the
TEXAS CONNECTION TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
SEPTEMBER 2015
In This Issue •
Covering Property in Storage
•
Funds to Recover from a Disaster
•
AirBnB = Know the Risks
Just a few days ago, our industry lost a foundation cornerstone and many of us lost a dear friend. Myron F. Steves Sr. passed away on Saturday, August 29, 2015 at the age of 103. He was the Founder, and for many years the driving force behind the company that bears his name. Myron started his career in 1937, received his CPCU designation in 1949 and formed his own company in 1955. That company became a household word and standard of success to those of us who spent our careers in Texas insurance. He supposedly retired in 1989… but he spent a lot of time in the office for a retired guy. But with the heavy management responsibilities passed on to his children and family of employees, he could spend more of his time making others smile… and spreading joy. Thanks for your humor and your example… so long dear friend.
Texas PIA CE Classes Schedule Sponsored by
Month 2015 Sept Oct Nov 2016 January February March
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
Date
Region
Wed 9/30 Wed 10/28 Wed 11/11
DFW HOU SA
Wed 1/20 Wed 2/24 Wed 3/23
DFW HOU SA Page 2
Presidents Corner ………………….………
Page 3
…...……… Classifieds ………………………...………… AirBnB: Know the Risks …………...…...… TDI Enforcement Ac>ons …….……..……. Funds to Recover ………...…………..…… By The Numbers ………..………....……… Word Scramble ……...…….……….…..…… Our Partners ……..……………....….…… The Last Word ………………….……………
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Covering Property in Storage
Page 9 Page 11 Page 14 Page 15 Page 17 Page 19 Page 23 Page 24
Prada Marfa, by artists Elmgreen and Dragset, is just off of I-90, northwest of Valentine, Texas.
It’s a permanently installed sculpture displaying actual Prada shoes and handbags. The building’s only door is non-functional. (TxDOT) considered it to be a billboard that did not fit permiJed specifica>ons un>l 2014 when they announced that the structure would be reclassified as a museum, with the Prada Marfa as its only exhibit.
Well… I’m down to my last month as president of Texas PIA. As some of you know, this is my second >me in twenty years to serve. It was, thanks to loyal partners & members, an enjoyable two years. We saw membership double, we found a new zeal for local CE programs (See page 2), and added new products, discounts, and revenue streams. Honestly, the hardest part of this job may well be coming up with original material for this “President’s Corner”! October 1, our incoming president, Shirley Almany, will be driving the wagon and we can expect our associa>on to con>nue to grow and prosper under her guidance. Shirley has been a very influen>al part of Texas PIA for many years and we appreciate her volunteer spirit. The Texas PIA has always supported the independent agency system and individual member agents with day to day agency management issues, access to markets & revenue sources. Oh, yes… I may be “passing the torch” but I will s>ll be around suppor>ng our members and our goals.
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
Tony Page 3
Texas Insurance Professional Services Ray Reyes
or
Bob Dixon
(214) 618-2365
(832) 375-0787
ray@piatx.org
bdixon@piatx.org
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The Houston Chapter of Texas PIA & YIPs invites you to aDend a Special Mee;ng
2410 Richmond Ave, Houston, TX 77098 Please plan to join us Wednesday, October 28th for : • A great seafood dinner, like only Pappadeux can do it! • Guest Speaker Colonel Roy Phillips of King Phillips Ins. • 2 hours of Ethics CE credit • Drawing for door prizes • Meet a new carrier coming into Texas As space is limited, you must be registered to aDend Register on-line: www.piatx.org/HoustonSpecial Register by phone: 972-862.3333 Thanks to our sponsor: Windhaven Insurance THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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Too much stuff? Almost 9 percent of American households rented a selfstorage unit in 2012, up from 6 percent in 1995. Before joining them, be aware that you, as the lessee, remain responsible for loss or damage to everything in your unit, unless your rental agreement specifies otherwise. The states of The contents coverage sec>on (Coverage C) of a homeowners policy protects personal belongings, no maJer where they’re located. The typical policy provides between 50 and 70 percent of the policy’s dwelling limits in coverage for personal property. This means a policy with limits of $500,000 would typically provide between $250,000 and $375,000 in contents coverage. Newer (since 2011) ISO standard homeowners policies specifically limit coverage on personal property owned or used by the insured and located in a self-storage facility to 10 percent of Coverage C limits or $1,000, whichever is greater. Insurance policy forms differ, however, so the policy might not have this limita>on. For example, older ISO homeowners policy forms state: Our limit of liability for personal property usually located at an “insured’s” residence, other than the “residence premises,” is 10% of the limit of liability for Coverage C, or $1000, whichever is greater. This policy would provide up to the contents limit for your goods in a storage unit, because the unit is not a “residence.” Reading the policy’s Coverage C sec>on carefully will help determine what limits apply to goods in storage. The policy’s exclusions, sub-limits and valua>on basis also determine how well it protects off-premises belongings. (con>nued on page 13) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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Texas PIA Offers Members Satisfying E&O Solutions “Fifteen
minutes could save you
15%.... Everyone knows that… but did you know that not all E&O policies are the same?
