Farmers Insurance Group AUTO MODULE - II District Training
Module II Objectives • Review Module I • Endorsements • Rate Classifications • Introduction to Auto Companies • Farmers Texas County Mutual (TCM) • Review Module II • Homework Assignment
Module I Review 1. What are the four parts of an auto policy? 2. What does Part A-Liability cover in an auto contract? 3. What is the minimum liability coverage an insured must carry to operate a motor vehicle in Texas?
Module I Review 4. What does each number represent in 20/40/15? 5. What is the difference between Medical coverage and PIP coverage? 6. If four persons covered under Med Pay had $2,000 in medical bills each, and the insured had $2,500 in Med pay on his policy, what is the total amount that would be paid? 7. What is UM/UIM coverage? 8. Who is covered under UM/UIM coverage?
Module I Review 9. What does Part D - Collision Damage coverage cover? 10. What does Part D - OTC coverage cover? 11. What deductibles should you recommend to your auto customers? 12. How do you sell an auto policy when your “apples to apples” quote is higher than your competitor?
Endorsements • 510 - Additional Insured • 511 - Extended Non-Owned Coverage • 512 - Designation of Covered Person • 513 - Federal Employees Using Autos in Govt Business • 520 - Coverage for Tapes, Records and other devices • 521A - Covg for sound receiving and transmitting equipment • 523A - Rental Reimbursement • 560C - Recreational Trailers/Motorhome • 561C - Recreational Trailers/Motorhome-Contents Covg • 565 - Auto Death Indemnity • 571 - Certified Risks (SR-22’s) • 573 - Supplementary Death Benefit • 515A - Named Driver Exclusion
Endorsements • E511 - Extended Non-Owned Covg This endorsement provides for unlimited use of automobiles not owned by, but furnished for, the regular use of the named insured, spouse or relatives, if resident of the same household. (Med pay is available, PIP is not) Non-acceptable for truck drivers (unless Fed employee which covers liability ins.), bus or taxi drivers, owner or operators of garages, or drivers of emergency vehicles (except peace officers).
Endorsements • E512 - Designation of Covered Person or Organization. • This is attached to the policy when it is necessary to designate a specific person or org. as an insured. Caution should be excersized in adding additional insureds. There must be a definite need. There is no premium charge.
Endorsements • E521A - Sound Receiving and Transmitting Equipment • Pays for direct accidental loss to any of the following devices: radio bank, two way mobile radio, telephone, scanning monitor receiver. (No deductible) Only available with OTC and Coll coverage. Equipment has to be permanently installed and over $1,500.
Endorsements • E523A - Rental Reimbursement Covg • Written in TCM and MCA. • $20 per day $600 Max • $25 per day $750 Max • $30 per day $900 Max • $35 per day $1050 Max • The car must be out of service or missing for more than 24 hours. The car must carry OTC and Collision.
Endorsements • E565 - Auto Death Indemnity • Written in TCM and MCA. • Provides a form of life insurance for named persons. Can be written for the named insured and/or any other person in household.
Endorsements • E515A - Named Excluded Driver • Written on an exception basis for a driver who chooses not to be rated based on poor driving history and has maintained auto insurance elsewhere. Agent must seek Underwriting approval and maintain signed endorsement on each policy in the household. Use extreme caution when using this endorsement.
Rate Classifications All auto insurance companies use a State mandated classification to rate for drivers age, sex, marital status and vehicle use. Because we have statistical information supporting young single male working drivers are more likely to be involved in an automobile accident than older married female non-working drivers; thus, we can charge a higher premium for these drivers. We cannot and do not use discriminating factors such as race, religion or socioeconomic status to determine rates. The rate classes shown on the next few slides are standardized for every insurer in the State of Texas.
