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Social Media Business

Opportunities

and the personal lines client

with

Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CPIW Vice President of Technical Affairs

Massachusetts Association of Insurance Agents

One agent just asked …

We have been asked by a number of clients who are

participating with the airbnb program if their homeowners

policy provides coverage.

Does the ISO homeowners policy provide coverage if you

rent your primary residence out on a temporary basis and

if so how many days per year is allowable.

If it does where can we find the specific language.

Air bnb and the HO policy

Another agent asked …

Question for you, do you know anything about the sites that

you can rent out a room, your home etc… sites like airbnb? It

is similar to the Uber process you have a room you advertise it

on airbnb and people book your room for their vacations

etc….

I know recently there has been an exclusion added to the auto

policy excluding coverage for when people rent themselves

out like a taxi but I wasn’t sure if the insurance companies had

plans to do something similar on the home side.


AIRbnb and other ways your insured can MAKE money by

renting all or parts of their home

First … a little about Airbnb. This is a format merely to hook

up people who want to rent out a portion or all of their

property to those who want to rent it. The guest looks for

cheap vacation and the host looks for a little “extra money”.

If your insured puts their home “online” with Airbnb, …they

(Airbnb) do NOT provide liability or first party property

coverage to your client.


Host Guarantee coverage $1,000,000.

It states it is NOT insurance (kind of like what auto

rental companies provide …).

It does NOT provide personal liability coverage …unlike UBER

advertises for those involved in their personal taxi service

arrangement.


Host Guarantee coverage $1,000,000.

If the renter does damage the rented premises,

Airbnb suggests that host and guest try to iron out the

problem first.

Airbnb suggests that host buy his/her own insurance.


Gotta love this website

http://www.airbnbhell.com/airbnb-guest-stories/

Horror stories of Airbnb accommodations







Will the homeowner’s HO coverage respond to

damage to rented premises or liability incidents

arising out of renting situations?

Well, what’s the standard answer? “It depends”.

Is this a “business” as defined by the HO policy?

I can only talk to ISO policies …

We just looked at the definition of business in the HO policies


How is business defined under the HO policy??

HO-91

court cases

continuity

chance for profit


How is business defined under the HO policy??

HO-2000/2011

trade/occupation?

(I think so)

or …you made more

than $2000 last year


Airbnb is the booking agent and collects fees

So, it CAN be determined how often and how much very easily!

The terms and conditions of Airbnb state they collect the booking

fee.

Also, the potential guest guarantees that credit card can be

“attached” for “Damage To Accommodations”.


Airbnb is the booking agent and collects fees

Airbnb reminds the host that he/she is responsible for taxes –

city/state/federal.

Airbnb also reminds the host to determine whether zoning laws;

the building owner if tenant in apartment; or condo association if

condo owner allows this rental activity.


Eligibility issue in all ISO HO editions

remember the 2 roomers or boarders issue


HO policy coverage and “business” activity

The ACORD HO application (as well as specific carrier

applications, I imagine) asks:


The MA MPIUA application asks:


Concealment/misrepresentation and fraud can always be an

issue ….if lie


HO-91 Section I & II Condition

HO-2000/2011 Section I Conditions Section II Condition

HO-2000/2011

It is IMPERATIVE that we communicate the full extent

of what “business” means to the client.

Depending on the extent of rental activity

the hosting homeowner COULD be considered a

“business”.


HO policy coverage and “business” activity

Coverage A

is not affected …to extent the insured did not “lie” about what

they were doing if asked.

There is no business exclusion under Coverage A.

As long as get past …concealment, misrepresentation and

fraud


Coverage B Other Structures and “business”

The ISO HO policy – all editions

exclude business use of Other Structures.


HO-91 HO-2000 HO-2011

We must remember

Coverage C

IF this is considered a “business” activity then the

maximum amount of contents provided on the

premises is $2500 under ALL the ISO HO editions.

