Ask PIA

Finder’s fees

Can I pay a finder’s fee to an unlicensed person who makes a referral to me of an insurance prospect?

Tie-in sales

Can we require a client to consolidate all their business with our agency in order to enjoy some of the excellent products we offer? It would be more cost effective for us.

Surcharge rules

Our insured was in an auto accident that was not his fault. However, he did have medical bills. Can the company surcharge him for submitting the medical claim?

Loss of reinsurance

We’ve been notified that one of our carriers is planning to get off a commercial liability and auto risk due to loss of reinsurance. However, this is a two-year policy and the company wants to terminate coverage after the first year. Can the company do this?

Returning unearned premiums

Our agency has a question regarding the permissibility of a company practice with respect to returning premiums generated due to an endorsement on an auto policy in New Jersey. The insured had fully paid the premium for the policy term. An endorsement to the policy midterm has generated a credit on the policy premium. Instead of returning the premium, the company has kept the funds and states that the credit will be applied to the insured’s next renewal premium. Is it permissible for a company to retain an insured’s funds in this manner, or should the money be immediately returned?

Arson investigation immunity

One of our insureds is being investigated in connection with a suspected arson fire. Our office is in New York, but the property that burned is in New Jersey. We have been asked to provide insurance information to the local law-enforcement team that is investigating the fire. Could you tell me whether we have any protection from legal action by our client if we do so?

Producer contracts

Is our agency required to have written contracts with all our licensed producers?

Advertising ’free rate quotes’

Is it permissible for a producer or an insurer to advertise that it provides “free rate quotes” for automobile insurance?

Record retention—receipts

What should we do if we don't have a policy number to put on a receipt that we give to a customer who makes a premium payment in cash? Isn't the policy number supposed to go on a receipt?

When a producer resigns

What are our responsibilities when an employed producer resigns?

Payment to the producer

We recently encountered a sticky situation where a broker embezzled money. The insureds have proof of paying the broker. Does their payment obligate the insurer, even though the company never got the premium? What if the producer had been acting as an agent, not a broker, in this case?

Advertising “no phone quotes”

Can a producer advertise that it provides “no phone quotes”?

Family Leave Act—who pays?

I would like a clarification of the Family and Medical Leave Act of 1993. Who pays for the employee’s medical coverage if the employee takes a leave under this federal act?

Management services for 401(k) plans

I think I saw something about a new law that lets insurance agents provide investment advice in connection with 401(k) plans. Can you give me the details? Does this have anything to do with Enron?

Captive insurers

Can PIA provide me with some information on captive insurance companies?

C.L.U.E. reports

Does a company using Comprehensive Loss Underwriting Exchange, a data bank maintained by LexisNexis, have to release a copy of the C.L.U.E. report to the agent of the client?

Bad check exposure

Is there any way to avoid liability for earned premium when my customer pays me with a bad check, and I have paid the company with an agency check?

Waive DOL overtime

Can my employees waive their right to overtime?

The mailbox rule

My client received a notice of cancellation for nonpayment and mailed the premium before the date of cancellation. If the payment isn’t received until after the date of cancellation, can the carrier cancel the policy?

DOL overtime—bonuses

I have an employee who makes $22,000 a year, but he receives a $3,000 bonus every year in December. Would this employee meet the overtime salary threshold?

Cut-throughs

What is a “cut through”? If an insurance company becomes insolvent, are the company’s reinsurers responsible to pay claims against it, whether or not a cut through is in place?

Lost policy

We have a client who is involved in a dispute with an insurance company over pollution coverage. The issue involves an old policy; our client no longer has the contract. The company long ago destroyed its records and is denying any coverage. The company is putting the burden of proof on the client to produce a policy. What are our client’s chances of collecting?

OSHA log form sources

How do we get OSHA log forms? What forms are needed?

Reformation of policy language

In a settlement agreement we saw recently, the company consented to a “reformation” of its policy. Specifically, the company stated that its renewal policy was improperly issued, and that its intent was to cover the loss in question. What does the term “reformation” mean in this context?

Subpoenas

I just received a subpoena in connection with policies placed on behalf of my client. What is it and how should I respond?

Premium trust accounts in other states

May a producer maintain a premium trust account in a bank in another state?

Statute of limitations in subrogation action

My client, ABC Swim Club, has a commercial general liability policy with Small Insurance Co. ABC had a swim meet at XYZ Swim Club who has a commercial general liability policy with Medium Insurance Co. A member of ABC injured herself while diving into XYZ’s pool. The injured member has sued XYZ, but not ABC. Medium has asked Small to share in the loss, claiming ABC did not supervise the member correctly. ABC’s officers want to know why Small has a reserve on the books if ABC has not been served suit by the member and the statute of limitations has expired? What do I tell them?

Waiver of subrogation vs. waiver of transfer of rights

If our insured is contractually required to name the other party as an additional insured on his policy, wouldn’t the request to also attach the Waiver of Transfer of Rights of Recovery Against Others to Us (CG 24 04) endorsement be redundant?

Is a “waiver of subrogation” the same as a “waiver of transfer of rights?” We have seen both terms used. Do they both mean that the insurer will not subrogate?

