Frequently Asked Questions

Below are some of our frequently asked questions. If you have any other questions or concerns, please feel free to contact us.

  1. Why do I have to carry so much insurance on my home?
  2. Why is my neighbor’s homeowners insurance premium less than mine?
  3. Why does my credit rating affect how much my insurance costs?
  4. I am taking my family on vacation this summer. We may travel to a foreign country. Will I need any special insurance to cover my personal property and liability?
  5. My son (daughter) is leaving home to attend college this fall. Will my auto and homeowners insurance policies cover him (her) while at college?
  6. Should I purchase the Loss Damage Waiver offered by the rental agent when I rent a vehicle?
  7. If I have health insurance, why do I need Personal Injury Protection or Medical Payments coverage?
  8. Why do I have to carry so much insurance on my property?
  9. What is a Workers' Compensation Experience Modifier, how is it computed and how does it affect my premium?
  10. Why are you unable to Provide Notice of Cancellation on Certificates of Insurance as you have in the past?
Why do I have to carry so much insurance on my home?
This is a great question, and one that our customers ask frequently. For one thing, we believe you should have an amount of insurance that is sufficient to rebuild your home – probably your largest investment – in the event it is totally destroyed by a fire or tornado.

In addition, your policy contains what is called an insurance-to-value provision. This is essentially an agreement between you and the insurance company. In exchange for your agreement to insure your home for at least a specified percentage of its replacement value, the company agrees to issue the policy for a lower premium than it would charge for a policy without this provision. After a loss – even a small loss – if the amount of insurance on your home isn’t sufficient to satisfy your part of the agreement, then the insurance company can reduce the amount it would normally pay.

While it is your responsibility to establish the value of your property and select the amount of insurance for your policy, we can help with that decision and explain what you can do to avoid a loss penalty.

(This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers).

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Why is my neighbor’s homeowners insurance premium less than mine?

Homeowners policies are like cars. There are different types with different options. And all of those options affect the premium. Your neighbor may have chosen a higher deductible, or chosen to buy a policy that does not provide as much coverage, or chosen to buy a lower amount of insurance.

 

There are other factors that affect the premium as well. Without reviewing your neighbor's policy it is hard to tell whether they purchased a “Chevrolet” or a “Cadillac”.

 (This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers)



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Why does my credit rating affect how much my insurance costs?

There have been a number of studies in Texas and other states that have shown a direct relationship between credit and claims. The state of Texas allows credit as a rating factor because the impact of credit can be proven like other factors including prior claims, driving experience or the age of a home.

 

For example, we know that more young drivers will have accidents than experienced drivers. Even though not every young driver will have an accident, they all pay more for insurance. And everyone else pays less.  The same is true when credit ratings are used to develop premium for auto and homeowners policies.  Those with good credit ratings typically pay less for their policies.

 

 

This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.



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I am taking my family on vacation this summer. We may travel to a foreign country. Will I need any special insurance to cover my personal property and liability?

Vacations -whether taken in the summer or the winter -can pose unusual risks you don’t encounter every day, especially when you travel out of the country.

 

If your fishing skills are a little rusty and you injure a fellow fisherman, or if one of the kids starts a fire in a hotel room, will your homeowners insurance respond and pay the claim or defend a lawsuit?  What if you participate in different recreational activities while on vacation, like golfing, boating, jet skiing, biking, snowmobiling, or hang-gliding?  Will you be renting a golf cart or snowmobile, or maybe a moped, 3-wheeler, and 4-wheeler?  All of these activities can be fun, but they can also be dangerous.  Will one of your policies respond if you hurt someone or damage property belonging to others while participating in these activities?

 

One of your current policies may provide coverage for some of these activities, but unfortunately, there is no policy that will provide coverage for all of these activities.  

 

Automobile RisksThe typical auto policy covers auto accidents and losses in any U.S. state, territory or possession, and Puerto Rico and Canada. In fact, the liability limits under your auto policy may actually change as you cross state lines or enter Canada, in order to meet financial responsibility or compulsory insurance laws requiring certain minimum limits and coverages for automobiles operated in that jurisdiction.

