Why Earthquake Insurance is Important Everywhere

When most people think about earthquakes in the United States, California and Alaska are the two states that come to mind. However, earthquakes can happen in any part of the country. Many people move out of areas that are prone to earthquakes after experiencing one to escape the possibility of a repeat experience. The truth is that there is no place that is completely safe from earthquakes. They are a very real threat that everyone must consider and plan for. One of the most vital aspects of proper preparedness is having ample insurance coverage.

Earthquake damage isn’t covered in the majority of homeowners policies. This is also true for business policies. Both types of policies specify that damage from earth movement is not covered. While actual damage from a quake may not be covered, property insurance may provide coverage for fires and other incidents that occur as a result of it. Policyholders should scour their policies to understand the specific exclusions. If the policy seems difficult to read, it’s important to contact an agent with any questions.

Many people think they won’t experience a major earthquake during their lifetime. This is especially true for those who live in areas where earthquakes happen every 100 years or less. Although many people may not experience a strong earthquake like the recent Virginia incident, there are over 5,000 incidents recorded each year by the USGS. Damage from earthquakes has been recorded in all 50 states in history. There have been reports of damage in 39 states alone since 1900. This proves that while some people may not live in areas that commonly experience earthquakes, they’re still not immune to the threat.

Earthquake insurance is available as a rider, which is added to a business or personal property policy. People who have one of these types of coverage should contact their insurer to find out what coverage options are available. Since they’re unpredictable and happen suddenly, it’s best to be prepared for all types of disasters. Earthquake insurance is so important that it can’t be stressed enough. While the majority of people assume all California homeowners have this type of coverage, research indicates that about 12% actually have this type of insurance. The nation’s average is less than 12%.

Earthquake insurance costs vary by location, building type and the age of the building. It’s much more expensive to insure older buildings. In addition to this, brick structures are more expensive to insure. Buildings with wood frames withstand the force of earthquakes better, so it’s cheaper to insure them.

To offer an example, a home with a wood frame in Washington may cost between $1 and $3 per $1,000 of coverage. The same home may be less than $.50 per $1,000 insured on the East Coast. However, a brick home may cost between $3 and $15 per $1,000 in the Pacific Northwest. In most East Coast locations, the same home may only be between $.60 and $.90 per $1,000.

Every earthquake policy also has a deductible. This means that homeowners must pay upfront for a portion of the damages before the insurer pays the remaining amount. The deductible may be up to 20% of the structure’s replacement value. The percentage depends on the insurer and the location of the structure.

There are also options for renters. There are coverage policies that protect personal property. In addition to this, they usually cover living expenses if the building becomes uninhabitable after an earthquake. It’s important for renters to keep a list of belongings and their values. Major appliances, furniture, electronics and other expensive items must all be documented properly. A new way of creating a record of belongings is making a narrated video tour of the home and focusing on belongings.  It is best to contact your insurance agent to secure the earthquake coverage that is right for your individual needs.

Understanding the Basics of Insurance Deductibles

To get the most out of a car or home insurance policy, it is important to understand the roles deductibles play. A deductible is the amount deducted from an insured loss. When a damage claim is filed, the deductible is the amount of money a policyholder must pay upfront. It may be a percentage of the policy’s total or a set dollar amount. Larger deductibles are associated with smaller premiums. To find the verbiage concerning deductibles, consult the front page of the auto or homeowners policy. Deductibles are subtracted from the claim amount. For example, if a person with a $500 deductible files a claim for $10,000, that policyholder will receive a check for $9,500. However, if that individual’s deductible is calculated using percentages, the amount may differ. With percentages, the variable is calculated from the total claim and then subtracted from the total.

In many areas of the United States, deductibles are increasing. This is especially true in states prone to hurricanes. Property damage deductibles work differently than those for other types of insurance. For example, a deductible applies each time a claim is filed for auto or homeowners insurance. However, a deductible applies only once each year for health insurance. There are some exceptions for damage-related insurance products. In some cases, hurricane coverage has a per-season deductible. The following points cover some of the most important deductible information.

Deductibles Do Not Apply To Liability Claims

While there is no deductible for a liability claim with a homeowners or auto policy, there is a deductible for property damage. Deductibles apply to claims made to the comprehensive policy. In homeowners insurance, deductibles also apply to damaged items inside the insured structure. However, they do not apply if a homeowner is sued or if a medical claim is filed by an injured visitor.

Higher Deductibles May Save Money

One of the easiest ways to cut expenses is to raise deductibles for homeowners and auto insurance policies. Increasing an auto insurance deductible from $200 to $500 reduces collision and comprehensive premium costs up to 30 percent. Raising the deductible to $1,000 may result in a savings of more than 40 percent. Remember this is the out-of-pocket amount that must be paid regardless of the amount of the claim.

Flood Insurance Deductibles Vary

Since flooding is not covered in standard homeowners policies, it is sold by the NFIP and private insurance companies. There are several different choices of deductible amounts for these policies. Keep in mind that some mortgage companies require homeowners to keep their deductibles under a specific dollar amount. Flood coverage for vehicles can be obtained with an optional comprehensive plan.

