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AUTO MODULE - II

This module reviews the key concepts of auto insurance policies and covers various endorsements. Learn about liability coverage, minimum requirements, deductibles, and additional insured options.

helenjenkins
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AUTO MODULE - II

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  1. AUTO MODULE - II

  2. Module II Objectives • Review Module I • Endorsements • Rate Classifications • Introduction to Auto Companies • Farmers Texas County Mutual (TCM) • Review Module II • Homework Assignment

  3. 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?

  4. 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?

  5. 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?

  6. 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

  7. 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).

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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.

  13. 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

  14. 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.

  15. 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.

  16. 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.

  17. 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.

  18. 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.

  19. 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.

  20. 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.

  21. 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.

  22. 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)

  23. 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.

  24. 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

  25. 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

  26. 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.

  27. 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.

  28. 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.

  29. 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.

  30. 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.

  31. 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.

  32. 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.

  33. 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.

  34. 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.

  35. 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 VIN for specific criteria.

  36. 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

  37. 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.

  38. 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

  39. 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

  40. SPORTS CARS Triumph TVR Tuscan Typhoon Vector Viper Volkswagen Scirocco, GTI, Corrodo Volvo Pantera Plymouth Laser Pontiac Fiero, Trans Am, Firebird Porsche SAAB Shelby Singer Subaru SunbeamC Toyota 2000GT, Supra, MR-2, Corolla

  41. Module II - Review 1) What are the names of the three auto Companies? 2) Up to this point, what differences have you learned about each of the three auto Companies? 3) Using your notes, what endorsement covers Rental Reimbursement? 4) What rate class would be used for a 30 year old male who uses his car to drive to/from work? 5) What rate class would be used for a married 18 year old female who is a housewife?

  42. Module II - Review 6) What rate class would you use for a single 21 year old female who drives to/from school? 7) What rate class would you use for a single 18 year old male who drives to/from school? 8) What rate class would you use for a single 18 year old male who shares a car with his 48 year old mother? 9) In TCM, how many points would you charge for a speed citation?

  43. Module II - Review 10) In TCM, how many points would you charge for: a) a speed citation on 9/24 and a ran red light citation given on 10/3? b) a speed citation on 9/24 and an accident on the same day? c) an accident on 9/24 and a speed on 10/3? d) three ran red light citations on 9/24 and an accident on the same day?

  44. Module II - Review 11) How many points can a person have before they are ineligible for coverage in TCM? 12) Can an individual that has 3 non-fault accidents in the past 3 years be issued a policy in TCM? 13) Can an individual who received a DWI 3 months ago be issued a policy in TCM?

  45. Module II - Review 14) How many cars can be issued on one TCM policy? 15) Can you have one person issued on a vehicle in TCM and his/her spouse have a policy in MCA? YES, we will discuss split households in a later module.

  46. Homework Assignment Review rate classes and point surcharges before next class.

  47. Quote of the Day.. It’s not where you start -- it’s where you finish that counts. Zig Ziglar

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