Problem #1

Insurers often take proactive roles in advertising the end of relationships with former agents by sending out mass mailings notifying insureds as well as reclaiming forms and stationary carrying the insurer's logos and slogans. Why? What interests does the insurer serve in communicating the end of the relationship to current and potential insureds? Give an example of a situation the insurer is seeking to avoid in engaging in this proactive role.

Problem #2

ABC Insurance Agency was a general agent for United Home Insurance, a provider of real property insurance and BBB Auto Insurance, a provider of automobile insurance. According to the terms of the agency agreements between ABC and United and AJM and BBB Auto, ABC had authority to solicit applications for insurance, receive premiums, issue binders and renew policies.

Keith Chambers was a local landlord and ABC customer. Keith maintained all of his rental policies through United and all of his automobile policies through BBB Auto. On March 15th, Keith contacted ABC and asked ABC to issue a temporary policy covering a new rental property he just picked up at a property auction. The representative at ABC was familiar with the property Keith has just acquired - specifically he knew it is located in a crime-ridden part of town and was condemned by the city prior to the auction. ABC extended the temporary insurance but did not identify to Keith or otherwise indicate which insurer it intended to contract with. On March 20th, prior to the issuance of the formal insurance policy, Keith's rental burnt to the ground. Keith contacted ABC immediately and initiated the claims process.

Walk through the fact pattern above and determine the following:

• Whether ABC had authority to issue the temporary insurance sought by Keith?
• Which insurer is likely to be looked to for coverage of Keith's losses?
• Whether the insurer will have to pay the claim filed by Keith?
• Whether the insurer has any defenses it could raise against ABC?