Farmers E & O vs. UFAA

bartman · Post by **bartman** » Thu Dec 23, 2010 1:37 am

Recently UFAA (United Farmers Agents) has been pushing their E & O against Farmers Insurance Group E & O. I don't like the hard sell that I think UFAA is pushing (are they for the agents or a sales arm for the E & O company) however they have tooted their own horn enough that other agents are asking me what I think.

Has anyone taken a hard look at what is really covered and if another E & O is really a viable option? I have priced out E & O in the past and found that price wise, with my series 6 license, that I was not saving much money. However, I do write business outside of Farmers, where Farmers will not take the business, and want to be sure I am covered by my E & O.

I am reluctent to step away from the Farmers Group plan. Any thoughts?

pcock1 · Post by **pcock1** » Thu Dec 23, 2010 12:28 pm

agent since 1965, farmers since 1977 have farmers E & O ufaa rates were a little less, but hard sell was a turn off. paying attention to the way your agency processes business dotting the Is and crossing the Ts and keeping good notes is more important in my mind than the E & O carrier or price Farmers E & O is fine for me

gregcw · Post by **gregcw** » Thu Dec 23, 2010 1:02 pm

I was a FIG agent from 1982-1989. What I remember of the E&O that we had then, was that there was no deductible if it was a FIG policy but a substantial $1,500 deductible for that time period for business placed outside of FIG. If that is still true and if that also encompasses Foremost, Bristol West and their CAPTIVE G/A I don't think that a small premium savings would be enough to be a significant benefit. My current deductible is $2,500 occurrence with a $7,500 aggregate for all business.

justthere · Post by **justthere** » Thu Dec 23, 2010 4:25 pm

I have been with Farmers for 20 years. I also do not like the hard sell. Just because UFAA does not like Farmers does not mean that they are always right (or wrong). Farmers E&O is competitively priced and you can purchase zero deductible for Farmers and brokered business at a fair cost. The main problem with Farmers E&O, if it is really a problem is if you place business outside of Farmers when Farmers would have taken it. If a claim comes up, then you have no coverage. So, if you are following the rules of your contract, then there is nothing to worry about. If you are violating the contract, then you are asking for trouble. So, as was stated previously, document everything and you should not have any problems. If you have an account that Farmers could take, there is almost always a way that you can get a verbal declination from an underwriter. Document it and then go on.

lonestar · Post by **lonestar** » Wed Dec 29, 2010 7:21 pm

bartman, if you compare the Farmers E & O plan versus the UFAA plan, you will realize that the UFAA policy is a superior policy. Pay attention to the Class 1 exclusion that the Farmers plan has. After all, FIG has the agent's best interest at heart, right?
As explained to me by Kevin Dalke, who helped design the UFAA policy, here is a summary of his explanation:

"Some of the coverage’s not available on the Farmers program are-

-Coverage for the Category or Class one claim wording that excludes an agent’s failure to provide an available Farmer's coverage on a Farmers policy
-Employment Practices Liability Coverage
-Coverage for the unintentional release of confidential client data
-Punitive Damages where allowed by law
It sounds like most of the other posters on this thread have never had an E & O claim, and would explain why they react like most insured's and state they are satisfied with their current position.

If however you incur a claim that meets the Category or Class one wording in the sponsored plan and were then required to appeal to FIG to pay the claim, you may recognize what many agents only beginning to now understand. You are not depending on insurance, just Farmers good will. Some agent claims are paid some are not. The question is whether your claim will be paid. There is nothing written requiring FIG to pay it, just the verbal indication that you will be taken care of.

There are also the claims filed by the company against the agent who had little or no leverage with the insurer or the company and no one representing his interests alone. That is too bad considering the agent is the premium payer.

Since you are diligent enough to confirm whether this plan is a viable option I can only hope you may want to invest some time reviewing the policy you are purchasing and compare. With the level of review from a number of sources about this issue and all of the data that has been provided it is clear to most agents that they are at a disadvantage and that is why this plan was created.

