The Big I Washington Winter 2018

I WINTER 

Big Washington 

BIG I WASHINGTON IS A PUBLICATION OF THE INDEPENDENT 

INSURANCE AGENTS & BROKERS OF WASHINGTON 

2018 

Paid Family 

Medical Leave ‘Tax’ 

Big I Pac: 

An Industry Leader 

Is It Comp or 

Is It Collision?

“From top to bottom I am just 

amazed at the quality of people 

at GIA that we work with on a 

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American Heritage Insurance 

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Serving over 2,300 agents throughout Washington and Oregon, and a proud supporter of IIABW.

WINTER 2018 

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 

Contents 

6 A Message from Dave Merrill IIABW President 

8 Insurance Commissioner’s Corner 

10 Supporters of Insurpac 2018 

11 Paid Family Medical Leave ‘Tax’ Starts 1/1 

11 Mark Your Calendar: 2019 Conferences 

12 Young Agents Holiday Party 

14 Big I Pac: An Industry Leader 

16 Is It Comp or Is It Collision? 

21 2019 Food Lifetime Volunteer Afternoon & 

Networking Reception 

22 IIABW Webinar Series 

Ad Index 

15 Berkshire Hathaway 

Guard 

guard.com 

2 Grange Insurance 

Association 

grange.com 

3 Griffin Underwriting 

Services 

goGUS.com 

19 Imperial PFS 

ipfs.com 

24 Liberty Mutual 

LibertyMutual.com 

23 Mutual of Enumclaw 

mutualofenumclaw.com 

7 Preferred Property/JGS 

umbrellaprogram.com 

20 RT Specialty 

rtspecialty.com 

9 Risk Placement Services 

RPSins.com 

5 Western National 

Insurance 

wnins.com 

Cover photo by istockphoto.com/PhilAugustavo 

Officers of IIABW 

President: Dave Merrill, Merrill & Merrill, Seattle 

President-elect: Melissa Power, ACSR, CIC, 

Homestreet Insurance Agency, Spokane 

Secretary: Amberlyn McQuary Buratto, CIC, 

Stonebraker McQuary Insurance, Clarkston 

Treasurer: Duane Henson, LUTCF, WAFD Insurance Group, 

Mt. Vernon 

IIABA Director: Lori Reed, Mitchell Reed & 

Schmitten Insurance, Wenatchee 

Executive VP: Daniel Holst, IIABW, Bellevue 

Board of Directors 

Shaun Borth (At Large), McDonald Zaring Insurance, Walla Walla 

Rob Bush (King), Valley Insurance, Kirkland 

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

Insurance, Inc., Wenatchee 

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 

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

Melissa Power, ACSR, CIC (At Large), 

Homestreet Insurance, Spokane 

Nick Stay (Pierce) American Underwriters Insurance, Tacoma 

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

Rob Tripple (Past President) Tripple, Tripple & Tripple, Edmonds 

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

Robert Young (At Large) Tradewinds Insurance, Oak Harbor 

Staff 

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

Suzanne Arnett, Director of Member Services - 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 

Nora Anderson, LTA Bookkeeping, Contract Bookkeeper - 

nanderson@wainsurance.org 

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 

WINTER 2018 Big Washington

CL_ConferenceCall.pdf 1 5/8/2018 9:15:38 AM 

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President’s Letter 

TWO TAX 

PROPOSALS 

COULD HAVE 

Dave Merrill 

IIABW President 

As the 2018 election gets further behind us 

in the rearview mirror, IIABW is finalizing 

our legislative agenda for the 2019 session. 

Democrats expanded their majority in both state chambers 

by picking up three seats in the Senate and seven in the 

House previously held by Republicans. That will mean a 

28-21 Democratic majority in the Senate and a 57-41 edge 

in the House. 

Heading into the 2019 state legislative session, lawmakers 

will come to Olympia facing at least a $1.5 billion budget 

shortfall. Legislative Democrats are expected to make a 

significant push for tax increases to cover the shortfall. 

Among the substantial tax policies under discussion 

are a new five-to-seven percent state capital gains tax 

and an increase of B&O (business and occupation) 

taxes on professional services. Defeating both of these 

tax proposals will remain at the top of IIABW’s political 

priorities. 