 

It’s a different story, however, if you travel to Mexico or a foreign country other than Canada or Puerto Rico. Your policy does not provide adequate coverage for accidents in those countries.  (Your policy may extend some coverage to accidents in Mexico, but the coverage is very limited and you shouldn’t count on it providing adequate protection for your family.)  If you don’t plan to rent a car while vacationing in a foreign country, but may be using some form of public transportation such as buses and taxis, consider buying special trip insurance to cover medical and other expenses that may result from an accident -see Trip Insurance below. 

 

If you rent a car while vacationing in the U.S., your auto policy provides limited coverage for damage to the rent car and other claims arising out of the operation of the rent car.  However, we recommend you purchase the damage waiver offered by the rental company for complete protection.  (We have a separate report available on rental car exposures.  Please ask and we’ll send it to you.) 

 

If you rent a car in a foreign country, you will definitely need special coverage.  Ask the rental company what they offer, and see Trip Insurance below.

 

Recreational Vehicle and Watercraft Risks.  If you rent any kind of recreational vehicle or watercraft on your vacation, your auto or homeowners policy may not cover damage to the rented vehicle or watercraft, or injury to others or damage to property owned by others.  To be safe, we recommend you ask the rental company if a damage waiver and liability insurance is available for an additional charge. 

 

Personal Property.  Your homeowners policy covers property you take on vacation anywhere in the world, but the amount of coverage on property away from home may be lower than the limit shown on your policy. In addition, most policies won’t cover unusual types of losses you might encounter on vacation. For example, there may be no coverage if a monkey at the wild animal park or a bear at the campground shreds luggage or other personal belongings. Also keep in mind the policy may contain very small limits of coverage for money and jewelry, so take special precautions if you carry more cash and jewelry on vacation than you would usually carry at home.

 

Your policy covers theft, but you must report the theft to local authorities.  Obtain a copy of the police report before leaving the area, especially if the loss occurs in a foreign country.

 

Liability Risks.  The liability section of your homeowners policy applies to accidents anywhere in the world, but all policies contain exclusions related to certain activities like the recreational vehicle and watercraft activities mentioned above.  For the typical liability risks, however, like injuring someone while fishing, or setting the hotel room on fire, your homeowners policy will pay claims or defend lawsuits in the U.S. or any foreign country.  If you don’t already have a personal umbrella policy, ask us about this.  These policies provide high limits of liability over and above your auto and homeowners policies, and may also cover unusual exposures not covered by those policies.

Trip Insurance.  Trip Insurance covers canceled or interrupted trips, as well as emergency medical coverage and rental car coverage for U.S. citizens traveling abroad. It typically comes in a package that covers these and other exposures, although it can be purchased to cover a single exposure. Package policies are the most common and once were sold primarily by travel agents. However, with growing numbers of travelers making travel plans themselves on the Internet, web sites offering Trip Insurance are flourishing. For an example of one of these sites, take at look at insuremytrip.com

 

Vacation Time is Insurance Check-Up Time

Contact our agency for a review of your policies before you go on vacation. This is an excellent time to consider purchasing those higher limits and broader coverages we’ve been telling you about.

 

 

(This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.)

 



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My son (daughter) is leaving home to attend college this fall. Will my auto and homeowners insurance policies cover him (her) while at college?

This is a great question, and one that our customers ask frequently. 

When college students move from home to their home-away-from-home - a rented dorm or apartment – insurance issues can arise and should be addressed before they leave home.

One key question that arises in discussing these issues is whether the student is still considered a resident of your household.  This is a legal question, but your homeowners and auto policies both contain provisions that apply the broadest coverage available in those policies to persons who are legally considered residents of your household.

It is generally accepted that students living away from home while attending college are residents of their parents' household. Based on previous Texas court decisions, the real test is whether the absence of a person from the household is intended to be permanent or only temporary - whether there is physical absence coupled with intent not to return. This leaves a great deal of room for interpretation. There may be borderline cases that require you to think about alternatives. For example, it may be difficult to consider a 23-year-old graduate student living in an apartment year-round to be a resident of your household.

