Q. A commercial-lines damage insurance broker insures an agricultural farm; the client wants to add his house to the same contract. Can this be done?
A. To insure this kind of “hybrid” risk, the representative must hold both commercial-lines insurance certification (to offer the agricultural insurance contract), and personal-lines insurance certification (to offer the residential insurance contract). Furthermore, if there are two separate client-files, they must be linked together.
A farmer who lives in a house on an agricultural farm must purchase owner-occupant insurance, a product offered by personal-lines insurance representatives. The farm itself must be covered by an agricultural insurance contract, purchased from a commercial-lines representative. Consequently, a representative who offers her client both contracts must hold a license in both personal-lines and commercial-lines insurance.
Furthermore, it is advisable to place the risks with the same insurer: while making the transactions, this will reduce the likelihood of forgetting any information that could affect either of the insurance policies. Placement with the same insurer also helps to avoid ambiguous situations involving the insured’s civil liability, in particular if the house is situated on the grounds of the farm. To avoid any omissions, it is also preferable to create a single client-file.
In cases where there is more than one client-file, the files must be linked together. Representatives must always remain vigilant to ensure that they are able to both assess the insured’s needs and identify any potential interconnections between the agricultural and the residential insurance contracts.
Likewise, if a representative holding personal-lines insurance certification has a self-employed client who wishes to add business-related coverage to her home insurance contract, the representative must be careful not to push the boundaries of his certification. The Autorité des marchés financiers (the Authority) reminds professionals to “be cautious when distributing such products, since the risk assessment may require special analysis. Indeed, the insured’s activities may look more like those of a small business, and this could result in representatives overstepping the limits of their certification. Under such circumstances, the insurance product must be offered by a damage insurance agent or broker (full sector) or a commercial-lines damage insurance agent or broker (class of sector).”1 [unofficial translation]
In conclusion, the ChAD would like to remind representatives of their obligations concerning the Rules for Business Cards and Other Representations
, which are set out in a guide issued by the Authority. For example, they must use the correct titles for the sectors in which they are authorized to practice. The ChAD has prepared a table [in French only] listing the titles that agents, brokers and claims adjusters may use. For English titles, please refer to the Guide.