Declination Statement - Earthquake Coverage

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sgoebel
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Declination Statement - Earthquake Coverage

Post by sgoebel »

Looking for opinions on the best way to phrase a Declination Statement when offering earthquake coverage and the client declines the option/coverage.

To give a little back-ground as to how this will be used... I specialize in stand-alone residential earthquake insurance on the Company/MGA side. Our product provides broader coverages and lower deductibles than the typical "mandatory offer" (Mini EQ Policy) that all admitted CA Home/Fire carriers are required to offer in CA. On several occasions I've been asked by some of our brokers & agents to incorporate a declination statement into our printable quote sheets so that they can have their clients initial or sign the declination on the quote sheet when the client doesn't want earthquake coverage. The agent/broker would then be able to keep this quote sheet/declination-of-coverage in the customer file to protect E&O. Just recently my IS/IT dept granted me the opportunity to design a new quote/proposal sheet, so I thought I should ask here for any good suggestions for what you would like to be included.

Here's what I have so far:
Declination Statement: I am not interested in a residential earthquake policy at this time. I do understand that my agent/broker has access to earthquake insurance, and can provide a quote for me in the future if I become interested in earthquake insurance. I decline earthquake coverage at this time X________________ .

The quote date, agency info, client info, etc. will be at the top of the quote page, so felt I didn't have to add it into the statement. The middle of the page will have our 5 coverage & deductible options broken into 5 columns detailing coverage limits, deductible amounts, and sub-limited items for each option in it's respective column. For clients who do want one of the earthquake coverage options, there will be an "I accept" space to initial in bottom of each column, so they can initial in the option of their choosing.
mccluney
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Re: Declination Statement - Earthquake Coverage

Post by mccluney »

The only proper reply to your question is to have an attorney draft the statement.
sgoebel
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Re: Declination Statement - Earthquake Coverage

Post by sgoebel »

Thanks for the reply McCluney, and you are absolutely correct. Any project like this where we’ll be putting out a document for our producers to use does have to go through our compliance division and it has to get approved by our legal counsel before we can make it available.
The purpose of me posting it here was to see if any independent agents/brokers might have any ideas or suggestions that I should consider adding... before I send it into compliance & legal. There might even be some out there that have their own EQ Declination Statements they might want to share? The bottom line (for me) is that the bulk of our EQ business is written through independent agents/brokers, and I want to do my part and make sure I address any needs & concerns that they may have now that I have this opportunity.
That being said, I did get a couple suggestions from some producers and here’s where I’m at now:
If not currently interested in Residential Earthquake (EQ) Insurance, please initial the declination statement below
I understand that my agent/broker is offering stand-alone EQ coverage to me and that my home/dwelling/condo policy does not provide coverage for damage due to EQ unless specifically endorsed to provide EQ coverage. Additionally I understand that the typical EQ endorsement only provides limited coverage which may not be as much coverage as this EQ offer can provide. At this time I am not interested in a stand-alone residential EQ policy, however I do understand that my agent/broker has access to EQ insurance, and can provide a quote for me in the future if I become interested in EQ insurance. I decline earthquake coverage at this time X____________

If there are any agents/brokers out there with any other suggestions that I should include (before submitting it through my compliance/legal review), any and all replies are appreciated!
p&csme
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Re: Declination Statement - Earthquake Coverage

Post by p&csme »

To truly reduce the agent’s/broker’s E&O exposure, I would suggest that the following items be included in any coverage Acceptance / Declination Statement:

(1) A legally sufficient description of the coverage being declined (you don’t want the insured – after a claim—stating that he/she didn’t understand the scope and/or the importance of the coverage declined). Naturally, the usual policy disclaimer statements should also be included. It also would be of value to include wording making it absolutely clear that the insured would have no coverage for Earthquake claims should he/she decide to decline coverage.

(2) An estimate of the premium charge associated with the coverage had the insured decided to accept coverage (you don’t want the insured – after a claim—stating that he/she would have purchased such valuable coverage had he/she known how affordable the coverage was).

(3) A sentence in the Statement stating that the insured acknowledges and understands that his/her choice to decline coverage will apply to all subsequent renewals of the policy unless he/she requests otherwise in writing.

