1. Farmers Insurance Group
AUTO MODULE - II
District Training

2. Module II Objectives Review Module I Endorsements Rate Classifications
Introduction to Auto Companies
Farmers Texas County Mutual (TCM)
Review Module II
Homework Assignment
9/17/2018

3. Module I Review 1. What are the four parts of an auto policy?
2. What does Part A-Liability cover in an auto contract?
3. What is the minimum liability coverage an insured must carry to operate a motor vehicle in Texas?
9/17/2018

4. Module I Review 4. What does each number represent in 20/40/15?
5. What is the difference between Medical coverage and PIP coverage?
6. If four persons covered under Med Pay had $2,000 in medical bills each, and the insured had $2,500 in Med pay on his policy, what is the total amount that would be paid?
7. What is UM/UIM coverage?
8. Who is covered under UM/UIM coverage?
9/17/2018

5. Module I Review 9. What does Part D - Collision Damage coverage cover?
10. What does Part D - OTC coverage cover?
11. What deductibles should you recommend to your auto customers?
12. How do you sell an auto policy when your “apples to apples” quote is higher than your competitor?
9/17/2018

6. Endorsements 510 - Additional Insured
Extended Non-Owned Coverage
Designation of Covered Person
Federal Employees Using Autos in Govt Business
Coverage for Tapes, Records and other devices
521A - Covg for sound receiving and transmitting equipment
523A - Rental Reimbursement
560C - Recreational Trailers/Motorhome
561C - Recreational Trailers/Motorhome-Contents Covg
Auto Death Indemnity
Certified Risks (SR-22’s)
Supplementary Death Benefit
515A - Named Driver Exclusion
9/17/2018

7. Endorsements E511 - Extended Non-Owned Covg
This endorsement provides for unlimited use of automobiles not owned by, but furnished for, the regular use of the named insured, spouse or relatives, if resident of the same household. (Med pay is available, PIP is not)
Non-acceptable for truck drivers (unless Fed employee which covers liability ins.), bus or taxi drivers, owner or operators of garages, or drivers of emergency vehicles (except peace officers).
9/17/2018

8. Endorsements E512 - Designation of Covered Person or Organization.
This is attached to the policy when it is necessary to designate a specific person or org. as an insured. Caution should be excersized in adding additional insureds. There must be a definite need. There is no premium charge.
9/17/2018

9. Endorsements E521A - Sound Receiving and Transmitting Equipment
Pays for direct accidental loss to any of the following devices: radio bank, two way mobile radio, telephone, scanning monitor receiver. (No deductible) Only available with OTC and Coll coverage. Equipment has to be permanently installed and over $1,500.
9/17/2018

10. Endorsements E523A - Rental Reimbursement Covg Written in TCM and MCA.
$20 per day $600 Max
$25 per day $750 Max
$30 per day $900 Max
$35 per day $1050 Max
The car must be out of service or missing for more than 24 hours. The car must carry OTC and Collision.
9/17/2018

11. Endorsements E565 - Auto Death Indemnity Written in TCM and MCA.
Provides a form of life insurance for named persons. Can be written for the named insured and/or any other person in household.
9/17/2018

12. Endorsements E515A - Named Excluded Driver
Written on an exception basis for a driver who chooses not to be rated based on poor driving history and has maintained auto insurance elsewhere. Agent must seek Underwriting approval and maintain signed endorsement on each policy in the household. Use extreme caution when using this endorsement.
9/17/2018

13. Rate Classifications
All auto insurance companies use a State mandated classification to rate for drivers age, sex, marital status and vehicle use. Because we have statistical information supporting young single male working drivers are more likely to be involved in an automobile accident than older married female non-working drivers; thus, we can charge a higher premium for these drivers.
We cannot and do not use discriminating factors such as race, religion or socioeconomic status to determine rates.
The rate classes shown on the next few slides are standardized for every insurer in the State of Texas.
9/17/2018

14. Rate Classifications Adult Rate Classes:
There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and:
The auto is not used for business nor driven to or from work or school. (Clergy shall be rated as 1A rate classes)
Under A A-34
A A-41
A A-42
A A-5
A-33
9/17/2018

15. Rate Classifications Adult Rate Classes:
There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and:
The auto is not used for business but is driven to/ from work or school more than 50% of the time.
Under B B-34
B B-41
B B-42
B B-5
B-33
9/17/2018

16. Rate Classifications Adult Rate Classes:
There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and:
The auto is not used for business but is driven to or from work or school less than 50% of the time. (Or drives to/from park and ride 5 times a week).
Under C C-34
C C-41
C C-42
C C-5
C-33
9/17/2018

