Frequently Asked Questions
The UFAA plan is generating a large amount of interest and the following are the most common questions.As an informed Farmers Agency owner, you owe it to yourself to review your options through The UFAA Plan created exclusively for Farmers Agents.
- I have always bought my coverage from the Farmers sponsored plan. Why should I change coverage after all these years?
- What are the coverage issues in the Farmers sponsored plan?
- If my claim with the Farmers sponsored plan is denied for this reason, what do I do next?
- Does my agency appointment agreement require that I have my E&O coverage with the Farmers sponsored plan?
- What are the advantages offered by The UFAA plan in contrast to the Farmers sponsored coverage?
- Can I carry both the Farmers sponsored coverage and The UFAA Plan coverage?
- How do I cancel coverage with the Farmers sponsored plan?
- Is the Farmers Benefit enrollment period the only time I can change coverage and how is this processed?
- Can I return to the Farmers sponsored plan if I choose to?
- Will I qualify for coverage in The UFAA plan?
- Will my coverage be non-renewed or rates increase if I have a report a claim to The UFAA plan?
- Can Farmers file a claim against me if I insure with The UFAA plan?
- Do I need to buy an extended reporting period endorsement or a “tail” if I cancel the Farmers sponsored coverage?
- May I maintain The UFAA plan coverage if I terminate with Farmers?
- As my Policy in Force grows, will my rates increase during the policy year while insured in The UFAA plan?
- Will my rates increase because The UFAA plan is currently a smaller group than the Farmers sponsored plan?
- Do I have to complete an application for a quote?
- Does the UFAA plan cover business outside of Farmers?
- Does the UFAA plan provide coverage for my staff and agency producers and is there an additional cost?
- When I bind coverage with The UFAA plan when will I have to pay the premium and what are the payment options?
- Are there any fees beyond the premiums?
- Do I have to be an UFAA member to get coverage?
- Are both the Farmers sponsored plan and the UFAA plan “claims made” policy forms?
- Can I get the same limits of coverage as offered in the Farmers sponsored plan?
- What is the deductible in The UFAA plan and what does the buyback cost?
- Is the defense cost coverage within or outside of the limit of liability I choose in the UFAA plan?
- Does the UFAA plan offer a free Extended Reporting Period or “Tail’ similar to the Farmers sponsored plan?
- Why does the Farmers group carrier pay a claim that agent feels is invalid?
- Who is the Named Insured and who benefits from the Farmers sponsored plan?
- Are there any areas where the Farmers group plan provides better coverage?
- Am I required to provide a loss history to get coverage in The UFAA plan?
- Is UFAA the UFAA plan broker, receiving any commissions or coverage in The UFAA plan?
All agents who placed their coverage with The UFAA plan improved their coverage**, obtained advantages not offered in the Farmers sponsored plan, and the average agent saved over $500 annually and in some cases much more.
2. What are the coverage issues in the Farmers sponsored plan?
One issue very few agents are aware of is a “Coverage Question or Category One” type claim. Your coverage under the Farmers Group E&O coverage excludes your failure to provide an available Farmers coverage when the insured met Farmers underwriting guidelines and would have covered the loss
3. If my claim with the Farmers sponsored plan is denied for this reason, what do I do next?
Once your E&O claim is excluded you have to appeal to Farmers to apply retroactive coverage to your insured’s policy.
Per Farmers own statements, “Farmers has no written obligation to pay your loss”.
Payment of your excluded E&O claim is solely at Farmers discretion.
There are cases where Farmers has refused to pay these losses and the agent involved had exposure to all defense and settlement costs.
Farmer’s also now tracks all agent requests for policy reformation under the Farmers sponsored E&O plan.
No. According to Farmers, where you insure your agency is your choice, Farmers provides specific forms to cancel the E&O coverage, your insured’s claim handling won’t be affected and you may make the change at any time during the year.
5. What are the advantages offered by The UFAA plan in contrast to the Farmers sponsored coverage?
There is no Coverage Question or Category one claims condition wording in the UFAA plan for your failure to provide an available Farmers coverage. You do not have to appeal to Farmers to cover a loss of this type at their discretion
At no additional cost coverage is provided for all retail business you are licensed to transact for all Farmers, FFS and all admitted and authorized non-admitted carriers in the state coverage is placed in, this is the equivalent of Farmers Level 3 coverage.
