“Don’t Fumble These Coverages”

1. “Don’t Fumble These Coverages” David Thompson, CPCU, AAI, API Dthompson@faia.com TODAY’S SPECIAL GUEST Fred Kelly

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5. HOUSEKEEPING INFO • Class times: 9:00 a.m. to 11:00 a.m. • One Break – 11 Minutes • For the Gators, 10 + 1 = 11 • CE form information • Restrooms • Local information

6. DFS Rule # 69B-228.060(5)(c) Prohibits… • Sleeping; • Reading of non-course books, newspapers, or other non-course material; • Using a cellular phone or other electronic device except to take class notes or to complete mathematical exercises; • Leaving the class other than during authorized breaks. • Shouting out “Go Noles” or “Gators Suck” Go Noles!

7. Unauthorized Entity Issues • Verify with the DFS: • www.fldfs.com/www.myfloridacfo.com • 1-800-342-2762

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18. 200+ Articles

19. Florida Insurance Research Library

25. Subjects Today • Kid’s Cars • Kids – Homeowners Coverage Issues • Scooters, Segways, Other “Moving Toys” • Spring Break – Renting Condos & Hotels • Alcohol! • Renting Motor Homes to Visit the Kid • Rental Cars

27. The Kickoff Question • Can a kid who is 16 years of age legally sign an application for personal auto insurance?

28. 627.406  Power to contract; purchase of insurance by or for minor.-- • (1)  Any person of competent legal capacity may contract for insurance. • (2)  Any minor of the age of 15 years or more, as determined by the nearest birthday, may, notwithstanding his or her minority, contract for annuities or for insurance on his or her own life, body, health, property, liabilities, or other interests or on the person of another in whom the minor has an insurable interest. Such a minor shall, notwithstanding such minority, be deemed competent to exercise all rights and powers with respect to or under any contract for annuity or for insurance upon his or her own life, body, or health or any contract such minor effected on his or her own property, liabilities, or other interests or on the person of another, as might be exercised by a person of full legal age. Such a minor shall not, by reason of his or her minority, be entitled to rescind, avoid, or repudiate the contract, nor to rescind, avoid, or repudiate any exercise of a right or privilege thereunder, except that such a minor, not otherwise emancipated, shall not be bound by any unperformed agreement to pay, by promissory note or otherwise, any premium on any such annuity or insurance contract.

29. Kid’s Cars “The insurance went up HOW much?”

30. Kid’s Cars • No matter how you slice the banana, it’s going to cost you a ton to insure kids. • To quote a student: • “When my customers complain about the cost to insure kids I tell them they should have considered that in the heat of passion 16 years earlier.” Before we go any further, how will this affect our insurance in 16 years?

31. Kid’s Cars – The Cost • Pre-kid, two cars, high limits: • $750 • Kid turns 16: • $1250 • Kid gets boring car: • $1850 • Spouse has wreck: • $2450

32. Kid’s Cars – The Options • No car • Good risk management • Car in parent’s name, driven by kid • Generally the least expensive way. No coverage gaps. • Car in kid’s name • Disaster waiting to happen • QUESTION: Why???

33. A Word On Statutes • What is FS 322.09?

34. 322.09 (1)(a) The application of any person under the age of 18 years for a driver's license must be signed and verified before a person authorized to administer oaths by the father, mother, or guardian, or, if there is no parent or guardian, by another responsible adult who is willing to assume the obligation imposed under this chapter upon a person signing the application of a minor. This section does not apply to a person under the age of 18 years who is emancipated by marriage.

35. 322.09 (2) Any negligence or willful misconduct of a minor under the age of 18 years when driving a motor vehicle upon a highway shall be imputed to the person who has signed the application of such minor for a permit or license, which person shall be jointly and severally liable with such minor for any damages caused by such negligence or willful misconduct.

36. Kid’s Cars – No Car • List the kid as a driver for rating and underwriting reasons. • QUESTION: How does listing the kid as a driver affect coverage? • As long as the kid is a family member, he/she has all policy coverages • Separate policy needed once the kid is no longer a resident. • What is “resident?”

38. In the Oregon case of Waller v. Auto-Owners Insurance Company the 17-year old daughter of an insured moved from Florida to Oregon to attend college.  She rented an apartment in her name and her father’s name, represented she lived in Oregon for the purposes of getting an in-state tuition rate, opened a bank account in her name, obtained utilities in her name, and obtained an Oregon driver’s license.  The daughter also maintained a bedroom in her parent’s home in another state and some of her possessions remained there.  She had never expressed intent not to return to her parent’s home after college, being unsure of her plans after graduation.  After being injured in an auto accident she claimed residency with her parents, seeking $1,475,000 in underinsured motorist coverage from her parent’s policy.  While the trial court sided with the insurance company in denying the claim, the appeals court ruled the trial court had erred in its decision and the case was sent back to the trial court.

39. In the Ohio case of Prudential v. Koby a 32-year old captain in the U.S. Army was ruled to have held dual residency, at his home as well as that of his parents.  The court stated, “…there was no requirement that, in order for a person to be a resident of the named insured’s household, such residence must be the sole or exclusive residence of the person.”

40. In the Florida case of Progressive v. Wesley a child, Taylor Wesley, was killed in an automobile accident. At the time of the accident her parents were divorced and the father was awarded primary custody of the child, however both parents shared parental responsibility.  The child kept a room at the home of both parents.  Arguments were presented on both sides showing how the child lived with one parent.  The court said, “Either determination of Taylor’s residency would be reasonable.  We must accept the interpretation which would favor the insured.”  Coverage was afforded under the policies of both parents. 

41. A Warning on Residency • You’re an insurance nerd, not a lawyer. • Don’t commit that someone is or is not a family member. • Simply explain coverage for family members.

42. Car in Parents’ Name • List kid as driver – underwriting & rating • Least expensive choice • No coverage gaps • Kid’s wreck = parents’ problem

43. Car in Kid’s Name • Huge potential problem • What limits do parents often want to carry on the kid’s car? • Minimum limits • Why? • Cost • “My neighbor said…” • “A lawyer said…” • “A Gator said…”

44. Car in Kid’s Name • There is an advantage: • QUESTION: What is it? • Car not titled to parents • Car loaned by kid to someone else, parents may not be as likely to be sued • QUESTION: If this option is selected what recommendation is there to the parents? • Same limits on all policies

45. Car in Kid’s Name -- Dangers • Exclusion in parents’ policy voids coverage for them while kid (or siblings) drives the kid’s car. • Liability • Med-pay • Physical damage • UM and PIP affected too • QUESTION: What is the UM Statute #?

46. Kids Cars -- Underwriting • QUESTION: Why won’t some companies write a kid on a separate policy, or why won’t they write the parents if the kid has his own car and insurance: • Kid is covered under parents’ policy while driving parents’ autos and non-owned autos. Also has access to med-pay, UM, physical damage in non-owned autos.

47. Kid’s Cars – Bottom Line • If the car and policy are in the kid’s name, assume the parents’ policy is worthless. • Parents depend on kid’s limits if they are sued.

48. Kid’s Cars This is Just a Summary For the “Rest of the Story…”

50. Kid’s Cars –Questions?