liable for Defective Sidewalk Lawrence N. Rogak, Esq.

Classiﬁeds

[AD FEATURES] 13

MSO: Pellet Stove Safety

[FEATURES] 4

Foreword: Deserving Credit Steve Acunto, Publisher

Face to Face: One for the Road Michael Loguercio

The Social Notebook: Email Marketing for the Independent Insurance Agent Chris Paradiso

In Focus: Gannon Insurance Agency Kelly Donahue-Piro

On the Level: Defeating the Zebra, Lemonade, Insurify and CoverWallet Jamie Deapo

In the Associations: Rep. Blaine Luetkemeyer to Address Big “I”

Guest Article: Cyber Insurance: Are You Sure You’re Covered? Keith Fuller

info@insurance-advocate.com www.insurance-advocate.com INSURANCE ADVOCATE / March 14, 2016 3

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[ FOREWORD ]

STEVE ACUNTO

“The evil that men do lives after them, the good is oft interred with their bones.” - Julius Caesar, Shakespeare S

Deserving Credit uShakespeare’s quote applies to the insurance industry in the public and the media’s eyes all too often. So I thought that a few recent items point to “credit deserved” by insurance people. Leonard Scioscia has been named President of Little Flower’s Board of Directors. Little Flower Children and Family Services of New York (Little Flower) provides critical programs and services to children, families and adults with developmental disabilities in New York City and across Long Island. Mr. Scioscia has served on the board since 2013. Since joining, he has shown great interest in helping the youth of Little Flower by attending events such as Career Day, in which he participated as a panel speaker. Cook Maran & Associates, a full service insurance broker and consulting firm with offices in East Hampton, Southampton and Melville, N.Y., as well as Marlton and Fair Lawn, N.J., is dedicated to the entity. Mr. Scioscia is the CEO…. … The New York Life Foundation just announced that it has passed the $25 million grant-making mark for total funds committed to supporting grieving children and their families. Helping children who have experienced the death of a loved one is a major focus area of the Foundation, which has worked to raise awareness of the scope and impact of childhood bereavement since 2007. The Foundation’s latest grant, a $3 million commitment to the Boys and Girls Clubs of America to deliver training and technical support to help local club staff support grieving youth through their Be There program, propelled the Foundation over the $25 million mark. “We are very proud to reach this milestone, which represents our sustained dedication to this important yet historically underserved population,” said Heather Nesle, president of the New York Life Foundation. In the U.S., nearly one in twenty children will lose a parent before age 16, and the vast majority will experience the loss of a family member or friend by the time they complete high school. Many grieving children suffer in silence and isolation, subject to a range of emotional, psychological and 4 March 14, 2016 / INSURANCE ADVOCATE

VOLUME 127, NUMBER 5 MARCH 7, 2016

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com

Helping children who have experienced the death of a loved one is a major focus area of the Foundation, which has worked to raise awareness of the scope and impact of childhood bereavement since 2007.

behavioral difficulties which, if left unaddressed, can extend well into adulthood. In response to this need, New York Life has made grants to a wide range of distinct grief-related nonprofits, underwriting bereavement camps, children’s recreational groups, tragedy assistance for military families, university research, and more. Additionally, the Foundation extends direct support to childhood bereavement centers/programs across the country through its Grief Reach program, which has awarded 153 community expansion and capacity building grants to date. Since 2004, the Foundation’s overall budget has grown steadily, topping $18 million in 2016. “Despite its prevalence and poignancy, childhood bereavement is still considered a ‘niche’ funding area,” said Nesle. “As one of the largest national corporate funders of childhood bereavement, New York Life is actively working to increase capacity in the field by building communication and collaboration among grantees and helping to raise national awareness of the issue.” For example, New York Life’s long-term support of the National Alliance for Grieving Children (NAGC) has enabled the organization’s transformation into a professional, organized alliance of grief CONTINUED ON PAGE 15

CONTRIBUTORS Peter H. Bickford Jamie Deapo Kelly Donahue-Piro Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com COPYEDITOR & PROOFREADER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Media, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN MEDIA, INC.

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $110.00. TO ORDER Call 914-966-3180, fax 914-966-3264, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2015. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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[ FACE TO FACE ]

MICHAEL LO GUERCIO

One for the Road uSo often we hear about “Driving While Impaired” (DWI), referring to how prevalent it has become, the injuries and deaths that are attributed to those who commit this act and the impact that it has on the offender’s life, the third party who may be involved, their families, and of course insurance. Although DWI (by alcohol) is the most commonly referred-to term, there is another offense that is equally as disturbing, but not as well understood: “Driving While Ability Impaired by Drugs” (DUID). In actuality, a study by the Governors Highway Safety Association (GHSA) and the Foundation for Advancing Alcohol Responsibility has found that drugged driving is increasing while drunk driving is declining. Now this is where these statistics become real interesting: according to Property Casualty 360, 40% of drivers involved in a fatal motor vehicle accident have tested positive for drugs, which is just about the same percentage as those drivers who tested positive for alcohol. In addition, a very recent roadside survey by the National Highway Traffic Safety Administration (NHTSA) has determined that 22% of drivers tested positive for some form of drug or medication. As a result of these and other studies being conducted around the country, federal and state legislators are becoming ever so pressured into addressing the issue of DUID. Furthermore, with the advent of legal marijuana usage in twenty-three states and Washington DC, along with legal recreational usage in four more states (plus Washington DC), we can expect these numbers of DUID to continue to increase. Organizations such as the GHSA are publically asking the federal government to take the same steps in combating this growing issue as it did and continues to do with seat belt laws that it enacted years ago. What also adds to the complications of drug impaired versus alcohol impaired driving, is that there are literally hundreds of drugs available that may be classified as legal prescription obtained, illegally obtained, or over-the-counter, that can and

will impair a subject’s ability to operate any motor vehicle…not just a car. In addition, the study conducted by the GHSA also discovered that: • Marijuana is by far the most common drug that is used, found in roadside surveys, and found in fatally-injured drivers. Marijuana use by drivers likely increases after a state permits recreational marijuana use. • About 20% of young adults aged 1825 and about 6% of adults aged 26 and above use illegal drugs or marijuana at least monthly. In comparison, over 50% of each age group drink alcohol at least monthly. • About 12-15% of drivers in NHTSA’s 2013-14 roadside survey tested positive for some illegal drug or marijuana, substantially more than tested positive for alcohol. Detection of illegal drug use is also much more difficult by law enforcement personnel, and to further complicate police departments, laws that apply to those who are suspected of DUID vary across the country. Other noteworthy points regarding DUID is that any drug may increase the risk of a driver being involved in a motor vehicle accident, as it decreases the concentration level of the driver. Also of note is that the effect of a specific drug may be different on each person, and most drug use may double the risk of being in an accident. Combine drugs with alcohol, and you have a cocktail with a potentially disastrous result. If you would like to view the entire report and study regarding the above, please visit www.ghsa.org In this writer’s opinion, it is a shame that we as a government have to protect people against themselves; and punish those who do not conform, as they will not do it on their own. If we do not take immediate and swift action, we are all at risk by these activities, and stand to lose our lives, freedoms, and even our money in the form of increased insurance premiums.

