The Big I Washington Spring 2018

Big Washington 

BIG I WASHINGTON IS A PUBLICATION OF THE INDEPENDENT 

INSURANCE AGENTS & BROKERS OF WASHINGTON 

SPRING 2018 

Big Washington SPRING 2018 1

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Claims Representative 

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2 

SPRING 2018 Big Washington


SPRING 2018 

Contents 

6 A Message from Rob Tripple, IIABW President 

7 Washington State Insurance Commissioner Mike 

Kreidler 

8 IIABW’s 2018 Legislative Wrap-Up 

10 Impact of Tax Reform on Agencies 

12 Avoiding Operational Pitfalls: An “Every Day” Plan 

14 Young Agents Conference Information and 

Registration 

16 Regulatory Changes Impact Agents 

18 Thank You for Your Investment in InsurPac in 2017 

20 Big “I” PAC: An Industry Leader 

21 Thank You Big “I” PAC Contributors 

22 ACV vs. RC Recovery in Liability Claims 

27 Young Agents Give Back to the Community 

28 ACT Releases Texting Resources 

30 Big “I” Markets Product Availability – Washington 

Ad Index 

11 Berkshire Hathaway 

Guard 

guard.com 

2 Grange Insurance 

Association 

grange.com 

5 Griffin Underwriting 

Services 

goGUS.com 

17 Imperial PFS 

ipfs.com 

32 Liberty Mutual 

LibertyMutual.com/ 

Business 

31 Mutual of Enumclaw 

mutualofenumclaw.com 

27 Preferred Property/JGS 

umbrellaprogram.com 

16 RT Specialty 

rtspecialty.com 

3 Western National 

Insurance 

www.wnins.com 

Official Publication of Independent 

Insurance Agents & Brokers of Washington 

11911 NE 1st St., Suite B103, Bellevue, WA 98005 

Ph. (425) 649-0102 Fax: (425) 649-8573 

Web: www.wainsurance.org 

Officers of IIABW 

President: Rob Tripple, Tripple, Tripple & Tripple, Edmonds 

President-elect: Dave Merrill, Merrill & Merrill, Seattle 

Secretary: Melissa Power, ASCR, CIC, 

Homestreet Insurance Agency, Spokane 

Treasurer: Amberlyn McQuary Buratto, CIC, 

Stonebraker McQuary Insurance, Clarkston 

IIABA Director: Sue Knobeloch, CIC, CPIW, 

Association of Risk Managers NW, Tacoma 

Executive VP: Daniel Holst, IIABW, Bellevue 

Board of Directors 

Rob Bush, (King), Valley Insurance, Kirkland 

Craig Field (Chelan/Douglas), Mitchell Reed & Schmitten 

Insurance, Inc., Wenatchee 

Matt Henderson (At Large) PayneWest, Richland 

Duane Henson, LUTCF (Skagit/Island), 

WAFD Insurance Group, Mt. Vernon 

Mary Lemon (Spokane), Hub International Northwest, Spokane 

Amberlyn McQuary Buratto, CIC (At Large), 

Stonebraker McQuary, Spokane 

Dave Merrill (At Large), Merrill & Merrill Insurance, Seattle 

Ryan Porter (At Large), Porter Whidbey Insurance, Freeland 

Melissa Power, ACSR, CIC (At Large), 

Homestreet Insurance, Spokane 

Lori Reed, (Past President) Mitchell Reed & Schmitten 

Insurance, Inc., Wenatchee 

Nick Stay (Pierce) American Underwriters Insurance, Tacoma 

Dave Street (Grant), Martin-Morris Agency, Wenatchee 

Carissa Veltri (Benton-Franklin), Conover, Tri Cities 

Dan Wareham (At-Large), Blasingame Insurance, Spokane 

Staff 

Daniel Holst, Executive V.P. - dholst@wainsurance.org 

Suzanne Arnett, Sr. V.P. of Education - sarnett@wainsurance.org 

Kimberly Ostling, Director of Member Programs - 

kostling@wainsurance.org 

Kathy Gardner, Administrative Assistant - kgardner@wainsurance.org 

Bill Stauffacher, Stauffacher Communications, Contract Lobbyist - 

gocougs@billstauffacher.com 

Big I Washington is the official magazine of the Independent 

Insurance Agents & Brokers of Washington and is published 

quarterly. News items from IIABW members are requested. IIABW 

does not necessarily endorse any of the companies advertising 

in this publication or the views of its writers. IIABW reserves the 

right in its sole discretion to reject advertising that does not meet 

IIABW qualifications or which may detract from its business, 

professional or ethical standards. 

Advertising 

For more information on advertising, 

contact Eric Johnson 

Blue Water Publishers, LLC 

phone: 414.708.2059 • fax: 414.354.5317 

eric@bluewaterpublishers.com 

The publisher cannot assume responsibility for claims made by 

advertisers, content provided by the editor, or for the opinions expressed 

by contributing authors. 

4 


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President’s Letter 

Big I 

There is a lot happening at IIABW this 

year. Here is just a short list OF things 

the Big I is doing for your agency and 

the industry. 

Rob Tripple 

IIABW President 

Lobbying 

IIABW recently collaborated with other small businesses 

to successfully defeat a proposed 7 percent state capital 

gains tax, which would have had a significant impact 

on the sales of our businesses. IIABW members joined 

together to lobby against this tax at the All Industry Day at 

the Capitol in February. 

I am joining eight other members in Washington, D.C., in 

April to lobby our Congressional delegation on flood and 

crop insurance, tax reform, health care, cyber security and 

regulatory reform. Thank you to the 65 individuals who 

contributed over $10,000 to our federal political action 

committee, InsurPac, and the 120 agencies who have 

contributed over $28,000 to our state Big I Pac. Your time 

and money are the key to the Big I’s success in Olympia 

and Washington, D.C. 

New Producer Development 

IIABW has devoted a significant amount of time over the 

last couple years to help agencies recruit, hire, train and 

mentor new CSRs and producers. We are working with 

community colleges on an online insurance certification 

program and apprenticeship program to create an avenue 

for agencies to develop new employees. Watch for more 

information on this exciting opportunity. 

Young Agents 

Once we get new people into the industry, IIABW has 

been successful providing support to help them make 

insurance their career. Over 300 people have participated 

in the Young Agents’ five events, which not only provided 

industry professionals an opportunity to learn but also to 

give back to the community. In two volunteer events the 

Young Agents sorted 4,500 pounds of food, collected 

3,000 pounds of donated food and contributed over 

$1,000 to food banks. Be sure to encourage your new 

producer, CSR, sales rep, underwriter, etc. in your office to 

participate in the Young Agents events. 

Education 

Mark your calendar for this year’s IIABW/PIA Annual 

Conference which will be held on Sept. 19-21 at the new 

Hyatt on Lake Washington. It is a great opportunity to 

learn, network, socialize, golf and have fun. If you choose 

to learn in the comforts of your office, check out IIABW’s 

webinar series, which have been very popular because 

of the quality topics and instructors. A dozen three-hour 

live webinars are offered each month covering timely and 

practical topics. 

Markets 

IIABW provides members a number of personal and 

commercial lines markets to sell to your customers and 

products to use in your own agency. Check out our 

company appointments, niche markets, agents’ E & O 

program, employee benefits, etc. 