The Washington State Legislature convenes on January 

15 and its primary obligation is to approve a two-year 

state budget. Democrats have grown their majority to 57- 

41 in the House and 28-21 in the Senate. IIABW expects 

that policy and budget action will reflect a progressive 

Democratic agenda. Last week, Governor Inslee proposed 

a $54 billion two-year budget plan that proposes three 

major tax increases: 

• Business-and-occupation (B & O) tax for services: 

Income from insurance commissions are NOT currently 

included in Inslee’s proposed tax increase of the 

B&O tax on services which will increase from 1.5% to 

2.5%. Insurance commissions are taxed at a special rate 

of 0.484%. 

• Capital-gains tax: The budget includes a 9% tax on 

most capital gains income above $25,000 for individuals 

and $50,000 for households. For the most part, capital 

gains income that is taxable under federal tax law would 

also be taxed under this new law - including the sale of 

an agency’s book of business. 

Photo by istockphoto.com/alfexe 

6 


• Real estate excise tax (REET): Currently the state’s 

REET rate is 1.28%. Inslee’s proposes a restructuring of 

the rate: reducing it to 0.75% for properties valued at 

below $250K; keeping it the same for properties valued 

$250K - $1 million; and increasing it to 2% for properties 

over $1 million, and 2.5% for properties over $5 million. 

IIABW has collaborated with small business owners over 

the last few years to defeat a new state capital gains tax. 

We have successfully argued a capital gains tax: 

• Is not a tax just on the 1 percent but will hit all small 

business owners when they sell their companies. 

• Is simply a small business retirement tax because 

most insurance agency owners consider the sale of 

their business as a major part of their retirement. 

IIABW has collaborated with the insurance industry over 

the years to defeat proposed increases of the B&O 

tax on insurance agencies. Insurance agencies have a 

special B&O tax rate of .484 percent, compared to the 

1.5 percent rate for most professional services (lawyers, 

CPAs, engineers, PR/advertising firms, real estate agents, 

lobbyists, etc). Our biggest concern is that our preferred 

3285 rate could Big Ibe Washington 

eliminated which would triple our rates. We 

7.675X4.9 

have been successful keeping our special rate by arguing: 

Gen Umbrella 

• An increase would put local insurance agents at an 

even greater competitive disadvantage with GEICO 

and other national direct writers who do not pay B&O 

taxes because they don’t pay agent commissions. 

• Agents do not have the authority to increase the price 

of insurance premiums to recover cost increases so 

any B&O tax increase is a direct and substantial cost 

to local insurance agencies. 

What can you do to help IIABW accomplish our goal of 

defeating both of these proposed taxes? 

First, contact your legislators when we put out a call to 

action. IIABW has been successful in the past getting 

the agent community to contact their legislators and 

encourage them to defeat damaging tax bills. Legislators 

take calls from their voters very seriously. Second, you 

can attend the All Industry Day at the Capitol on March 

26 in Olympia. Finally, you can contribute as an agency 

and as an individual to our state political action committee, 

Big I Pac. We pool member’s contributions to support 

candidates who advance IIABW’s core principles. We have 

already collected over $28,000 from 115 agencies over 

the past few months (see page 14). 

Thank you in advance for your help battling these two tax 

proposals which could have a devastating impact on your 

agency and our industry. 

Sincerely, 

Dave Merrill, IIABW President 

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Insurance Commissioner’s Corner 

KREIDLER 

LAUNCHES 

PROJECT TO 

Mike Kreidler 

Washington State 

Insurance Commissioner 

• The OIC will pursue maximum fines and tax penalties 

against captive insurers that have unlawfully insured 

risk in Washington state after the 18-month grace period 

ends on June 30, 2020. 

Captive insurers are legal in 36 states, 

but Washington is not one of them. 

Washington state doesn’t have any 

laws on the books that address them 

directly. We’ve never had an idea how 

many captives are insuring risk in our 

state. Starting in 2019, we have a plan 

to identify them. 

A captive is an insurance company that is established 

by a parent company for the sole purpose of insuring 

the parent’s exposures. A textbook example of a captive 

is Cypress, a company whose sole insured is Microsoft 

Corp., headquartered in Redmond, Wash. 

Captives like Cypress run afoul of state laws because 

they do not have a certificate of authority to sell insurance 

in Washington state, and because they don’t pay the 

mandatory 2 percent premium tax that all insurers pay. 

There are two admitted markets in Washington state – 

admitted insurers and surplus lines. The business being 

currently being sold through captives should be placed 

through surplus lines in order to be legal in our state. 

This month, I announced a plan to allow captives that 

have unlawfully insured risk in Washington state to report 

their sales to my office. Those who self-report by June 30, 

2020, will pay reduced fines and premium tax penalties. 