Michael Loguercio has been active in the insurance industry since 1978, as a licensed insurance broker and an insurance technology professional. He is an active Past President of the Young Insurance Professionals of New York State, current ACT/AUGIE, Professional Insurance Agents of New York State, Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member. NY-YIP/PIA has honored Michael with a “Distinguished Service” award in 2001; “Insurance Professional of The Year” award in 2009; “Lifetime Achievement” award in 2012; and “Special Service” awards in 2013, 2014 and 2015. In his community, Michael is the Councilman for the 4th District in The Town of Brookhaven, NY; served 12 years on the Longwood Central School District Board of Education on Long Island, NY; served as a Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of the Ridge, NY, Volunteer Fire and EMS Department; the Middle Island, NY, Rotary Club; Central Brookhaven Lion’s Club; and he also served two terms on his Church’s vestry. In 2013 he was awarded the SCOPE “Community Service” award for his dedication to the public. Michael is a regular columnist with the Insurance Advocate magazine since 2008, and may be contacted at 631-345-9359 or MichaelLoguercio@aol.com. You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr.

So until next time when we will be talking about the spring conventions and activities, “Ciao for now!”[IA]

6 March 14, 2016 / INSURANCE ADVOCATE

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[ THE SOCIAL NOTEBOOK ]

C H R I S PA R A D I S O

Email Marketing for the Independent Insurance Agent uEmail is a great marketing tool that’s been used for years now. But email marketing has an inherent problem: when you see an email hit your inbox from a big name corporation, do you open it? If the latest deals came up from Target, or if Progressive was emailing you to tell you that you could be saving a bundle, would you actually open that email or would you send it to the trash? Getting your email opened is just the first step of the process. Let’s talk about how your email marketing campaigns can stand out from the competition.

Increasing Your Open Rate Your emails are nothing if they go straight to the trash. There are only a few factors you can control to make sure your emails are getting opened. First, focus on when you send out your email marketing campaigns. Consider which day of the week and what time of day are best. Generally speaking, Monday is a dead day for email marketing. Because people are usually running around or preoccupied, weekend emails have pretty low open rates as well. Tuesdays and Thursdays seem to be the best days to send out “call to action” emails. Historically speaking,

Tuesday is the best. Wednesdays aren’t quite as successful as Tuesdays or Thursdays, but if you have an informative but lower priority email you need to send out, consider Wednesday as an option. The other factor is the time of day. The below graph, provided by Mailchimp, represents average email open rates based on time of day. A third factor you can control is your subject line. Your subject should be personable and welcoming. You don’t want it to sound like a robot sent the email out or like you simply don’t care. Avoid salesy words, such as “new offer” or “save big,” and never, EVER use the word “free.” Other than that, be sure to keep your subject lines short and simple. Make sure they never repeat themselves. And remember to not over-complicate things.

Building a Positive Customer Experience Once you’ve figured out how to get your emails opened more frequently, consider what’s inside. Your email should be welcoming and informative. Most importantly, it should somehow help your customer or prospect. This way they don’t regret opening it.

Christopher Paradiso, CPIA , is President of Paradiso Financial & Insurance Service. He has been acknowledged by several insurance publications as a leader in the industry for his use of digital marketing and social media to help brand his agency and promote other small businesses within his community. Chris has also been recognized for his charity work with The Connecticut Children’s Medical Center. In 2011, Chris introduced “Paradiso Presents LLC,” a social media program aimed at teaching small agencies to not only survive, but compete in today’s complex online marketing world. Chris resides in Stafford Springs, CT with his wife and two children, Mia and Gianni.

Your greeting should be personalized and should include the recipient’s first name. You can do this with almost any email marketing tool (our agency uses Zywave). If you have trouble finding out how to do this, just contact your email marketing system’s support team to help you out. Next, make sure your email follows your company’s branding guidelines. If you don’t have any in place, consult a professional graphic designer or branding professional to help you get started. The visual appeal of your emails make a world of difference, so include your branded logos, colors, and some corresponding visuals to give your message a nice look. Be sure your insurance agency’s phone number is clearly listed at the very top of your emails and all of your contact information is at the bottom, so there’s no confusion about how to get in touch with you. Other than that, make your message personable. I can’t stress enough how much your customers will appreciate a perCONTINUED ON PAGE 10

8 March 14, 2016 / INSURANCE ADVOCATE

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[ THE SOCIAL NOTEBOOK ] CONTINUED FROM PAGE 8

sonalized message that makes them feel like they are working with you on a oneon-one basis.

Onboarding Process Whenever you write a new policy for one of your customers, launch a series of automated messages that start hitting their inbox shortly after the sale. That way, they won’t feel like you’ve abandoned them and were just after their money.

Our agency’s onboarding email roadmap may give you ideas to help build your own successful email plan going forward. • Day 1: Your first email should thank your customers for their business. Consider providing them a survey, just like we have, to see how their experience went. • Day 2: We send out a “meet the team” email as part of our onboarding process, to remind customers that we are real people, real agents, and we’re here to help them.

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[ THE SOCIAL NOTEBOOK ] CONTINUED FROM PAGE 10

• Day 14: Two weeks in, we send the customer an email about our mobile app. The email highlights all the great things our app can do for them and contains download instructions as well, to help them get started.

• Day 21: In the third week, we send customers links to our social media profiles. We encourage them to connect with us online and give them some information about our updates to help attract their attention and generate response.

about our service offerings. There is serious power in marketing to existing clients. There is always the possibility that a customer has more to insure, so we highlight everything we can cover in this email.

• Day 35: In the fifth week, we send out information about insurance discounts, but we don’t mention that in the subject line, because it is salesy! We want to make sure our customers know that we are working for them, to help enhance their insurance and financial experience. This email does just that.

• Day 28: The fourth week is when we send our customers information

• Day 42: In the sixth week, we take time to support our business partners. As we have promised these partners, we are here to help promote and support their businesses. Crossmarketing local businesses has helped us extend our reach, so we crafted this email to get the word out. • Day 49: The seventh week is the last in our onboarding process. With this email, we send customers an account review and let them know that we are here to help, especially if their rates ever increase. Onboarding isn’t the only time that we send out automated email from our agency. We also have notices going out for account renewals on an automatic basis, 120 days prior to the renewal date. It’s important that this email gets sent out before the renewal hits, so people have plenty of time to prepare and think about it in advance.

Special Occasion Email Campaigns Some of your email campaigns will have to be sent manually, because they’re special occasions, not regular occurrences. We have campaigns for birthdays, holidays, company events and other special occasions. These can be crafted on an individual basis, and again, sent out manually. Get creative in your approach but avoid sending too many emails. You don’t want to bombard your customers with so many emails that they start marking them as spam. When it’s appropriate, remind your customers that you’re there to serve them and that you care. If you have any further questions about your email marketing, please feel free to reach out to me.[IA]