(4) A sentence in the Statement stating that the undersigned, in signing this document, represents that he/she is authorized to act on behalf of all insureds.

As stated in the initial post, the quote date, agency info, client info, etc. will be at the top of the quote page, so doesn’t need to be added into the Statement. Additionally, the 5 coverage & deductible options detailing coverage limits, deductible amounts, and sub-limited items for each option will also be provided elsewhere in the form and doesn’t need to be included into the Statement.

[NOTE: The following sample Statement language {shown in blue font} is provided for illustrative purposes only. It is not intended to be complete, accurate, or legally sufficient. You will need to draft your wording based on the specific policy language provided in your earthquake coverage form(s).]

Earthquake insurance provides coverage for direct physical loss of or damage to Covered Property at the premises described in the Declarations of your policy caused by or resulting from…{the remainder of this description would be based on the specific policy language of the coverage you provide}.
[NOTE: This general description of coverage is not, and does not become a part of any policy, does not provide any coverage, and is not intended to, nor can it be construed to, replace the provisions of any policy. If there is any conflict between the policy and the general description of coverage, the provisions of the policy shall prevail.]

Most standard residential property insurance policies do not cover earthquake damage. Furthermore, government disaster-relief programs are extremely limited—they are designed to help you get partly back on your feet, but not to replace your home and everything you lose.

If you decide to decline coverage for Earthquake, you will have no insurance coverage for such losses or claims and you will be responsible for any and all damages caused by or resulting from earthquake.

By signing below the undersigned acknowledges that he/she understands the explanation of the coverage, the availability of different coverage limits and deductible amounts, and the premium amounts associated with these various options, but has chosen to reject the offer of Earthquake coverage in its entirety. The undersigned further acknowledges that this declination of Earthquake coverage will apply to any renewal, reinstatement, substitute, amended, or replacement policy, unless a Named Insured makes a written request to purchase Earthquake coverage. The undersigned also represents that he/she is authorized to act on behalf of all insureds in signing below.

____________________________________________________________________
Printed Name of Named Insured or Authorized Representative of Named Insured

_________________________________________________________________ ________
Signature of Named Insured or Authorized Representative of Named Insured Date
sgoebel
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Re: Declination Statement - Earthquake Coverage

Post by sgoebel »

Great info p&csme! This is exactly the type of input I was hoping for!

I should have items 1 & 2 wrapped up. I know I didn’t share a copy of how the print-out of the proposal sheet will look, but I’ll have clear descriptions of the limits and deductibles detailed out by option, and the premium will also be clearly displayed by option.

Item 3 could be a bit tricky because our product is a stand-alone EQ policy and is in no way tied to the renewal of their home/dwelling policy, so if they don’t take it, there will be no renewals (for our EQ policy). Then again, if the insured is declining our product offer, they are most likely declining the home/dwelling carriers EQ offer as well, and this declination statement is intended for the benefit of the agent/broker, so we might be able to word it “all subsequent renewals”? I’m thinking best if I submit it that way and see if my compliance/legal gives it the “OK”.

Item 4 is something I didn’t think of, and it’s something that my compliance dept would have probably slapped me in the face with! :roll: I’ll have to word item 4 into the statement as well. …Our Marketing and Business Development Depts have another name for our compliance dept. Sometimes we kid around and call them the “Business Prevention Dept.” :wink:

And thanks for the other suggested wording for me to consider! You have truly been a great help and I appreciate your input! I’ll get to work putting together a Declination Statement that is well-rounded and all-encompassing for our agents and brokers to use.

Thanks again p&csme!
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Re: Declination Statement - Earthquake Coverage

Post by scojo415 »

Great Question - I would have them sign a statement that says: "I decline earthquake insurance"

Additionally - just because there is some confusion here I would have them sign this statement: "I understand that homeowners insurance excludes all forms of land movement, including but not limited to earthquakes, landslides, and other forms of land movement."

Having consumers sign these forms does two great things:
1. Helps them understands
2. Assists in providing more coverage

Scott
https://quakecov.com
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