Various States & Companies Affect Deductible Amounts

Insurance is a state-regulated product, and insurers are required to follow their state’s rules. The laws affect how deductibles are worded in policies and how they are implemented. Since there are a wide range of deductibles found in each state, it is best to compare policies. Keep in mind that doubling the deductible may save more than 20 percent on the cost of a policy.

Percentage Deductibles Apply To Hurricanes, Hail & Earthquakes

Earthquake deductibles may be much less than 10 percent or as high as 20 percent of the structure’s replacement value. Insurance rates are higher in states such as Nevada, Utah and Washington. Consumers in these states may choose higher deductibles to save money. There are special earthquake policies for California residents. To learn more about areas prone to earthquakes, discuss them with an agent.

There are two separate types of wind damage deductibles. The first is a hurricane deductible, which applies to wind damage sustained from hurricanes. The second type is a windstorm deductible, which applies to damages sustained from any other type of windstorm. Hurricane deductibles depend on specific triggers. These are usually designated by the National Weather Service, individual states and insurers. The triggers apply when a storm is officially deemed a tropical storm or hurricane. To learn more about how these triggers work, discuss them with an agent. Some states allow set deductibles. However, communities in high-risk coastal areas may have mandatory percentage deductibles.

How to Avoid Colliding With a Moose or Deer

Many insurance claims are filed each year as the result of collisions with deer or moose. Although some accidents may happen regardless of precautions, most can be avoided with heightened awareness. Follow these tips to avoid a collision with a moose or deer.

1. Pay attention to the warning signs. Waterways, forested areas and plains marked with deer or moose signs are the prime places to encounter these wild creatures. It is important to understand that they are more likely to appear during certain months. If it is hunting season, keep in mind that startled deer may run across the roads more frequently. They also run more when there are fires nearby, so be aware of any wildfires in the area.

2. Travel at a safe speed. When approaching curved roadways or areas with more hills, slow down. Drive slower at night. Keep in mind that it takes several seconds to stop completely when traveling at higher speeds. Slower speeds can reduce the likelihood of a collision, and slower speeds also lessen the impact of an unavoidable collision.

3. Drive defensively at all times. Practice stopping the car within the length of the headlight beams. Do this in a safe place with little to no traffic. Always drive at a speed where this is possible to do at night. Be ready to react quickly, and always have a plan for what to do. For example, if a deer or moose stops in the middle of the road, brake quickly without swerving. Many accidents happen because people swerve into trees or other cars instead of actually hitting an animal.

4. Scan the landscape frequently. During daylight hours, the key to preventing a collision with a moose or deer is spotting it before it reaches the road. These creatures often run through fields in the late fall or winter months, so they may blend in better with the dead vegetation. Always watch for movement, and be prepared to stop suddenly.

5. Use the horn when needed. If a deer or moose is running near the road, honk the horn. In most cases, the animal will freeze or move away from the noise.

6. Take the proper steps after a collision. Driving defensively is the best way to prevent a collision, but it is important to know what to do if a collision occurs. First, pull over to the side of the road. Put on the hazard lights and make sure the other passengers in the vehicle are conscious. Treat injured passengers accordingly. It is important to keep a first aid kit available in the vehicle. Put road flares out if they are available.
If the animal is dead and lying in the road, try to angle the vehicle enough that the headlights cast light on it. This may help prevent other drivers from hitting the animal. Never approach an injured animal. It may gore, kick or attack a human out of fear. Stay in the vehicle, call the police and wait for help to arrive. If anyone is injured to the point of needing medical care immediately, call 911.

Addition Tips To Consider
Although these six tips are the most important to follow, it is also helpful to know more about deer and moose behaviors. Many of these animals travel together, so there may be more following what appears to be a lone animal. Rest assured that if one deer or moose is seen alone, there are more within one mile. Even if a deer or moose is spotted off in the distance, slow down immediately to enhance alertness and safety.

In some states, oncoming motorists will alert other drivers of dangers in the road ahead. To do this, they usually blink their headlights quickly once or twice. If this happens, slow down and be alert. Tired drivers are more likely to hit deer, so pull over and rent a motel if sleepiness is overwhelming. Do not count on deer whistles to be effective. They have often fallen short of the promises printed on their packaging. These whistles will not work with moose. Keep these tips in mind to avoid submitting an insurance claim. 

Yet Another Reason to Improve Your Credit – Lower Insurance Rates

Your credit rating can affect a lot more than you may think. Almost all insurance companies factor in credit ratings to set rates for new and existing auto insurance customers. Yet, blemished credit doesn’t necessarily translate into higher insurance premium rates. Instead, it is the overall insurance risk score that can cause a rise in your rates. 

Insurance risk scores are similar to those used by lenders to determine whether or not to approve a loan or line of credit because both look at your credit information.  But credit risk models are formulated to predict the likelihood of loan default. Insurance risk models, by contrast, are built to predict the likely loss ratio of any particular individual. In other words, whether you will result in more or fewer losses than average to the insurer. The higher your insurance risk score, the less likely you are to file a claim.