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ADVERTORIAL

Pellet Stove Safety THE USE OF PELLET STOVES to heat homes and businesses has increased markedly in recent years. One reason is the cost savings they represent versus other heat sources. The Environmental Protection Agency (EPA) estimated that 88,000 pellet stoves would be sold in 2015. However, there can be hazards. Educating clients to the potential problems is a value-added service of the professional insurance agent. Pellet stoves look a lot like traditional woodstoves, however the operation and fuel differs. Pellet stoves burn pellets composed of wood and other biomass materials. The compressed pellets, similar in size and shape to rabbit food, burn more efficiently than wood, giving off more heat, and very little ash residue. There is Another is the installaless creosote buildup, tion of a solar panel with which reduces chimney battery backup. The elecfires. The U.S. DepartThere is less tricity requirement is ment of Energy (energy.gov) states that creosote buildup, minimal, so a large panel is not necessary. Care pellet fuel appliances are which reduces must be taken in the inthe cleanest solid fuel stallation to prevent voltresidential heating applichimney fires. age surges that could ance and that EPA certidamage the stove. fied stoves are likely to The manufacturer’s be in the 70-83% effispecifications for instalciency range. lation, cleaning and maintenance Wood pellet stoves are usually cool should be followed carefully since pellet to the touch, as their operation temperfuel appliances are more complex than ature is lower than that of traditional traditional wood stoves. Prior to prowood stoves. Pellet fuel appliances are viding coverage, insurance companies available as free standing stoves or firemay require an inspection to verify that place inserts. Pellet fuel replacement the appliance was installed correctly. furnaces and boilers, which can suppleUnused fuel should be removed at the ment or replace existing systems, are end of the heating season. also available. Proper storage of the pellets is also Pellets are loaded into a hopper important. Pellets are generally sold by where they are fed into the stove. This the ton, with an average family using 2system means the pellet stove can burn 3 tons per season. Increased moisture for longer periods of time without being in the pellets reduces the stove’s effirefilled. Most hoppers can hold at least ciency and increases the weight of the a day’s supply of pellets. Some systems bag. To reduce moisture buildup, bags have more complex feeder devices with should be stored under a roof and raised a thermostat and computer to regulate so they are not directly on the ground the delivery rate. Pellet stoves require or floor. electricity to feed the pellets from the The Cold Climate Housing Research hopper into the stove, so they are not a Center (CCHRC) (makinghouseswork. practical option during a power failure cchrc.org) recommends that the storage unless there is a backup power supply. area be ventilated with a carbon monoxManual feeding of the fuel is one option.

ide detector near the door. Pellets give off carbon monoxide, which is lethal when inhaled, even in properly vented areas. There have been at least nine deaths in Europe since 2002 from wood pellet storage (www.ncbi.nlm.nih.gov). Although not all pellets release measurable amounts of carbon monoxide, precautions to provide adequate ventilation and a detection device should be taken. The EPA’s New Source Performance Standards (NSPS), issued in 1988, exempted most pellet stoves from emissions limits. However, as of 2015, new pellet stoves must comply with the same regulations as other wood burning stoves, and must have a permanent label certifying that they meet the 2015 EPA standards (www.epa.gov). Pellet stoves can be a cost-saving heat source, but there are safety concerns. Helping clients understand the potential drawbacks and hazards is another sign of the true insurance professional.

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[ IN FOCUS ]

K E L LY D O N A H U E - P I R O

Focus and Finish Gannon Insurance Agency uIs there a recipe for success? If you ask Steve Gannon, he would say “Yes!” “By a combination of hard work, focus and pure drive, anyone can succeed,” says Steve. “If you aren’t willing to go out on the weekends, take evening appointments when you first start out, you may not get to where you want to be.” This is exactly what Steve Gannon did when he opened Gannon Insurance on August 1, 2000. Now 16 years later he has built a sizable agency outside of Philadelphia in Bensalem, PA. The great news is that the agency is still growing each and every year. When Steve graduated college he started working in the claims department of Prudential. He still credits learning the most about insurance by being in the claims department. Steve really got to see how insurance can impact people both by having the right insurance and by having not enough! He learned early and believes insurance is not about price but what it actually does. Prudential was offering to reimburse employees who wanted to get their MBA and Steve took them up on their offer with the thought that he could jump industries. However, like many of us in insurance, he found his home right here. Steve was recruited out of claims to sell life insurance with New York Life. This is where he received great sales training and after about one year was recruited to sell P&C as well as life at a local Allstate operation. Being a young, energetic and tenacious gentleman, he decided he wanted to open his own agency and was vetted and approved by Erie in 2000. He now has a full service insurance agency selling personal lines, commercial lines and life insurance. In the early days Steve was 100% focused on sales. His wife would be at the office assisting the customers and Steve would be a sales machine. When they started a family, his wife started tending to the family and Steve made the investment in his first full time team member. When you talk to Steve, he is humble to say “My biggest success is surviving the first five years in business.” As many 14 March 14, 2016 / INSURANCE ADVOCATE

STEVE GANNON, OWNER

scratch agencies know, the first five are the hardest. Steve also comments, “I had to make investments, I encourage every agency owner to invest. When you start making money, that’s exactly when you need to take the leap or your agency will remain small.” The Gannon Agency is constantly investing in the betterment of the team and the community. Now 10 employees strong, it never stops giving back to the community. They do such things as hosting Thanksgiving dinners in the community, donating to community organizations, helping the business community and more. The agency also shuts down one day per year to focus on training and development. Giving is at the heart of Gannon Insurance; here is just a sampling of the community organizations they support. • NOVA – Network of Victims Assistance • Alex’s Lemonade • Make-a-Wish Foundation • Bensalem P.A.L. • Hopes and Dreams Foundation • Sean Hogan, Sr. Foundation • Ronald McDonald Houses The industry has changed from 2000 to now. The challenges are real. In Steve’s

Kelly Donahue-Piro, founder and president of Agency Performance Partners, is a no-nonsense effectiveness expert who has helped hundreds of insurance agencies identify and capitalize on sustainable improvement opportunities. Her specialties include agency culture assessment and change; management and supervisory coaching and benchmarking; customer retention strategy development; digital marketing strategy, planning and implementation; and sales planning, management and skillbuilding. In 2014, she created Agency Performance Partners with a mission to “partner with insurance entrepreneurs who dream to take their business to the next level and beyond, by relentlessly pursuing excellence in worldclass service and sales strategies.” The centerpiece of the organization’s transformational work is its Agency Performance AssessmentTM, a comprehensive survey tool Kelly created to zero in on organization-wide improvement opportunities and provide the foundation for a customized agency action plan. Mrs. Donahue-Piro is an engaging speaker who is available to conduct in-person and online agency success presentations that complement her firm’s one-on-one on-site and virtual consulting practice. Connect with her on social platforms, via email at kelly@agencyperformancepartners, or by phone at 401-415-6205.

opinion, the competitiveness of personal lines has increased the challenges the team faces. Commercials have turned long term clients into price shoppers. The modern agency today can no longer rely on renewals. You have to fight to keep them. “Our agency calls every single personal lines renewal. We want to connect with our client to find the changes and tell them we care. If we don’t, a competitor would love to take them from us.”

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[ IN FOCUS ] IN THE ASSOCIATIONS CONTINUED FROM PAGE 4

stakeholders with a growing membership and fundraising base. Between 2012 and 2015 alone, NAGC’s membership has increased by 85 percent and the size of its annual national symposium has doubled, drawing over 450 attendees this year. “The childhood bereavement support field is grateful for the generous support provided by the New York Life Foundation. Their support is wide-reaching and has had a direct impact on the expansion and

BACK ROW (L-R): APRIL SOMERSHOE, DIRECTOR OF WELCOME; STEVE GANNON, PRINCIPAL AGENT; SABRINA FRANCO, AGENT; CHRISTINE BIEMULLER, PRODUCER; ANDREA CASSELS, AGENT FRONT ROW (L-R): JENNA RAMOS, ASS’T DIRECTOR OF WELCOME; ASHLEY ROMM, AGENT; JUDY MIDGETTE, AGENT; TONYA HUNSBERGER, AGENT & TEAM LEADER