Here’s how the plan works: 

• The self-reporting period will last 18 months, from Jan. 1, 

2019 through June 30, 2020. 

• Starting July 1, 2019, the fine amount and tax penalty will 

increase for every six months that the captive insurer 

waits to self-report, until June 30, 2020. 

Captives that insured risk in Washington state more than 

15 years are encouraged to self-report by June 30, 2020. 

• If they self-report, they will not be subject to fines and 

premium tax penalties. 

• If they don’t self-report, my office will pursue maximum 

fines and tax penalties. 

Going back to the Cypress case, we found that the 

insurer collected more than $91 million in premiums from 

2009 until 2017. In August 2018, Cypress agreed to pay 

$876,820 to settle its unpaid premium taxes, interest and 

penalties. Starting in July 2018, Cypress started obtaining 

new policies through a licensed surplus line broker, in 

compliance with state law. 

We will know more about the landscape of captives in 

Washington state when we wrap up this project in mid- 

2020. The bottom line is that I want to make sure that all 

insurers pay their fair share as part of doing business in 

this state. 

More information: 

• Kreidler offers reduced fines, premium tax penalties to 

captive insurers https://www.insurance.wa.gov/news/ 

kreidler-offers-reduced-fines-premium-tax-penaltiescaptive-insurers. 

• Captive insurer for Microsoft pays $876,820 to settle 

license, taxes https://www.insurance.wa.gov/news/ 

captive-insurer-microsoft-pays-876820-settle-licensetaxes. 

• Kreidler’s captive insurer plan https://www.insurance. 

wa.gov/captive-insurers. 

Sincerely, 

Dave Merrill, IIABW President 

8 


We Build 

Relationships 

That Thrive 

Long Term Vision 

At RPS, you’re so much more than a customer to us. From our very first interaction, our vision has 

always been a commitment to building a long term relationship that provides you with the 

resources to grow and succeed. It’s an intimate process that begins with communication, attention 

to your needs, and providing a platform of strategies, programs, and services a true partner expects 

from a market leader. 

To learn more how RPS is building partner relationships with retail agents 

and brokers across the country, we invite you to download our Building 

Relationships That Thrive at RPSins.com/Relationships. For other information 

contact Joe Kelsch 480.758.6503, Joe_Kelsch@RPSins.com or email 

ContactRPS@RPSins.com. 

RPSins.com 

Big Washington WINTER 2018 9

SUPPORTERS OF 

IIABW would like to thank our members who collectively contributed over $13,000 in 

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

well over $1 million was raised in 2018. 

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

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

from their employees and owners: 

• Propel 

• Tripple, Tripple & Tripple 

• Mitchell Reed & Schmitten 

• ARM Northwest 

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 educate them. 

Thank you to the over 65 agents and brokers who have contributed to InsurPac in 2018. 

• HUB International NW 

• Stonebraker McQuary Agency 

>$1,000 

Kurt Carlson, Propel Insurance 

Susan Knobeloch, ARM Northwest, Inc 

Robert Tripple, Tripple Tripple & Tripple LLC 

$500-$999 

Robb Dale, HUB International NW 

Duane Henson, WAFD Insurance 

Group Inc 

Claudia McClain, McClain Insurance 

Services, Inc. 

Amberlyn McQuary Buratto, Stonebraker 

McQuary Agency Group, Inc. 

Patrick Otter, Otter Insurance Agency 

David Street, Martin-Morris Agency, Inc. 

Tom Taylor Jr, Taylor-Thomason 

Insurance Brokers 

$250 - $499 

Bill Gellor, Gellor Insurance, Inc. 

Jim Gibbons, Mitchell, Reed & 

Schmitten Ins Inc 

Peter Hendrick, Propel Insurance 

Daniel Holst, IIABW 

Kimberly Krogh, HUB International NW 

Suzanne Lewis, Propel Insurance 

John McDonald, McDonald McGarry 

Insurance Brokers 

Dave Merrill, Merrill & Merrill 

Lori Reed, Mitchell, Reed & 

Schmitten Insurance, Inc 

Nick Stay, American Underwriters 

Ins Agencies Inc 

Dan Wareham, Blasingame Insurance 

$100-$249 

David Babbitt, Babbitt Insurance 

Group LLC 

Shaun Borth, McDonald Zaring 

Insurance 

Rob Bush, Leavitt 

Craig Field, Mitchell, Reed & 

Schmitten Ins Inc 

Rebecca Gebbers, V.I.P. Agency South 

Susan Greer, Propel Insurance 

Max Hanley, Propel Insurance 

Kris Lawrence, Propel Insurance 

Mary Lemon, HUB International NW 

Kenneth Martin, First Rate Insurance 

Plus, Inc. 