Branding/Leads 

IIABW members are encouraged to take advantage of 

the Trusted Choice branding materials, which focus on 

our strengths: choice, customization and advocacy. You 

can get marketing dollars reimbursed to you by using the 

Trusted Choice logo. Trustedchoice.com is our consumer 

portal, which saw over four million visitors last year leading 

to over 100,000 referrals to Big I members all over the 

country. All IIABW members get a free listing on the site 

and you can get listed first in searches by becoming an 

Advantage Plan subscriber. 

Be sure to take advantage of all that the Big I has to offer. 

Go to our website (www.wainsurance.org), our Facebook 

page, and watch for our enewsletter, the IIABW Bulletin. 

Best Regards, 

Rob Tripple, President 

6 


Office of the Insurance Commissioner 

Only 11% Of 

Homeowners 

Are Covered For 

Earthquakes - 

Mike Kreidler 

Washington State 

Insurance Commissioner 

Over the years, I’ve been asked with 

some regularity about how many people 

in Washington state have earthquake 

insurance. The best I could do was to 

guestimate somewhere between 10 

percent and 14 percent. 

I don’t have to guess any longer. 

For the first time in our state’s 

history, we know that 11.3 percent 

of homeowners in Washington state 

have some type of earthquake 

coverage. Just over 18 percent of 

insured homeowners in Thurston 

County have earthquake coverage, 

followed by Clark County at 16.4 

percent and Kitsap County at 16 

percent. 

In King County, the state’s most 

populous, 15.7 percent of residential 

properties have earthquake 

coverage. Sparsely populated 

Columbia County has a coverage 

rate of just .02 percent. 

This is first time we’ve had 

conclusive data about Washington 

state’s earthquake market. Certainly, 

today’s technology makes collecting 

and analyzing data far easier than 

ever before. Also, as our state has become more involved 

in disaster mitigation and resilience work, it became clear 

that we needed baseline data in order to move forward. 

If we don’t know how many people have earthquake 

insurance, how will we know where to focus our outreach 

and preparedness work? 

Here’s what we found out when we surveyed 240 P&C 

insurers last fall: 

• Insured homeowners in Western Washington have a 

higher percentage of coverage, 13.8 percent, than those 

in Eastern Washington, 1.7 percent. 

• The counties of King, Pierce, Snohomish, Thurston and 

Clark account for 76 percent of all residential policies 

with earthquake coverage in the state. 

• Deductibles for residential earthquake coverage match 

the industry standard of 10 percent to 15 percent. 

• Insurers reported the average 

insured residential property was 

covered for $512,000. 

• Just over 43 percent of 

commercial properties in Washington 

have earthquake coverage. 

• The average commercial 

property was insured for about $3.1 

million. 

• The counties of King, Snohomish, 

Pierce, Kitsap and Clark have 61 

percent of all commercial earthquake 

policies in the state. 

What’s next? That depends on 

the Legislature, but things look 

promising. I sponsored legislation 

to bring together public and private 

organizations to recommend actions 

to mitigate risk and losses from all 

types of natural disasters. If approved, the working group 

would report its recommendations to the Legislature in 

December 2018 and my office would lead the work. 

So far, we’ve received a great deal of support for the bill 

from legislators, but we won’t know for certain until they 

make final decisions. 


Legislative Update 

IIABW’s 2018 

During the recently completed 60-day legislative session 

ended last week, the legislature passing a 2018 supplemental 

operating budget that increased the state’s two-year budget to 

$45 billion. By spending an additional $941 million, lawmakers 

funded teachers’ salaries one year earlier than expected – 

putting the legislature in position to finally have complied with 

McCleary court decision to fully fund K-12 education. 

Capital Gains Tax 

The legislature strongly considered a new 7 percent capital gains tax, exempting 

the first $50,000 for couples and $25,000 for individuals. The bill did not pass this 

year but it will be coming back in 2019 and will have more momentum if Democrats 

add to their one seat majorities in the legislature. IIABW actively worked against HB 

2967, including testifying against the proposal. We are prepared to battle against 

this tax next year given the significant impact it would have on the sale of a book 

of business. 

Wrongful Death 

The trial lawyers’ top legislative priority, a proposal to expand the state’s wrongful 

death statute, failed to pass the legislature. Lawmakers were poised to pass SB 

6015, which would have established joint and several liability provisions for a new 

class of plaintiffs. When a proposed amendment that would have eliminated the 

joint and several liability parts of the bill was clearly going to pass, the bill was taken 

off the agenda and died. 

Motor Vehicle Abstracts 

Legislation died that would have stopped the state from selling motor vehicle 

abstracts to insurers. HB 2278 broadly prohibited state government agencies from 

sharing or selling any information that included personal identification numbers. 

8 


The bill’s impact on insurers’ access to abstracts was an unintended impact of the 

proposal. Before the bill died, the insurance industry was successful in getting 

amendments in place to maintain access to abstracts. 

Risk Mitigation Services 

A proposal that allows personal property insurers to provide up to $1,500 in a 

12-month period for various risk mitigation goods and services passed the legislature. 

HB 2322 enables insurers to fund various items that are intended to reduce risk – 

including water monitoring, foundation strapping, home safety monitoring, or brush 

clearing. 

Non-Competition Agreements 

The legislature again failed to act on several issues aimed at preventing or 

significantly restricting non-competes. IIABW is opposed to weakening or eliminating 

non-competes and expects this issue will return for consideration next year. 

Budget Highlights 

The legislature’s supplemental budget was able to spend an additional $941 million. 

To do so, lawmakers diverted money typically earmarked for the state’s Rainy Day 

Fund and increased state property tax revenue to “buy down” the state property 

tax rate hikes and fund teacher salary increases. Here’s a more detailed summary 

of how these policy decisions played out: 

• The legislature dedicated $935 million in increased state property tax revenues 

to the state’s Education Legacy Trust Account. 

• Doing so allowed the Legislature to redirect $700 million that typically would 

have been placed in the state’s Budget Stabilization Account (Rainy Day Fund). 

• $776 million was used to fund K-12 salary increases a year early. 

• $390 million was used to “buy down” the 2017 session’s McCleary property tax 

rate increases which significantly impacted many counties. The rate reductions 

will take effect in the 2019 calendar year. 


Impact Of 

In December, Congress passed 

a law which made sweeping 

changes to the U.S. tax code. 

The centerpiece of the law is a 

lowering of the corporate tax 

rate. Big I members can read a 

10-page White Paper on how the 

tax cuts impact their agencies by 

going to IIABW’s website (www. 

wainsurance.org). 

In addition to changing tax rates for individuals 

and creating a special deduction for small 

businesses organized as pass-through entities, 

the law: 

• Establishes a 21 percent flat tax rate for 

C-corporations, which impacts approximately 

one-third of Big “I” members. 

• Reduces individual rates by one to four 

percentage points across six of the seven tax 

brackets and almost doubles the standard 

deduction, while instituting stricter limits on 

itemized deductions. 

• Enables a significant portion of the two-thirds 

of Big “I” members organized as pass-through 

entities (such as S-corporations, LLCs and 

partnerships) to utilize a 20 percent deduction 

on business income earned from the agency, 

subject to limitations. 

10 


STABILITY 

A new section has been added to the federal individual 

tax code that creates a 20 percent deduction on “qualified 

business income” (QBI) for owners of pass-through 

businesses. However, the new law prohibits the owners 

of some types of businesses from utilizing the deduction if 

their overall taxable income is above $415,000 (joint) and 

$207,500 (single). 