HEADQUARTERS LOCATED IN BENSALEM, PA

One strategy that Steve wants to impart on other agents is the importance of smart recruiting. You need to find great talent in all age brackets. Finding the right people makes everything easier and keeping the wrong ones is a waste of time and effort. You have to be forever recruiting and never stop; you will find the best people! Steve jokes that he hopes his kids are professional athletes, but if that doesn’t work they will be welcomed at the agency if that’s where they want to be. “Under no circumstance would I want my children here if they have other dreams. I want them to

attack their dreams the same way I did,” he comments. Steve is excited for the future. He’s looking forward to growing his commercial business and continuing to serve the community. The agency is focused on building a great marketing strategy by continuing to use new channels such as social media, email marketing and sales management. The future is bright for the Gannon Girls, a nickname the all-female team has given themselves! When you call, you are sure to get a smile and a friendly voice.[IA]

Between 2012 and 2015 alone, NAGC’s membership has increased by 85 percent and the size of its annual national symposium has doubled, drawing over 450 attendees this year.

advancement of services provided to bereaved children and teenagers across the United States,” said Andy McNiel, chief executive officer of NAGC. “Just as important as their financial support of the field has been the heart with which they have provided that support. From the staff to the leadership, the Foundation cares deeply about the issues and that children and families receive the support they need. New York Life’s support of the issue extends across our whole organization. Helping families deal with the death of a loved one – both financially and emotionally – is at the heart of what New York Life does,” said Maria Collins, vice president of the New York Life Foundation. “As a result, we have been able to embody our commitment to grieving children from the top down.” Nice work, friends.[IA]

www.insurance-advocate.com INSURANCE ADVOCATE / March 14, 2016 15

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JD POWER:

Soft Market Drives HO Claimant Satisfaction Down Amica Mutual Ranks Highest in Overall Satisfaction among Claimants

16 March 14, 2016 / INSURANCE ADVOCATE

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uFor the first time in five years, customer satisfaction among homeowners filing a property claim has slipped, largely driven by declines in satisfaction with the total settlement and service interactions, according to the J.D. Power 2016 U.S. Property Claims Satisfaction StudySM just released. The study measures satisfaction with the property claims experience among insurance customers who have filed a claim for damages by examining five factors (listed in order of importance): settlement; first notice of loss; estimation process; service interaction; and repair process. Satisfaction is calculated on a 1,000point scale. The $502.6 billion[1] U.S. property and casualty insurance industry is entering a cycle of reduced profitability due to declining premium rates. Data from the 2016 U.S. Property Claims Satisfaction Study suggests that many insurers may already be shifting their focus away from customer satisfaction and toward areas of cost reduction. According to the study, satisfaction has declined by five points to 846 from 2015. The largest changes are in the service interaction factor (-8 points), driven by declines in both the local agent (-8) and claims professional (-28) sub factors. Weather events are also a significant driver of declines in customer satisfaction this year. Survey results are significantly impacted by the way insurers handled a few major events, such as the winter storms that hit the Northeast in early 2015 and the severe weather/hail claims that hit Colorado and some surrounding states in late 2014. However, weather alone does not fully explain the dip in overall satisfaction. For instance, simple service practices such as returning promised callbacks are down one percentage point from last year, and only 42% of customers indicate that when contacting their insurer someone was “always available immediately” to assist them. Responsiveness, a primary driver of service interaction satisfaction, is down significantly year over year among claimants interacting with local insurance agents or claims professionals (-0.09 and -0.43 points, respectively, on a 10point scale). “During times of catastrophic events, insurance companies typically ramp up and have teams of claims professionals poised and ready to process claims locally in the affected region,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. “However, maintaining a high level of support is not cost effective when

“During times of catastrophic events, insurance companies typically ramp up and have teams of claims professionals poised and ready to process claims locally in the affected region,” [1] Source: Insurance Information Institute http://www.iii.org/publications/insurance-handbook/economic-andfinancial-data/us-insurance-industry-all-sectors.

there is a lull in large events and especially when rates begin to fall. Belt tightening to a leaner team can sometimes mean less support and longer response times to process claims. Insurers need to be aware when cost cutting impacts response times. The less satisfied customers are with the claim process, the less likely they are to renew their policy.” Following are some of the key findings of the 2016 study: Providing an Outstanding Claims Experience Can Generate Advocacy and Retention: The study finds that 81% of highly satisfied claimants (overall satisfaction scores of 900 or higher) say they “definitely will” renew their policy and 81% say they “definitely will” recommend their current insurer, while only 14% of displeased claimants (scores of 549 or less) say they “definitely will” renew and 7% say they “definitely will” recommend. Strikingly, 13% of displeased claimants indicate they have switched insurers due to their claims experience and 40% indicate an intention to shop within the next 12 months. Younger Property Claimants Looking for More Assistance with the Process: The desire for more help is strongest among the youngest groups such as Gen Y[2] where 31% indicate they want additional help selecting a contractor. This suggests that younger customers, who presumably have not had the same tenure of home ownership and also have less experience in having property work done, are looking toward their insurer to help coordinate the repairs. Non-Weather Water Claims Not Weathering Satisfaction: Non-weather water claims are the most frequently reported claims in 2016. Satisfaction with the handling of non-weather-related water damage dropped 19 points to 835, while satisfaction with the handling of hail damage claims is highest at 858. Additionally, satisfaction with theft claims is 840 (+20 points from 2015), while satisfaction with fire claims is 839 and with mold 834 (-27 and -38 points, respectively).

Highest-Ranked Insurance Companies Amica Mutual ranks highest in overall satisfaction with the property insurance claims experience for a fifth consecutive year, achieving a score of 898. Amica Mutual performs particularly well in nearly all study factors. Auto Club of Southern California Insurance Group ranks second with a score of 879, followed by COUNTRY Financial, Encompass, and Erie Insurance, all scoring 863 in a tie. USAA also achieves high levels of customer satisfaction, although the insurer is not included in the rankings due to the closed nature of its membership. The 2016 Property Claims Satisfaction StudySM is based on more than 5,700 responses from homeowners insurance customers who filed a property claim between January 2014 and December 2015. For information about the 2016 U.S. Property Claims Satisfaction Study, visit http://www.jdpower.com/resource/usproperty-claims-satisfaction-study. [2] J.D. Power defines Gen Y as those born from 1977-1994.

INSURANCE ADVOCATE / March 14, 2016 17

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18 March 14, 2016 / INSURANCE ADVOCATE

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[ ON THE LEVEL ]

JAMIE DEAPO

Defeating the Zebra, Lemonade, Insurify and CoverWallet uRecently many independent agents breathed a sigh of relief as Google announced they were withdrawing from insurance. This news was definitely a positive and welcomed by everyone currently in the insurance business. This is not a time for independent agents to get lax or cocky! Although Google has decided to withdraw, that doesn’t mean they might not return sometime in the future. Especially if in the future they view the insurance marketplace as vulnerable and a significant opportunity for them to make money. In addition, unless you’ve been living on a deserted island, you must already know that there are a number of other technology-driven direct carriers poised to enter the marketplace and make their mark. What the hell is going on here? It’s the evolution of the insurance industry fueled by technology and the perception that insurance can be sold direct, without the professional advice and service of an agent. The scary thing is that many consumers are buying into this concept. Unfortunately, independent agents bear part of the blame for this occurring. For many years we shared the marketplace only with captive agents and we were comfortable and fairly successful competing in that marketplace. As a matter of fact personal insurance, although it developed with steady and stable growth, was looked at as a second class citizen in many agencies. That resulted in many agencies not investing in the appropriate training their personal insurance staff needed to properly compete and grow the agency’s book of business. As things progressed many agencies competed on only price and their staff became order takers. In addition, agency customers were told the agency would regularly review and update their coverage which never happened. As a result many customers went years without ever being contacted or hearing from their agency. This allowed direct response carriers the opening they needed, along with the advancement of technology, to convince and attract consumers to buy through them 20 March 14, 2016 / INSURANCE ADVOCATE

