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Heritage Limited Producer Agreement


   

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

  • Ownership and control of expirations may be deemed the property of the General Agent if upon termination of the Agreement, the General Agent or Company determines that the Producer is in default of its accounts payable to the Company, and there are no specified dispute or appeal rights available to the Producer.
  • Certain timeframes imposed on the Producer throughout the Agreement, such as “24 hours” and “immediately”, (see details below), may be difficult for the Producer to comply with.
  • Multiple and inconsistent indemnification provisions (see details below).

Provision-by-Provision Review

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

Agreement pertains only to those policies assumed from Citizens.

(1) Producer has no authority to bind the Company on new applications, but does have limited authority to bind for endorsements or changes to existing policies (see paragraph [2]).

(3) a. General Agent may amend the Commission Schedule at any time but must provide written notice to General Agent 180 days in advance of the effective date of the change.

(6) 4) Provides that if Producer collects or receives any premiums for which the Company or General Agent has exercised its right to directly bill the policyholder, then Producer must promptly account for the funds it collected or received and deliver those funds to the Company or General Agent within 24 hours.

(8) Includes separate indemnification language for instances where Producer has not immediately returned to the Company numbered policy forms and other supplies after the Company has requested them by written demand. (The word “immediately” should be better defined). When such forms are not returned, Producer agrees to hold Company and General Agent harmless from liability and indemnify them for direct or indirect damages, including attorneys’ fees, incurred by the Company or General Agent due to the loss of such forms. This provision does not include language which would offset the Producer’s obligation to indemnify to the extent the damages were caused or contributed to by the Company or General Agent, and it appears to be in conflict with the overall indemnification language in paragraph (18).

(10) This paragraph may be attempting to impose additional indemnification requirements on the Producer, but the second sentence of the paragraph is unclear or incomplete.

(11) Provides that upon termination of the Agreement, ownership and control of expirations shall be deemed the property of the Producer, if the Producer has promptly surrendered all Company supplies and has promptly accounted for and paid all funds due the Company. However, ownership and control of expirations can be deemed the property of the General Agent if upon termination of the Agreement, the General Agent or Company determines that the Producer is in default of its accounts payable to the Company, and there are no specified dispute or appeal rights available to the Producer.

(14) Requires that upon suspension, revocation or termination of the authority of the Producer under the Agreement, the Producer must immediately pay to General Agent all accounts due and owing to the General Agent. The word “immediately” may need to be better defined.

(15) Provides that the venue for any legal action under the Agreement will be Pinellas County, Florida. Also provides that if the General Agent is required to take any legal action whatsoever against the Producer under the Agreement, that the Producer agrees to pay reasonable attorneys’ fees and costs incurred in such action brought by the General Agent. It is not clear whether the intent of this broad language (which applies to ANY legal action) is for the Producer to pay the General Agent’s attorneys’ fees, or simply to pay his own attorneys’ fees. In any event, this language does not contemplate the fault of either party and is not consistent with the overall indemnification language in paragraph (18).

(17) (E) Allows either party to terminate the Agreement for any reason upon 15 days prior written notice to the other party.

(18) The indemnification language in this paragraph is fair and mutual, and also includes language that would offset either party’s obligation to indemnify the other to the extent the damages were caused or contributed to by the other party.

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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