17. Rate Classifications Adult Rate Classes:
There is no male operator under 25 years of age, no unmarried female operator under 21, no operator 65 years or older and:
The auto/truck is used for business.
Under (3A-1 truck) (3A-34 truck)
(3A-2 truck) (3A-41 truck)
(3A-31 truck) (3A-42 truck)
(3A-32 truck) (3A-5 truck)
(3A-33 truck)
9/17/2018

18. Rate Classifications Mature Rate Classes:
There is no male operator under 25 years of age, no unmarried female operator under 21, but there is an operator 65 years or older and:
Pleasure Work/School Carpool Business / Truck
A-0 6B-0 6C A-0
70+ 6A-9 6B-9 6C A-9
9/17/2018

19. Rate Classifications Youthful Rate Classes:
There are one or more male operators under 25 years of age, and the male is either married or not the principle driver of the auto:
2A11(<17)
2A12(17-18)
2A13(19-20)
2A21(21-22)
2A22(23-24)
9/17/2018

20. Rate Classifications Youthful Rate Classes:
There are one or more male operators under 25 years of age, and the male is unmarried and is the principle driver of the auto:
2C11(<17)
2C12(17-18)
2C13(19-20)
2C21((21-22)
2C22(23-24)
9/17/2018

21. Rate Classifications Youthful Rate Classes:
There are one or more female operators under 21 years of age, and is unmarried and has no children:
2D1(<17)
2D2(17-18)
2D3(19-20)
9/17/2018

22. Rate Classifications Farm Rate Classes:
There is a farm auto and there is no male operator under 25 years of age, no unmarried female operator under 21 years of age and:
Under AF AF-42
AF AF-5
AF-31
AF-32
AF-33
AF-34
AF-41
9/17/2018

23. Rate Classifications Youthful Farm Rate Classes:
Male under 17 part-time driver or married: AF11
Male part-time driver or married: AF12
Male under 17, single, full-time driver: CF11
Male 17-18, single, full time driver: CF12
Unmarried female under 17: DF1
Unmarried female 17-18: DF2
Unmarried female 19-20: DF3
9/17/2018

24. Farmers Auto Companies
MCA - Mid-Century Insurance Company
TFIC - Texas Farmers Insurance Company
TFIC no longer accepting new business
TCM - Texas County Mutual
TCM- Ultra-Preferred
9/17/2018

25. Field Underwriting: Overview
As an “agency manager”, field underwriting is one of your most important responsibilities. Effective field underwriting is key to profitability and surplus enhancement (the financial stability of the Company).
Underwriting is a systematic process for evaluating risks. Underwriting involves evaluating, selecting, classifying and rating each risk.
9/17/2018

26. Field Underwriting: Overview
The purpose of underwriting is to secure a safe and profitable distribution of risks.
You should place the acceptable risks in the appropriate program with the proper rating classification, then “manage” those risks once they are accepted as Farmer’s insureds.
9/17/2018

27. Field Underwriting: Overview
Underwriting involves making decisions beyond the Customer Selection and Underwriting Guidelines:
Subjective underwriting means searching for any moral, morale and/or physical hazards that affect the applicant’s risk potential.
Objective underwriting means applying the underwriting guidelines to analyze and reach a decision.
9/17/2018

28. Field Underwriting: Overview
You are the “eyes and ears” of the Company. As a field underwriter, you are a valuable source of information in the decision to accept or reject a risk.
As with a Regional Underwriter, the underwriting process involves:
Gathering information and analyzing it
Evaluating the options
Making a decision on accepting, declining or modifying
the risk.
9/17/2018

29. Mid-Century Insurance Company
Mid-Century Insurance Company (MCA) is our preferred Company. In this Company, we will place our prospective insureds who will be the least likely to have claims in the future. Because our rates in this Company are some of the best we have to offer, the Underwriting requirements are very stringent.
9/17/2018

30. Texas County Mutual
Texas County Mutual (TCM) is our sub-standard Company. In this Company, drivers pay an increased rate because of moving violations, lack of driving experience, vehicle type, previous claims activity and driving a motor vehicle without maintaining the state minimum liability insurance. Unlike TFIC and MCA, County Mutual rates are not promulgated by the State.The Ultra-Preferred Program is written in TCM.
9/17/2018

31. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List - Personal
Persons with a hazardous driving record. This means drivers who have:
1) Three or more accidents in the past three years regardless of fault.
2) Convicted of driving under the influence of intoxicants, alcohol or drugs in the past 12 months.
(see 1101)
9/17/2018

32. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List - Personal
3) Two or more of the following cites in the past 3 yrs:
a. Driving under influence or refusal to submit to chemical or breath test.
b. Driving while license is suspended or revoked.
c. Hit and run; leaving the scene of an accident
d. Involuntary manslaughter, reckless or negligent homicide or assault.
(see 1101)
9/17/2018

33. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List - Personal
3) Two or more of the following cites in the past 3 yrs:
e. Operating a motor vehicle without owners authority.
f. Reckless driving, careless driving, impaired driving, eluding a police officer.
g. Racing or speed contest.
h. Loaning Operator’s license or Registration to another.
Eight or more points. (Will review after Underwriting)
(see 1101)
9/17/2018

34. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List- Personal
4) No valid operator’s license or permit for the vehicle being operated.
5) Persons with a criminal record.
6) Persons having received a narcotics conviction or who are excessive users of alcohol or drugs.
7) Residents or mailing addresses uncertain or not permanent, motel, shipboard, etc.
(see 1101)
9/17/2018

35. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List- Vehicles
1) Midget cars, snowmobiles and similar contrivances.
2) Vehicles with a value in excess of $75,000 (submit for approval)
3) Vehicles not registered in the U.S... (Gray market vehicles)
4) Subleased vehicles
5) Cars with substantial damage or not in operating condition
6) Cars in storage
7) Utility vehicles used for business purposes
(see 1101)
9/17/2018

36. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List- Vehicle Use
1) Annual mileage over 25,000
2) Demonstrator vehicles - dealers or salesmen
3) Driver instructor cars
4) Emergency vehicles and cars equipped with bells, sirens or red lights
5) Farm trucks requiring a State or Fed motor permit to operate
6) Garage or service “loaner” cars
(see 1102)
9/17/2018

37. TCM - Underwriting Guidelines
Unacceptable/Non-Binder List- Vehicle Use
7) Messenger or delivery service-cleaners, florists etc..
8) Newspaper or magazine distribution
9) Operated extensively in Mexico
10) Rent-a-car agencies
11) School bus use (except “car pools”), taxicabs, limos etc..
12) Towing for delivery, drive-away, haul-away
13) Vehicles used for hauling employees as passengers.
(see 1102)
9/17/2018

38. TCM - Point Rules & Surcharges
All TCM auto risks shall use the same rating rules as MCA for rate classification, territory, symbols, etc..
In addition, surcharges apply in accordance with the rules that follow.
(see )
9/17/2018

39. TCM - Point Rules & Surcharges
The following point assignment rules and point schedule should be applied to determine the appropriate surcharge.
Each driver shall be assigned to the car whose rating is based on his/her driving.
Each driver must be assigned to a car but not to more than one car. Every car must be assigned a driver unless there are more cars than drivers, in which case all excess cars have no driver assigned.
9/17/2018

40. TCM - Point Rules & Surcharges
Points developed by the driver with the greatest number of citation points are added to the accident points developed by all drivers of the auto to determine the number of points.
If two or more autos are insured in TCM, the accident points shall be determined by the total of all drivers of the auto assigned to each car and citation points shall be determined by the driver assigned to each car who has the highest number of citation points.
9/17/2018

41. TCM - Point Rules & Surcharges
Experience Period
The experience period for new business shall be the 3 year period prior to the new business effective date, and for renewals, the 3 year period prior to the renewal effective date.
(see 1451)
9/17/2018

42. TCM - Point Rules & Surcharges
Two points will be assigned for each chargeable accident.
Do not charge points for the following types of accidents:
1. Struck while legally parked.
2. Struck while legally stopped.
3. Insured collected in full from other party.
4. Other party received a citation and the insured did not.
5. Colliding with a bird or animal.
(see 1433)
9/17/2018

43. TCM - Point Rules & Surcharges
MAJOR CITATIONS
Charge 4 points each of the following:
1. DUI, DWI, open container or bottle, drunk in a vehicle, implied consent, refusal to submit to chemical or breath test.
2. Negligent homicide, manslaughter.
3. Racing, speed contest, improper start from a parked position, excessive acceleration.
4. Driving while license revoked, suspended or canceled.
(see 1433)
9/17/2018

44. TCM - Point Rules & Surcharges
MAJOR CITATIONS
Charge 4 points each of the following:
5. Hit and run; leaving the scene of an accident and failure to comply with requirements upon striking an unattended vehicle.
6. Reckless driving, careless driving, impaired driving, eluding a police officer.
(see 1433)
9/17/2018