and companies like Geico and Progressive were born and flourished. As technology continued to advance and other firms saw Geico and Progressive’s direct market share grow substantially they decided that this was a market where some significant inroads could be made. So here we are in 2016. Breathing a sigh of relief that a significant competitor has decided to leave the market but realizing that many more are on the horizon and your personal insurance clients, and even your small-to medium-business clients, may be at risk of being taken away by these companies. If you’re an independent agent who intends to be in the marketplace going forward and generates a good portion of your business from this marketplace it has got to be keeping you up at night. So what can independent agents do? There are four important areas that agents need to focus on. First and most important is staffing and training. These areas are critical to the success of an agency. The value proposition of independent agents involves professional advice and service. If your staff is lacking in this area you won’t be able to compete. In addition to exceptional training your staff needs to know how to function effectively in the marketplace. That means understanding how to turn a prospect looking for “cheaper premiums” into one who values having the right coverage at a competitive price. Not easy to do with the extraordinary amount of advertising attempting to convince them that all coverage is the same and only price and ease of doing business matters. It’s no secret that we’re in the early stages of a major loss of agency personnel with significant knowledge and expertise to retirement. How are you going to overcome that? Have you been developing your younger employees and where will you find the new employees you need? It's common knowledge that many young people aren’t interested in or don’t even consider a career in insurance. We need to solve this problem and attract more young talented individuals into our business.

Jamie Deapo is AVP of Membership & Member Programs for IIABNY and is an approved CE instructor in New York. Prior to being with IIABNY, he was an independent agent in the Syracuse area for 15 years. Jamie started his career in 1972 working for insurance carriers, and he has held various underwriting and marketing positions with several national as well as regional companies. He is a past president of the Independent Insurance Agents of Central New York and served on the board of directors of IIABNY.

Part of the training for all staff needs to revolve around the agency’s commitment to providing exceptional customer service at every level. It has to be an agency mandate that is developed into your agency’s culture. It needs to be consistently monitored and dealt with wherever slippage is discovered. All agency policies and procedures need to be reviewed and made as customer friendly and helpful as possible starting from the customer’s first call into the agency. Second and almost equally important for agents is maximizing the use of technology in the operation of your agency. It’s a key to freeing up agency personnel to work with clients as well as allowing your agency to stay in regular contact with clients and offer the exceptional customer experience today’s consumer is looking to receive. Wherever current hardware, software and technology can be placed in your agency’s workflow to speed up processing and free up staff, it needs to be. I realize there is a cost to this but there is an even bigger cost in lost business if you ignore this need. Technology and innovation is what the direct response companies use to lure your customers away. It will also uncover valuable time for your staff to work with customers, develop their relationships and improve your retention in today’s marketplace. The third important area is data analytics. Insurance carriers are using data analytics more and more in the underwriting CONTINUED ON PAGE 22

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[ IN THE ASSOCIATIONS ] ON THE LEVEL

Rep. Blaine Luetkemeyer to Address Big “I” uWASHINGTON, D.C.—The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) announced that Rep. Blaine Luetkemeyer (R-Missouri) will address the association’s Large Agent/Broker and CEO dinner on April 14 during the Big “I” Legislative Conference. “The Big ‘I’ is proud to announce that Rep. Luetkemeyer will be addressing our annual gathering of top agents and brokers, and leadership and industry executives,” says Bob Rusbuldt, Big “I” president and CEO. “As a former insurance agent who is now chairman of the powerful House Financial Services Committee Housing and Insurance Subcommittee, Rep. Luetkemeyer has a unique perspective and impact on the issues that directly affect our members and their clients. We are honored that he will be joining us April 14.” The Large Agent/Broker and CEO dinner is sponsored by the Big “I” Agents and Brokers Roundtable, a group which advises the Big “I” board of directors on important topics impacting larger agencies. The group has recently worked on issues such as agent licensing reform, terrorism risk insurance, Affordable Care Act implementation, and industry workforce recruitment. Large agents and brokers from around the country, as well as regional and national carrier CEOs, will be in attendance. Rep. Luetkemeyer has served as a leader on extension of the Terrorism Risk Insurance Act (TRIA) program and passage and implementation of the National Association of Registered Agents and Brokers Reform Act (NARAB II). He will also play a critical role in the future of the National Flood Insurance Program (NFIP). Rep. Luetkemeyer and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) are currently conducting a review of the NFIP with the expectation that they will propose major changes prior to the Sept. 30, 2017 expiration of the program. “As a former agent, Subcommittee Chairman Luetkemeyer has a strong understanding of the insurance market and the critical role that independent 22 March 14, 2016 / INSURANCE ADVOCATE

agents play,” says Charles Symington, Big “I” senior vice president of external and government affairs. “The Big ‘I’ has a long history of working closely with him on key issues that directly impact agents, brokers and insurance consumers. We are grateful to Rep. Luetkemeyer for his hard work as an advocate for small business and the independent agency system.” Rep. Luetkemeyer represents Missouri’s 3rd Congressional District and is a well-known rising star in the Republican Party known for his commitment to small business issues. He serves on the House Financial Services Committee and the House Small Business Committee. The fourth generation native of St. Elizabeth, Missouri, operates a 160acre farm in his district and had a long and distinguished career as a farmer, small businessperson (including having worked as an insurance agent) and Missouri public servant prior to being elected to Congress in 2008. Rep. Luetkemeyer earned a bachelor degree in political science with a minor in business administration from Lincoln University in Jefferson City, Missouri. The Big “I” Legislative Conference is the insurance industry’s best-attended, most effective legislative meeting. This year’s event will take place April 13-15 at the Renaissance Washington, D.C., Downtown Hotel. The legislative conference is an opportunity for Big “I” members to discuss important issues with their congressional representatives. Top issues this year include the National Flood Insurance Program, Federal Crop Insurance Program, insurance regulatory reform, healthcare and other economic challenges facing independent insurance agents and their clients. Other highlights of the Big “I” Legislative Conference include in-depth issues briefing sessions, appearances by numerous high-profile speakers to discuss important insurance and national issues, and hundreds of meetings on Capitol Hill between Big “I” agents and brokers and their elected representatives in Congress. [IA]

CONTINUED FROM PAGE 20

and selection of their insureds. Progressive’s Snapshot and all the other auto tracking devices were just the tip of the iceberg. Companies are now able to know more and more specific information about your clients and prospects. I just read an article about Verisk Insurance Solutions and the new tool they have developed that will allow insurance carriers to more accurately determine the age of your client or prospect’s roof. What affect do you think that will have on the underwriting of your new and renewal business? Data analytics will ultimately let carriers determine the likelihood of various types of losses for specific risks. Follow it, understand it and be prepared to deal with it as insurance progresses. Mining data is also important to your agency. The more you know about your clients and prospects, the better able you are to analyze and use that information to enhance your agency’s marketing efforts. Being able to focus in on those clients that may have had a life or business event that may require additional protection is invaluable. In addition to marketing, your agency’s data allows you to develop a strong CRM program that will allow for the regular contact that is so important to developing an exceptional customer experience. Today’s consumer wants and expects you to have regular contact, offering advice and information that they might find helpful and showing your desire to have a strong relationship focused on them and their needs. Your agency’s data and the technology tied to it will be a critical factor in your success. Lastly, cyber liability coverage is essential for every independent agency. If you don’t have it you need to get it! With the amount of personal information that flows through an independent agent and the current atmosphere of cyber hacking, it is crazy not to have protection. If you’re asking clients to buy it and don’t have it yourself that’s incredible. The insurance world is changing rapidly. If you don’t change to meet these challenges your market share and agency are at risk. The time is now and if agencies don’t start to implement these changes, they will find themselves struggling as they go forward. IIABNY has developed tools to help with these four key areas, knowing that they are crucial to agency success today and in the future. We are only a phone call away.[IA]

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[ GUEST ARTICLE ]

KEITH FULLER

Share with Your Clients

Cyber Insurance: Are You Sure You’re Covered?