Homeowners Policy
Your homeowners policy covers personal property owned or used by a resident of your household while the property is located anywhere in the world.

However, most policies limit the amount of coverage on personal property to 10 percent of the amount shown on the policy for personal property, when the property is located at another residence away from the home address. 

Look at your policy and find the limit provided for personal property.  Take 10 percent of that amount, and then think about the items your student has taken to college:  clothes, TV, computer, other electronics, furniture, and household items.  How much would it cost to replace all those items if they were all lost at the same time in a fire or other catastrophe? 

In addition to the dollar limitation, some policies don’t cover theft of personal property from the student's residence, except while the student is temporarily living there. This is a definite problem, especially when the apartment is owned, or rented for a 12-month term, and the student comes home for the summer.

Your homeowners policy also provides liability coverage in case a family member is legally liable for another person’s injury or damage to another person’s property.  This coverage clearly applies to accidents at home or away from home, but some policies limit the coverage when an accident occurs at an owned or rented residence other than the family home.  Some insurance companies offer liability coverage at separate residences for an additional cost.



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Should I purchase the Loss Damage Waiver offered by the rental agent when I rent a vehicle?

Bottom Line

We recommend that you buy the Loss Damage Waiver from the rental company.

This is a great question, and one that our customers ask frequently.  Whether you rent a vehicle for personal use while on vacation, or as a substitute while your vehicle is out of commission for repair or service, or for business use while out of town, there comes that time when you’re standing at the rental car counter and the agent asks the inevitable question:  “Do you want to buy our loss damage waiver (or our insurance coverage)?”

 

Most loss damage waiver (LDW) fees are outrageous.  Sometimes they cost more than the daily rental fee itself.  But are they worth the additional cost?  The answer may depend on your tolerance for risk and inconvenience.  You must decide if the extra cost is reasonable, considering the potential for an uninsured loss should something happen to the vehicle during the term of the rental contract, and the resulting inconvenience of dealing with the rental company and your insurance company to satisfy the rental company’s demands.

 

First, you should know that the LDW is not actually an insurance policy.  It is a waiver of the rental company’s requirement in the rental contract that you bring the vehicle back in the same condition as when it left their lot.  Most rental contracts make you responsible for any damage to the vehicle, including theft and weather-related damage.  When you purchase the LDW, the rental company is removing that provision from the contract on a conditional basis. 

 

If you don’t purchase the LDW and the vehicle is damaged, here are some of the costs for which you could be held responsible under the rental contract:

 

  1. Cost to repair damage to the vehicle, or the full value of the vehicle if it is a total loss

 

  1. “Diminished value” of the vehicle – the difference between what the vehicle was worth before the accident and what it is worth after repairs have been made

 

  1. “Loss of use” – the amount of money the rental company loses on rental fees while the vehicle is out of service for repair or replacement

 

  1. Administrative or loss-related expenses incurred by the rental company, such as fees for towing, appraisal, and claims adjustment, plus general office expenses for handling the paperwork

 

Whether all or any of these costs are covered by your personal auto policy depends on several factors.  One big factor is the type of personal auto policy you have purchased.  Insurance companies sell different policies in Texas and the coverage and exclusions are not the same from one company to the next.  Some companies sell a policy that covers damage to the rented vehicle in the liability section of the policy, while others sell a policy that covers damage to the rented vehicle in the physical damage section.  Each type of policy is discussed separately below. 

 

We encourage you to ask your agent which type of policy you have, because as you will see, the differences are significant.

 

Reasons to purchase the Loss Damage Waiver when you have a policy that covers damage to the rental vehicle in the liability section:

 

1.  Your limit of liability may not be sufficient to satisfy the rental company’s demands.

Coverage for damage to the rental car and related costs are provided by the property damage liability section of your personal auto policy.  If the property damage limit of liability is not sufficient to cover the value of the vehicle you rent, plus pay for any other costs the rental company demands, you will be personally responsible for the costs that exceed what your insurance company has to pay.