Ann Medina, Oltman Insurance 

Agency Inc. 

William Mooney, Propel Insurance 

Ryan Porter, Porter Whidbey 

Insurance, Inc. 

Melissa Power, Homestreet Insurance 

Frank Radford, McDonald Insurance 

Group, Inc. 

Mike Reed, Mitchell, Reed & 


Brent Schmitten, Mitchell, Reed & 


Nick Sinnett, Propel Insurance 

Courtney Tribble, Risk Placement 

Services 

Eve Willett, Pony Insurance Services, Inc 

Paid Family/ 

In 2017, Washington’s Legislature passed a paid family and 

medical leave law. Starting in 2020, Washington will be 

the fifth state in the nation to offer paid family and medical 

leave benefits to workers. Employers will start collecting 

premiums of 0.4% of each employee’s gross wages on Jan. 

1, 2019. 

Businesses of all sizes calculate premiums using the same 

formula. Unless your business is operating an approved 

voluntary plan, this is how you calculate premiums: 

• Calculate the total premium for each of your employees. 

Gross Wages x .004 = Total Premium 

• Calculate the employee and employer shares of the total 

premium. Under the law, the total premium is a shared 

cost split between employers (36.667%) and employees 

(63.333%). 

All employers, regardless of size, are responsible for 

remitting the employee share of the premium to ESD on 

a quarterly basis. You can choose to withhold the entire 

63.333% from your employee’s paycheck, or you can cover 

all or some of the premium on your employee’s behalf. 

If you have fewer than 50 employees, you will only be 

assessed the employee portion of the premium. That 

means you multiply the total premium x 0.63. Starting Jan. 

1, you must withhold that portion of the premium from your 

employees or opt to cover that portion yourself. Premiums 

should be withheld from each paycheck. Employers cannot 

collect missed premiums in later pay periods. 

You can also get more information at any time by going to 

www.paidleave.wa.gov/employers . 

Mark Your Calendar: 

March 26 

All Industry Day at the Capitol 

in Olympia 

June 6-7 

Young Agents Conference at 

the Enzian Inn in Leavenworth 

September 18-20 

IIABW/PIA Annual Conference 

at the Coeur d’Alene Resort 


Young Agents 

100 industry professionals attended the Halloween costumethemed 

Young Agents Holiday party in early November. The 

group donated over 2,000 pounds of food and over $500 

to NW Harvest. Congratulations PIU and Tripple, Tripple and 

Tripple for donating the most food and money to our state’s 

food bank. The group also raised $700 for InsurPac, our 

federal political action committee. The Young Agents will be 

holding a volunteer event on March 7th at Food Lifeline in 

South Seattle following by a networking reception (flyer on 

page 21). Their annual conference will be held at the Enzian 

Inn at Leavenworth on June 6-7. 

12 


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Agent Advocacy - Supports lobbying efforts protecng your industry by 

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important advocacy efforts of the IIABA. 

Swiss Re Corporate Soluons 

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Aggregate deducbles available 

Defense cost outside the limit 

$25,000 1st Party Personal Data Breach 

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Deducble reducon up to $25,000 per claim with proper 

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BIG I PAC: 

IIABW would like to thank its members for their support of the BIG I PAC, our state political 

action committee. 115 agencies have contributed over $28,000 to the PAC in 2018. 

Support from our membership has helped the Big I be effective advancing agent issues in 

Olympia, including no state capital gains taxes or increases in B&O tax, 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 agent-specific, insurance industry 

and general business issues. We pool your hard-earned personal and corporate dollars to send a powerful message: 

IIABW agents care about the political make-up 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. 

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

> $1,000 

Stonebraker McQuary Agency Group 

$600-$999 

AAA 

Advantage Group 

Conover Insurance 

HUB International NW 

Leavitt Group NW 

McDonald Zaring Insurance 

Parker, Smith & Feek 

PLC Insurance 

Propel Insurance 

$400 - $599 

Insurance Management Company 

Martin-Morris Agency 

McClain Ins. Services 

Mitchell, Reed & Schmitten 

Tripple, Tripple & Tripple 

VIP Agency Inc. 