At this time, it is unclear whether insurance agencies 

and brokerages will be considered a “specified service 

business” by the IRS. IIABA believes there are grounds for 

the IRS to include insurance agencies in the definition of 

“specified service business” thereby limiting the ability of 

some of our larger pass-through members from using the 

deduction. However, there are also reasonable arguments 

for the exclusion of insurance agencies from the definition. 

As such, IIABA is currently advising members who have 

taxable income above the specified income levels that, 

out of an abundance of caution, to assume they are 

limited in their ability to utilize the deduction and that they 

should reach out to their accountants for advice. IIABA is 

strenuously advocating before Treasury and the IRS that 

Congress did not intend to include insurance agents and 

brokers in the definition of “specified service activities”. 

This does not impact the 1/3 of Big I members organized 

as C corps. 

Impact On Valuations 

These changes to the tax code may impact agency 

valuations and agency operating structure. According to 

an analysis by Reagan Consulting, insurance agencies 

currently organized as C-corporations, as well as smaller 

pass-throughs in states with low income tax rates, are 

most likely to see increased valuations. However, because 

taxes for pass-through entities are based on every owner 

or shareholder’s individual tax picture, it is impossible to 

determine general impacts with certainty. 

The analysis also notes that the new tax law will likely have 

a minimal impact on larger pass-through insurance agency 

valuations, and that converting to a C-corporation may or 

may not be beneficial because in most cases it still costs 

less in taxes to get cash out of a pass-through entity than 

a C-corporation. 

In addition, several S-corporation benefits have not been 

affected by tax reform, such as allowing for an asset 

purchase structure in a third-party transaction, which can 

lead to more aggressive valuations from buyers. However, 

for agencies that do not distribute significant profits to 

owners, the C-corporation structure may be advantageous, 

as it enables them to retain significantly higher amounts of 

post-tax cash. 

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Avoiding Operational Pitfalls: 

An “Every Day” Plan 

By Ellen McCarthy, Vice President at 

Swiss Re Corporate Solutions 

Running a successful insurance 

agency is akin to putting together 

a winning sports team. You want to 

get the best athletes available and 

ensure that those players perform 

at a high level by implementing a wellconceived 

regime of skill development. 

But athletic prowess, by itself, is not enough. Nothing is more 

frustrating than seeing an undisciplined player get penalized 

during a game for failing to follow an established rule. In the sports 

world, these errors routinely end up changing the outcome of the 

game. 

Likewise, in the insurance arena an agency can have great producers 

and a solid marketing plan in place, but if key agency processes aren’t 

being followed, the resulting E&O claim can be quite painful. 

Consider the following: 

• An agency has specific procedures in place for the issuance of 

Certificate of Insurances (COI). Its manual provides that, if a COI 

is given for an additional insured, the agency must make sure the 

carrier is notified and that an endorsement is issued for the certificate 

holder. A well-respected CSR is faced with multiple COI requests and, 

due to a heavy workload, delays notifying the carrier of one of the 

issued COIs, then forgets to follow up. A lawsuit is filed against the 

certificate holder after an accident on a job site. The certificate holder 

demands a defense from the insured’s GL carrier, but the carrier 

declines to defend or indemnify because the certificate holder was 

not an insured. A claim is then made against the agency. Total Cost: 

$180,000 

12 12 


• An agency is contacted by a customer for homeowners 

coverage. The agency’s manual requires that all files 

must have a completed application. The producer inputs 

information into the carrier’s web portal for a quote with 

a plan to update the inputted information as needed 

upon receipt of the application and the policy is bound. 

Several months later, a fire occurs and the agency 

cannot locate the application. The carrier pays the 

claim but then sues the agency on the theory that the 

agency failed to follow its own guidelines by not getting 

an application, insisting that it never would have written 

the policy had the correct information been relayed. At 

deposition, the producer has no choice but to admit that 

the procedure was to get the completed application 

before binding coverage and has no explanation as to 

the whereabouts of the missing application. Total Cost: 

$500,000 

• A producer procures coverage on multiple commercial 

properties for a longtime client. Subsequently, at the 

client’s request, the producer asks the carrier to remove 

property coverage for one of the properties as it was to 

be leased to a tenant. The agency has a best practices 

manual, which states there should be a deletion/ 

reduction request in writing, but the producer did not get 

one (in fact, very rarely did this producer get anything 

in writing). A subsequent vandalism claim occurs on the 

property, which the carrier denies due to the lack of 

coverage. The client then brings suit against the agency 

for the uncovered vandalism loss and maintains that the 

property was supposed to have coverage. Total Cost: 

$470,000 

• An agency procures commercial auto coverage for a 

client whose principal is “John Doe Sr.” The agency 

manual specifies that an insured’s complete legal name 

must be entered on all applications. The application has 

a list of individuals who would be covered by a Broad 

Form Drive Other Car Endorsement. The producer lists 

“John Doe” as a covered person. Subsequently, the 

principal’s son and former employee, John Doe Jr., is 

involved in a car accident. He seeks coverage under 

the policy on the theory that he was covered as “John 

Doe,” The court ultimately agrees that, due to the 

“ambiguity” as to who the intended insured was, the 

carrier must cover John Doe Jr. The carrier pays its limits 

and then seeks this sum from the agency for causing the 

ambiguity. The carrier asserts that the agency violated 

its own guidelines in not using the legal name of the 

insured. Total Cost: More Than $1 Million 

While mistakes happen (after all, that is what insurance is 

for), there are simple ways an agency can reduce claims 

arising from procedural errors. 

• The “four eye” approach. Before any policy is issued, 

have another staff member do a review to make sure 

nothing was missed. Yes, this can be time consuming 

but the payoff can be substantial. 

• Random audits. Select a number of files to review on 

a periodic basis. Do not limit this audit to new or junior 

employees. We often see that the more senior staff 

members are the ones who forget to follow the rules. 

• Periodic refresher sessions for all staff members. 

While these can be dry and boring, try to make them 

more appealing. Try a “game show” type of approach in 

which “contestants” get prizes for answering questions 

correctly. This can be a great team building exercise as 

well. 

• Checklists. Have a checklist that is used every time, by 

every staff member – NO EXCEPTIONS. There is nothing 

more demoralizing for a staff member to find out that the 

rules only apply to certain people. 

• Workload management. Make sure that staff members 

are not overloaded. It is much harder to follow expected 

procedures when overburdened. That’s when all of us 

start cutting corners. 

• Audits. Retain an outside auditor to come and review 

the agency from top to bottom. While these do come 

with a price tag, pull out the Declarations Page of your 

E&O policy and compare the cost of an audit to having 

to pay your deductible on even a single E&O claim, not 

to mention the premium increase that could result from 

a serious claim and the loss of customer confidence. 

Procedural errors have proven to be just as costly as 

substantive mistakes, particularly when the plaintiff is 

able to highlight the agency’s failure to follow its own 

rules. In each of the examples above, the agency had 

good procedures in place and the agency principals were 

confident that those processes were being followed. It 

was only when a penalty flag was thrown, i.e., an E&O 

claim came to light, that the agency realized its rule book 

was being ignored. 

Legendary wrestling coach and Olympic gold medalist 

Dan Gable once offered a simple path to success: “If it’s 

important, do it every day.” He’s right. The ramifications 

of failure underscore the importance of having your team 

in full compliance with established agency procedures. 