Coverage for all Employees and Agency Producers that your agency is legally liable for while acting on your behalf at no additional cost and unlike the Farmers sponsored plan, coverage is included for producers not appointed by Farmers.
Coverage may be continued if you become an Independent Agent without purchasing “tail coverage” (Subject to underwriting)
Provides Pre Claims attorney’s fees for response to subpoena and records requests
Provides coverage acting as an Expert Witness on an insurance related matter, Speaker, Instructor or Teacher when continuing education credits approved by the DOI are earned by the attendee
Coverage while acting as a Notary Public whether an insurance related transaction or not
Optional Employment Practices Liability Insurance endorsement
Only agencies with a favorable loss history are accepted
Farmers isn’t an insured in the UFAA plan thus avoiding a potential conflict of interest if Farmers should bring a claim against your agency. No Waiver of Subrogation is afforded to Farmers
Deductible applies to Damages only, is the same for Farmers or non-Farmers placements, is aggregate in any policy year and may be waived at no additional cost by compliance with the Deductible Waiver Endorsement
Provides individual risk management evaluation and manual
Offers reimbursement for the attendance of legal proceedings at the company’s request of up to $350 per day and a maximum of $50,000 for all claims
Extended Reporting Period options are available covering all agency business at a cost lower than what the Farmers sponsored plan charges for non-Farmers business alone (when you exercise the typical time frame of 5 years or less) and does not require a particular type of agent appointment agreement termination to qualify for coverage
No claim or application data is supplied to Farmers or to UFAA
Premium rated only for your exposures, no subsidy of other agents or company
Agency appointment agreement termination status doesn’t affect your coverage benefits
The UFAA plan carrier requires your approval to settle any claim
6. Can I carry both the Farmers sponsored coverage and The UFAA Plan coverage?
This is not a recommended method. Would you have an insured carry two different polices on the same exposure? You would pay twice the premium and each coverage from has an “other insurance” clause that could possibly limit coverage in both forms. You should carry only one policy, The UFAA plan.
7. How do I cancel coverage with the Farmers sponsored plan?
The E&O Coverage Waiver Form is the only notice required by the Farmers Benefits Department to cancel your coverage and it is sent to you as an attachment to the email with your UFAA sponsored policy. Farmers will notify Calsurance of your request to cancel coverage.Do not cancel any currently in force coverage until replacement coverage is confirmed bound.
No, you may opt out of the Farmers sponsored coverage at any time during the year without penalty. The Farmers Benefits Department will confirm with a copy of your benefit statement showing your change.
Currently, you are not required to waive coverage with Farmers each year you insure outside their plan but, you are solely responsible to confirm your coverage status with the Farmer’ sponsored plan.
9. Can I return to the Farmers sponsored plan if I choose to?
The UFAA plan is structured specifically to allow you to re-enroll with Farmers effective January 1 with no lapse in coverage. You are responsible to confirm your coverage status with the Farmer’ sponsored plan if you should make this choice.
10. Will I qualify for coverage in The UFAA plan?
Agencies applying for coverage in the UFAA plan must have an acceptable claim history and all agencies must meet minimum standards in agency operations. These standards allow the most competitive rates and broad coverage terms to be offered in this program. All agencies are encouraged to apply to determine their eligibility.
11. Will my coverage be non-renewed or rates increase if I have a report a claim to The UFAA plan?
While an agency incurring a claim is subject to underwriting review, a single claim will not necessarily cause a non-renewal of coverage as agency size, practice, or claim incurred will bear on each decision.
12. Can Farmers file a claim against me if I insure with The UFAA plan?
The Farmers Subrogation Department files claims against Farmers agents whether the agent insures with the Farmers sponsored or other coverage plans.
No, The UFAA plan provides retroactive coverage from the first date of uninterrupted coverage or your reserve appointment date with Farmers if insured continuously.
14. May I maintain The UFAA plan coverage if I terminate with Farmers?
Agents currently insured in the UFAA plan who terminate their contracts with Farmers during the UFAA plan year will be offered this option. This is subject to claims underwriting, continuation of a similar type agency as your Farmers agency and Limited Independent Agent membership in UFAA.