WAFD Insurance Group 

$200-$399 

American Underwriters Insurance Agencies 

Blasingame Insurance 

Buck & Affiliates 

Callis & Associates 

Castell Insurance 

Central WA Ins. Agency 

Davidson & Associates Ins. Agency 

Dorsey Insurance 

Fryer Insurance Agency 

Gellor Insurance 

Gress-Kinney-Parish 

Griffith/Rush Drake Ins. Group 

Homestreet Insurance 

InsureQ 

JMS Insurance 

Lee Ins. Services 

Monteith Insurance Inc. 

Mosaic Insurance Alliance, LLC 

Mumma Associates 

Oltman Ins. Agency 

Pickett Agency 

Robert M. Trask Agency 

Schmidt Ins. Services 

Shinstrom & Norman, Inc. 

Taylor-Thomason Ins. Brokers 

Tradewinds Insurance Inc. 

WCLA Insurance Agency 

Western Insurance Associates 

Woodland Insurance Agency 

Wycoff Ins. 

14 


$100-$199 

Adams Insurance 

Brookey Insurance Services 

Capital Insurance 

Century Insurance Services 

Christopher Togawa 

D.W. Ferguson & Associates 

Dan Marek Insurance 

Don Swanson Insurance 

Ed Poe Agency 

Fairbanks Insurance Services 

First Rate Insurance Plus 

Good People Insurance 

Gus Paine Insurance 

Harbor Insurance Services 

Homer Smith Insurance 

Insurance Svcs. Network 

Interstate Insurance Agency 

ISU Insurance Solutions Group 

Kraft Insurance Agency 

Longview Insurance 

Lower Valley Brokers 

Mechelsen Inc. 

Mike Casey Insurance 

Montgomery Ins. Agency 

North Town Insurance 

NRG Insurance 

Obenland & Low Agency 

Otter Insurance 

Paravene Ins. Partners 

Phillips Insurance 

Plaza Insurance Agency 

ProStar Insurance 

Rockwell Ins. Group 

Rollo VanSlyke Ins. Agency 

Sears & Associates 

Simcoe Insurance 

Snapp & Son Insurance 

Stanford Insurance 

Sunset Insurance Agency 

Thornburgh Ins. Agency 

Wallace Insurance Consulting 

Wenner-Davis & Associates 

Insurance 

Wingert Ins. Agency 

IS IT 

COMP 

OR IS IT 

COLLISION? 

By Bill Wilson 

Not infrequently, an 

auto suffers a physical 

damage loss. There’s no 

question that the loss is 

covered ... the only issue 

is whether the loss is 

covered as a collision or 

another-than-collision 

(comprehensive) loss. 

In this article, we’ll 

examine several “ASK 

AN EXPERT” claims, 

and we’ll show a simple 

(if incomplete) solution 

to this problem. 

16 



Is it comp or is it collision? Is it live or is it Memorex? OK, 

I’m dating myself here, but the comprehensive vs. collision 

debate is one we hear often in auto claims. Here are some 

questions our “Ask an Expert” service has received: 

Q: 

“An insured was driving along the highway, the hood 

somehow became unhooked, flew up and smashed 

into the windshield causing $2,400 damage to the windshield 

and hood. What is it? Comp claim or collision?” 

Q: 

“A car was jacked up and the jack slipped, causing 

the car to fall to the ground and break the rear axle. 

The adjuster says the car collided/hit the ground and the 

collision deductible applies. True?” 

Q: 

“An insured, with the help of another person, was 

carrying a small refrigerator past (over the hood of) 

the car and put some deep scratches on the top of the hood 

as it passed over the car. The refrigerator did not leave the 

hands of the people carrying it when the loss occurred. 

Please let me know if you would interpret the policy to cover 

this loss under Collision or Other Than Collision.” 

Q: 

“A guy, discovering thieves on his loading dock, pulls 

his car across the exit in the fence to block them in. 

They ram his car and escape. The adjuster said this was 

clearly a collision between two vehicles. It went to court and 

the court said it wasn’t.” 

Q: 

“One of our personal lines customers had an auto 

claim. The insured was driving down the highway and 

someone had spilled a large amount of paint in the road. The 

insured unknowingly drove thru the paint and it splattered up 

onto the car. The insurance carrier wants to pay it as collision. 