 

2.  Your policy may exclude rented pickups and vans used for business purposes.

If you rent a pickup or van for business purposes, your personal auto policy may not provide coverage at all.  Some insurance companies consider an SUV to be a pickup or van, and may therefore not cover any damages arising out of the use of an SUV rented for business purposes.

 

3.  Your premium may go up or your policy may not be renewed if you have an at-fault accident.

You are driving an unfamiliar vehicle in unfamiliar territory.  If you have an at-fault accident while driving the rented vehicle, your insurance company may hold it against you – with a premium surcharge or perhaps even non-renewal.

 

4.  Your line of credit may be adversely affected.

If you don’t buy the LDW, the rental company will probably ring up an estimated damage amount on your credit card, pending notification to and settlement by your insurance company. 

 

5.  You may suffer a huge inconvenience.

When you have purchased the LDW, you can bring a damaged vehicle back to the rental company, throw the keys on the counter, and walk away.  When you haven’t purchased the LDW, you may have to spend a significant amount of time dealing with the rental company and your insurance company.

 

 

Reasons to purchase the Loss Damage Waiver when you have policy that covers damage to the rental vehicle in the physical damage section:

 

1.  Your policy may not cover damage to the rental vehicle at all.

Coverage for damage to the rental vehicle and related costs are provided by the physical damage section of your personal auto policy – IF your policy provides physical damage coverage on at least one of your covered vehicles.

 

2.  Your insurance company may not pay the entire amount demanded by the rental company.

When your policy provides physical damage coverage on one of your covered vehicles, the policy covers damage to a rented vehicle.  The amount payable by the insurance company is the lesser of the “actual cash value” of the vehicle or the amount “necessary” to repair or replace the vehicle, minus your deductible.  In addition, the policy covers “loss of use” with a daily limit (usually as low as $20 per day) and a maximum limit (usually $600), and there is usually a 1- or 2-day waiting period before the policy will begin to pay these expenses.  Because of all these limitations, you may become personally responsible for:

§ The amount demanded by the rental company to repair or replace the vehicle in excess of “actual cash value” or the amount “necessary” to repair or replace;

§ The amount of your deductible;

§ The amount demanded by the rental company for “loss of use” in excess of the daily and maximum limits payable by your insurance company;

§ The amount demanded by the rental company for “diminished value” of the vehicle, even after the repairs are complete;

§ The amount demanded by the rental company for administrative or other loss-related expenses.

 

3.  Your policy may exclude some electronic equipment.

Your policy may exclude loss to some electronic equipment that receives or transmits audio, visual or data signals.  If you rent a vehicle equipped with a GPS receiver, for example, your policy may not cover it.

 

4.  Your premium may go up or your policy may not be renewed if you have an at-fault accident.

You are driving an unfamiliar vehicle in unfamiliar territory.  If you have an at-fault accident while driving the rented vehicle, your insurance company may hold it against you – with a premium surcharge or perhaps even non-renewal.

 

5.  Your line of credit may be adversely affected.

If you don’t buy the LDW, the rental company will probably ring up an estimated damage amount on your credit card, pending notification to and settlement by your insurance company. 

 

6.  You may suffer a huge inconvenience.

When you have purchased the LDW, you can bring a damaged vehicle back to the rental company, throw the keys on the counter, and walk away.  When you haven’t purchased the LDW, you may have to spend a significant amount of time dealing with the rental company and your insurance company.

 

 

Bottom Line

We recommend that you buy the Loss Damage Waiver from the rental company.

 

 

 

(This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content.  Please read your insurance policy.  If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply.  The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.)



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If I have health insurance, why do I need Personal Injury Protection or Medical Payments coverage?

Personal Injury Protection (PIP) coverage provides payment for medical bills, funeral expenses, lost wages or replacement services (for homemakers) if you or a member of your family are injured in an auto accident. This coverage also applies to passengers in your vehicle, who may or may not have health insurance.

 

It's a broad "no-fault" coverage that will pay, even if others pay, allowing in some cases to double-dip for expenses. It has very few exclusions.