Rate Classifications Adult Rate Classes: There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and: The auto is not used for business nor driven to or from work or school. (Clergy shall be rated as 1A rate classes) Under 25 1A-1 45-49 1A-34 25-29 1A-2 50-54 1A-41 30-34 1A-31 55-59 1A-42 35-39 1A-32 60-64 1A-5 40-44 1A-33
Rate Classifications Adult Rate Classes: There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and: The autois not used for businessbut is driven to/ from work or school more than 50% of the time. Under 25 1B-1 45-49 1B-34 25-29 1B-2 50-54 1B-41 30-34 1B-31 55-59 1B-42 35-39 1B-32 60-64 1B-5 40-44 1B-33
Rate Classifications Adult Rate Classes: There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and: The auto is not used for business but is driven to or from work or school less than 50% of the time. (Or drives to/from park and ride 5 times a week). Under 25 1C-1 45-49 1C-34 25-29 1C-2 50-54 1C-41 30-34 1C-31 55-59 1C-42 35-39 1C-32 60-64 1C-5 40-44 1C-33
Rate Classifications Adult Rate Classes: There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and: The auto/truck is used for business. Under 25 3-1 (3A-1 truck) 45-49 3-34(3A-34 truck) 25-29 3-2 (3A-2 truck) 50-54 3-41(3A-41 truck) 30-34 3-31 (3A-31 truck) 55-59 3-42(3A-42 truck) 35-39 3-32 (3A-32 truck) 60-64 3-5 (3A-5 truck) 40-44 3-33 (3A-33 truck)
Rate Classifications Mature Rate Classes: There is no male operator under 25 years of age, no unmarried female operator under 21, but there is an operator 65 years or older and: Pleasure Work/School Carpool Business / Truck 65-69 6A-0 6B-0 6C-0 8-0 8A-0 70+ 6A-9 6B-9 6C-9 8-9 8A-9
Rate Classifications Youthful Rate Classes: There are one or more male operators under 25 years of age, and the male is either married or not the principle driver of the auto: 2A11(<17) 2A12(17-18) 2A13(19-20) 2A21(21-22) 2A22(23-24)
Rate Classifications Youthful Rate Classes: There are one or more male operators under 25 years of age, and the male is unmarried and is the principle driver of the auto: 2C11(<17) 2C12(17-18) 2C13(19-20) 2C21((21-22) 2C22(23-24)
Rate Classifications Youthful Rate Classes: There are one or more female operators under 21 years of age, and is unmarried and has no children: 2D1(<17) 2D2(17-18) 2D3(19-20)
Rate Classifications Farm Rate Classes: There is a farm auto and there is no male operator under 25 years of age, no unmarried female operator under 21 years of age and: Under 25 1AF-1 55-59 1AF-42 25-29 1AF-2 60-64 1AF-5 30-34 1AF-31 35-39 1AF-32 40-44 1AF-33 45-49 1AF-34 50-54 1AF-41
Rate Classifications Youthful Farm Rate Classes: Male under 17 part-time driver or married: 2AF11 Male 17-18 part-time driver or married: 2AF12 Male under 17, single, full-time driver: 2CF11 Male 17-18, single, full time driver: 2CF12 Unmarried female under 17: 2DF1 Unmarried female 17-18: 2DF2 Unmarried female 19-20: 2DF3
Farmers Auto Companies • MCA - Mid-Century Insurance Company • TFIC - Texas Farmers Insurance Company • TFIC no longer accepting new business • TCM - Texas County Mutual • TCM- Ultra-Preferred
Field Underwriting: Overview As an “agency manager”, field underwriting is one of your most important responsibilities. Effective field underwriting is key to profitability and surplus enhancement (the financial stability of the Company). Underwriting is a systematic process for evaluating risks. Underwriting involves evaluating, selecting, classifying and rating each risk.
Field Underwriting: Overview The purpose of underwriting is to secure a safe and profitable distribution of risks. You should place the acceptable risks in the appropriate program with the proper rating classification, then “manage” those risks once they are accepted as Farmer’s insureds.
Field Underwriting: Overview Underwriting involves making decisions beyond the Customer Selection and Underwriting Guidelines: Subjective underwriting means searching for any moral, morale and/or physical hazards that affect the applicant’s risk potential. Objective underwriting means applying the underwriting guidelines to analyze and reach a decision.