This space is dedicated to all Member Agents or Companies.
It’s FREE!
Look for employees buy & sell agencies Sell your mother-in-law’s cat Sell your mother-in-law!
Send Ads to classifieds@piatx.org
E&O is like other types of insurance… you buy it hoping you’ll never need it… but if you do… E&O can be the difference in whether you stay in business or not. How about it? Do you know what your policy covers…. And more importantly, what it doesn’t? Texas PIA offers members, quality E&O markets and coverage. And members say they have saved as much as 40% when they switch to exclusive PIA programs. Call today and get an analysis of your coverage and a competitive quote from multiple markets. Call Texas Insurance Professional Services: Ray Reyes (214) 618-2365 ray@piatx.org
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
or
Bob Dixon (832) 375-0787 bdixon@piatx.org
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Home rental clearinghouses such as Airbnb and VRBO make it easy for homeowners to rent out a spare bedroom or a second home when they aren’t using it. This might sound like a good way to earn extra money. Before diving in, consider the risks and existing insurance coverage. VRBO handles mainly second homes/apartments that owners want to rent out to generate income. Airbnb primarily lists vacant rooms, in-law units or accessory dwelling units (ADUs) in or on the owner’s residence. Both scenarios create security and risk exposures for property owners. Homeowners who sign up with VRBO have a choice of two levels of service: do-it-yourself or property management. In a do-it-yourself arrangement, the homeowner creates the VRBO lis>ng for their home, answers inquiries and handles booking. Alterna>vely, VRBO will handle these chores for a higher percentage of the rental fee. However, the responsibility for insuring the property and any other risks of ren>ng remains with the homeowner. Airbnb offers homeowners a $1 million Host Guarantee. This guarantee provides protec>on for up to $1 million in damages to eligible property “…in the rare event of guest damages which are not resolved directly with the guest…” The guarantee applies only in certain countries (including the U.S.). However, Airbnb cau>ons that the guarantee does not apply to cash and securi>es, and it provides only limited coverage to high-value and difficult to replace items such as jewelry, collec>bles and artwork. Further, it does not apply to damage that occurs in common areas, or wear and tear. (con>nued on page 16) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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(Con;nued from Page 7)
• Exclusions: Homeowners policies exclude coverage for damage due to flood, earthquake, landslide and mold. In hurricane-prone coastal areas, policies also exclude coverage for windstorm damage. • Sublimits: Homeowners policies typically place much lower sublimits on certain high-value, easily lost, stolen or damaged items, such as jewelry, furs, stamps, coins, guns, computers, an>ques and collec>bles, as well as on business personal property. The policy might limit coverage for these items to as liJle as $1,500. • Valua>on: Homeowners policies value lost or stolen property on either an actual cash value or replacement cost value basis. This determines whether an insurer will pay either the actual cash value of the lost or damaged items (usually purchase price less deprecia>on) or the cost of replacing them with similar goods aRer a loss. Replacement cost policies cost more, but provide higher payouts if an insured has to file a claim.