An agent presents advice for clients re: Cyber Cover uProtecting your balance sheet in the past meant making sure that your property and any additional liability your company has from its day-to-day operations are covered. The world has changed drastically and now you need to be aware of threats from outside entities that you may never know even existed until it’s too late. Cyber-attacks are happening every day and it’s no longer just the large corporations who are the focus. Small and mid-sized corporations are now being targeted as the ease of a breach is simplified and vulnerabilities are magnified due to their lack of resources. A cyber-attack on a smaller company can be devastating and according to Paychex, 60% of small and medium sized businesses go out of business within six months of a cyber-attack. Understanding your insurance options and ensuring you have the proper coverage is critical to surviving a cyber-attack. We have reached a point in our society where we are so reliant on the Internet for conducting business that cyber insurance is a necessity. Without it, the effects of a breach can be so crippling that a single event can bankrupt an organization overnight. The good news is that most carriers now offer cyber policies, but cyber insurance is still so new that there is not a standard policy form and each carrier has approached their cyber policies in different ways. At Smith Brothers, we receive questions on a daily basis from clients and prospects asking if their current cyber coverages are protecting them from the effects of a cyber-attack. The truth is, the policies can’t protect you, but they will help relieve some of the costs that would be incurred with such a breach. A trusted risk advisor will help you better understand your options, but below are three things you need to know about cybercrime and how it impacts your policy. 1. Cyber insurance does not cover the loss of securities (money, stocks etc.). When we hear about a cyber 24 March 14, 2016 / INSURANCE ADVOCATE

The sad fact is that breaches are only going to become more common as criminals develop new ways to steal corporate data, and while it may be impossible to stop them it is possible to mitigate the effects of such an attack.

breach in the news, we always hear about the money that is stolen by hackers and the total cost of the breach. In reality, these should be viewed as separate scopes. When money is stolen due to a cyber breach, the coverage for this loss would potentially fall under your crime policy and is not covered under your cyber policy. What may be covered are the expenses incurred by the company to remediate the breach. These include items such as public relations costs, providing victims with credit protection as required by law, any fines imposed and defense costs due to civil suits from the breach. When evaluating cyber policies, it is important to make sure these costs are covered. 2. Cyber breaches aren’t only accomplished by breaching your network and stealing data. There are many ways a breach can occur and each policy covers different types of breaches in different ways. Some breaches may be covered on the base form, while others will require an endorsement for coverage. Make sure your trusted advisor explains how each is covered in your policy. Below are some common breaches we come across.

Keith Fuller works for Smith Brothers Insurance as a Risk Advisor. He has extensive experience in manufacturing, exporting of products, cyber security and risk management. Prior to Smith Brothers, Mr. Fuller worked as the Global Commercial Manager for HSB Global Standards and the Operations Manager for Telesis, LLC where he spent over 15 years helping international companies grow and protect their business. He graduated in 2009 from UCONNs Executive MBA program and obtained his undergraduate degree from Southern New Hampshire University.

a. Ransomware: Wired magazine defines Ransomware as Malware that locks your keyboard or computer to prevent you from accessing your data until you pay a ransom. The malware has been developed by attackers to the point that it will now encrypt your data with a pin that only the attacker knows and your data will not be released until you pay the ransom. b. Social Engineering: As described by Techtarget, Social Engineering is a “non-technical method of intrusion attackers use that relies heavily on human interaction and often involves tricking people into breaking normal security procedures. Attackers are generally relying on a person’s nature to be helpful.” Examples of this are phishing emails, pretexting (requesting information for verification) or spam. c. Denial of Service (DOS) Attacks: This is a type of attack where the attackers attempt to prevent legitimate users from accessing the service. Essentially what it does is

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[ GUEST ARTICLE ] prevent access to the network by flooding the network with invalid messages and data which then dramatically slows or disables the network. d. Theft of mobile devices: Surprisingly, most companies never even consider this a threat. But think about it for a second. How easy is it for a phone, tablet or even a laptop to be stolen? Most companies have some security on these devices to keep them from being opened, but one that often seems to get overlooked is flash drives. How many flash drives do you have that are encrypted? Do you know what data your employees are putting on those flash drives? Make sure to work with your risk advisor to ensure that your cyber policy covers the loss of data through these devices. 3. Each cyber policy is different: As I mentioned earlier, due to the everchanging technology, cyber exposures are changing daily. It’s important to find a trusted advisor who is knowledgeable in cyber insurance and has conducted an analysis of the different policies to make sure that you are properly covered for your exposures. You also want someone who is going to stay up to date on the changes in cyber insurance, as it is incredibly complex and many business owners do not have the time nor capacity to do it themselves. The sad fact is that breaches are only going to become more common as criminals develop new ways to steal corporate data, and while it may be impossible to stop them it is possible to mitigate the effects of such an attack. There is currently a lot of confusion surrounding cyber insurance and a risk management advisor who has spent time to understand your business can help you match the appropriate policy to your business model and make sure your company is properly insured.[IA] This article is to give the reader a general awareness level of some issues related to cyber insurance. All policies are different and each entity has unique exposures, so consult your advisor and legal counsel to conduct a speciﬁc risk analysis and establish a risk transfer program for your business.

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[ ON MY RADAR ]

BA R RY Z A L M A

CGL Provides No Cover for Building House on Someone Else’s Land

Insured’s Work on Property Was Clearly Excluded uNo insurance policy provides coverage for every possible risk of loss. When an insured builder built a house that encroached on the property of another, it sought coverage for the damages of the true property owner. The insurer provided a defense under a reservation of rights but refused to pay the damages assessed. In ProBuilders Specialty Ins. Co. v. Coaker, Slip Copy, 2015 WL 7018415 (W.D.Wash., 11/10/2015), ProBuilders Specialty Insurance Company, RRG (“PBSIC”) moved for summary judgment seeking a declaration that PBSIC owed no duty to indemnify Defendants Michael and Marilee Coaker (“the Coakers”), Sundance Builders, Inc. (“Sundance”), and Mike’s Roofing, Inc. (“Mike’s Roofing”) for damages arising out of the construction of the Coakers’ single-family home in Duvall, Washington.