Every day. 

Ellen McCarthy is a vice president and claim expert at 

Swiss Re Corporate Solutions and teleworks out of the 

Overland Park, Kansas, office. 


I NDEPENDENT INSURANCE AGENTS & BROKERS OF WASHINGTON 

Young Agents Conference 

June 14-15, 2018 

Campbell’s Resort, Chelan 

Campbell’s Resort 

Campbell’s is a beachfront 

resort located in downtown 

Chelan. Call Campbell’s at 

(800) 553-8225 to make a room 

reservation. Use code 476910 

to receive the discounted 

conference rate of $152 for a 

traditional room and $188 for a 

Deluxe room. The deadline for 

the special rate is May 15th or 

whenever the room block is 

filled. For more information, go 

to www.campbellsresort.com. 

Thank you to our 

Conference Speakers 

Dave Gregory, Stonebraker McQuary 

Christopher Boggs, Big I Virtual 

University 

Abigail Bliss, Trustco Insurance 

Veronica Stevens, Cochrane & Co. 

Brittany Connolly, Cochrane & Co. 

Joseph Subitch, Philadelphia Ins. 

Mike Arnold, The Partners Group 

Craig Field, Mitchell, Reed & 

Schmitten 

Joshua Smith, AAA Washington 

Thursday, June 14 

7:00 am Golf at Bear Mountain Golf Course 

12:00 pm Registration (lunch on your own) 

1:00-2:00 pm Building Relationships: Breaking Down the Walls Part 1 

2:00-4:00 pm Replacement Cost Really Isn’t—Understanding Property 

Valuations (2 CE) 

4:00–5:00 pm Understanding and Explaining the Mystery of Coinsurance 

(1 CE) 

6:00-7:00 pm Reception Lakeside 

7:00-8:00 pm Dinner Lakeside 

Friday, June 15 

8:30-9:30 am Breakfast: Building Relationships: Breaking Down the Walls 

Part 2 

9:30-10:30 am Who is an “Insured” in the CGL and BAC (1CE) 

9:30-10:30 am Homeowners DIC (1 CE) 

10:45-12:45 pm Understanding Commercial Property Underwriting and COPE 

(2CE) 

10:45-11:45 pm Personal Lines Jeopardy (1CE) 

11:45-12:45 pm How to do Personal Lines Business with an MGA (1CE) 

12:45-1:45 pm Lunch: From the Ground up, Building a Profitable Insurance 

Agency 

1:45-4:45 pm Risk Management Assessment of Campbell’s Resort (3 CE) 

5:00-630 pm Hospitality Suite Reception 

6:30 pm Dinner at Lake Chelan Winery

I NDEPENDENT INSURANCE AGENTS & BROKERS OF WASHINGTON 

Young Agents Conference 

Thank you to our 

Conference Sponsors 

Title 

Liberty Mutual 

Safeco 

Gold 

Nationwide Insurance 

Stauffacher Comm. 

Silver 

Scottish American 

RT Specialty 

Griffin Underwriting Services 

AFCO Premium Finance 

Bronze 

Western National Mutual Ins. 

Mutual of Enumclaw 

ServiceMaster of Tacoma/ 

ServiceMaster by ASI 

Pacific International Underwriters 

Metlife 

RIC Insurance 

CIG 

Cochrane & Company 

Tepco Premium Finance 

WSRB 

Travelers 

Otter Insurance 

Conover Ins. 

Imperial PFS 

Superior Underwriters 

Grange Insurance 

First Insurance Funding 

SERVPRO 

To Register: 

Return form with registration fee (golf is 

extra). Spouses/Guest can register for the 

social functions only. Cancellation requests 

received by May 31st are fully 

refundable less a 15% service fee. No 

refunds are provided after May 

31st. 

Golf: 

On June 14 at 7:00 am we’ll 

hold a golf tournament at Bear 

Mountain course. Golf, cart & 

breakfast, cost $80. 

For questions & foursome 

requests: Suzanne Arnett 

425-649-0102 x 224 

or sarnett@wainsurance.org 

Name: _________________________ 

Designations: ___________________ 

WAOIC # _______________________ 

Spouse/Guest:___________________ 

Firm: ___________________________ 

Address: ________________________ 

City: ___________________________ 

State: ________ Zip: ______________ 

Phone: _________________________ 

Email: __________________________ 

Continuing Education: 

9 hours of CE will be offered 

Bear Mountain Golf Course 

Payment Options: 

__ $135 IIABW Member __ $160 Non member 

__ $80 Golf 

__ $80 Guest (Social functions only) 

Amount enclosed: $_________ 

__ Make check payable to IIABW 

__ Charge to __ VISA or __ MasterCard 

Card #: _________________________ 

Exp. Date: ______________________ 

Security Code: ___________________ 

Name on Card: __________________ 

Signature: ______________________ 

Card Billing Address: _____________ 

_______________________________ 

Questions: 

Contact Suzanne Arnett at sarnett@wainsurance.org or (425) 649-0102.

REGULATORY 

CHANGES 

NEW SICK-LEAVE RULES IN WASHINGTON 

YOUR CLIENTS’ NEEDS ARE WORLDS APART 

FROM A ONE-SIZE-FITS-ALL CONCEPT. 

Their complex risks require creative, innovative solutions. The industry 

veterans at RT Specialty are precisely the ones to help you navigate the 

wholesale specialty and MGA marketplace. RT Specialty leads the way 

in providing specialty insurance services, proven leadership, extensive 

industry experience and quality services to retail agents. 

Agents and brokers, for more information please contact: 

Sue Brennan - President 

326 Admiral Way, Suite 210 

Edmonds, WA 98020 

Main: 425-774-2237 

PROPERTY | CASUALTY | EXECUTIVE & PROFESSIONAL LIABILITY | AGRIBUSINESS 

WORKERS’ COMP | HEALTHCARE | AVIATION | LIFE SCIENCES | CONSTRUCTION 

TRANSPORTATION | CLAIMS SERVICES | BINDING AUTHORITY | PERSONAL LINES 

RT Specialty, LLC (RT), a subsidiary of Ryan Specialty Group, LLC, provides wholesale brokerage and other services to agents 

and brokers. RT is a Delaware limited liability company based in Illinois. As a wholesale broker, RT does not solicit insurance from 

the public. Some products may only be available in certain states, and some products may only be available from surplus lines 

insurers. In California: RT Specialty Insurance Services, LLC License #0G97516. ©2017 Ryan Specialty Group, LLC 

Initiative 1433, which was passed by the voters in 

2016, requires employers beginning in 2018 to accrue 

paid sick leave at the rate of one hour for every 

40 hours worked for most full-time, part-time and 

temporary employees. For more information, go to 

the Department of Labor & Industries website. 

FEDERAL ENFORCEMENT OF MARIJUANA LAWS 

Attorney General Jeff Sessions in January changed 

the policy that federal prosecutors use in deciding 

whether or not to pursue federal prosecution of 

marijuana-related offenses in states that have 

adopted recreational marijuana decriminalization 

laws. This conflict between state and federal statutes 

places a marijuana business at risk of being federally 

prosecuted. Six states have legalized recreational use 

of marijuana and at least three more are in the process 

of legalizing it sometime in 2018. 

