Tie-in sales

Bulletin 158

Tie-in sales

January 18, 1989

Although tie-in sales in some instances are acceptable, the practice of tying the sales of one product

to another may be an unfair trade practice in certain situations. These situations occur when:

1. The consumer is required to place additional coverage with an insurer not of the consumer's choice

in order to obtain a desired coverage, and

2. The consumer's alternative opportunities to purchase the desired coverage are severely limited or

non-existent (for example, where the insurer holds all or a substantial portion of the market share of

the desired coverage).

Generally, tie-in sales are permitted where the consumer is free to reject the offer of tied coverages

because alternate sources of the desired coverage are freely available. Some tie-in sales may even be

beneficial and desired by the consumer because of convenience, better price, or avoidance of gaps in

coverage. For example, insureds may benefit by placing coverage with one company because disputes

between carriers over applicable coverage can be avoided. The consumer also may want coverage

from only one company to avoid confusion when a claim must be made. The packaging of several

products together may result in a lower total cost and more complete coverage for the insured.

Agents who wish to tie coverages should be cautious and should make sure that the consumer always

has another choice available in the market. Without this choice the practice of tying coverages is

coercive and may violate unfair trade practices laws.

Joseph A. Edwards

Superintendent of Insurance

NOTE: This bulletin is intended solely for informational purposes. It is not intended to set forth legal

rights, duties or privileges nor is it intended to provide legal advice. Readers are encouraged to

consult applicable statutes and regulations and to contact the Bureau of Insurance if additional

information is needed.