Self-Storage Tenant Policies Many self-storage unit operators offer tenants specialized insurance to cover their stored goods. Here are some things to look for:
• Exclusions: Unless a policy covers expo-
sures excluded by the homeowners policy, such as flood, mold, earthquake and windstorm, it might duplicate coverage an insured already has. • Primary coverage: Some policies have an “other insurance” clause, which s>pulates that it will only pay a claim aRer any other applicable insurance policy (such as a homeowners policy) pays a claim. • Low deduc>bles. Some policies offer very low or zero deduc>bles. A low- deduc>ble policy that offers primary coverage means a claim can be filed without affec>ng the homeowners coverage. • Strong A.M. Best ra>ng. Most storage unit losses are small, only a few thousand dollars. But a major event, such as a fire, could destroy an en>re facility. If the operator of a large facility sells coverage to many tenants, total claims could reach hundreds of thousands or millions of dollars. You’ll want coverage with an insurer that can easily absorb this type of loss. Inside Self-Storage magazine reports that several states require self-storage operators to have an insurance license to sell coverage to tenants, including Arizona, California, Florida, Illinois, New Jersey, New York, North Carolina, Texas, Utah and Washington. Before buying coverage from a self-storage operator in one of these states, check with the state insurance department to ensure they have the proper licensing.
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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TEXAS DEPARTMENT OF INSURANCE ACTIONS Dixon, Warren Date of Ac;on: 4/27/2015 Loca;on: Aus>n Ac;on Taken: Indicted Viola;on: Organized Criminal Ac>vity, 3rd Degree Felony Hoosier, Donald R Date of Ac;on: 4/27/2015 Loca;on: Aus>n Ac;on Taken: Indicted Viola;on: Organized Criminal Ac>vity, 3rd Degree Felony Rice, Eddie Date of Ac;on: 4/27/2015 Loca;on: Aus>n Ac;on Taken: Indicted Viola;on: Organized Criminal Ac>vity, 3rd Degree Felony Sauceda, Bradley R Date of Ac;on: 4/27/2015 Loca;on: Aus>n Ac;on Taken: Indicted Viola;on: Organized Criminal Ac>vity, 3rd Degree Felony
Contact Us Need more information on the benefits of membership? Have a question about member services? Give us a call: Texas PIA & Young Insurance Professionals 3632 Frankford Rd 200B Dallas, Texas 75287 (972) 862.3333 joe@piatx.org www.piatx.org
Collier, EvereD W Date of Ac;on: 4/24/2015 Loca;on: Beaumont Ac;on Taken: Indicted Viola;on: Insurance Fraud, State Jail Felony Veloz, Maria Date of Ac;on: 4/24/2015 Loca;on: Dallas Ac;on Taken: Sentenced to 6 months deferred adjudica>on, ďŹ ned $1,500.00 and ordered to pay $10,230.38 in res>tu>on. Viola;on: Insurance Fraud, Class A misdemeanor Albert, Phylis Date of Ac;on: 4/17/2015 Loca;on: San Antonio Ac;on Taken: Informa>on Viola;on: Insurance Fraud, Class A misdemeanor McMillan, Shernita A Date of Ac;on: 4/17/2015 Loca;on: Fort Worth Ac;on Taken: Sentenced to 2 years deferred adjudica>on and ordered to pay $4,400.00 in res>tu>on. Viola;on: False Statement for Property or Credit, State Jail Felony
Live a good, honorable life. Then when you get older and think back, you'll enjoy it a second me. - The Insurance Sage
: https://wwwapps.tdi.state.tx.us/inter/asproot/fraud/indictments/clips.asp
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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Forty percent of all businesses affected by a natural disaster never re-open, according the Small Business Administration. We recently discussed SBA disaster loans with Rick Jenkins, supervisory public information officer with the SBA. ARer a disaster, businesses of all sizes and private, nonprofit organiza>ons may apply for an SBA physical disaster loan of up to $2 million. Borrowers can use these funds to repair or replace damaged real estate, equipment, inventory and fixtures. They may also request as much as 20 percent of the loan amount in addi>onal funds to use for mi>ga>on. Owners can use these funds to protect the property against future disasters of the same type. Jenkins recommends that business owners know their geography and its associated hazards. In the West, dry summers and drought condi>ons can lead to wildfires. Businesses located in coastal areas, par>cularly near the Gulf Coast, are vulnerable to hurricane. And businesses in low-lying areas anywhere are subject to flood. Jenkins suggests taking appropriate mi>ga>on measures. For example, in windstorm areas, reinforcing structures and installing hurricane shuJers and >e-downs can reduce the risk of damage. Business owners on the West Coast will want to pay aJen>on to trees and brush located on their premises. To prevent the spread of wildfire, business owners will want to keep landscaping trimmed and well-watered and remove dry brush. Although SBA disaster loans will cover uninsured or under-insured losses, business owners should not rely on loans to recuperate from a disaster. To recuperate as quickly as possible from a disaster, Jenkins recommends that business owners buy as much insurance as they can on real estate and contents. “Insure, insure, insure,” he says. “Only borrow what your insurance won’t cover.”