Parties that directly engage in such activities and 

parties that knowingly support such activities 

(landlords, utilities, insurers, etc.) potentially remain 

subject to prosecution for violating federal laws. The 

16 


state initiatives have no effect on the ability of federal 

investigators and prosecutors to pursue federal 

criminal action. IIABA is working with the IRS and 

the Trump Administration to clarify how insurance 

agencies could be impacted by this change in policy. 

CADILLAC TAX & NFIP EXTENSION 

The Congressional deal to reopen the federal 

government after a three-day shutdown in January 

had two insurance-related pieces. 

• It added another two-year delay of the Affordable 

Care Act’s ‘Cadillac’ tax, which has now been 

delayed until 2022. If enacted, this harmful tax 

would hit many of our small business members 

and their clients, potentially forcing them to choose 

between paying the tax or reducing benefits for 

their employees. 

ELIMINATE THE BUSY WORK 

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technology, our integration 

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• It temporarily reauthorized the National Flood 

Insurance Program. Lapses in the program, 

even very short ones, have a negative effect on 

consumers. The second Congressional deal to keep 

the government open extended the NFIP through 

March 23. Congress extended the NFIP again 

through July 31. 

For more information please contact 

one of our Washington branches: 

WAB - Bothell, WA | 800.888.2750 

WAS - Spokane, WA | 800.234.7373 

Copyright © 2018 IPFS Corporation. All rights reserved. 

Visit us today at ipfs.com 

or follow us on social 

media for news and 

updates on Imperial PFS 


Thank You For Your Investment 

IIABW would like to thank our members who collectively contributed over $10,000 

in individual contributions to our national political action committee, InsurPac. 

Nationally, well over $1 million was raised in 2017. 

We would like to say a special thank you to Sue Knobeloch of ARM Northwest who serves on our national 

association’s Board of Directors and is our state’s InsurPac Chair. Also, thanks to the agencies who raised the 

most from their employees and owners: 

• Propel 

• Tripple, Tripple & Tripple 

• ARM Northwest 

• Stonebraker McQuary Agency 

InsurPac is one of the reasons why the Big I is routinely rated in Fortune magazine’s top-25 list of most successful 

lobbying groups in Washington,D.C. By pooling individual contributions, InsurPac helps elect candidates and reelect 

members of the U.S. Congress who share the Big I’s business philosophy. 

While contributions do not buy solutions to legislative debates, they do allow the Big I significant “face time” with 

very busy elected officials to give us an opportunity to educated them. 

18 


Thank you to the more than 65 agents and brokers 

who have contributed to InsurPac in 2017. 

>$1,000 

Kurt Carlson, Propel Insurance 

Susan Knobeloch, ARM Northwest Inc. 

Don McQuary, Stonebraker McQuary Agency 

Robert Tripple, Tripple Tripple & Tripple LLC 

$500-$999 

Duane Henson, WAFD Insurance Group Inc. 

Claudia McClain, McClain Insurance Services Inc. 

Sandy McDonald, McDonald McGarry Insurance Brokers 

David Street, Martin-Morris Agency Inc. 

Tom Taylor Jr., Taylor-Thomason Insurance Brokers 

$250-$499 

Bill Gellor, Gellor Insurance Inc. 

Susan Greer, Propel Insurance 

Daniel Holst, IIABW 

Suzanne Lewis, Propel Insurance 

Dave Merrill, Merrill & Merrill 

Patrick Otter, Otter Insurance Agency 

Lori Reed, Mitchell Reed & Schmitten Insurance Inc. 

Nick Stay, American Underwriters Insurance Agencies Inc. 

$100-$249 

Rob Bush, Valley Insurance Agency 

Craig Field, Mitchell, Reed & Schmitten Insurance Inc. 

Matthew Kremer, Propel Insurance 

Brett Meade, Propel Insurance 

Ryan Porter, Porter Whidbey Insurance Inc. 

Melissa Power, Homestreet Insurance 

Lisa Torres, Propel Insurance 

< $100 

Suzanne Arnett, IIABW 

Mike Arnold, The Partners Group 

Keith Bean, McDonald Insurance Group Inc. 

Hector Bolanco, Griffin Underwriting Services 

Tanya Brown, Rice Insurance 

Aran Buchan, HUB International NW 

Margaret Cassidy, IBQ Systems 

Lanie Clark, Parker, Smith & Feek Inc. 

Martha Colbert, Red Shield Insurance Company 

Wendy Dear, Griffin Underwriting Services 

Connie Divelbiss, Mutual Insurance Services 

Brian Fassburg, Pacific International Underwriters Inc. 

Sarah Floyd, Superior Underwriters 

Jessica Gleason, Griffin Underwriting Services 

Megan Godsil, PHCY 

Gabe Gonzalez, Safeco Insurance 

Debra Haller, Insurance Services of WA Inc. 

Robert Hoogendam, Imperial PFS 

Kristen Horlacher, Superior Underwriters 

Chanel Hradecky, Rice Insurance 

Sarah Jacob, Swett & Crawford 

Spencer Jacobson, Rice Insurance 

Chris Koslinski, HUB International 

Taylor Madison, Hagerty Insurance LLC 

Sheliah Massoth, Rice Insurance 

Katy Merriam, RT Specialty 

Andrew Merrill, Merrill & Merrill 

Daniel Merrill, Merrill & Merrill 

Natalie Merrill, Merrill & Merrill 

Tammy Neilson, Worldwide Facilities LLC 

Molly O’Neill, Griffin Underwriting Services 

Candice Pagano, The Johnson Marshall Agency 

Karlee Rahm, Griffin Underwriting Services 

Jennifer Shores, Griffin Underwriting Services 

Tyler Stoddard, Griffin Underwriting Services 

Mandi Strange, Crump Insurance Services NW 

Jessica Swails, Worldwide Facilities LLC 

Connie Toomey, C. Don Filer Agency Inc. 

Sean Tripple, Tripple Tripple & Tripple LLC 

Patty Vanderhoven, Brown & Brown of WA, Inc. 

Carissa Veltri, Conover Insurance Services LLC. 

Bob Wright, PLC Insurance LLC 


Big “I” PAC: 

IIABW would like to thank its 

members for their support of the 

BIG “I” PAC, our state political 

action committee. 120 agencies 

have contributed over $28,000 

to the PAC in 2017. 

Support from our membership has helped 

the Big “I” be effective advancing agent 

issues in Olympia, including no state capital 

gains taxes, fair non compete agreements, 

reasonable insurance regulations, agent 

friendly health care exchange, etc. 

Simply put, a PAC contribution is the 

equivalent of purchasing political insurance. 

Your contributions are used to support 

elected officials and candidates who 

advance IIABW core principles on agentspecific, 

insurance industry and general 

business issues. We pool your hard-earned 

dollars to send a powerful message: IIABW 

agents care about the political makeup 

of Olympia, we care about our industry’s 

future, and we care about our customers. 

We back up our talk by actively participating 

in the political process with a proactive 

lobbying presence, a major PAC presence 

and broad-based grassroots relationships 

in every legislative district. 

IIABW is a strong voice for independent 

insurance agents in Olympia. We’re trusted 

and respected in both Republican and 

Democratic camps because legislators 

know you at home, hear from you when 

they’re in Olympia, and count on our support 

when it really matters. 

Personal AND corporate contributions can 

be made to the Big “I” Pac and sent to: Big 

“I” Pac, 11911 NE 1st St., Suite B103, Bellevue, 

WA 98105. 