The producer wants this to be ‘Other than Collision’ claiming 

the paint to be missiles or flying objects. Webster’s shows 

a missile as ‘an object thrown or projected so as to strike 

something at a distance.’ Have others had this issue?” 

Q: 

“Our insured drove through a puddle of paint from 

a can that had fallen off a truck and the car’s finish 

was damaged from the paint that sprayed up. The truck that 

lost the paint can was not identified and, therefore, they can’t 

go back to that entity. The company says this is a collision 

loss (collision with an object - the puddle of paint) and the 

agent contends it is a comprehensive loss. I can see both 

arguments - any thoughts?” 

Q: 

“If a rock or flying debris is kicked up by another 

vehicle or is just in the air for unknown reasons and 

hits a windshield, it is a comp claim. If it hits the hood or other 

part of the vehicle it is classified as a collision claim. Is there a 

law that specifically defines why the location of debris impact 

on the vehicle determines they type of loss? What is the 

reasoning for this? Any information would be appreciated.” 

A: 

While most physical damage claims can easily be 

categorized as Collision or Other Than Collision (i.e., 

“comprehensive”), sometimes this isn’t as simple a matter as 

it would appear. 

Here’s what the ISO PP 00 01 01 05 Personal Auto Policy 

says: 

“Collision” means the upset of “your covered auto” or a 

“non-owned auto” or their impact with another vehicle or 

object. 

Loss caused by the following is considered other than 

“collision”: 

1. Missiles or falling objects; 

2. Fire; 

3. Theft or larceny; 

4. Explosion or earthquake; 

5. Windstorm; 

6. Hail, water or flood; 

7. Malicious mischief or vandalism; 

8. Riot or civil commotion; 

9. Contact with bird or animal; or 

10. Breakage of glass. 

If breakage of glass is caused by a “collision,” you may elect 

to have it considered a loss caused by “collision.” 

In a general sense, “collision” is a single named peril 

coverage, while “other than collision” is an all-risk coverage. 

If you can demonstrate that it isn’t a collision then, barring 

any exclusions in the policy, it must be a comprehensive 

loss. 

In the flying/falling hood claim above, our consensus was 

that this was not a collision. Since no other exclusions 

applied, it must therefore be a comprehensive loss. The 

argument hinges around the “definition” of collision ... 

“impact with ANOTHER vehicle or object.” Since the hood 

is part of the subject vehicle, our argument is that the loss 

cannot be a collision since that would require the vehicle 

striking a secondary vehicle or object. 

This is similar to a court case a number of years ago. A car 

was jacked up on the driver’s side to change a flat tire. The 

jack slipped, causing the vehicle to drop and break the rear 

axle – the low repair estimate was $800. The insurer wanted 

to apply a $200 collision deductible on the basis that the 

vehicle “collided” with the ground. The case went to court 

and the decision was that, since the passenger side tires 

were still in contact with the ground, the vehicle couldn’t 

collide with something that it was already in contact with. In 

fact, the court ruled that the vehicle was a falling object and 

ordered that the $100 comprehensive deductible applied. 

In the second claim cited above involving movement 

of a refrigerator, it becomes tougher to make a clear 

determination. When we submitted this “Ask an Expert” 

claim to our personal auto faculty, those responding voted 

4-2 for this being a comprehensive claim. The majority felt 

that this just wasn’t a “collision” as contemplated by the 

drafters of the policy. 

18 


However, those voting for the loss being a collision claim, 

made the following argument: 

As I see it, this is a collision loss. The policy wording says 

impact with another object. Since it was being held at the 

time the incident occurred it would not be a falling object. 

Black’s Law Dictionary, 6th Edition defines collision as: 

“Striking together of two objects, one of which may be 

stationary. Act or instance of colliding; state of having 

collided. The term implies an impact or sudden contact of a 

moving body with an obstruction in its line of motion or one 

stationary and the other, no matter which, in motion.” 

As the occurrence is not one of the delineated perils 

excluded from collision and seems to fit a legal definition of 

an object in motion having an impact with another object, I 

say collision. 

So, again, this is one of those situations that can be argued 

either way. When either interpretation is reasonable, 

courts tend to side with the insured who did not draft 

the situationally ambiguous policy language. So if both 

arguments are plausible, I’d say that “justice” would be 

best served by charging the lower deductible for a 

comprehensive loss. 

These claims are not isolated incidents. For example, in 

another claim, the insured was in the process of parking 

his car when the garage door “fell” on it. Being startled, 

he tried to slam on the brakes, but hit the gas instead 

and ran through the back wall of his garage. In this actual 

court case, this was deemed to be a comprehensive loss 

since the door, as a falling object, set off an uninterrupted 

sequence of events leading to the damages. 