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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(Con>nued from Page 11) So the Airbnb Host Guarantee meets your insurance needs, right? Wrong. As Airbnb says, “The Host Guarantee is not insurance and should not be considered as a replacement or stand-in for homeowners or renters insurance.” In addi>on to kicking in only aRer nego>a>ons with your guest fail, it lacks two important coverages you find in your homeowners or renters policy: medical payments coverage and liability coverage. Airbnb states specifically that its Host Guarantee does NOT cover liability. So if you rent your spare bedroom to an Airbnb guest who falls on your stairs and breaks her arm, will you have coverage? The answer to that depends.
Homeowners, Vaca;on Home or Landlord’s Policy? Homeowners policy: If you are living in the property and occasionally rent out a spare room or inlaw unit, your homeowners policy might provide the coverage you need. The medical payments por>on of your homeowners policy will pay up to a specified amount toward the medical or funeral expenses of a third party (person not covered by the policy). That person must suffer accidental injury or death on your property for coverage to apply, but he/she does not have to prove that you were liable. A basic homeowners policy will pay up to $1,000 for medical payments. You can increase this amount, but even limits of $5,000 will only make a dent in a major claim. However, it can help prevent minor incidents from escala>ng into major disputes and claims. The liability por>on of your homeowners policy provides more coverage. It will cover your costs if a third party is injured on your property or suffers a property loss (such as theR). Coverage applies even if you are negligent, but not for your “inten>onal acts.” Read your policy carefully to ensure it doesn’t exclude coverage for rental ac>vity. Most homeowners insurance policies exclude coverage for liability due to “business pursuits.” To date, we don’t know of any insurers denying claims on the basis of an Airbnb rental being a business. However, if you rent frequently, you might want addi>onal liability coverage or specialized innkeeper’s coverage. Vaca;on home policy: If you plan to rent out a vaca>on or second home, you might not want to rely on your vaca>on home policy for coverage. Those policies are designed to cover a property that will be occupied by the owner, not one rented out for income. A homeowners or vaca>on home (con>nued on page 22) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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I don’t know about you, but I let my guard down during the summer driving through school zones. Since we are starting a new school year, let’s look at some numbers that should remind us to be careful. The Human Cost: Make no mistake, law enforcement agencies are eager to enforce the laws below, and for good reason. A study released by National Safe Kids Campaign entitled Child Pedestrians at Risk in America: a National Survey of Speeding in School Zones sighted this sobering statistic. A pedestrian struck by a car going 20 miles per hour is only about 5 percent likely to die. If the vehicle is going 30 miles per hour or more, however, the probability of death jumps to 40 percent. The Monetary Cost: Here’s the average fine for 10 mph over the posted speed limit in a school zone: Huntsville—$312 College Station—$305 Alice—$305 Conroe—$276 Mesquite—$275 Garland—$274 Kerrville—$272 Lewisville—$266 Laredo—$266 New Braunfels—$253 Brownsville, Houston, Denton—$250 Statewide, the fine for using cell phones and handheld devices in a school zone is $200.
Defensive driving is always a good idea. Its an especially good idea while we navigating over 1,200 school zones in Texas hosting over 5 million students. THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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Enroll with our new partner, Secure 24/ADT and: •
Show your homeowners customers how to lower their insurance rates with a monitored security system.
•
Secure 24 offers your customer a special installation pricing.
•
Secure 24 pays you $200. when they install a system you refer.