20 


Thank you to the following agencies who have contributed to BIG “I” PAC. 

>$1,000 

Stonebraker McQuary Agency Group 

$600-$999 

AAA Washington 

Advantage Group 

Conover Insurance Inc. 

HUB International Northwest LLC 

Kibble & Prentice/USI 

Leavitt Group Northwest 

McDonald Zaring Insurance 

Parker, Smith & Feek Inc. 

PLC Insurance LLC 

Propel Insurance 

VIP Agency Inc. 

$400-$599 

BK-JET Group LLC 

Martin-Morris Agency 

McClain Insurance Services 

McDonald Ins. Group Inc. 

McGriff, Seibels & Williams 

Mitchell, Reed & Schmitten Insurance Inc. 

WAFD Insurance Group Inc. 

$200-$399 

American Insurance Associates LLC 

Blasingame Insurance 

Buck & Affiliates 

Callis & Associates 

Castell Insurance Inc. 

Central WA Insurance Agency Inc. 

Davidson & Associates Insurance Agency 

Fortiphi Insurance LLC 

Gellor Insurance Inc. 

HomeStreet Insurance 

InsureQ 

JMS Insurance LLC 

Monteith Insurance Inc. 

Mosaic Insurance Alliance LLC 

Oltman Insurance Agency Inc. 

Pickett Agency 

Robert M. Trask Agency Inc. 

Shinstrom & Norman Inc. 

Snapp & Son Insurance Inc. 

Tradewinds Insurance Inc. 

WCLA Insurance Agency Inc. 

Western Association Services Inc. 

Wycoff Insurance 

$101-$199 

Brookey Insurance Services 

Century Insurance Services LLC 

Christopher Togawa Ins Agency Inc 

D.W. Ferguson & Associates 

Dan Hoffman Insurance 

Dan Marek Insurance 

Duane Weber Insurance Inc. 

Ed Poe Agency 

Epic Insurance 

Fairbanks Insurance Service 

First Rate Insurance Plus Inc. 

Good People Insurance Group 

Gus Paine Insurance 

GVI Corp. 

Herbert Snowden Insurance 

Insurance by the Woods 

Insurance Servics Network Inc. 

Interstate Insurance Agency 

ISU Insurance Solutions Group 

Johnson Insurance Agency 

Kraft Insurance Agency Inc. 

Lee Insurance Services Inc. 

Longview Insurance Inc. 

Lower Valley Brokers 

M.M. Fryer & Sons 

McDonald McGarry Insurance Brokers 

Mechelsen Inc. 

Miranda Insurance Agency LLC 

Montgomery Insurance Agency 

Noyd & Noyd Insurance Agency Inc. 

Otter Insurance 

Phillips Insurance Inc. 

Plaza Insurance Agency 

ProStar Insurance 

Schmidt Insurance Services Inc. 

Sears & Associates 

Sunset Insurance Agency LLC 

Thornburgh Ins. Agency 

United Insurance Brokers Inc. 

Villa Insurance Group Inc. 

Virgil McLagan Company 

Woodward-Scott Agency 

< $100 

Adams Insurance 

American Business & Personal Insurance 

Association of Risk Managers NW 

Cactus 

Capital Insurance 

Chinook Insurance Group LLC 

Coastal Insurance Group LLC 

Degginger McIntosh & Associates Inc. 

Embree Insurance Agency Inc. 

First Underwriters 

Graves Agency LLC 

Harbor Insurance Services 

Hartley & Hartley Insurance Inc. 

Homer Smith Insurance Inc. 

InsurePro 

ISG Barker & Associates 

Island Insurance Associates 

Jenny Tan Insurance 

McGregor Insurance Inc. 

MJC Insurance 

Northern Marine Insurance 

Northwest Insurance Brokers 

NW Financial & Insurance Services 

Obenland & Low Agency Inc. 

Premier Group Insurance 

Pruett Insurance Inc. 

Red Pony Insurance Services Inc. 

Rudolf Birkenkopf 

The Benefits Academy 

Tripple, Tripple & Tripple LLC 

Vino Services NW & Bridge Insurance Services 

VIP Agency Inc. 

Wallace Insurance Consulting Inc 

Wenner-Davis & Associates Insurance 

Woodland Ins. Agency Inc. 

Y. I. Manchik Insurance Agency LLC 


ACV 

RC 

VS. 

RECOVERY 

IN LIABILITY 

C L A I M S 

By Virtual University Faculty 

22 


AN AT-FAULT MOTORIST STRUCK A 

DWELLING AND GARAGE, INCLUDING 

THE VEHICLES IN THE GARAGE. DOES 

THE PAP LIABILITY COVERAGE PAY ON 

A REPLACEMENT COST (RC) OR ACTUAL 

CASH VALUE (ACV) BASIS? IN THIS 

ARTICLE, WE’LL EXAMINE THIS AND 

OTHER CLAIMS THAT CONSIDER WHAT 

VALUATION METHOD IS APPROPRIATE 

IN LEGAL LIABILITY CLAIMS. 

Q: “An at-fault motorist lost control of his vehicle 

and struck a single family dwelling, causing 

extensive damage to the attached garage, 

enclosed vehicles and miscellaneous personal 

property in the garage. The PAP Insuring 

Agreement states, ‘We will pay damages for ... 

or ‘property damage’ for which any ‘insured’... 

because of an auto accident.’ Does the insurer 

owe ACV or RC on the damage to the dwelling 

and attached garage? 

“The adjuster has advised the claimant to 

collect under HO because the at-fault insurer 

will only pay ACV. The adjuster suggests the 

HO insurer will subrogate anyway (of course!). 

I think at-fault insurer owes RC – what do 

you think? I see no ‘betterment’ arising from 

restoring the building to its pre-damaged 

condition, which may well require new 

materials.” 


“I AM NOT CERTAIN THAT 

RC OR ACV IS AN ISSUE 

IN A THIRD PARTY CASE. 

IT IS DAMAGES AND HOW 

THE ATTORNEY ARGUES 

DAMAGES AND HOW 

THE JURY BUYS THE 

ARGUMENT. IT SHOULD 

BE THE COST TO THE 

PLAINTIFF THAT IS THE 

CONCERN.” 

24 

A: This is a legal issue since the PAP liability 

coverage pays for damages for which an 

insured is “legally responsible.” It’s silent as 

to whether or not valuation is on an ACV or 

RC basis. 

The only way to answer the question is to 

check with someone familiar with Iowa law 

to see how such claims or suits have been 

resolved. In the meantime, the advice given 

is probably good ... settle on a RC with the 

HO insurer and let them subrogate. 

I ran this by our faculty and they provided the 

following opinions. 

Faculty Response: A liability insurer only 

owes tort damages, that is the difference 

between the value of the damaged or 

destroyed property before the loss and its 

value after the loss. RC is paid as a bonus 

to people who pay for the coverage as a 

contractual right. A subrogating insurer that 

pays RC can never collect more than the tort 

damages that are normally ACV. 

Faculty Response: I agree completely that it is 

a matter of state law regarding how damages 

are measured. ACV and RC (especially ACV) 

are purely first-party insurance concepts, 

i.e., matters of contract between the parties 

to the HO policy whereas calculation of 

damages for a tort is a matter of tort law, or 

more technically the law of “remedies.” The 

liability insurer, of course, 

owes whatever the legal 

amount of damages is. 