In another case, an insured visited his favorite tavern until 

about 1 a.m., and then drove by the supermarket that 

he managed. He discovered a gang of thieves loading 

merchandise on a rear loading dock. He pulled his car 

across the open gate in the fence around the delivery 

area in order to block their exit and they rammed his car to 

escape. The insurer agreed to pay the loss, but wanted to 

apply the collision deductible. When the case went to court 

(yes, people will file suit over a relatively trivial difference in 

deductibles), the court ruled that this was a comprehensive 

claim ... an act of vandalism. (BTW, don’t forget that claims 

of this type could fall under UM PD if available in your state.) 

claim since the deductible is usually lower than the collision 

deductible and losses are usually not chargeable. 

Finally, with regard to the paint claims, we ran this by our 

VU faculty and got the following observations: 

FACULTY RESPONSE 

I guess market conditions are beginning to affect coverage 

interpretations. This should be a comprehensive or “other 

than collision” loss. Denting the car by running over a 

paint can in the road is a collision claim. Having your car 

get hit with overspray when someone paints nearby is 

a comprehensive loss. If the insured tripped carrying 

a bucket of paint and spilled it on the car, it would be a 

comprehensive loss. 

Collision is defined as “impact with another vehicle or 

object.” Characterizing the car’s contact with the paint as 

an “impact” is stretching the language a bit. One doesn’t 

normally “collide” with puddles, paint or otherwise. Similar 

claims that are paid under “other than collision”: (1) Cars 

that inadvertently drive into bodies of water and suffer 

water damage, (2) tree sap falls on the car damaging the 

finish, and (3) paint is damaged by “acid rain.” If the damage 

in direct and accidental and it’s not a “collision,” then it’s 

“other than collision.” 

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Online Quoting 

Continued on page 20 >> 

On the question about why debris striking the windshield 

is a comp claim but striking another part of the body is a 

collision, the answer probably lies in the policy provision 

related to glass breakage. Glass breakage by any 

nonexcluded cause is usually considered a comprehensive 

claim; however, if caused by collision, the insured can elect 

to consider it a loss by collision, as specifically outlined in 

the policy excerpt above. This is to prevent the insurer from 

applying two deductibles: one for comprehensive (glass 

breakage); and one for collision (damage to the rest of the 

auto). Of course, if the only damage is to the glass, then 

the insured would want to consider it as a comprehensive 

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Sometimes insured’s want their entire car repainted in 

situations like this, when it could probably be “buffed 

out.” Sometimes adjusters will take a position like this in 

response. Sometimes they just don’t know how it should 

be covered. 


Since the damage was not to the tire, the point of any 

collision, but to the upper surfaces, which didn’t collide 

with the puddle itself, why not consider the various drops 

of paint missiles? 


I’ve seen these types of losses paid as collision over the 

years when the can itself was hit and the paint released as 

a result of the car running over the can. On the other side I 

have seen losses involving cars who ran over either freshly 

painted road surfaces or spilled paint on the road paid as 

comp losses. 


I don’t think you can “collide” with a puddle ... you run 

through it or over it. Also, collision requires contact with 

another vehicle or object ... I don’t think a puddle, in the 

normal sense, is an “object.” I’ve seen these types of claims 

paid as comprehensive losses for years. More important, 

collisions are usually “chargeable” from the standpoint 

of rating points because they are generally preventable 

or avoidable by the insured. Comprehensive claims (e.g., 

“contact with a bird or animal”), on the other hand, are 

usually beyond the control of the insured. In a case like this, 

it’s unlikely that the insured could avoid the damage, so it 

doesn’t seem equitable to potentially charge the insured 

for this type of accident. 


This is clearly an Other than Collision claim. The physical 

damage insuring agreement pays for “direct and accidental 

loss” to a covered auto. Loss is then split into two categories, 

Collision and Other than Collision. Collision is defined as 

the “upset” or “impact with another vehicle or object.” The 

policy then goes on to identify several types of losses like 

fire, vandalism and falling objects that will be considered 

“Other than Collision,” even though some of them involve 

impact with an object. Nowhere does the policy say that 

the 10 listed OTC perils are the only losses that will be 

considered OTC. Since the insuring agreement pays for 

all direct loss, losses that aren’t don’t involve a collision 

would clearly be “other than collision.” To characterize the 

splattering of paint as a “collision” is ludicrous. 