 

Medical Payments coverage is like PIP in that it reimburses covered persons for their medical expenses up to the policy limit. But that’s where the similarities stop. Medical Payments coverage does nothing to reimburse the injured person for lost wages or replacement services. And, unlike PIP, it coordinates with insurance that may be provided by another auto policy or coverage, thus preventing double dipping.

 

Either coverage can be used to cover deductibles and co-pays under a health insurance plan.

 

 

 

(This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.)



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Why do I have to carry so much insurance on my property?

 

Your policy contains what is called a coinsurance provision.  Coinsurance is essentially an agreement between you and the insurance company.  In exchange for your agreement to insure the property for at least a specified percentage of its actual value, the company agrees to issue the policy for a lower premium than it would charge for a policy without a coinsurance provision.  After a loss – even a small loss – if the amount of insurance on your property isn’t sufficient to satisfy your part of the agreement, then the insurance company can reduce the amount it would normally pay. 

 

While it is your responsibility to establish the value of your property and select the amount of insurance for your policy, we can help with that decision and explain what you can do to avoid a loss penalty.

 

 

 

(This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.)



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What is a Workers' Compensation Experience Modifier, how is it computed and how does it affect my premium?

The experience rating modifier is the one area where an employer’s efforts can significantly reduce Workers' Compensation premium costs.

 

Experience rating is the interaction of claims management and insurance pricing. An organization that controls its losses also controls its experience modifier and ultimately is responsible for higher or lower premiums. Although the formula is quite complicated, an understanding of the basic components will assist you in minimizing the impact of losses.

 

The experience modification formula considers losses for a three-year period, excluding the current policy period. The “losses” are more than just the amount that has been actually paid out on a claim. They are the “incurred” losses, which also include the reserves that an insurance company adjuster has estimated the loss will pay out in the future, either in direct medical treatment or as indemnity payments to the injured worker while he or she is unable to return to work.

 

As an example, let’s consider that an experience modifier for a risk is being calculated during 2006 for a policy that will be written effective Jan. 1, 2007. Since the 2006 policy is not yet closed (expired), the loss data is not available. This one-year lag period allows the insurance company the time to close most claims and more accurately estimate the cost of the open claims that will continue for more than one year. The three years that the experience modification calculation is based on are the years that began in January 2003, January 2004 and January 2005.

 

In its simplest form, the experience rating calculation compares the actual losses for the individual employer with the expected losses for the average employer in the same industry and same state with the same amount of payroll.

 

An experience modifier of 1.00 represents an employer whose actual losses closely matched the expected losses for their business. If the actual losses were greater than the expected losses, the experience modifier would be greater than 1.00; conversely a modifier less than 1.00 means that actual losses were less than expected.

 

Since no two employers in the same industry will have the same claims histories, the experience modifier calculation is designed so that the employer with the greater claims pays more for workers’ compensation. Through this system, employers have a financial incentive to improve the safety of the workplace. The chart below shows the significant impact that the experience modifier has on the actual premium an employer pays for insurance:

 

 

 

Manual Premium

Exp Mod

Discount/Surcharge

Modified Premium

$62,106

.73

$16,769 Discount

$45,337

$62,106

1.00

No Impact

$62,106

$62,106

1.43

$26,706 Surcharge

$88,812

 

 

The last aspect of the experience rating modifier that impacts the calculation is the frequency of claims. The formula places a higher penalty on an employer who has 10 injuries costing $5,000 each versus an employer who has one injury costing $50,000. Although the ultimate expense may be the same, the employer with one claim is considered a much better risk. A history of frequent losses normally implies there are poor safety standards in place and little management commitment to improving safety. In Texas, as in most states, large claims are “capped” so that the amount that exceeds the cap is not counted at all in the calculation. The current cap in Texas is $107,000. This capping process reduces the penalty to the employer when there are “shock” losses.

 

The examples below show the impact of losses on the experience modification calculation as well as the impact of frequency versus severity in the calculation.