Offhand I would say it 

is more likely ACV than 

RC. 

Of course, the property 

insurer is subrogated but 

if it recovers more than 

what it owes its insured, 

I don’t think it can keep 

the difference. As a 

matter of practicality, 

the two insurers should 

probably settle between 

themselves and just end 

it. 

Faculty Response: I 

am not certain that RC 

or ACV is an issue in a third party case. It 

is damages and how the attorney argues 

damages and how the jury buys the 

argument. It should be the cost to the plaintiff 

that is the concern. 

One example is the diminution of value in 

a third party case where the attorney uses 

the affidavit from the dealership to argue 

the damage of having a wrecked-repaired 

auto. In the last that I observed, the affidavit 

was for $5,500 and the defense argued the 

speculative nature of the damages and that 

the real cost would not be known until the car 

was actually sold. The jury awarded $3,500 

for the diminution portion of damages. 

The liability policy agrees to pay damages 

and the court determines damages. I do 

see plaintiffs argue what would be a RC 

theory and defense attorneys argue more 

of a market value (never calling it ACV) but 

saying that the damaged property only had 

a value of $XXXX, not the cost to buy a new 

one that the plaintiff is asking for. 

Faculty Response: I think one good source 

would be the Second Restatement of Torts, 

which would give the prevailing rule in the 

U.S. generally and probably lots of state 

court citations on the amount of damages 

in a tort case involving damage to property. 

Generally, it’s some form of ACV. 

Faculty Response: California’s BAJI or 

Pattern Jury instructions read: Reasonable 

compensation to plaintiff or damage to his 

property. 

That sum is equal to the difference in the fair 

market value of the property immediately 

before and immediately after the accident. 

If the damages have been repaired, or 

are capable of repair, so as to restore the 

fair market value as it existed immediately 

before the accident, at a cost less than such 

difference in value, then the measure of 

damage is the cost of such repair rather than 

such difference in value. [BAJI 14.20 D] 

Reasonable compensation for property lost 

or destroyed in, or because of, the accident. 

That amount is the fair market value of such 

property at the time of its loss or destruction. 

[BAJI 14.21] 

“In actions for negligence, a manufacturer’s 

liability is limited to damages for physical 

injuries; no recovery is allowed for economic 

loss alone. (Seely v. White Motor Co., supra, 

63 Cal.2d 9, 18.) This general principle, the 

so-called economic loss rule, is the primary 

obstacle to plaintiffs’ claim. “ [Aas v. Superior 

Court of San Diego County, 24 Cal.4th 

627, 12 P.3d 1125, 101 Cal.Rptr.2d 718 (Cal. 

12/04/2000)] 


Faculty Response: ACV is typically all that’s 

owed. People don’t question that in an 

auto liability claim. They don’t expect the 

liability carrier to replace their totaled car 

with a new one. But they don’t understand 

not getting all the damage to other types 

of property paid, or having a deduction for 

depreciation. 

How the law measures ACV is often different 

than replacement cost less depreciation. A 

common legal measure is the difference in 

the value of the property before and after 

the loss. 

I sat as a juror years ago on what turned out 

to be a subro case, though you couldn’t tell 

that in the legal proceedings. In court, the 

insured was suing a TV manufacturer for 

faulty circuitry that started a fire. Once we 

decided that the TV was responsible, the 

judge instructed us to determine the ACV of 

the property. We were given copies of the 

property lists from their claim and ultimately 

awarded about 40 cents on the RC dollar, 

partly because we weren’t very sympathetic 

to the insured. All of that money went back 

to the HO carrier. 

Faculty Response: I hate to say it (because 

it’s from the “left coast”), but California’s 

approach is quite fair. Returning the insured 

to the “fair market value,” or cost of repair, 

is exactly what most people would expect. 

They do NOT expect to be told, “Your 

building (we think) has depreciated by X 

percent so here is our settlement, have a 

nice day.” 

Faculty Response: I had almost this same 

question yesterday from an Indiana agent 

except the accident involved an at-fault 

driver insured under a Business Auto form. 

The damage was to a commercial building 

and the adjuster for the at-fault driver wants 

to depreciate the damage to the build 

by 30 percent. The agent for the at-fault 

driver feels this is incorrect, as do I. I know 

if someone damages my building I want it 

fixed – and I sure don’t want to have MY 

insurer pay (it would be subject to a $$$$ 

deducible). Plus, the way the markets are 

today, my insurer would nonrenew me, 

my premiums go up, and I get my friendly 

lawyer to sue everyone in sight. 

With regard to settling with the HO carrier 

and letting them subrogate. Question: Does 

the deductible apply? Answer: YES. Will the 

HO carrier cancel? Answer: Probably. The 

insured does not understand “subrogation” 

(and I’m not sure some insurers do either). 

Another question: If you take this approach, 

is this loss charged to the HO agent? 

Most likely the insured is out the deductible, 

but at least they get replacement cost 

otherwise. The HO insurer would get back 

part of the payment (though probably 

not enough to reimburse the insured the 

deductible). With the insurer negotiating, 

rather than the insured, I’d bet the 

liability insurer would back off on the 30 

percent depreciation to something more 

reasonable. The building would have to 

be in a poor state of repair to demand that 

much depreciation. 

Q: “This question has to do with a claim 

arising under the CGL. I have a plumbing 

contractor who installed a hot water heater 

and forgot to secure a fitting, resulting in 

water leaking out. By the time the claimant 

discovered this, the hardwood floors had 

buckled and the carpet was ruined. 

“Here’s the problem ... the claims adjustor 

for my contractor has told the claimant that 

they’re only legally liable for the damages 

on an ACV basis, not replacement cost. So 

the claimant will not be put back whole. I 

asked the adjustor to show or tell me where 

“legal liability” on a 3rd party property 

damage claim was defined as ACV. He said 

that it was common law (state of Alabama). 

“I’ve been in this business for a long time and 

can’t believe that, if this is the case, I haven’t 

had any complains about the settlement of 

these kind of claims. Now for the first time 

ever, I have an insured, a claimant, and 

contractor raising heck with me about the 

settlement. Got any suggestions or words 

of wisdom?” 

A: The only “words of wisdom” I can give 

you are those of the 16th century French 

physician Francois Rabelais: “What can’t 

be cured must be endured.” Of course, 

your insured probably isn’t interested in 

what some old dead guy thinks about the 

situation. 

I agree that, often, 

these claims are 

just settled and 

the insured gets 

his/her property 

replaced, but there 

is some basis in 

law in many (or 

“YOUR INSURED PROBABLY 

ISN’T INTERESTED IN WHAT 

SOME OLD DEAD GUY THINKS 

ABOUT THE SITUATION.” 


most) states for paying only ACV. I 

ran this by our CGL faculty and got 

the responses below. 

Looking at it from a purely legal 

and contractual perspective, the 

insured probably doesn’t stand 

much chance. So, as the agent, 

I would just try to reason with 

the adjuster and, if possible, 

demonstrate via other claims that 

most carriers you represent would 

just replace the property. Probably 

the only alternative is to have the 

homeowner make claim under his/ 

her HO policy and let the HO and 

CGL carriers duke it out. 

P.S. The premise that insurance 

should make one “whole,” as you 

put it, would seem to support 

ACV, not RC. Why should the 

insured get a brand new floor if 

the existing one has wear? If it 

doesn’t have wear, then ACV and 

RC would essentially be the same. 