Delivery of policy

What is the time frame in which an insurer must deliver a policy to a producer in New Jersey?

Rebates

May a producer provide an inducement to a customer to purchase insurance from the producer, such as merchandise, money or a gift certificate?

Disclosure of commission

As a result of Sarbanes-Oxley, we have to show our commission on either the rate schedule or declaration page. Really? Is it PIA's interpretation of Sarbanes-Oxley that the amount of commission to brokers has to be shown in the policy?

Dollar limitation on finder’s fee

Are there any dollar limitations or restrictions as to the amount that a finder’s fee can be paid to an unlicensed individual?

Rate filing

What is the process in New Jersey to obtain a carrier’s rate filing?

Duty to report suspected insurance fraud

Do I have a duty to report suspected insurance fraud in New Jersey?

W-9 IRS tax forms—request by policyholder

We have been asked by a client to provide a W-9 Form. What is this and why does the client need it?

Requirement to provide declaration page

Are producers required to scan declaration pages into their agency management system for policyholders?

Referral fees/rebating—lottery tickets

May our agency offer lottery tickets costing $5 as an incentive to our clients for providing referrals? We are concerned because, while the tickets cost only $5, if they are winners the pay-out might be more than $100, and we would be providing them to clients.

Website accessibility

Does my website have to be accessible to people with disabilities?

Witnessing of signatures

Was there a change to the law relating to witnessing the signature of an insured in New Jersey?

Acceptance of client gift

I came in on a vacation day to take care of an issue for a client's personal auto policy. He was so thankful, he sent me a gift basket; one that would typically be valued at $50. Can I accept this?

Electronic documents in insurance transactions

Has the New Jersey Department of Banking and Insurance issued any statements on the allowability of electronic documents in insurance transactions?

New DWI—notification to department

One of my producers was arrested for Driving While Intoxicated. How soon must he/she notify the New Jersey Department of Banking and Insurance of the arrest?

Insurance industry “quality assurance” law

I have heard that there is an Insurance Industry Quality Assurance Law in place. How does it affect me, as an insurance producer?

Photo inspection requirements

Does New Jersey have an inspection requirement on private-passenger vehicles? If so, does it apply to private-passenger vehicles written on a commercial auto policy?

Gifts to producers for referrals

In New Jersey, can a puffback restoration company offer an insurance producer a $20 gift card for every restoration job he/she directs to the restoration firm?

New Jersey restrictive covenants

Under New Jersey law, is it permissible for an employee, in the absence of a valid written restrictive covenant, to make preparations to enter into a new business, such as organizing a corporation while still employed?

New Jersey law regarding commission rates for property/casualty lines

How does New Jersey Insurance Law handle commission rates on most property/casualty lines of insurance?

Rebating—marketing initiatives

One of my carriers just offered me the opportunity to participate in a marketing support program, where I can purchase $50 and $150 movie theater passes for $25 and $75, respectively. I am encouraged to offer these passes to my clients for a number of reasons including policy purchase incentives and referral gifts. Is this legal? What are my options? What can I do with them?

Consumer’s right to information on adverse underwriting decisions

In New Jersey, does a consumer have the right to get information on adverse underwriting decisions made against them?

Duty to scan policy for gaps

In New Jersey, does an agent or broker have the duty to anticipate an insured's coverage needs and attempt to provide them with suggested coverages?

Disclosure of customer’s records—pending lawsuit

Do the Gramm-Leach-Bliley Act (GLBA) privacy rules that restrict the disclosure of nonpublic financial information prohibit me from sharing or disclosing a customer’s records in response to a lawsuit regardless of whether the customer has exercised his or her opt-out rights?

Disruptive client—agency refusal to write coverage

What do you do with a client that you don’t want anymore? We have an insured that is very disruptive when he comes into the office to make a payment.

Recreational drone registration

My client just bought a drone for each of her sons and herself. Does she have to register them and how does she go about doing so?

Suits against insurance producers

What is the applicable statute of limitations in New Jersey for lawsuits brought against insurance producers?

Renewal questionnaire

We just received a notice from one of our carriers that they will be sending out renewal questionnaires to our insureds. Normally, this is a common practice, in this instant they are not sending them out to all insureds, only those in the coastal areas. If an insured does not comply and return the questionnaire, they will have their policy nonrenewed. Can a carrier target specific geographic locations for renewal questionnaires like this?

Raffle to current customers

Our agency wants to run a raffle to increase our visibility. We plan to reach out to our existing homeowners insurance customers and give away a cruise vacation package worth $1,000 if they allow us to quote their auto insurance. Is this permissible in New Jersey? What about other states in the Northeast?

Exemptions from DOL overtime

How do I know if my employees are exempt from overtime?

DOL overtime—biweekly pay

Employees in my agency are on a biweekly pay schedule. If one of my employees who is eligible for overtime works over 40 hours in the first week of a pay period, can I have them work less in the second week in order to avoid paying overtime?

DOL overtime—outside-sales exemption

Will my producers qualify for the outside-sales exemption, even though many of them maintain office space at the agency?

Hemp and marijuana

What is the difference between hemp and marijuana under the 2018 Farm Bill?

Premium payments via online money services

Can I accept insurance premium payments via Paypal or Venmo?