BACKGROUND This is an insurance coverage case that arises out of a mistake concerning property lines. In 2004, the Coakers purchased a piece of real property in Duval, Washington, for the purpose of building one or more houses there. Adjacent to the Coakers’ property sits a parcel of undeveloped forest land owned by three brothers named Chen (“the Chens”). The Chens’ property included a 30–foot by approximately one-quarter-mile strip of land known as “the panhandle” that extended out to the west from the bulk of the Chens’ property. The panhandle lay between the southern border of the Coakers’ property and the northern border of the property of another neighbor, Robert Wilan. Mr. Coaker did not know of the panhandle when he and his wife purchased their property, and he mistakenly believed that his southern property line abutted Mr. Wilan’s northern property line. Sundance Builders, Inc. is a company that the Coakers formed in 2005 for the 26 March 14, 2016 / INSURANCE ADVOCATE

purpose of constructing residential homes and townhouses. Their policies provided three coverages: Bodily Injury and Property Damage (Coverage A), Personal Injury and Advertising Injury (Coverage B), and Medical Payments (Coverage C). In 2008, the Coakers, acting through Sundance, began building a house for themselves. Defendants believed that they were building the house entirely on the Coakers’ property, but in fact the house encroached on the Chens’ panhandle. When Mr. Coaker learned of the error, he contacted Eric Chen and began negotiating a possible solution. The boundary agreement ultimately fell through, however, and at some point negotiations ceased. In 2014, the Chens filed suit against the Coakers, Sundance, and Mike’s Roofing in King County Superior Court alleging causes of action for trespass and negligence and seeking damages, ejectment, and specific performance of the boundary agreement. PBSIC received notice of the Chens’ suit on August 8, 2014. PBSIC defended under a reservation of rights. The case proceeded to a bench trial before the Honorable Samuel Chung, and on August 17, 2015, Judge Chung found that the Coakers had been negligent in building the house on the Chens’ panhandle. Nevertheless, Judge Chung concluded that the appropriate remedy was to quiet title to the panhandle in the Coakers and require the Coakers to pay the Chens the monetary value of that land. On December 12, 2014, PBSIC sued contesting coverage. PBSIC sought summary judgment declaring that the policies it issued to Sundance provide no coverage for any damages arising out of the construction of the Coakers’ house. PBSIC offers several arguments to support this request, including that (1) no “property damage” occurred, as the policies define that term, and (2) even if property damage did occur, various exclusions preclude coverage.

Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http:// shop.americanbar.org/eBus/Store/Pro ductDetails.aspx?productId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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[ ON MY RADAR ] DISCUSSION Insurance Contract Interpretation The interpretation of an insurance policy is a question of law for the court. Bodily Injury, Advertising Injury, and Personal Injury PBSIC argues, with citations to relevant policy provisions, that neither the allegations in the underlying litigation nor any facts in the record in this case trigger bodily injury, advertising injury or personal injury coverages. The court agreed with PBSIC and finds that summary judgment in PBSIC’s favor is appropriate on this issue of whether it owes indemnity. PBSIC has no duty under the policies’ bodily injury, advertising injury, and personal injury coverages to indemnify Defendants for damages arising out of the construction of the Coakers’ house. Property Damage & Exclusion (J)(5) PBSIC’s motion turns on the parties’ dispute over whether the policies’ property damage coverage applies here. PBSIC asserts that such coverage does not apply because the underlying litigation did not

The exclusion on which the court relied was clear and unambiguous.

involve “property damage,” as the policies define that term. PBSIC further argues that even if the underlying litigation involved property damage, multiple exclusions bar coverage for such property damage. The court concluded that exclusion (J)(5) precludes coverage for damages arising out of the construction of the Coakers’ house. Even if the underlying litigation involved property damage as the policies define that term, the policies’ property damage coverage remains subject to multiple exclusions. Pursuant to exclusion (J)(5), however, “[t]his insurance does not apply to … [p]roperty damage to … [a]ny real property on which you … are performing operations, if the property damages arises out of those operations….” It is undisputed that Sundance was in the home construction business, that Sundance selected the site for the Coakers’

house and constructed the house on that site, that the house encroached on the Chens’ real property, and that the construction caused the alleged damage to the Chens’ real property. As such, the Chens’ property damage was (1) property damage to real property on which Sundance was performing operations, and (2) property damage that arose out of Sundance’s operations. Exclusion (J)(5) therefore bars coverage in this case. Under that exclusion, the Chens’ property damage was not “property damage to which this insurance applies.” The court concluded that the policies excluded coverage for damages arising out the construction of the Coakers’ home.

ZALMA OPINION The exclusion on which the court relied was clear and unambiguous. Even if it did not exist there was no bodily injury, property damage or personal injury as those terms are defined in the policy. The court decided to use the exclusion since it was more clear than relying on a definition to avoid coverage, although both were appropriate.[IA]

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[ COURTSIDE ]

L AW R E N C E R O G A K

Abutting Owner and Next Door Owner May Be Liable for Defective Sidewalk Sangaray v West Riv. Assoc., LLC Overruling prior precedents, the Court of Appeals holds that New York City’s sidewalk liability law does not only impose tort liability on the owner abutting the sidewalk where a trip and fall occurs, but the owner of the property next door may also be liable if that owner’s negligence contributed to the accident. How can that happen? In this case, a sunken sidewalk flag abutted two different properties. Although the plaintiff tripped in front of the Mercado property — where the sunken flag met the next flag — the sunken flag also abutted the West River property. Because the sunken flag was defective, and it abutted both properties, both owners are potentially liable. — LNR uPlaintiff alleges that he tripped and fell when his right toe came into contact

It shall be the duty of the owner of real property abutting any sidewalk, including, but not limited to, the intersection quadrant for corner property, to maintain such sidewalk in a reasonably safe condition.

Lawrence N. ("Larry") Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best's Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.

with a raised portion of a New York City public sidewalk. The sidewalk flag that plaintiff was traversing ran from the front of a property owned by defendant West River Associates, LLC (West River) to a

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[ COURTSIDE ] neighboring premises owned by defendants Sandy and Rhina Mercado (Mercados). A photograph contained in the record depicts the sidewalk flag sloping and descending lower than a level flagstone that is in front of the Mercado property. The expansion joint that plaintiff ’s toe contacted abutted solely the Mercado property. Plaintiff commenced this common law negligence action against West River and the Mercados. After defendants served their respective answers, plaintiff responded to West River’s demand for a verified bill of particulars by alleging, among other things, that West River violated section 7210 of the Administrative Code of the City of New York. That provision, which was enacted for the purposes of transferring tort liability from the City to certain adjoining property owners as a cost-saving measure (see Vucetovic v Epsom Downs, Inc., 10 NY3d 517, 521 [2008]), provides as relevant here: “a. It shall be the duty of the owner of real property abutting any sidewalk, including, but not limited to, the intersection quadrant for corner property, to maintain such sidewalk in a reasonably safe condition. “b. Notwithstanding any other provision of law, the owner of real property abutting any sidewalk, including, but not limited to, the intersection quadrant for corner property, shall be liable for any . . . personal injury, including death, proximately caused by the failure of such owner to maintain such sidewalk in a reasonably safe condition. Failure to maintain such sidewalk in a reasonably safe condition shall include, but not be limited to, negligent failure to . . . repair or replace defective sidewalk flags . . .” West River moved for, among other things, summary judgment dismissing plaintiff ’s complaint, asserting that because the area of the sidewalk upon which plaintiff tripped was located entirely in front of the Mercado property, the “defect” did not abut the West River premises, and therefore West River could not be held liable for failing to maintain its sidewalk. In support of its motion, West River submitted an affidavit from a land surveyor who conducted a boundary survey of the sidewalk in front of the West River and Mercado properties. The surveyor determined that the expansion joint upon which plaintiff claimed he tripped was wholly in front of

