This document discusses the benefits financial advisors can provide by bridging gaps in their clients' property and casualty insurance coverage. It notes that major life events often reveal needs for insurance reviews. The document outlines signs that indicate a client may need a property and casualty review, such as owning high-risk properties or assets. It also discusses types of insurance like employee practices liability insurance, differences between homeowner's policies, and factors to consider when determining appropriate umbrella policy limits.

1. Bridging the Property and
Casualty Gap
Presented by:Amie Cherry
HUB International Personal Insurance
2009

2. Topics
• Does advising on Property and Casualty (P&C)
issues increase Professional Liability?
• What are some of the recognizable signs that
your client needs a P&C review?
• Employee Practices Liability Insurance
• Texas Homeowner’s insurance policies are not
created equal
• Umbrella policies…how much is enough?

3. Reasons to Bridge
• Nurtured and growing assets can evaporate
overnight
• “See your insurance agent” is a thin veneer
• Be more productive
• Client satisfaction, retention and referrals
• Peace of mind

4. Does advising on Property and Casualty
(P&C) issues increase Professional Liability?
• Principle 3: Competence –
“Competence also includes the wisdom
to recognize the limitations of that
knowledge and when consultation or
client referral is appropriate.”

5. CFP Board Standards
• Principle 7: Diligence – “A CFP Board
designee shall act diligently in providing
professional services.”
• Rule 302 – “…when the CFP Board
designee is not professionally competent,
the CFP Board designee shall seek the
counsel of qualified individuals and/or
refer clients to such parties.”

6. 7/1/08 CFP Board Standards
• Requires a heightened duty of care to
client
• CFP’s providing financial planning
services duty of care will be raised from
the current duty to “act in the interest
of the client” to the “duty of care of a
fiduciary”

7. Does advising on Property and Casualty
(P&C) issues increase Professional Liability?
• A CFP is generally not an accountant, lawyer
or P&C insurance professional. Help in
uncovering insurance issues, help client come
up with questions and thoughts for the
insurance advisor.
• Rely on the idea of doing a better service to
your clients and therefore minimizing the risk
of being sued by providing the service rather
than ignoring the need.

8. Does advising on Property and Casualty
(P&C) issues increase Professional Liability?
• Review insurance professional’s client
recommendations before released to
client. Ask your own questions and for a
copy of a quote not used.
• Document insurance conversations with
your client such as who/when you
referred them and when insurance plan
was delivered.

9. What are some of the recognizable signs
that your client needs a P&C review?
• Most people hire a financial advisor in
response to a major life event, according
to Susan Bradley of FPA. Those major
life events are becoming more and more
frequent as some 76 million baby
boomers get divorced, sell their
businesses, make career changes, become
widowed or enter retirement.

10. Trigger Circumstances
• Property in catastrophe prone areas
– Florida, Texas Coast, California, NE Coastal
• Liquidity event
- Significant purchases
- Limits of liability not adequate
- Client gets more media exposure

11. Trigger Circumstances
• Board Membership – Private, public and nonprofit
- Shareholders of a public company can sue the
company and the board for mismanagement
- Sarbanes Oxley raised the level of responsibility and
liability of directors and officers
- Nonprofit board purchases inadequate liability limits
or has none
- Company files for bankruptcy

12. Trigger Circumstances
• High Public Profile
– More visibility to predators
– More attractive identity theft candidate
– Lawsuits alleging libel, slander or defamation of
character
• Significant Personal Net Worth
– Lawsuit target
– Loss of future earnings if client loses lawsuit and
liability coverage is inadequate
– Significant expenses related to defending lawsuit

13. Trigger Circumstances
• Significant International Travel
– Client or spouse can be injured and requires medical
evacuation
– Client can be kidnapped and held for ransom
– Not all insurance policies are valid outside of US and Canada
• Multiple Residences
– Tenant liability issues
– Overseas property may be excluded from policy
– Valuation of personal property may be over or understated
– Farm and ranch policy needed

14. Trigger Circumstances
• Property in trust or with alternate ownership
– Trust may not be properly named in
insurance policies
– Insurer may not recognize the trust on the
policy complicating a claim
– Client’s trust may have additional
exposures not addressed in insurance
policies