The following is the HO-2000/2011 language:


We must remember

Coverage C

The HO-2000 and HO-2011 language is more forgiving

as the exclusion states the restriction applies for items

used “primarily” for business.

Is there a separate room or area in the house

designated for guest rental?

The remainder of the household contents should NOT

be restricted by this language.


We must remember

Coverage C

The ISO HO-91 language is stronger:

Used at ANY time or ANY manner for a “business”

purpose … wow!

So, if the paying guest is also allowed throughout the

whole house and sits on the family couch to watch TV with

the host … hmmmmmm


What about the landlord furnishings coverage?

NO theft …any HO edition

HO-2000/2011 allows purchase of more …

HO 05 46 Landlord’s Furnishings Additional Coverage

Endorsement.


Coverage C

will NOT provide

any contents coverage FOR these guests

if this is considered a “business” and they are roomers or

boarders.

The following exclusion applies under Coverage C

Personal Property in ALL HO editions:


We must remember

Peril restriction for theft of Personal Property

Under named perils, the theft peril excludes:


We must remember

whether this activity is considered a business OR a

landlord furnishings issue …

I wouldn’t put anything valuable in the area rented to

guests!

If they decide to “bring it home” your homeowner client

host will see how “well” that million dollars of Host

Guarantee Protection coverage provided by Airbnb works!


What about injury to guests …

or because of guests …and your Host HO client gets sued?

The ISO HO policy …

any edition excludes business and rental …but allows


There is an exclusion for renting to more than 2 roomers or boarders.

Does home still qualify as “residence premises”

If rents whole house …how often…

If it is NOT a “residence premises” then you have NO

Coverage A, B, D, E …


Be proactive ….talk to your HO carriers…

BEFORE your insured asks the question.

ASK

their “feeling” on rental activities of all or part of

the house such as Airbnb is.

what they consider “business”;

what they consider “occasional”;


ASK

what they will do with the clause regarding

roomers or boarders or the definition of

“residence premises”.

Will the insurance company consider Airbnb a

form of rooming and boarding house potential?

what their “appetite” is for this activity under the

HO policy BEFORE your clients ask about it.


Airbnb terms and conditions … are a “trip”

these terms and conditions …were in bold type and

capitalized:

IF YOU CHOOSE TO USE THE SITE, APPLICATION, SERVICES OR

COLLECTIVE CONTENT AND PARTICIPATE IN THE REFERRAL

PROGRAM, YOU DO SO AT YOUR SOLE RISK.

YOU ACKNOWLEDGE AND AGREE THAT AIRBNB DOES NOT HAVE

AN OBLIGATION TO CONDUCT BACKGROUND CHECKS ON ANY

MEMBER,

INCLUDING, BUT NOT LIMITED TO, GUESTS AND HOSTS, BUT

MAY CONDUCT SUCH BACKGROUND CHECKS IN ITS SOLE

DISCRETION.



NO responsibility for me …as a guest or host:

YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT

PERMITTED BY LAW,

THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF

THE SITE, APPLICATION, SERVICES AND COLLECTIVE CONTENT,

YOUR LISTING OR BOOKING OF ANY ACCOMMODATIONS

VIA THE SITE, APPLICATION AND SERVICES, YOUR PARTICIPATION

IN THE REFERRAL PROGRAM, AND ANY CONTACT YOU HAVE WITH

OTHER USERS OF AIRBNB WHETHER IN PERSON OR ONLINE

REMAINS WITH YOU.