I would think that having the best coverage for a reasonable price from a carrier that represents your interests alone would be the main concern of any agent. If that is not true for you, are there other reasons to doubt this plan and its features?"
http://www.ufaa.com/phorum/read.php?1,1 ... #msg-12315

gregcw · Post by **gregcw** » Thu Dec 30, 2010 6:20 pm

Admittedly, I wasn't thinking about the policy language... Just the deductibles. I also do not have the FIG group policy to review because that was taken with the FIG Agents guide that it was printed in - along with my manuals and FIG supplies when we parted company. Since E&O policies are company specific v. ISO, lonestar brings out some good points for consideration. I do know that FIG was always more ready to cover THEIR backside and more than willing to EXPOSE their agents backsides. They were also less than candid in most of their practices dealing with agents. One of the coverages that lonestar mentions (Employment Practices Liability Coverage) was not even something that was the issue in the '80's that it is today.

sacman · Post by **sacman** » Fri Dec 31, 2010 10:32 am

Something FIG agents should consider-

Recently I was talking to a FIG agent that is involved in an E&O claim.
The claim is bogus but still needs to be defended.
The insured threatened to sue because the policy didn't cover his loss.
Agent called the claims adjuster and was told, let them sue, the loss isn't covered.
8 months later the client DID sue, the agent reported the lawsuit to FIG's group E&O plan.
Farmers E&O declined coverage for the agent because they claim he didn't report it in a timely manner, even though he reported it the day after being served. They claim he should have reported it 8 months earlier when the client threatened to sue. Now the agent needs to hire/pay for his own legal representation.
Is this the kind of E & O policy/company you want protecting your financial well being?

JAM · Post by **JAM** » Fri Dec 31, 2010 2:06 pm

First of all its not a UFAA policy and its issued through Lexington. From what I remember it was a superior policy and much better on the price. It also covers your outside business. You can even add your wife etc.. if she has a broker shop. My $0.02

RKunz2 · Post by **RKunz2** » Sat Jan 01, 2011 12:03 am

There are a few commentors in here that get it. Policy form and coverage FIRST!!! Price should always be a secondary consideration whenever you talk about agent/broker E&O. We're all supposed to be better than that as insurance professionals. Obtain a specimen copy of both policies and compare side-by-side. You could start by identifying the type of E&O policy each party is offering; MPL or Specified Professions. If Specified, then it was written for the business, but that also allows the carrier to narrow coverage. MPL will be broader in more cases, if something isn't specifically excluded, then there is coverage. Pricing is a meaningless factor if you get hit with an unexpectedly uninsured claim, isn't it? When you mix FINRA, P&C, Life, and the ability to broker business, you need to be fully aware of how the policy will react in each unique situation. Also, while I understand the 'hard-sell' is a turn-off (it would be to me too), get over it. If the policy is better, tell the hard-seller to shut up and process the paperwork. Remember that you share the unique position of being the Buyer and the Professional too, so Buyer Beware and read before signing on the dotted line.

Best of luck in all your endeavors and let's make 2011 our year!

lonestar · Post by **lonestar** » Sun Jan 02, 2011 11:22 am

RKunz2 makes a valid point: Would any of your customers be comfortable purchasing a home policy from you, if the policy did not spell out coverage for fire? And if the same customer asks for clarification as to why the specified peril of fire is not mentioned in the policy, would you, the agent, feel comfortable stating the following to said customer, to make he/she feel better?: "Don't worry that the peril of fire is not spelled out as a covered peril in the policy. You will be taken care of..." Agents enrolled in FIG's E & O plan are customers that are being told verbally that they will be taken care of in the event of a class 1 claim. Would anyone in their right mind depend on a claim being paid based on a carrier's goodwill instead of what is spelled out in the legal contract called a policy?