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Avatar Homeowners Limited Service Agreement Review


This review exclusively focuses on major issues of concern to insurance agencies and does not address general contract issues or provisions of the contract that contain boilerplate language.

Items of Concern

  • Agreement is for a period of three years with a discretionary option given to either party to renew.
  • MGA may offset, and in some circumstances withhold, servicing fees (commissions) owed to Limited Representative when MGA determines there is an unpaid obligation owed by Limited Representative to MGA or insurer, without any dispute or appeal process afforded to Limited Representative.

Provision-by-Provision Review

Structure corresponds to the lettered and/or numbered paragraphs of the contract (PDF).

I. Appointment and Authority

1. Provides that the terms of the Agreement apply only to “take out” policies removed from Citizens.

3. Provides that Limited Representative shall not have binding authority unless specifically granted by MGA and accepted by Limited Representative. If binding authority is granted, it may be revoked at any time by notice from MGA, however, a notice period is not specified.

4. Provides that the underwriting guidelines and written directives may be amended by MGA at any time and no notice requirements to Limited Representative are specified.

II. Premiums and “Servicing Fees”

2. Allows insurance company or MGA to offset undisputed servicing fees owed to Limited Representative with any unpaid obligations of Limited Represented to MGA, without giving the Limited Representative the opportunity to dispute or appeal the amounts claimed by the MGA to be owed.

4. Requires Limited Representative to refund servicing fees on cancelled policies and on reductions in premiums at the same rate the servicing fees were originally earned, and to do so within 45 days of MGA’s notice to Limited Representative, otherwise, MGA reserves the right to withhold payment of any and all servicing fees owed to Limited Representative.  This provision does not include a dispute or appeal process for the Limited Representative.

III. Indemnification

The indemnification language is fair and mutual and includes liability and cost of defense; however, it does not limit the indemnification obligation for either party when the other party has caused or contributed to the damage.

V. Suspension or Termination

1. Provides that after three years from the assumption date of the last affected policy, either party may terminate the Agreement by providing 90 days advance written notice to the other party.

5. Provides that after three years from the assumption date of the last affected policy, the Agreement MAY be extended by the Limited Representative in two-year increments, if the Limited Representative provides at least 30 days prior notice to the MGA.

VI. Ownership of Policyholder Information

Recognizes that undisputed ownership of policyholder information remains with the Limited Representative both during and after the termination of the Agreement, and that the MGA will not use policy or policyholder information in any marketing for the sale, service or renewal of any form of insurance unless the policyholder selects another agent of record.

VII. Miscellaneous

3. Provides that the Agreement shall be construed under the laws of Florida and that any action to enforce or interpret the Agreement shall be in Hillsborough County.

4. Provides that the Agreement shall not be amended unless both parties consent to the amendment in writing. 

FAIA’s Office of the General Counsel provides this contract review only for general information and comments. It is not intended to answer specific individual legal, business, or other questions. It was prepared solely for use as a guide, is not a substitute for the Agent’s/Agency’s independent evaluation of any provision in a contract, and is not a recommendation that the contract be signed, revised or rejected.  Any communication you have with the Company regarding this contract should be an individual communication, and not on behalf of a group of agencies or through FAIA. If specific legal or other expert advice is required or desired, please seek the services of an appropriate, competent professional, such as a licensed Florida attorney familiar with the Florida Insurance Code.   

 Reviewed October 2014

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