AGREEMENT
AGREEMENT made this 31 day of December, 1995 by and between Citizens Security
Group, Inc., a Minnesota corporation, hereinafter "Citizens", and Adjusting
Unlimited, Inc., a Minnesota corporation, hereinafter "Adjusting".
R E C I T A L S :
(R1) Citizens is a Minnesota corporation in the business of providing insurance
for individuals, businesses and others in the State of Minnesota and other
states.
(R2) Adjusting is in the business of providing services on behalf of insurance
companies including adjusting claims for said insurance companies.
(R3) Citizens desires to have Adjusting adjust claims on its behalf and
Adjusting is willing to provide said adjusting services.
WHEREFORE, based on the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:
1. APPOINTMENT AND ACCEPTANCE. Citizens does hereby appoint Adjusting as
an authorized party to adjust claims on Citizens behalf. Said
appointment in nonexclusive and Citizens reserves the right to appoint
other parties to adjust claims. Adjusting does hereby accept the
appointment and agrees to provide Adjusting services on behalf of
Citizens according to the terms of this Agreement and industry
standards.
2. COMPENSATION. As and for its agreement to adjust claims on behalf of
Citizens, Adjusting shall be paid by Citizens a retainer amount of
Fifty thousand and no/100 ($50,000.00) dollars per month payable on a
monthly basis. This amount will be increased on January 1 of each year
at the rate of Citizens premium growth for the previous year. Said
amount shall be paid during the entire term of this Agreement and shall
not be changed except upon the mutual agreement of the parties to this
Agreement.
12-15-95
3. OBLIGATIONS. Adjusting agrees to provide adjusting services on behalf
of Citizens on claims assigned to Adjusting by Citizens as per Addendum
A. Adjusting further agrees to follow such procedures in regard to
adjusting claims, payment of claims, releases and other matters as are
directed by Citizens from time to time.
4. OTHER COMPANIES. In the event Adjusting provides adjusting services to
insurance companies other than Citizens, and in part consideration for
the loan provided by Citizens and the weekly retainer provided by
Citizens, Adjusting agrees to pay Citizens fifty (50%) percent of all
net pre-tax profits earned by Adjusting in providing adjusting services
to other insurance companies. Adjusting agrees to provide to Citizens
an accounting on a quarterly basis in regard to all adjusting services
provided to other insurance companies, including the income from said
services, the expenses attributed to said services and the amount due
Citizens. Payments shall be made by Adjusting to Citizens for
Citizens' fifty (50%) percent share of the net profits from said other
adjusting services on or before the 15th day of the end of each quarter
commencing April 15, 1996.
5. INSURANCE. Adjusting agrees to obtain professional and general
liability insurance and workers compensation insurance from companies
licensed to do business in the State of Minnesota and with such
coverage's in such amounts as agreed to by the parties. Adjusting
shall provide Citizens with proof of said insurance periodically as
requested by Citizens.
6. TERMINATION. Either party may terminate this Agreement upon one
hundred eighty (180) days written notice to the other party.
7. DISPUTES. All claims, disputes or issues relating to or arising out of
this Agreement shall be submitted for resolution by arbitration and
only after efforts by the parties to resolve the dispute have been
exhausted. The parties may agree on some other alternative dispute
resolution method. In the event the parties are unable to agree to the
arbitration procedure, arbitrators of some other form of dispute
resolution, the arbitration shall be in accordance with the rules of
the American Arbitration Association before an arbitrator who is
licensed to practice law in the State of Minnesota. Each party shall
equally share the fees and costs of the arbitration and arbitrator.
The agreement to arbitrate shall survive the termination of this
Agreement.
8. NO AUTHORITY. Adjusting is prohibited from making any contract or
agreement in the name of Citizens except as approved by Citizens in
writing or as otherwise authorized in this Agreement.
9. TERM. This contract will be in effect January 1, 1996 and terminate
January 1 1999.
12-15-95
10. INDEPENDENT PARTY. Nothing herein shall be construed to ascribe unto
Adjusting a status other than that of an independent contractor.
Further, nothing contained herein shall be construed to establish a
partnership or joint venture relationship between the parties.
Adjusting is an independent contractor with full and complete liberty
to use its own free and uncontrolled judgment and discretion as to the
method of performance of each obligation and undertaking by Adjusting.
11. INDEMNIFICATION. The parties hereto hereby indemnify and hold the
other harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever (I) by reason of any untrue
statement or alleged untrue statement of any material fact contained
in this Agreement; (II) by reason of or in connection with the
execution and delivery or transfer of or payment failure to pay under
this Agreement; (III) by reason of any action by the other party not
contemplated or authorized in this Agreement; provided, however,
that the parties do not indemnify the other regarding any claims,
damages, losses, liabilities, costs or expenses, to the extent, but
only to the extent, caused by the willful misconduct or gross
negligence of the other.