Also … the taking NO responsibility for me …as a guest or host:

NEITHER AIRBNB NOR ANY OTHER PARTY INVOLVED IN

CREATING, PRODUCING, OR DELIVERING THE SITE,

APPLICATION, SERVICES, COLLECTIVE CONTENT OR THE

REFERRAL PROGRAM WILL BE LIABLE FOR ANY INCIDENTAL,

SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES,

INCLUDING LOST PROFITS, LOSS OF DATA OR LOSS OF

GOODWILL, SERVICE INTERRUPTION, COMPUTER DAMAGE OR

SYSTEM FAILURE OR THE COST OF SUBSTITUTE PRODUCTS OR

SERVICES, OR

FOR ANY DAMAGES FOR PERSONAL OR BODILY INJURY OR

EMOTIONAL DISTRESS ARISING OUT OF OR IN CONNECTION

WITH THESE TERMS,


There is also Vacation Rentals By Owner

www.vrbo.com

Flipkey.com

Other organizations

http://www.vrbo.com/

ISO has created an

“advisory” filing to be

issued with their HO

policy

ISO advisory

ISO advisory

Caution to homeowner

I have a customer who is thinking of driving for UBER in Boston. He is currently on a Mass personal auto policy with Company X. I was thinking he would need to insure his vehicle on a comm’l policy? UBER sent him information. Please advise if his personal auto policy is ok or does he need a comm’l auto policy

UBER (LYFT) (SIDECAR)

Vehicle sharing/renting/charging for rides

My client is being told by UBER that he can operate his UBER

business under a personal policy with no risk of loss.

I told him we will not write a personal policy knowing that he

works for Uber.

He states that the doc provides most if not all of the coverage

a personal lines policy would exclude while operating under

UBER’s direction.

If I am reading this correctly, and without a policy this is just

a casual comment, the coverage looks very good.


Have you seen this?

Do we know how a Mass. auto policy would respond to a

claim under UBER?

Would you write a personal policy if presented with this?

Any advice you can offer would be appreciated?


So …what is UBER?

UBER has a few variations but if your client is at least 23,

has a mid-size car with personal auto insurance, a good

driving record, and a smart phone that will download the

UBER app then he/she qualifies under UBERX.


So …what is UBER?

Fares are set and the driver supposedly receives 80-85%

of the stated fare.

Strangers enrolled in UBER will contact those UBER

drivers who have identified their availability.

If your client is one of the available drivers then he/she will

provide the transportation…for hire. The further your

insured drives the more it costs. Hmmmmm doesn’t this

sound like a public or livery conveyance?


UBER advertises that the drivers have their own personal

insurance. UBER provides $1million liability coverage as

excess over the driver’s insurance.

UBER does state that if the primary insurance is not

available then their policy covers from the “first dollar”.

This is a good thing … because the MAP has a public or

livery conveyance exclusion applicable to Part 4 and ALL

optional coverages (Parts 5-12).


The “LYFT” option

The LYFT Website advertises “Your friend with a car”.

However, this friend is NOT providing free rides!

Again, a mobile phone app allows potential riders to be

hooked up with potential drivers for a fee.

Drivers get 80% of the ride fee. There is a background

process for being a driver or a rider.

But … if it smells like a duck and quacks like a duck …

it’s a duck.


The “LYFT” option

This “ridesharing” seems to be a

public or livery conveyance type

situation to me!

LYFT advertises that a million dollars of excess liability

coverage is available.

I would hope that it will drop down when the driver’s

personal auto policy denies the claim.


SideCar …more of the same …rideshare

(public or livery conveyance)

Again, an organization allowing an individual to “find,

fetch, and pay for a ride with just a few touches on their

smartphones”.

SideCar advertises that they provide “peer-to-peer”

ridesharing.

But, someone pays the driver for a ride …. Hmmmmm

sounds like public or livery conveyance to me.


Public or livery conveyance IS and has ALWAYS been

excluded under the MAP (or PAP)

Sounds like UBER, LYFT, SIDECAR ….

Courts have defined this as …

“The term public or livery conveyance means a vehicle

used indiscriminately in conveying the public, and not

limited to certain persons and particular occasions or

governed by special terms. The words "public conveyance"

imply the holding out of the vehicle to the general public for

carrying passengers for hire. The words livery conveyance

have about the same meaning.”


