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Cypress P&C LSA


   

This review of Cypress Property & Casualty Insurance Company’s limited service agreement for policies assumed from Citizens 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 

  • Provides that the Producer owns its expirations upon termination of the Agreement if the Producer is not in default of accounts payable to the Company/MGA and has surrendered all supplies. This language does not set forth a dispute resolution or appeal process for the Producer if the Producer disagrees with the MGA’s assessment that the Producer is in default. 
  • Producer to pay MGA’s attorneys’ fees if MGA is required to take legal action against the Producer under the Agreement. 
  • Indemnification provisions are fair and mutual, but they do not take into account contributory or comparative negligence. 

Provision-by-Provision Review

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

Introduction—Authorizes Producer to represent the Company only with regards to those policies that Cypress (Company) has assumed from Citizens. 

2.a. Authorizes MGA to amend the commission schedule at any time, in its sole discretion, upon written notice to the Producer, but no advance notice period is required.

6. Provides that if Producer fails to return “supplies” to MGA, Producer must agree in a certificate that Producer will hold the MGA harmless for damages assessed directly or indirectly against the Company and/or the MGA as a result of the missing supplies.

8. States that Producer agrees to assume liability for damages if Company/MGA is subjected to a loss/expense as a result of an unauthorized action or statement by the Producer in an advertisement regarding the Company and/or MGA.

9. Provides that the Producer owns its expirations upon termination of the Agreement if the Producer is not in default of accounts payable to the Company/MGA and has surrendered all supplies. This language does not set forth a dispute resolution or appeal process for the Producer if the Producer disagrees with the MGA’s assessment that the Producer is in default.

10. Provides that the Producer cannot sell its records/expirations and/or anything of value in its agency without the MGA’s prior written consent if the Producer is in default under this Agreement. Again, there is no dispute resolution or appeal process set forth for the Producer.

13. Venue for any legal dispute under this Agreement is Duval County. In addition, the language provides that if the MGA is required to take any legal action whatsoever against the Producer under this Agreement, the Producer agrees to pay reasonable attorneys’ fees and costs incurred by MGA.

15.c. Provides that either party can terminate the Agreement (with written notice) for gross or willful misconduct of the other party, and defines gross or willful misconduct to include the failure of the Producer to pay any funds owing to the Company and/or MGA for any reason within seven days (plus three days for mailing) after a request has been made by the Company/MGA. No dispute resolution or appeal process is set forth for the Producer to challenge this determination by the Company/MGA.

16. Sets forth indemnification provisions that are fair and mutual, but they do not take into account contributory or comparative negligence. For example, Producer is obligated to indemnify the MGA for damages caused by Producer’s errors or omissions, but doesn’t include the phrase “except to the extent caused or contributed to by the MGA”.  

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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