Field Underwriting: Overview You are the “eyes and ears” of the Company. As a field underwriter, you are a valuable source of information in the decision to accept or reject a risk. As with a Regional Underwriter, the underwriting process involves: Gathering information and analyzing it Evaluating the options Making a decision on accepting, declining or modifying the risk.
Mid-Century Insurance Company Mid-Century Insurance Company (MCA) is our preferred Company. In this Company, we will place our prospective insureds who will be the least likely to have claims in the future. Because our rates in this Company are some of the best we have to offer, the Underwriting requirements are very stringent.
Texas County Mutual Texas County Mutual (TCM) is our sub-standard Company. In this Company, drivers pay an increased rate because of moving violations, lack of driving experience, vehicle type, previous claims activity and driving a motor vehicle without maintaining the state minimum liability insurance. Unlike TFIC and MCA, County Mutual rates are not promulgated by the State.The Ultra-Preferred Program is written in TCM.
TCM - Underwriting Guidelines Unacceptable/Non-Binder List - Personal Persons with a hazardous driving record. This means drivers who have: 1) Three or more accidents in the past three years regardless of fault. 2) Convicted of driving under the influence of intoxicants, alcohol or drugs in the past 12 months. (see 1101)
TCM - Underwriting Guidelines Unacceptable/Non-Binder List - Personal 3) Two or more of the following cites in the past 3 yrs: a. Driving under influence or refusal to submit to chemical or breath test. b. Driving while license is suspended or revoked. c. Hit and run; leaving the scene of an accident d. Involuntary manslaughter, reckless or negligent homicide or assault. (see 1101)
TCM - Underwriting Guidelines Unacceptable/Non-Binder List - Personal 3) Two or more of the following cites in the past 3 yrs: e. Operating a motor vehicle without owners authority. f. Reckless driving, careless driving, impaired driving, eluding a police officer. g. Racing or speed contest. h. Loaning Operator’s license or Registration to another. Eight or more points. (Will review after Underwriting) (see 1101)
TCM - Underwriting Guidelines Unacceptable/Non-Binder List- Personal 4) No valid operator’s license or permit for the vehicle being operated. 5) Persons with a criminal record. 6) Persons having received a narcotics conviction or who are excessive users of alcohol or drugs. 7) Residents or mailing addresses uncertain or not permanent, - motel, shipboard, etc. (see 1101)
TCM - Underwriting Guidelines Unacceptable/Non-Binder List- Vehicles 1) Midget cars, snowmobiles and similar contrivances. 2) Vehicles with a value in excess of $75,000 (submit for approval) 3) Vehicles not registered in the U.S... (Gray market vehicles) 4) Subleased vehicles 5) Cars with substantial damage or not in operating condition 6) Cars in storage 7) Utility vehicles used for business purposes (see 1101)
TCM - Underwriting Guidelines Unacceptable/Non-Binder List- Vehicle Use 1) Annual mileage over 25,000 2) Demonstrator vehicles - dealers or salesmen 3) Driver instructor cars 4) Emergency vehicles and cars equipped with bells, sirens or red lights 5) Farm trucks requiring a State or Fed motor permit to operate 6) Garage or service “loaner” cars (see 1102)
TCM - Underwriting Guidelines Unacceptable/Non-Binder List- Vehicle Use 7) Messenger or delivery service-cleaners, florists etc.. 8) Newspaper or magazine distribution 9) Operated extensively in Mexico 10) Rent-a-car agencies 11) School bus use (except “car pools”), taxicabs, limos etc.. 12) Towing for delivery, drive-away, haul-away 13) Vehicles used for hauling employees as passengers. (see 1102)
TCM - Point Rules & Surcharges All TCM auto risks shall use the same rating rules as MCA for rate classification, territory, symbols, etc.. In addition, surcharges apply in accordance with the rules that follow. (see 1432-1434)
TCM - Point Rules & Surcharges The following point assignment rules and point schedule should be applied to determine the appropriate surcharge. Each driver shall be assigned to the car whose rating is based on his/her driving. Each driver must be assigned to a car but not to more than one car. Every car must be assigned a driver unless there are more cars than drivers, in which case all excess cars have no driver assigned.