UBER/LYFT use is EXCLUDED under the MAP … It IS public or livery conveyance and doesn’t NEED another exclusion

Part 4 exclusion

Optional Parts exclusion 5,6,7,8,9,10,11,12


The AIB 2016 MAP will also exclude coverage under parts

2 and 3 …

PIP

Part 3


The AIB 2016 MAP new exclusionary language 4-12


I don’t CARE HOW UBER/Lyft advertises … That activity is NOT allowed under the MAP – whether or not there is an exclusion – vehicle is not eligible


The insured has an obligation to inform the carrier when they start this activity so carrier can set up for non-renewal


And …the insured IS obligated to inform carrier DURING the policy period



There was a court case in California involving an UBER transportation provider and the UBER organization. UBER has settled it …and fighting with insurance carrier for reimbursement A driver who was “logged in” to UBER as available to drive struck and killed a 6 year-old girl in a crosswalk.

Is being “logged in” … use as public or livery conveyance???


UBER stated it was not liable because there was not an “active trip” at the time of the incident. UBER did pay victim’s family … The personal auto carrier is arguing that since their insured was driving around “logged in” to the ridesharing app that he/she was providing a livery service at the time of the incident. What a mess!


Because of that court case …UBER has changed their insurance offering. They now provide 50/100/25 for the time the individual has signed in until get call to pick up passenger… But it will ONLY pay if MAP doesn’t then the “big bucks” click in

What about MAP limits HIGHER than 50/100/25????

MA law


Oops, new MA law requires 50/100 BI $30,000 PD When signed in

new MA law requires the $1 million when on way to or when have customer


Once GET call now … all UBER/LFYT coverages apply … but client is relying on someone else’s insurance Hope it is there And …the sign in coverage doesn’t meet MA law ….


UBER advertises “contingent collision” and “contingent comprehensive” coverage Must have collision on MAP/PAP $2500 deductible and $50,000 maximum payable … Applicable …During the time actually on way to or have PAYING customer

What IS UBER Vehicle sharing/renting/charging for rides

What IS LYFT Vehicle sharing/renting/charging for rides


I know that if my client asked me if this was covered under the personal auto policy I would suggest that a BAP does cover such an activity. Donna McKenna, VP Communications created this chart

New ISO TNC endorsements

Expansive Public or Livery Conveyance Endorsement

PP 23 40

Limited Transportation Network Driver Coverage

PP 23 45 ( no passenger – only when signed in but not

summoned)

PP 23 41 Transportation Network Driver Coverage –

No passenger – but will cover on the way to passenger


Expansive Public or Livery Conveyance Endorsement

PP 23 40

complete exclusionary language leaving NO doubt the

second sign in … no coverage


Limited Transportation Network Driver Coverage

PP 23 45 ( no passenger – only when signed in but not

summoned)

1) new rating classification ….$$$$

2) add’l charge as WILL cover when “sign in” until GET

call – then must rely on UBER


PP 23 41 Transportation Network Driver Coverage –

No passenger – but will cover on the way to passenger

1) new rating classification ….$$$$

2) add’l charge as WILL cover

when “sign in”

when get call – until passenger touches door handle!

Primary coverage …and can have UBER/LYFT as

contingent coverage


Vehicle sharing for hire opportunities and the MAP

There are other methods of making money

through the ownership of a automobile.

If one doesn’t want to be paid for providing rides, one can

be paid for allowing the use of one’s vehicle.

An “innocent” sounding means of renting your vehicle to

someone else.


Relay Rides and FlightCar businesses

Over the last couple years I have written Techtalks

regarding the MAP and organizations that allow the

insured to rent his/her car to others.

The insured is not the driver and is not acting as a taxi …

the insured is …Hertz/Avis in disguise!

Someone pays to use their car.


MAIP eligibility states …as does most voluntary company

manuals:


Most

voluntary

carriers have

filed their

own vehicle

sharing

exclusion

counterpart


Thank you for attending…

Social Media Business

Opportunities

and the personal lines client

social media business - massagent.com...social media business opportunities and the personal lines...

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