Faculty Response: Common law 

in Texas is ACV. The homeowner 

can collect replacement cost on 

his homeowners and then the HO 

carrier can subrogate for amount 

of claim plus deductible. 

Faculty Response: The 

Restatements of Law – Torts 

do seem to give credence 

to the position of ACV (these 

“Restatements” are interpretations 

of the common law). The 

Restatements seem to state that 

the base for damages starts at 

ACV. They discuss giving weight 

to the gravity of value and usage. 

A: To me, the adjuster should 

consider that replacement of a 

hardwood floor with an equivalent 

hardwood floor that would not 

“IT IS UP TO A JUDGE OR JURY TO DETERMINE 

WHAT WILL MAKE THE CLAIMANT WHOLE. IF 

THEY FOLLOW THE RESTATEMENTS, THEY WILL 

START AT ACV, BUT THEY MAY NOT END THERE.” 

increase the value or usage of 

the home. On the other hand, 

payment of ACV could reduce the 

value and usage of the home if 

the claimant were not in a position 

to come up with the depreciation 

amount. 

This is why there is no valuation 

clause in the Liability Policy. It is 

up to a judge or jury to determine 

what will make the claimant whole. 

If they follow the Restatements, 

they will start at ACV, but they may 

not end there. 

Response: We settle auto PD 

claims on an ACV basis. How 

is this different? My research 

indicates that ACV is the correct 

approach. By the way, how is the 

homeowner not made whole at 

ACV? 

Faculty Response: ACV is just 

RC minus depreciation. Unless 

the floor is very old and/or 

in poor condition, how much 

could an interior hardwood floor 

depreciate? I would guess that 

the difference between ACV and 

RC for this type of property is 

minimal. If the adjuster is using a 

claims “crib sheet” that indicates 

depreciated amounts based on 

type of property and age, I’d 

make sure that he’s using a guide 

specific to this type of property ... if 

not, I’d challenge the ACV amount. 

Of course, if the homeowner 

chooses to file suit, he can make 

claim for a lot more than the direct 

damage and this could cost the 

CGL carrier much more than just 

replacing the property. 

Faculty Response: Though they 

didn’t cite case law, some of 

my legal resources indicate the 

measure of damages is fair market 

value, the cost to repair property 

plus loss of use. Legal opinions 

I’ve seen in the past also used 

the difference in fair market value 

before and after a loss, paving the 

way for diminished value claims. 

This article was reprinted with 

permission by IIABA’s Virtual 

University. 

26 


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ACT 

Releases 

Text messaging gives independent agents a quick 

and simple way to communicate with clients, 

on an individual or aggregate basis, regarding 

policy reminders, new product offerings and risk 

management tips. 

But the Federal Communications 

Commission (FCC) has broadly 

interpreted the federal Telephone 

Consumer Protection Act (TCPA) 

to regulate nearly all commercial 

text messaging, even if a text is 

sent to one person rather than 

multiple recipients. 

To help you meet the 

requirements of the TCPA, 

the Big I’s Agents Council for 

Technology (ACT) released a 

sample text messaging optin 

form and sample terms and 

conditions. 

Unlike the rules for some other 

commercial communications, the 

FCC has ordered that an existing 

business relationship does not 

provide an exemption to the 

TCPA requirements of obtaining 

prior express written consent 

before sending commercial text 

messages. 

Therefore, agents should ask 

clients to opt in to text messaging 

and provide messaging terms 

and conditions, even if the 

agency communicates via text 

only with existing or prospective 

clients or when the client or 

prospect initiates the texts. 

Agents also need to understand 

the capabilities of their agency 

management system for text 

messaging. 

Go to IIABW’s website (www. 

wainsurance.org) and log in to 

get this members’ only benefit. 

28 



Commercial Lines: 

Product Availability - Washington 

Big “I” Markets (BIM) is the IIABA member’s online 

market access program with no fees, no volume 

commitments and competitive commissions. 

Personal Lines: 

• Affluent Package 

• AIG 

• Chubb 

• Flood - In, Above & Outside of the NFIP! 

• Home Business Insurance 

• Jewelry 

• Non-standard Homeowners, Renters, Condominium, 

Rental Dwellings, Vacant Dwellings 

• Personal Articles Floater 

• Personal Excess Policy 

• Personal Umbrella Policy 

• Recreational Marine 

• Recreational Vehicles 

• Travel Insurance 

• Architects & Engineers Professional Liability by CBIC an 

RLI Company 

• Bonds: Bid, Contractor, Performance, Surety 

• Commercial Auto 

• Commercial Lessors’ Risk 

• Community Banks Business Insurance Program 

• Cyber Liability-Small Business Solution 

• Cyber Liability and Cyber Crime (Wrap+) 

• Directors and Officers Liability (Wrap+) 

• Employment Practices Liability (Wrap+) 

• Fidelity/Crime (Wrap+) 

• Flood - In, Above & Outside of the NFIP! 

• Habitational Markets 

• Apartments 

• Condo and Homeowner Associations 

• Highly Protected Risks 

• Hotels 

• Miscellaneous Professional Liability (Wrap+) 

• Pollution Contractors-Farms-USTs-Other 

• Real Estate Agents/Property Manager E&O 

• Small Commercial Markets 

• Travelers 

• RLI 

• Small Contractors Market 

• Wrap+ Executive Liability for Private Companies 

Online Registration 

As of March 14, 2018 

We’ve made it easier than ever to Plug into the Power of Big “I” Markets! Register online today and discover a fresh new way to do business. All 

products are only accessible online and coverage is subject to licensing compliance and underwriting approval. To register online you will need your 

login ID and password, your agency tax ID number, your agency E&O policy, and your state agency/agent license information (where applicable). Log 

on to www.bigimarkets.com today to begin the registration process and start quoting in minutes!

Thoughtful is 

Thoughtful is giving agents 

tools to succeed. 

giving our agents 

We’re proud to announce the Marketing Playbook. Our latest innovation to help agents 

strengthen 

tools 

relationships with 

to 

clients and prospects. 

succeed. 

An interactive hub, the Marketing Playbook give agents access to a library of content that 

can be shared via email or social media at the click of a button. 

Giving agents what they need to be successful is how thoughtful insurance is done. Start 

using the Marketing Playbook today. Visit, playbook.mutualofenumclaw.com. 

We’re proud to announce the Marketing Playbook, our latest innovation to help 

agents strengthen relationships with clients and prospects. An interactive hub, 

the Marketing Playbook contains our entire library of brochures, infographics, 

videos and more, in one organized, easy-to-use place. 

Giving agents what they need to be successful at helping others is how 

thoughtful insurance is done. Visit playbook.mutualofenumclaw.com to 

learn more.

Your clients are unique. 

Their coverage should be, too. 

At Liberty Mutual Insurance, we know that your clients have specific needs. As the 

#1 preferred business Insurer,* we take the time to work with you to understand 

them better — then build tailored coverage that’s as unique as they are. For more 

information, contact your territory manager or visit LibertyMutualGroup.com/Business. 

We are proud to support the Independent Insurance Agents & Brokers of Washington. 

32 

*Based on 2016 survey of business insurance buyers on preference of national carriers sold via independent agents. 

© 2017 Liberty Mutual Insurance. Insurance underwritten by Liberty Mutual Insurance Co., Boston, MA, or its affiliates or subsidiaries.

The Big I Washington Spring 2018

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