12. NONASSIGNABILITY. This Agreement and all rights accruing hereunder
shall not be assigned by either party without the prior consent of the
other. If Citizens is sold, acquired, or merged with any other
company, Adjusting will have the option to terminate this Agreement on
the date of sale, acquisition, or merger.
13. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties and shall not be amended except in writing
executed by both parties.
14. BINDING AGREEMENT. This Agreement shall be binding upon the parties
hereto, their heirs, successors and assigns.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
16. HEADINGS. Paragraph headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
17. NOTICES. Any notice to be given hereunder by any party to the other
party must be in writing and shall be deemed to be delivered and,
regardless of whether actually received, upon States Postal services,
in a prepaid wrapper, sent either certified or registered mail and
addressed to whom such notice is to be given, at the address set forth
below, or at such other address as any party hereto may designate to
the other party hereto by the giving of notice as provided herein:
If to Citizens:
Citizens Security Group, Inc.
P.O. Box 3500
Red Wing, MN 55066
Attn: Kirk D. Simmons 12-15-95
If to Adjusting:
Adjusting Unlimited, Inc.
P.O. Box 241
Red Wing, MN 55066
Attn: Andrew Schoenecker
IN WITNESS WHEREOF, the parties executed this Agreement the day and year
first above written.
Citizens Security Group, Inc.
By: /s/ Kirk D. Simmons
------------------------------
Its: Vice President
Adjusting Unlimited, Inc.
By: /s/ Andy Schoenecker
-----------------------------
Its: President
12-15-95
ADDENDUM A
Claims handling contract:
For the set fee, Adjusting Unlimited Inc. will complete the following procedures
for the following types of losses:
A. First and Third Party Property damage:
Property damage claims should exceed $2,500 and be less than $25,000 in total
damages. Exceptions are made for losses involving coverage issues or when
documentation of damages is needed for pursuit of recovery. Catastrophe related
claims are excluded from this contract except as provided below.
Building damage:
1. photos of the scene and risk
2. diagram of damaged areas
3. obtain an agreed price on the cost of repairs or replacement
4. conduct an Insurance to Value review when feasible
5. investigate subrogation or contribution potential.
6. issue Insurer checks if authority is granted from Insurer
Theft losses greater than $10,000 and less than $25,000:
1. photo scene
2. contact investigation officer
3. obtain signed police report authorization form
4. gather support documentation from insured issue Insurer checks if
authority is granted from Insurer
5. verify amounts submitted by insured
Catastrophe related claims ( involving claim volume greater than 15 from one
storm). AUI will handle the first 15 claims resulting from a catastrophe at no
additional fee. Reporting will consist of:
1. photos of the scene and risk
2. obtain an agreed price on the cost of repairs or replacement
3. issue Insurer checks if authority is granted from Insurer
B. Automobile damage:
AUI will investigate auto damage losses involving questionable condition of
the vehicle, pre-existing damage, and when total loss is questionable.
Catastrophe related claims are excluded from this contract.
1. obtain photos of the damaged vehicle
2. obtain CCC list for vehicle
Agreed prices on the cost to repair will be available in Ohio, Iowa,
Northern Minnesota and North Dakota.
C. Bodily Injury Investigations:
Bodily Injury investigations will be limited to claims requiring on site
investigation to rule out liability or require physical evidence to be obtained
by an outside representative. This includes losses involving death or severe
injury.
The investigation will include:
1. photos as needed
2. authorizations for records
3. recorded interviews as per definition below
4. medical records as per below
5. an analysis of liability if requested
D. Subrogation Investigations will include:
1. Obtain a fire or police report authorization.
2. list all potential tort feasors; giving the name, address, phone number
and contact name.
3. secure necessary evidence for pursuit of tort feasor.
4. obtain support documentation if available.
E. Salvage:
we will advise of salvage potential and contact a salvor if requested to do so.
F. Business income:
1. gather the documentation being submitted by the insured to support his BI
claim.
2. determine the time period it SHOULD HAVE TAKEN TO restore operation to
pre-loss condition. note: for AUI to do the adjusting of business income
losses, an addition fee may be charged.
G. Recorded statements:
AUI will take in person recorded interviews for situations involving:
1. phone contact is unsuccessful and face to face meeting is beneficial
2. Complex situations requiring an adjuster's physical presence to
comprehend.
H. Record pick ups:
AUI will pick up or deliver records if one of the following occurs:
1. any time the records can't be obtained by mail.
2. records required in less than 3 days
3. deliveries which can't be completed by normal mail
I. Photo copying:
Pick up and delivery are included in the contract, however the cost to
obtain the copies or records is a direct expense to the insurer.
The contract amount with AUI will cover the costs of:
- - labor
- - photos
- - vehicle use and mileage
- - tax on investigation services (a Minnesota tax)
- - long distance telephone and fax fees
Contact and reporting:
AUI will contact the insured and or claimant with 24 hours of receipt of the
assignment and same day whenever possible. Reports will be completed in 14 day
intervals until the assignment is completion. In addition, 5 day acknowledgment
reports will be submitted on first party property losses.