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Element Property Insurance Corp. (EPIC) LSA


   

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

  • Indemnification provisions are fair and mutual with the exception of the duty to defend.
  • Allows Company to directly solicit Agent’s customers to add supplemental coverages to their policies written by the Company.

Provision by Provision Review

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

Introductory Language:  Agreement is for one year but renews automatically for one year periods unless either party gives 60 days notice.

I—Authority of Agents

G. Requires Agent to exercise exclusive and independent control of the time and conduct of the Agency. I assume this means that only an agency principal would be signing this Agreement?

III—Premium Accounting

D. Requires Agent to hold all premiums collected or received by the Agent in trust for the Company.  Does this mean a separate account?  Florida law does not require a separate account if an agent or agency is appointed by an insurer.

F. Provides that if Agent has made an effort to collect audited premiums and has been unable to do so and thus requests the Company to do so, then no commission will be paid on the premiums collected by the Company.

IV—Commissions

B. Allows for negotiation and mutual agreement of the parties of special commission rates.

VII—Direct Bill Business

A. B.  Provides that amendments to the Agreement shall be by mutual agreement of the parties and that the Company must give the Agent 30 days notice of its intent to negotiate an amendment.

D. Provides that Agent may request and receive a complete list of direct billed policyholders with expiration dates at any time at Agent’s expense, and within a reasonable time after termination at Company’s expense.

VIII—Indemnification

Provides mutual and fair indemnification provisions with the exception of the duty to defend.  Agent agrees to defend the Company in actions caused by Agent; however, the Company does not agree to defend the Agent in actions caused by the Company, but instead the Company will indemnify the Agent for attorney’s fees.

IX—Termination

Provides fair and mutual termination provisions.

X—Ownership of Expirations

A. Provides that ownership of expirations, including those on direct-billed business, belongs to Agent, except where Agent has not properly accounted for funds.  However, specifically states that a difference of opinion with respect to balances owed by Agent to Company does not have the effect of vesting title to expirations in the Company.  Also provides that Company shall not use its records of expirations on direct billed business in any marketing method for the sale, service or renewal of any form of insurance coverage or other product which shall abridge Agent’s right of ownership.

XI—Additional Provisions

A. Provides that Company reserves the right to mail or deliver to any policyholder offers or solicitations that would enable the policyholder to add one or more supplemental coverages to his policy, and that any premium generated by such offers would be credited to the Agent.  At first glance, this appears to conflict with the provision above prohibiting Company from using records of expirations to market or sell insurance coverage.  However, if the language in this paragraph is specifically related to supplemental coverage on an existing policy, then there may not be a conflict.

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 2013
Current rating: 0 (0 ratings)