Ask PIA

Former employee contacting agency’s customers

What can a company do when it discovers that a former employee is contacting its clients?

Promotional items not rebating

I think they raised the amount we can spend on agency promotional items such as calendars, etc. What is the current limit?

Public-entity commission filings

I noted in a PIA publication the April 15 annual deadline for agencies to file reports of commissions received on public entities’ insurance business. I suspect some agents don’t file these reports as required by Regulation 87. What is the penalty?

Return premiums—financed policies

What rules govern the return premiums when a premium-financed policy is canceled for nonpayment? Is the return premium calculated on a pro-rata basis?

Claim payment offset—premium due

While investigating a claim submitted by one of our auto insurance clients, the company found that there was earned premium due on the policy. The company is planning to withhold from the claim check an amount that will cover the earned premium. Can they offset the claim settlement to collect this earned premium?

Banks’ rights to reject homeowners companies

What are the restrictions on a bank’s right to reject the insurance company that a mortgage borrower selects to provide homeowners insurance? We just had a policy rejected because the bank said the hurricane deductible was too large.

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?

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?

Payroll deduction mass-merchandising

We soon will be getting involved in an auto insurance program that is available to the employees of a company on a payroll-deduction basis. If an employer fails to pay the premium after withholding the money from insured’s paychecks, would the policy remain in effect or not?

Quasi-group property/casualty policies—advantaged rating

If a personal-lines policyholder has been given a discount based on belonging to a certain group, then the policyholder quits belonging to the group, can the rate be raised?

Requesting New York rate filings

What is the process a New York producer has to follow to obtain a carrier’s rate filing?

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?

Remuneration by repair shops prohibited

Is it legal for an insurance agent to accept a gift from a glass company in New York?

’Steering’ to repair shops

We have an insurance company that is telling people where to go for their glass repairs. Is this legal?

Tie-in sales

Recently we were asked by one of our commercial insurance markets to make the sale of one of its products conditional on the insured buying another of its products. Is this permissible?

Subpoenas

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

Minimum premium

A company recently told me that the New York State Department of Financial Services no longer allows companies to charge a minimum premium. Is this true?

When a mortgage lender demands excessive limits

How much insurance can a mortgage lender require the mortgage applicant to have?

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?

Net quote

May an insurance producer provide a ‘net quote’ and forgo commission?

Premium-financed policies—wholesaler reporting requirement

There is a law pertaining to premium-financed policies placed through wholesalers in New York. Does it mean that premium-finance companies can’t send premiums to retail-level brokers for remittance?

Rebates—charitable contributions

We were thinking of telling prospective clients that we would donate a portion of our commissions to charity, as an incentive for them to give us their business. Would this be legal?

Referrals, where a nonlicensee initiates the conversation

Is a nonlicensee permitted to initiate contact with a prospective insured to determine their interest in being referred to a licensee?

Grants from Motor Vehicle Law Enforcement Fee funds for law enforcement

I know that a portion of the $5 per-vehicle Motor Vehicle Law Enforcement Fee is supposed to go to support local law enforcement efforts. How are these grants awarded?

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?

Can parents be held liable for the negligent acts of their children?

Can parents of minor children be held liable under New York law for their kids having negligently started a fire that burned down the insured’s barn?

Gas cards as incentives

May an agency offer a $5 gas card if someone comes in for a quote?

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?

Advertisements—location of insurer

Does the requirement that insurance agency advertisements that use insurer’s names include the location of the insurer’s principal office apply to lists of companies represented, such as Yellow Pages and agency website listings?

Website accessibility

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

Refusal to accept premium

Can an agency stop collecting or decide not to accept premium payments from their insureds?

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.

Payroll services and similar sales incentives

May a producer offer payroll services as an incentive to buy insurance from the producer?

Physical damage inspection—insured’s photos

A policyholder bought a car from a used-car dealer, but she did not have a physical damage inspection within 14 days. An accident subsequently occurred, and the company denied collision coverage. The policyholder has her own “before” and “after” pictures showing there was no prior damage to the vehicle. Also, isn’t the company supposed to waive the inspection on newly purchased vehicles if the client produces a bill of sale?

Physical damage inspection—waivers

Our companies are not consistent in their physical damage inspection requirements. Some waive the inspection if the vehicle is at least seven years old. Other companies, require an inspection in this case. Are they required to waive the inspections?

Employee fringe benefits

Must an employer provide employees with any fringe benefits such as health insurance?

Mandatory defensive-driving course resulting from conviction

My client was mandated by the New York State Department of Motor Vehicles to take a defensive-driving course due to convictions for traffic violations. He took the class and the insurer is refusing to reduce his premium based on the fact that he was required to take the course. Is the insurer justified in denying the premium reduction?

Rebating—charitable contributions

We are considering offering a small donation to a children’s charity for every policy written or renewed through our agency. Can we legally do this without it being considered rebating?

Return commission

Does state law or regulation require me to return earned commission to the carrier for policies that are cancelled?

Inappropriate email messages

A departing employee used another employee’s email account to send an inappropriate message to a third party. Can I do anything about this?

Payroll companies

Are payroll companies impacting your insurance sales?

Rebates—gas cards

Would it be permissible for our agency to offer a free $15 gas card with our agency name and phone number on it for any new client who brings in their auto or homeowners insurance policies for a free quote?

 

Statute of limitations for lawsuits against producers

What is the applicable statute of limitations in New York state for lawsuits brought against insurance producers (agents and brokers)?

Gift to producers for job referrals

In New York, a restoration company wishes to offer an insurance producer a $20 gift card for every restoration job he/she directs to the restoration firm. Is this permissible for the producer to accept?

Trailers subject to registration

Are wood-chipper trailers subject to registration and financial responsibility requirements in New York?

Anti-arson application upon policy renewal

If an anti-arson application is required when a risk is newly written, is it also required when the policy renews?

New York State Department of Financial Services moratorium—timing of notices

We had an insurance company issue a homeowners nonrenewal notice on Oct. 29, 2012. On Nov. 5, 2012, the New York State Department of Financial Services ordered a moratorium prohibiting the nonrenewal of any “covered policy” until further notice. Does the moratorium apply to the nonrenewal issued before the New York State Department of Financial Services order?

NYSDFS moratorium—premium-financed policies

Does the moratorium on cancellations and nonrenewals issued by the superintendent of financial services apply to premium-financed policies?

Billing notices during NYSDFS cancellation moratorium

In regards to the Superstorm Sandy, I thought that the New York State Department of Financial Services put a moratorium in place on billing notices and cancellations. I ask this because one of my clients is telling me that they just got a billing notice from their carrier and the payment is due soon. Can the carrier still do this? I thought the moratorium notice prohibited this practice.

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?

Tortious interference: at-will employees

Is it possible for another agency to contact my employees to encourage them to work for them?

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?

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?

Regulation 64—excess-line policies

Do excess-line carriers in New York have to follow Regulation 64 and Insurance Law Section 2601 related to unfair claims practices?

Regulation 64—claims

What rules are there for carriers when handling claims? What are the penalties for violating the rules?

Hemp and marijuana

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

Telemarketing restrictions during state of emergency

Are there any restrictions on telemarketing calls during a state of emergency in New York? Am I prohibited from making any such calls during a state of emergency?

Regulation 64—unfair claims practices

What is the applicability of Regulation 64 related to unfair claims practices?

Broker of record letters

Can I include a hold harmless clause in my broker of record letter? I don’t want a client to come after me because their previous broker didn’t get them the correct coverage. Are these letters governed by insurance law in any way?