Member Alert: Communicate Personal Auto Restrictions
As the insurance marketplace continues to evolve, more carriers are adding restrictive language to policy forms along with revisiting interpretations of underwriting guidelines and appetite. These changes can result in the potential for customers to have uncovered claims, increasing potential errors & omissions exposure for agencies. We specifically want to highlight some recent changes in the personal auto marketplace that your agency should consider communicating to your customers.
The personal auto market has been hit especially hard by increased repair costs and social inflation with overall loss ratios in Kansas reaching 5-year highs, as revealed by the 2023 Kansas Annual P&C Marketplace Summary. We are aware of several personal auto carriers who have added or are enforcing restrictive language regarding listed drivers and collision coverage. Specifically, the policy will exclude collision coverage when an unlisted driver has been a resident or member of the household for at least 185 days. Liability coverage still exists, but the carrier will not provide collision coverage in the event of a claim.
This means that your customers with youthful drivers need to remember to add them to their policy as soon as they have a permit. If that youthful individual is not added to the policy in a timely manner, the carrier can deny collision coverage if the individual is involved in an accident. This presents an increased potential E&O exposure for the agency.
As a proactive risk management approach to help minimize the agency’s exposure, use the language below to communicate with your clients prior to the renewal of their auto policy. We’ve also provided a more generic reminder that you can use to remind customers that it is their responsibility to promptly notify the agency or carrier about changes in the exposures and the need for coverage increases. We also encourage you to use the sample post on your social media accounts to create greater awareness around this issue. Reach out to Beth Smoller at firstname.lastname@example.org with questions.
Sample Customer Communication – Personal Auto Prior to Renewal
Dear Valued Customer:
Your automobile policy is due to renew on 8/15/xxxx. In order to keep your coverage current and obtain your renewal options, we need the following information:
- Current list of drivers including date of birth, license number, and state of issuance. This includes children or residents of your household that have a permit or a restricted license.
- Current vehicle list, including VINs.
Please be aware your policy may have restrictive language that excludes collision coverage for any accident involving an unlisted driver. It’s imperative that all drivers be listed to ensure you do not have an uncovered claim.
Please return this updated information to our office no later than 8/1/xxxx. Thank you for your continued business and if we can be of any assistance, please don’t hesitate to contact us.
Sample Customer Communication – Personal Auto General Announcement
Dear Valued Customer:
We wanted to share that some personal auto carriers have added restrictive language to their personal auto policy. This new language pertains to unlisted drivers who are members of your household (such as your children). Your policy may now exclude collision coverage for an accident involving an unlisted driver.
This means that as soon as one of your children or a member of your household obtains a permit and/or a restricted license, you must notify us and add them to your policy. We realize there is an increased cost in adding youthful drivers to your policy, however, your carrier could deny a claim for collision coverage for an accident involving any unlisted drivers.
We always encourage you to review your policy and please reach out if you have any questions. Thank you for allowing us to serve you and contact the agency promptly with any changes in your insurance needs.
Sample Customer Communication – Notify the agency of changes
Dear Valued Customers:
We wanted to take this opportunity to remind our customers of the importance of reaching out to the agency to update us on any changes that may influence your insurance needs. A few examples, include the following:
- Adding newly permitted household drivers,
- Purchase or selling of vehicles,
- Changes in replacement cost of property,
- Additions or improvements to existing homes or outbuildings,
- New business ventures (including in-home businesses),
- Rental properties
There have been changes in the insurance marketplace with some carriers adding restrictive language to their policy forms, so it is more important than ever to let us know about life events and property changes that may influence your risk exposures.
One such example is that some personal auto carriers have added restrictive language that pertains to unlisted drivers who are members of your household (such as your children). This means that as soon as one of your children or a member of your household obtains a permit and/or a restricted license, you must notify us and add them to your policy. We realize there is an increased cost in adding youthful drivers to your policy, however, your carrier could deny a claim for collision coverage for an accident involving any unlisted drivers.
As an independent agent we are well equipped to serve our customers in a challenging insurance marketplace. Please reach out to us promptly with changes in your insurance needs and we always encourage you to take the time to review your policy. Thank you for allowing us to serve you.
Sample Social Media Post
Does your household have a youthful driver with a permit or a restricted license? It is important to get them added to your policy immediately or a carrier could deny a claim for collision coverage leaving you without coverage. Reach out today to add any youthful drivers not listed or to discuss any other life changes that could impact your insurance needs.