 

 

Example #1 Hypothetical Account

Claims History

Claims

Policy Yr

Actual

Primary

 

Under $2000

 01

5,660

5,660

 

Under $2000

 02

5,303

5,303

 

Under $2000

 03

3,018

3,018

 

#51261701

 01

3,267

3,267

Lost Time Claim

BJM3976

 03

72,848

5,000

Lost Time Claim

BJM9986

 03

4,708

4,708

Lost Time Claim

 

 

94,804

26,956

 

Premium Calculation

 

Class Code

3628

8742

8810

Mod

Adj Prem

 

Est Payroll

1,000,000

100,000

1,400,000

 

 

 

Divide/100

10,000

1,000

14,000

 

 

 

Prem Rate

3.50

0.75

0.36

 

 

 

Premium

35,000

750

5,040

 

 

 

 

 

 

40,790

1.275

52,007

 

 

Example #2 - What IF there had been no Lost Time Claims?

 

Premium

Mod

Adj Prem

Example #1

40,790

1.275

52,007

Example #2

40,790

.80

32,632

 

Example #3 - What IF instead of three lost-time injuries, there was only one but the total loss was the same?

 

Premium

Mod

Adj Prem

Example #1

40,790

1.275

52,007

Example #2

40,790

.80

32,632

Example #3

40,790

1.120

45,684

 

 

 

 

 

 

 

 

Remember, experience modifiers are not arbitrary numbers assigned by the insurance carrier; they are calculations based on the employer’s actual losses. You can reward yourself and your business by implementing safety programs that will reduce losses.

 

 

This article was derived from an article written by Jan Kearbey, CIC, CISR, CPIW, CWCP, Director of Education & Production for Service Lloyds Insurance Company of Austin, Texas, and was originally printed in Service Lloyds Connection Volume II, Issue 3.

 

(This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,500 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.)



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Why are you unable to Provide Notice of Cancellation on Certificates of Insurance as you have in the past?

Certificates of Insurance

Why is your agency declining to issue a certificate of insurance that provides for notice of cancellation to the certificate holder?

In September 2009, ACORD revised the ACORD 25 Certificate of Insurance form. One of the major changes was the removal of the cancellation notice provision. We are unable to issue an older edition of this form, modify the current form, or complete a proprietary form you provide. 

Notice of cancellation is a policy right, not an unregulated service. No insurer shown on this certificate is able to provide the cancellation notice you desire by endorsement. For example, the insured can cancel immediately, so it would be impossible for the insurer to give you the notice you request. State law also grants the insurer the right to cancel for reasons such as nonpayment with less notice than you require.

For the reason just cited, if our agency was to issue a certificate that provides the cancellation notice you request, we would do so with the full knowledge that it would be impossible to actually give that amount of notice under certain circumstances. As such, the certificate could be alleged to constitute a misrepresentation or fraud which could subject our agency and staff to serious civil and criminal penalties.

If a certificate purports to provide a policy right different from that provided by the policy itself, then the certificate effectively purports to be a policy form. Policy forms must be filed and approved by our state department of insurance. Use of nonfiled policy forms is illegal and could result in legal sanctions distinct from the assertion that the certificate is fraudulent.

We cannot use an older edition of the ACORD 25. Under the ACORD Corporation’s licensing agreement, the prior editions of superseded forms can be used for one year from the time the new forms are introduced. Using a prior edition would violate ACORD's licensing agreement and, as a copyrighted document, federal copyright law.

Likewise, we are unable to modify the new certificate to add a notice of cancellation. ACORD forms are designed to be completed, not altered. Our insurance company contracts only allow us to issue unaltered ACORD forms.

We are often asked to issue proprietary certificates provided by the certificate holder. Again, our insurance company contracts only allow us to issue unaltered ACORD forms. Many proprietary certificates include broad, vague or ambiguous language that may or may not be incompliance with state laws, regulations, and insurance department directives.

You may be interested in how the City of Atlanta, Georgia is now reportedly dealing with this issue based on a very detailed study they conducted in 2008.

     http://tinyurl.com/26guax8

We appreciate your understanding of the legal restrictions on our ability to fully comply with your request.



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