The policy form is the same as used in the UFAA plan and the rates should be similar and is subject to the minimum premium.
The policy is not auditable and all rating factors generate from each year’s application for the coming year. Gross agency commissions, claims and mix of business are the premium-rating factors.
No, The UFAA plan rates utilize publicly available rate filing data and is underwritten by a premier national insurer having an extensive professional liability portfolio with over 40 years experience writing Insurance Agents and Brokers. The UFAA plan premium rates have remained stable for all participants including those incurring claims or growth in their agency’s Policy in Force contrary to misinformation promoted by uninformed sources. Unlike guaranteed issue plans, The UFAA plan offers the potential for a more predictable and sustainable rate level by not including historical poor performers or providing coverage subsidies to plan sponsors.
17. Do I have to complete an application for a quote?
You may get an indication of rate with just a few questions. Completion of a nominal first year application is required and renewal application information from the previous year’s application is presented as a one page summary for your review.
18. Does the UFAA plan cover business outside of Farmers?
Yes, you have coverage for all retail business you are licensed to transact for all Farmers and affiliated companies including FFS and non-Farmers admitted carriers and non-admitted carriers approved in the state the coverage is placed in.
The UFAA plan provides coverage for all Employees and Agency Producers that your agency is legally liable for while acting on your behalf at no additional cost and you are not required to notify the UFAA plan insurer if your staffing numbers change until the renewal application.
Unlike the Farmers sponsored plan, your agency producers, while peforming professional services on your behalf, meet the defintion of an insured without being appointed by Farmers.
Premium payments are collected in the month your coverage incepts. You may pay either monthly or annually. You will receive an email reminder prior to all premium drafts from your account or credit card. Farmers will not allow a folio deduction as this is not a company-sponsored plan. A number of agents have established accounts at FIGFCU specifically for their E&O premium and have the funds folio deducted directly to this account. This operates in virtually the same manner as a folio deduction at no additional cost.
21. Are there any fees beyond the premiums?
Only in your first year of coverage are you required to participate in the UFAA plan Risk Management Survey, provided by Alpine Risk Management. There is a one-time fee of $100 for this service. This risk management service will provide you with a procedures manual that may be customized to your agency, and an on line survey and an evaluation of your agency operations to assist you in identifying possible loss exposures.
There is an annual monthly billing fee of as outlined on the web site, surplus lines premium tax for your particular state will apply and if you are not a UFAA member, limited membership fees as outlined in the next section will apply. All fees are included in the initial deposit along with the first month’s premium and any membership fees will be collected monthly as you pay your premium.
22. Do I have to be an UFAA member to get coverage?
You do not have to be a member to get a coverage proposal but the UFAA plan requires you to be at least a limited member at a cost of $13 per month (a substantial concession in comparison to the full membership cost) to be enrolled in the UFAA plan. Full members are eligible to apply and pay no additional membership fees to participate in the UFAA plan.
Groups such as IBA or PIA require you to be a full member to participate in their group insurance programs at a substantial (over $750 annually in many states) cost.
23. Are both the Farmers sponsored plan and the UFAA plan “claims made” policy forms?
Both the Farmers sponsored plan and the UFAA plan are claims made coverage forms.
24. Can I get the same limits of coverage as offered in the Farmers sponsored plan?
The UFAA plan provides the same limits from 1,000,000 to 5,000,000 and as an optional coverage for an additional premium Employment Practices Liability is offered.
25. What is the deductible in The UFAA plan and what does the buyback cost?
The UFAA plan offers a standard deductible is $2,500 per claim. However, those agencies that can confirm they have zero (0) open incident(s) and/or claim(s) that have not resulted in the payment of damages or defense costs prior to the policy effective date qualify for the following deductible.
Three (3) years agency ownership experience and claims free – $2,000 per Wrongful Act and Aggregate.
Four (4) years agency ownership experience and claims free – $1,500 per Wrongful Act and Aggregate.
Five (5) years agency ownership experience and claims free – $1,000 per Wrongful Act and Aggregate.
The deductible is not assessed due to defense expenses and applies only to damages paid to a claimant so if no claim is paid – you owe nothing.
