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Cabrillo Coastal (MGA for Safe Harbor Insurance Co.)


   

This review of the LSA for the Citizens Clearinghouse 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 

  • Indemnification language is not fair and mutual
  • Allows ownership of expirations to be acquired by Cabrillo when the Agent does not indemnify Cabrillo for subsequent costs or payments incurred by Cabrillo. These subsequent costs or payments are not clearly defined. 
FAIA has reached out to the general counsel for Cabrillo, and based on the comments herein, changes to the Agreement are being considered and are pending. 

Provision-by-provision review 

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

II. Compensation

Allows Cabrillo to unilaterally modify the attached commission schedule at any time and without notice to the Agent.

III. Collection and Distribution of Funds

C. Allows Cabrillo to examine the Agent's accounting records related to Cabrillo business at any time and without prior notice to the Agent.

IV. Licensing

Provides that the Agent agrees to indemnify and hold harmless Cabrillo against any and all loss or liability resulting from acts or omissions of the Agent in violation of any laws or regulations governing the transaction of insurance, fair business practices, advertising, property rights and privacy rights. This language is extremely broad and it does not allow for a comparative negligence standard where the Agent's acts are caused in whole or in part by Cabrillo. Nor does the Agreement include similar language in which Cabrillo agrees to indemnify the Agent for Cabrillo's acts or omissions, which violate laws or regulations.

VI. Indemnification

A. In this section, the language does provide that Cabrillo agrees to indemnify and hold harmless the Agent, but only in very limited circumstances; i.e., when the loss or damage to the Agent or the Agent's insureds is caused by Cabrillo's errors in the processing of policies or endorsements produced in accordance with this Agreement.

B. Recognizes the Agent's independent ownership and control of rights to renew policies written under and covered by this Agreement, unless Cabrillo becomes liable for subsequent costs or payments regarding renewed policies and the Agent does not indemnify Cabrillo for these costs within 30 days of Cabrillo's written request. This language seems unclear and overly broad in that it does not specify the types of subsequent costs or payments, which would trigger this exception.

C. Provides that the Agent agrees to indemnify and hold harmless Cabrillo, its insurers and its claims adjusting companies for any and all claims arising out of any ALLEGED acts or failures to act by the Agent, whether or not said claim is meritorious. This language seems overly broad and unfair to the Agent when an allegation against the Agent is ultimately proved without merit. Moreover, the language does not take into account the extent to which any alleged acts were caused by Cabrillo, its insurers, or it claims adjusting companies (no comparative negligence language).

D. Provides that the Agent shall have no right, claim or cause of action against any of Cabrillo's insurers and shall look exclusively to Cabrillo for the payment or satisfaction of any expense, cost, claim or cause of action arising directly or indirectly out of any action or inaction taken by Cabrillo or any of its insurers.

X. Contract Termination

A. Provides that the Agreement may be canceled at any time by either party by giving written notice to the other party, but does not address how many days notice must be given.

XII. Arbitration

B. Specifies that binding arbitration is the exclusive remedy for resolutions of disputes among the parties regarding rights and obligations under the Agreement.

E. Provides that each party shall bear the expense of its own arbiter and shall equally bear the expenses of the Umpire (the third arbiter).

XIII Miscellaneous Provisions

E. Provides that the Agreement is the entire Agreement between the parties; however, there are two Addenda to the Agreement entitled "Addendum #1 to Agency Agreement, Clearinghouse Business" and "Flood Insurance Addendum to Agency Agreement".

"Legal Statement" signed by Agency Officer authorizes Cabrillo to obtain credit reports and/or investigative consumer reports concerning the Principals of the Agency.

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 or rejected. 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 February 2014
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