In a similar claim, an insured was following a state highway 

truck spraying de-icing chemical on the roadway. The 

de-icing chemical reacted with the insured’s expensive 

aluminum alloy wheels, pitting and corroding them in a 

matter of minutes. The company paid under “other than 

collision,” even though no listed peril applied. 

This mistake happens a lot. Evidently many adjusters 

think that for something to be considered “other than 

collision” it has to be on the list of 10 OTC perils. It 

doesn’t, as explained in another Virtual University article, 

“Is Comprehensive Coverage All Risk or Named Perils?” 


“Collision” is usually defined as the upset of your 

covered auto or its impact with another vehicle or object. 

Any direct loss, not otherwise excluded, that does not 

meet the collision definition is considered other than 

collision (aka comp). My dictionary defines “impact” as: 

1. the striking of one body against another; 2. the force 

of such a striking; 3. to collide with; strike forcefully; or 

4. to have impact or make contact forcefully. It doesn’t 

sound like the vehicle “impacted” the paint. If the 

insured drove under a bridge that was being painted 

and the vehicle was damaged by paint spray, it would 

be a comprehensive loss. I think the adjuster needs to 

take another look at this and pay it as a comp claim. 

So, what can one do to avoid these disagreements? The 

answer is simple, though it flies in the face of tradition. Use 

the same deductible amount for both comp and collision 

coverages. Admittedly this doesn’t solve the potential 

problem of most collision claims being “chargeable” 

accidents compared to most comprehensive claims, but 

the frequent litigation most often arises simply from the 

difference in deductibles ... believe it or not. 

Reprinted with permission from IIABA’s Virtual University. 

20 


2019 Food Lifeline Volunteer Afternoon 

& Networking Reception 

Let’s help end hunger in Western Washington! 

Who: All Industry & guests 

What: IIABW’s Young Agents 2019 Lifeline Volunteer Afternoon and Networking Reception 

Where: Volunteer: Food Lifeline Hunger Solution Center, 815 S 96 th St., Seattle 

Reception: The Rock Wood Fired Pizza & Spirits, Renton Landing, 830 N 10 th St, Renton 

When: Thursday, March 7th, 2019 

Cost: Volunteer: Free from 1:30pm – 4:00pm (limited spaces available so sign up early!) 

Reception: $25 per person (includes appetizers) from 4:30 – 6:30 pm 

Two ways to help! Join us to volunteer, come to the reception, or both. 

We will be collecting donations at the reception that will go directly to Food Lifeline. 

Register online at www.wainsurance.org or complete/return this form by 2/27/19 

Name(s)_____________________________________________________ volunteer____ reception____ 

Email address(es)_______________________________________________________________________ 

Agency/Company Name_________________________________________________________________ 

__ Check payable to IIABW 

__ Credit Card: (pick one) __ Visa __ MasterCard ____________________________________________ 

Exp date:____/___/___ Security Code (on back of card) __________ 

Cardholder Name _____________________________________________________________________ 

Billing Address for credit cardholder: ______________________________________________________ 

Total paid___________ 

Mail To: IIABW, 11911 NE 1st St, Suite B103, Bellevue, WA 98005; or Fax To: (425) 649-8573 

Questions: Suzanne Arnett (425) 649-0102; ext 224 sarnett@wainsurance.org 


IIABW 

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January Webinars 

1/8 Commercial General Liability 

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1/17 Ethical Dilemmas ... Making the 

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1/29 Aging Parents and Insurance 

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1/30 Personal Auto Policy 

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2/25 Dispelling the Myths of 

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2/27 Homeowners Hot Topics ... 

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3/6 Top 10 Personal Lines 

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3/7 Protecting Your Most Valuable 

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3/14 Business Auto Coverages 

3/18 Commercial Property 

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3/19 Ethics and Agent Liability 

3/20 Liability Issues in Personal 

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3/21 Farm Vehicle and Equipment 

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3/26 The Importance of Crime 

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3/28 Businessowners Policy (BOP) 

April Webinars 

4/9 Aging Parents and Insurance 

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4/10 Cyber Liability 

4/11 Life Insurance ... Benefits for 

the Living 

4/15 Commercial General Liability 

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4/17 Ethics and the Law 

4/22 Who Is An Insured 

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4/24 Condominiums 

4/25 Workers’ Compensation 

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The Big I Washington Winter 2018

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