Waiver of Deductible
No matter what deductible you qualify for, at no additional cost, this amount may be waived in the event of a claim that results in the payment of damages (the deductible does not otherwise apply). The waiver is achieved by providing from the insured’s file related to the claim, the items listed in the Waiver of Deductible endorsement that prove as a consistent business practice you properly document your insured’s files. Please refer to this endorsement for details.
Deductible Credits
You may also qualify for a credit to your deductible that is dependent on how your claim is settled.
- Up to 75% of the deductible amount may also be waived with a maximum of $2,000 of your Deductible if your claim is settled without court mandated proceedings.
- If your claim is settled by mediation to the satisfaction of all parties including the UFAA plan insurer, your deductible will be reduced by a maximum of 50% or $2,000.
These features are offered as an incentive for loss control not currently promoted in the Farmers sponsored plan.
Defense costs are unlimited and in addition to your chosen limit of liability.
The UFAA plan offers a tail endorsement covering all your agency business at a lesser cost as in comparison to the cost charged by the Farmers sponsored plan for your non-Farmers policies alone for the typically purchased term of 5 years or less. The coverage you pay for in the UFAA plan is not in any way dependent on your contract termination status with Farmers.
Agents transferring their agency under the Family rights provisions should submit their request in writing and upon approval; coverage will be transferred to the new agency owner at no additional cost while maintaining the prior retroactive date of coverage.
28. Why does the Farmers group carrier pay a claim that agent feels is invalid?
In the Farmers sponsored plan insurer holds the sole right to settle and pay all claims, including ones submitted by Farmers, without your consent. A defendable claim is required for any carrier. The agent may not be negligent in many cases, but, due to poor procedure, cannot document their actions and as a result, the claim is paid.
29. Who is the Named Insured and who benefits from the Farmers sponsored plan?
Named Insured’s in the Farmers sponsored plan include: the Agency Force, District Managers and specifically endorsed entities and individuals outside of the Agency Force. Farmers Group Inc is the sponsoring entity and is a Vicariously Named Insured in the policy. The Named Insured of an insurance policy controls the application process, has access to loss data, may cancel the policy, receive notice and pay the premium. Farmer’s enjoys all these rights that typically are Named Insured’s rights under the policy.
Specific endorsements grant Farmers exclusive coverage for the FFS unit (specifically excluding coverage to the agency force), internal Farmers insurance agencies such as Kraft Lake, and for claims against Farmers where the agent wrote a non-Farmers policy.
These factors act to increase the Farmers group sponsored plan loss costs and all plan premium costs are borne by the agency force, as Farmers appears to pay no premium for its coverage exposures (per CA Department of Insurance rate filings).
30. Are there any areas where the Farmers group plan provides better coverage?
The UFAA plan excludes coverage for claims when you write policies with a self-insurance plan or trust, whether AM Best rated or not. Unless a self-insurance plan or trust has an AM Best rating of B+ or better, the Farmers sponsored plan would exclude coverage from a claim related to financial insolvency.
The Farmers sponsored plan now offers defense costs of up to $50,000 for claims otherwise excluded under the financial insolvency provision of its policy. Please refer to that policy for details.
31. Am I required to provide a loss history to get coverage in The UFAA plan?
You are required to provide your loss history only in your first year of coverage in the UFAA plan and the information to obtain yours is provided. When you request your E&O loss history, it is typically sent attached to an email by the Farmers sponsored E&O plan broker.
32. Is UFAA the UFAA plan broker, receiving any commissions or coverage in The UFAA plan?
No, UFAA is not the insurance broker and does not receive any commission on your premium payments. This plan is to benefit the Agency Force only. No one other than a Farmers agency is an insured or provided any benefit under the UFAA plan.
If you have questions or would like an explanation of the coverage and advantages, please contact Kevin Dahlke at 619 287 8613 or email kevin@dahlkeinsurance.com.
** When in comparison to the Farmers sponsored plan. Applicants are subject to loss history and other agency qualifications, not all agencies will qualify. This document is a summary of the coverage provided. All statements contained herein are subject to all the Terms, Conditions and Exclusions of both The UFAA Errors & Omissions Plan and The Farmers sponsored plan.