TCM - Point Rules & Surcharges Points developed by the driver with the greatest number of citation points are added to the accident points developed by all drivers of the auto to determine the number of points. If two or more autos are insured in TCM, the accident points shall be determined by the total of all drivers of the auto assigned to each car and citation points shall be determined by the driver assigned to each car who has the highest number of citation points.
TCM - Point Rules & Surcharges Experience Period The experience period for new business shall be the 3 year period prior to the new business effective date, and for renewals, the 3 year period prior to the renewal effective date. (see 1451)
TCM - Point Rules & Surcharges Two points will be assigned for each chargeable accident. Do not charge points for the following types of accidents: 1. Struck while legally parked. 2. Struck while legally stopped. 3. Insured collected in full from other party. 4. Other party received a citation and the insured did not. 5. Colliding with a bird or animal. (see 1433)
TCM - Point Rules & Surcharges MAJOR CITATIONS Charge 4 points each of the following: 1. DUI, DWI, open container or bottle, drunk in a vehicle, implied consent, refusal to submit to chemical or breath test. 2. Negligent homicide, manslaughter. 3. Racing, speed contest, improper start from a parked position, excessive acceleration. 4. Driving while license revoked, suspended or canceled. (see 1433)
TCM - Point Rules & Surcharges MAJOR CITATIONS Charge 4 points each of the following: 5. Hit and run; leaving the scene of an accident and failure to comply with requirements upon striking an unattended vehicle. 6. Reckless driving, careless driving, impaired driving, eluding a police officer. (see 1433)
TCM - Point Rules & Surcharges MINOR CITATIONS Charge 1 point for all citations except for the following: 1. Defective equipment (other than brakes) 2. Failure to display or sign Registration Card. 3. Failure to display license plates. 4. Failure to have driver’s license in possession 5. Pedestrian or parking citation. 6. Violation of Promise to Appear. (see 1434)
TCM - Point Rules & Surcharges HIGH PERFORMANCE CARS Definition: The high performance car is an auto with substantially more power than is required for smooth acceleration, comfortable driving and safe passing. The following list identifies the vast majority of High Performance cars; however, there are other vehicles not specifically listed. Also NOTE: Refer to your auto manual pages 1436-1437 for model year and IIN for specific criteria. (see 1436)
Acura NSX Aston Martin Cadillac Allante Chevy Camaro Chevy Corvette Dodge Daytona Dodge Spirit Dodge Stealth Dodge Viper Ferrari Ford Mustang GMC Syclone and Typhoon Lamborghini Lotus Maserati Mazda RX-7 Mercury Capri Nissan 300ZX Plymouth Laser Pontiac Firebird Porsche Toyota MR2 and Supra TVR Vector High Performance Cars
SPORTS CARS Although there is not a surcharge for sports cars in any company, Underwriting requirements restrict younger drivers who operate sports cars to be eligible for TFIC and MCA coverage's. NOTE: Refer to your auto manual pages 1083-1084 for specific models.
Acura NSX, Integra Alfa Romeo Aston Martin Austin Healy Avanti BMW Bricklin Buick Opel GT Cadillac Allante Chevy Camaro, Corvette Chrysler Laser, Conquest, LeBaron Citroen SM Cobra Cosworth Vega Nissan DeLorean De Tomaso Dodge Daytona, Charger, Stealth, Viper Eagle Talon Excalibur Ferrari Ford Probe GT SPORTS CARS
SPORTS CARS Maserati Mazda RX-7, 323GT, MX3, MX6, 626GT Mercedes Benz Merkur XR Mercury Capri MB Mitsubishi Monteverdi Morgan NSU Pantera Geo Storm GSI Honda CRX, Civic Del Sol Isuzu Impulse Jaguar Jensen Jensen Healey Lamborghini Lancia Lexus SC300, SC400 Lotus Lincoln Mark VII, Mark VIII