45. TCM - Point Rules & Surcharges
MINOR CITATIONS
Charge 1 point for all citations except for the following:
1. Defective equipment (other than brakes)
2. Failure to display or sign Registration Card.
3. Failure to display license plates.
4. Failure to have driver’s license in possession
5. Pedestrian or parking citation.
6. Violation of Promise to Appear.
(see 1434)
9/17/2018

46. TCM - Point Rules & Surcharges
HIGH PERFORMANCE CARS
Definition: The high performance car is an auto with substantially more power than is required for smooth acceleration, comfortable driving and safe passing.
The following list identifies the vast majority of High Performance cars; however, there are other vehicles not specifically listed. Also NOTE: Refer to your auto manual pages for model year and IIN for specific criteria.
9/17/2018
(see 1436)

47. High Performance Cars Lamborghini Acura NSX Lotus Aston Martin
Cadillac Allante
Chevy Camaro
Chevy Corvette
Dodge Daytona
Dodge Spirit
Dodge Stealth
Dodge Viper
Ferrari
Ford Mustang
GMC Syclone and Typhoon
Lamborghini
Lotus
Maserati
Mazda RX-7
Mercury Capri
Nissan 300ZX
Plymouth Laser
Pontiac Firebird
Porsche
Toyota MR2 and Supra
TVR
Vector
9/17/2018

48. SPORTS CARS
Although there is not a surcharge for sports cars in any company, Underwriting requirements restrict younger drivers who operate sports cars to be eligible for TFIC and MCA coverage's. NOTE: Refer to your auto manual pages for specific models.
9/17/2018

49. SPORTS CARS Acura NSX, Integra Alfa Romeo Aston Martin Austin Healy
Avanti
BMW
Bricklin
Buick Opel GT
Cadillac Allante
Chevy Camaro, Corvette
Chrysler Laser, Conquest, LeBaron
Citroen SM
Cobra
Cosworth Vega
Nissan
DeLorean
De Tomaso
Dodge Daytona, Charger, Stealth, Viper
Eagle Talon
Excalibur
Ferrari
Ford Probe GT
9/17/2018

50. SPORTS CARS Maserati Mazda RX-7, 323GT, MX3, MX6, 626GT Mercedes Benz
Merkur XR
Mercury Capri MB
Mitsubishi
Monteverdi
Morgan
NSU
Pantera
Geo Storm GSI
Honda CRX, Civic Del Sol
Isuzu Impulse
Jaguar
Jensen
Jensen Healey
Lamborghini
Lancia
Lexus SC300, SC400
Lotus
Lincoln Mark VII, Mark VIII
9/17/2018

51. SPORTS CARS Triumph TVR Tuscan Typhoon Vector Viper
Volkswagen Scirocco, GTI, Corrodo
Volvo
Pantera
Plymouth Laser
Pontiac Fiero, Trans Am, Firebird
Porsche
SAAB
Shelby
Singer
Subaru
SunbeamC
Toyota 2000GT, Supra, MR-2, Corolla
9/17/2018

52. Module II - Review 1) What are the names of the three auto Companies?
2) Up to this point, what differences have you learned about each of the three auto Companies?
3) Using your notes, what endorsement covers Rental Reimbursement?
4) What rate class would be used for a 30 year old male who uses his car to drive to/from work?
5) What rate class would be used for a married 18 year old female who is a housewife?
9/17/2018

53. Module II - Review
6) What rate class would you use for a single 21 year old female who drives to/from school?
7) What rate class would you use for a single 18 year old male who drives to/from school?
8) What rate class would you use for a single 18 year old male who shares a car with his 48 year old mother?
9) In TCM, how many points would you charge for a speed citation?
9/17/2018

54. Module II - Review 10) In TCM, how many points would you charge for:
a) a speed citation on 9/24 and a ran red light citation given on 10/3?
b) a speed citation on 9/24 and an accident on the same day?
c) an accident on 9/24 and a speed on 10/3?
d) three ran red light citations on 9/24 and an accident on the same day?
9/17/2018

55. Module II - Review
11) How many points can a person have before they are ineligible for coverage in TCM?
12) Can an individual that has 3 non-fault accidents in the past 3 years be issued a policy in TCM?
13) Can an individual who received a DWI 3 months ago be issued a policy in TCM?
9/17/2018

56. YES, we will discuss split households in a later module.
Module II - Review
14) How many cars can be issued on one TCM policy?
15) Can you have one person issued on a vehicle in TCM and his/her spouse have a policy in MCA?
YES, we will discuss split households in a later module.
9/17/2018

57. Homework Assignment
Review rate classes and point surcharges before next class.
9/17/2018

58. Quote of the Day..
It’s not where you start -- it’s where you finish that counts.
Zig Ziglar
9/17/2018