the Mercado property, as evidenced by the survey map that was attached to the surveyor’s affidavit. Plaintiff countered that West River breached its statutory duty by allowing its sidewalk flag to fall into disrepair and, in any event, failed to demonstrate its entitlement to summary judgment because it did not show that it maintained its sidewalk in a reasonably safe condition. The Mercados also opposed West River’s motion, arguing that, based on their own survey and an affidavit submitted by a licensed professional engineer, approximately 92% to 94% of the defective flag (which had settled due to subsidence of the underlying soil) was in front of the West River property, and 6% to 8% of the defective flag fronted the Mercado property. Supreme Court granted West River’s motion for summary judgment and dismissed plaintiff ’s complaint and the Mercados’ cross claim upon constraint of the Appellate Division, First Department’s holding in Montalbano v 136 W. 80 St. CP (84 AD3d 600 [1st Dept 2011]), which it interpreted as holding that a landowner’s duty to maintain the sidewalk is implicated only where the defect upon which the plaintiff falls abuts the landowner’s property (2013 WL 1808093, 2013 NY Misc LEXIS 1699 [Sup Ct, New York County 2013]). The court concluded that because plaintiff and the Mercados failed to dispute the evidence submitted by West River that the defect was in front of the Mercado property, plaintiff and the Mercados failed to raise a question of fact as to whether West River breached a duty owing to plaintiff. On plaintiff ’s appeal, the Appellate Division affirmed, holding that because the record demonstrated that “West River did not own the property that abutted the sidewalk where plaintiff tripped and fell, [it] was therefore not responsible for maintaining the sidewalk in a reasonably safe condition” (121 AD3d 602, 602 [1st Dept 2014] citing Administrative Code of City of NY § 7-210; Thompson v 793-97 Garden St. Hous. Dev. Fund Corp., 101 AD3d 642 [1st Dept 2012]; Montalbano, 84 AD3d at 602). Two Justices concurred with the majority’s interpretation of section 7-210, but asserted that the provision, as written, allowed West River to avoid liability for the consequences of its failure to maintain its sidewalk in a reasonably safe condition (see id. at 605 [Saxe, J., CONTINUED ON PAGE 32

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[ COURTSIDE ] CONTINUED FROM PAGE 31

concurring]). This Court granted plaintiff leave to appeal and we now reverse. Section 7-210 unambiguously imposes a duty upon owners of certain real property to maintain the sidewalk abutting their property in a reasonably safe condition, and provides that said owners are liable for personal injury that is proximately caused by such failure. The First and Second Departments have seemingly engrafted onto section 7-210 a “location requirement,” such that if the defect upon which a person trips abuts a particular property, then the owner of that property is deemed liable, without conducting any inquiry as to whether a neighboring owner’s failure to comply with its statutory duties may have also been a proximate cause of the accident (see e.g. Byron v City of New York, 119 AD3d 625 [2d Dept 2014] [holding that defendant made a prima facie showing of entitlement to summary judgment by demonstrating that the plaintiff ’s fall was caused by an alleged defect that was present in a portion of a sidewalk abutting the premises owned by the codefendant]; Lorenzo v Ortiz Funeral Home Corp., 113 AD3d 528 [1st Dept 2014] [granting codefendant summary judgment because the sidewalk [*4] defect that caused the accident was located in front of the neighboring defendant’s property, and, therefore, the codefendant did not have any obligation to repair it]; Camacho v City of New York, 96 AD3d 795 [2d Dept 2012] [defendant property owners met their prima facie burden by demonstrating, through the use of a land survey, that the portion of the sidewalk containing the alleged defect did not abut their property]; Montalbano, 84 AD3d 600 [defendant met his burden by submitting uncontroverted evidence that his property did not abut the portion of the sidewalk where the plaintiff fell and therefore established that he did not have a duty to maintain the portion of the sidewalk where the plaintiff fell in a reasonably safe condition]). The case upon which West River primarily relies, and which both the lower courts found controlling, is Montalbano. Contrary to West River’s contention, Montalbano is distinguishable from this case. In Montalbano, the plaintiff claimed that he tripped on a sidewalk flag that was raised on one side at the expansion joint (84 AD3d at 600). There was initially a dispute concerning whether the sidewalk flag 32 March 14, 2016 / INSURANCE ADVOCATE

abutted the property of defendant Owners Corp. or defendant Callanan, but as the litigation progressed, it became clear by way of a survey that the area where the plaintiff claimed he tripped abutted the Owners Corp. property (see id. at 601). The plaintiff and Owners Corp. argued, among other things, that because the majority of the flag abutted Callanan’s property, Callanan was liable to the plaintiff, but the court disagreed, holding that the plaintiff did not fall on a portion of the sidewalk abutting Callanan’s property (see id. at 602). The court further rejected the argument by the plaintiff and Owners Corp. that Callanan’s replacement of the defective sidewalk flag after the accident made Callanan liable to the plaintiff, holding that it was irrelevant whether Callanan had exercised control over that part of the sidewalk because section 7-210 “does not make persons who exercise control over the sidewalk liable — it refers only to owners of real property” (id. at 602). Unlike the plaintiff in Montalbano, who did not argue that Callanan failed to maintain the sidewalk flag abutting his property in a reasonably safe condition, plaintiff here argues that West River failed to comply with its own statutory duty to maintain the sidewalk abutting its premises in a reasonably safe condition, and that such failure was a proximate cause of his injury. To be sure, the location of the alleged defect and whether it abuts a particular property is significant concerning that particular property owner’s duty to maintain the sidewalk in a reasonably safe condition. That does not, however, foreclose the possibility that a neighboring property owner may also be subject to liability for failing to maintain its own abutting sidewalk in a reasonably safe condition where it appears that such failure constituted a proximate cause of the injury sustained. Thus, to the extent that Montalbano and other cases interpreting section 7-210 can be interpreted as holding that only the landowner whose property abuts the defect upon which the plaintiff trips may be held liable, they should no longer be followed for that premise. Simply put, section 7-210 (b), by its plain language, does not restrict a landowner’s liability for accidents that occur on its own abutting sidewalk where the landowner’s failure to comply with its duty to maintain its sidewalk in a reasonably safe condition constitutes a proximate cause of a plaintiff ’s injuries. Furthermore,

our interpretation of section 7-210 as tying liability to the breach of that duty when it is a cause of the injury is consistent with the purpose underlying the enactment of that provision, namely, to incentivize the maintenance of sidewalks by abutting landowners in order to create safer sidewalks for pedestrians and to place liability on those who are in the best situation to remedy sidewalk defects. As part of its prima facie showing of entitlement to summary judgment, West River was required to do more than simply demonstrate that the alleged defect was on another landowner’s property. Here, West River focused solely on the location of the actual defect upon which plaintiff allegedly tripped, and ignored its burden of demonstrating that it complied with its own duty to maintain the sidewalk abutting its property in a reasonably safe condition and/or that it was not a proximate cause of plaintiff ’s injuries. Plaintiff tripped on an expansion joint that abutted the Mercados’ property. That does not end the inquiry, nor does the fact that the defect upon which plaintiff tripped was in front of the Mercado property necessarily absolve West River of liability. Although West River did not have a duty to remedy any defects in front of the Mercado property, section 7-210 (a) imposed a duty on West River to maintain the sidewalk abutting its premises in a reasonably safe condition. Moreover, the plain language of section 7-210 (b) provides that West River may be held liable for injuries where its failure to maintain its sidewalk is a proximate cause of that injury. Here, most of the sunken sidewalk flag that plaintiff traversed abutted West River’s property, and plaintiff claims that West River’s sidewalk flag had sunk lower than the expansion joint upon which plaintiff allegedly tripped. Thus, West River failed to meet its burden of demonstrating entitlement to judgment as a matter of law, leaving factual questions as to whether West River breached its duty to maintain the sidewalk flag abutting its property and, if so, whether that breach was a proximate cause of plaintiff ’s injuries. Under the circumstances of this case, summary judgment should have been denied. Accordingly, the order of the Appellate Division should be reversed, with costs, and West River Associates, LLC’s motion insofar as it sought summary judgment dismissing the complaint denied.[IA]

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