15. Trigger Circumstances
• Collector, Classic or Recreational Vehicles
- Difficulty in insuring vehicle for true replacement value
- Proper vehicle damage repair
- Client “only drives it once in awhile” and doesn’t carry
sufficient coverage
• Watercraft or Aviation Exposures
- Master aircraft policy owners share limits and coverage
- Yacht furnishings usually include fine arts
- Worker’s comp issues with crews
- Navigational area needs reviewing

16. Trigger Circumstances
• Large Collection of Art, Antiques, Jewelry,
Collectibles
– Appraisals can be outdated
– Inventory is not kept up or doesn’t exist
– Client is purchasing overseas or over
internet and point of purchase insurance
– Improper care and custody issues

17. • The US Department of Labor estimates that
homeowners employed 896,000
housekeepers alone in 2003
• EPLI is expensive to defend against with
the average settlement verdict of $450,000
Employee Practices Liability Insurance (EPLI)

18. Employee Practices Liability Insurance
(EPLI)
• Wrongful dismissal
• Breach of any oral or written employment contract
• Employment related misrepresentation, defamation of
character or wrongful infliction of emotional distress
• Violation of employment related discrimination including
workplace harassment
• Wrongful discipline
• Wrongful deprivation of a career opportunity
• Invasion of privacy

19. Texas Homeowner’s Insurance
Policies are not Created Equal
• Almost everyone has one
• Basic Forms
– HOA - Named perils only. TX specific.
– HOB – Dwelling open perils, personal property named perils. TX
specific
– HOC – Dwelling and personal property open perils. TX specific
– HO3 – Similar to HOB
– HO5 – Similar to HOC
• Named peril – Named in contract and no others
• Open peril – Covers everything unless excluded

20. Texas Homeowner’s Insurance
Policies are not Created Equal
• Insurance to Value – How it’s determined. Inflation guard
• Endorsements
– Adds coverage
– Falling objects
– Sudden and accidental discharge of water
– Backup of sewer and drain
– Below foundation repairs
• Liability
– Primary to Umbrella policy
– Must be sufficient to transition into Umbrella coverage
• Etc.
– HOB-T, HCON-B, HO4, HO6, TDP-3

21. Umbrella Policies…How Much is Enough?
• What’s someone worth?
– Life insurance needs calculators are one way to value an
individual’s life but stops short of emotional loss to the survivors.
– What are the costs to survivors?
• Cheap Protection
– Economic impact associated with litigation can dwarf economic
damage caused by a home fire but the chances of sustaining a
loss in this matter is small, as is the premium
– Insurance companies are obligated to defend you and negotiate a
settlement if necessary. This cost is not born by the insured but
the insurance company. Some companies provide money for a
client’s personal attorney to be on the defense team.

22. Umbrella Policies…How Much is Enough?
• What Can Happen?
– Insured’s teenage child causes an accident resulting in ongoing
back and leg injuries for the victim. Victim collects $1,500,000
– A couples dependent child created a webpage that included
remarks about a number of individuals including one of his
school instructors. Parents were sued for defamation, invasion
of privacy and negligent supervision. Jury awarded $500,000.
– 37 year old suffered a fall while walking in front of an insured’s
home. Knee surgery, severe chronic pain. Plaintiff’s demand
was $2,500,000

23. Umbrella Policies…How Much is Enough?
• Optional Coverages
– Uninsured/underinsured motorist coverages covers
accidents involving the 1 in 5 Texas drivers that
uninsured or underinsured. Settlement amount payable
to you and can include pain and suffering. 1 in 7
Nationally.
– EPLI is usually endorsed onto umbrella policy.
– D&O is usually endorsed onto umbrella policy.

24. Umbrella Policies…How Much is Enough?
• How much?
– If 95% of all settlements fall under $1,000,000
do you want your client to be part of the 5%?
The client should be presented with choices of
coverage at different levels of coverages.
Generally speaking, $5,000,000 will cover 2
victims. Up to $100,000,000 is easily available
and more can be obtained.

25. Contact Information for Amie Alexander
HUB International Personal Insurance
2711 North Haskell Avenue
Dallas, Texas 75204
• 214.855.5607 – Direct
• 214.855.5656 – Fax
• 469.432.1655 – Mobile
• Amie.cherry@
hubinternational.com – Email
http://www.hubinternational.com/main_content.aspx?id=196
– Corporate Website