•
Free upgrades to cellular module if there is no phone line to the house
•
Upgrades available to ADT Pulse (home automa>on and video)
•
ADT has a money back service guarantee as well as a movers package guarantee
•
ADT will pay $500 of the deduc>ble in the case of burglary (certain restric>ons apply)
•
Increase revenue - $200 paid for each installed unit to the referring agent
•
Monitored security cer>ficates sent directly to the agent, from your Secure/24ADT representa>ve
•
Customers get a more comprehensive security package for $99, then refunded $100 aRer installa>on
ENROLL NOW: Call BreD Fallert Direct: 866-776-6574 refer@s24promos.com
Arrange each of the following anagrams to form a single insurance related word. Keep in mind that the anagram is not a clue. It has nothing to do with the insurance related word. Send us your answers to be entered in a drawing to win a fabulous prize! Feel free to call us if you’re stuck.
972.965.2025 Email to: Joe@piatx.org or fax to 972. 307.7888
PAPA RAILS
A
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SIX COUNSEL
E
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INCUR HARE
D
PURER COD
N
ENTER INTO I SEE CITRUS SCREEN OCCUR TEST ME LENT COY LIP WORN FRAMES
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THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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(Con;nued from Page ??) Landlord policy: A landlord policy will cover you for liability you incur if a renter is injured on your property. It will also cover you for loss of rental income if fire or other insured casualty damages your property and prevents you from ren>ng it out. One thing you will want to check, however, is your policy’s defini>on of a rental. Many policies consider a rental property one that is rented out for at least a month’s >me. If you are ren>ng your property out on a shorter-term basis, you might lack the coverage you need. An innkeeper’s policy might prove a beJer choice. If you’re considering ren>ng your primary residence or a second home, we can help you evaluate your exis>ng insurance policies to see if they will meet your changing coverage needs. You should also check your local zoning. Many locali>es restrict short-term rentals to certain areas. Ren>ng out your property where it’s forbidden could give your insurer a reason to deny a claim. Any property owner considering ren>ng out space—whether in your primary residence or a second home—should also consider buying an umbrella liability policy. An umbrella liability policy extends the coverage of your homeowners and auto policy. Coverage begins once you reach the limit of your underlying auto or homeowners policy (whichever applies), up to the policy limit. An extra $1 million in liability coverage can cost you as liJle as $200-$300 per year. Your actual cost depends on such criteria as the amount of coverage, the insurance company issuing the policy and your own “personal risk factors.” These include the number of traffic >ckets you’ve goJen in the past few years, and possibly your credit report. You can buy limits of up to $5 million, which might make sense for families with unusual risk exposures, such as a high net worth, celebrity or a high-profile posi>on.
Here’s the answers to last month’s puzzle. Remember there’s a $50 prize for the first person to submit the correct answers. (before the answers are published obviously.)
GENTLE GIN
SUNNIER RACE
NEGLIGENT
BE AN ICY FIRE
MOWERS HONE
BENEFICIARY
HOMEOWNERS
ANT IN TUNA
INTENDED PEN
ANNUITANT
INDEPENDENT
CACTI END
SLUR UPS
ACCIDENT
IN OSMOSIS
WIDER TIN RUNG
OMISSIONS
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
REINSURANCE
SURPLUS UNDERWRITING
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the
Last word
I don’t think I have ever done this before, but this year Texas PIA added a new company member and I think you will want to hear my experience. The company is Secure 24/ADT. See their ad on page 19. Here’s my story: About the time Secure 24/ADT partnered with Texas PIA, I found I needed a new monitored security system to keep my discount on my homeowners policy. As I’m sure you know, most homeowners insurers offer a substantial discount to policyholders if they have a monitored central security system. Usually the discount will almost pay for the monitored system. Member Agents can sign up with them… it costs you nothing. Then, each time you write or renew a homeowners policy, you refer your customer to Secure 24/ADT. If the customer takes advantage of the program, here’s what happens:
•
Your customer gets a lower rate on their homeowners policy, Your customer receives a $100.00 bonus, which virtually pays for the installation, equipment & labor. Your customer can sleep soundly, confident in the security
•
You receive a $200.00 referral fee... A big boost to revenue.
• •
In my case, I referred myself… so I received the $100.00 bonus, PLUS the $200.00 referral fee… I tell you it’s better than sliced bread! I am always leery of programs like this because, in the past, referral fees were promised but never delivered… But, I can tell you, this is not true of Secure 24/ADT! Take a look at their ad (page 19) and sign up… you’ll be glad you did!
Joe