Following is the information many insurance companies use to formulate a risk score and how each is weighted:

  • ·         Past payment history (approximately 35%)

A past payment history is determined by:  how you’ve paid your credit bills in the past; if your bills have been paid on time; items in collection status; the number of adverse public records (bankruptcy, wage attachments, liens); and the number and length of delinquencies or items in collection.  

  • ·         Credit owed (approximately 30%)

Credit owed is how many accounts, what kind of accounts, and how close you are to your credit limits. 

  • ·         Length of time credit has been established (approximately 15%)

Length of time credit established is how long you have had your credit accounts and how long you have had other specific accounts. 

  • ·         New credit (approximately 10%)

New credit is the number and proportion of recently opened accounts versus already established accounts; the number of credit inquiries; and the reestablishment of credit history after payment problems. 

  • ·         Types of credit established (approximately 10%)

Types of credit established are the various types of credit accounts including credit cards, retail store accounts, installment loans and mortgages. 

In summary, insurers rely on factors that show long-term stability. So, by demonstrating responsible use of credit and keeping your balances low, you should be able to improve you insurance risk score. A lower insurance risk score could translate into lower insurance premiums if you’ve been impacted by a negative credit history in the past.

Add a Teen Driver to Your Policy Without Breaking the Bank

For many families, adding a teen driver to their car insurance policy can prove to be painfully expensive. After all, insurance companies generally consider teens as high-risk drivers. Fortunately, there are a few ways to keep teen insurance costs to a minimum.

Here are a few things to keep in mind as you get ready to add your teen to the family insurance policy:

Make the grade

Typically, the higher grades a teen earns in school, the less their car insurance coverage will cost. Most insurers offer anywhere between 10 and 25% discounts for teens who maintain a B average or higher. Not only will this save you money, but it will also be a great incentive for your teen to keep up her grades. Consider telling your teen if their average drops below a B, she’ll have to take a break from driving until she can make the grade.

Increase your deductible

Most people cringe at the thought of a high deductible insurance policy. However, a higher deductible often means lower premiums-and that can save you loads of money when you’re adding a teen driver to your policy.

Your insurance premiums will probably increase significantly when you add your teen driver, so you’ll want to do everything possible to bring that premium down. You can achieve a lower premium by raising your deductible. However, if you choose a higher deductible, it’s important to stress that all the drivers in your family must be extremely careful on the road. If someone gets into an accident, you’ll have to pay more out of pocket before your insurance kicks in-and to top it off, your insurance rates will go up. Be sure to communicate this clearly to your teen driver.

Keep a clean record

According to the Insurance Institute for Highway Safety (IIHS), 16-year-olds have the highest rate of car crashes than drivers of any age. Sadly, many of these accidents prove to be fatal.

Many teens start off driving safely, but after a few months, become overly confident and start driving recklessly to show off for their friends. It’s critical to make sure that your teen is and remains a safe driver-not just for the sake of your insurance rates, but also for their safety.

If your teen has an accident or even gets a speeding ticket, your insurance rates will jump significantly. You may want to give your teen extra motivation to be safe behind the wheel. Explain to them that driving is a privilege, and if they receive a traffic violation you’ll have to take away that privilege.

Consider an older car

Many parents are tempted to buy their teen a new car that includes all the latest safety bells and whistles. However, it’s important to remember that new cars often mean higher insurance premiums. Consider buying an older used car for your teen or giving him or her the oldest car on your insurance policy.

Keep your policy up-to-date

Be sure to review your insurance policy at least once a year and ensure that all the information is accurate and up-to-date. Once your teen graduates from high school or celebrates his 18th birthday, your insurance rates may drop. Also, if your teen heads off to college without a car, you may be able to take them off your policy for the time being. (However, before you remove your teen from your policy, confirm that your teen will not be driving at all. It could cost you big if he were to have an accident without insurance.)

Do You Have Insurance When You Use Someone Else’s Car?

Bob is a sales manager for a chemical equipment company. He drives his employer-furnished car thousands of miles each quarter on business. He also drives it on weekend trips, errands around town, and vacations. Focused on his job, he doesn’t give much thought to who will pay if he has a car accident.

Janet and her husband own one car and can’t afford to buy a second right now. They get by as best they can with one, but sometimes this is a challenge. It seems like a gift from heaven when their retired neighbors offer to let Janet use their car over the winter while they live in Florida. Janet doesn’t think about insurance coverage; she’s thinking about how she no longer has to take a 90-minute commute involving three buses.

Bob’s employer has an auto insurance policy that will cover an accident he has while using his car on company business, but it might not cover accidents occurring when he drives it for personal use. If Bob strikes a pedestrian while driving to a sales appointment in midtown Manhattan, his employer’s insurance will probably cover any liability for the injuries. However, if he hits another car while he’s on vacation in Hilton Head, the employer’s policy might not apply.

Janet’s auto insurance policy will not cover an accident she has while she’s using her neighbor’s car. The policy states that it does not apply to injuries or damage resulting from the use of a vehicle that is A) furnished or available for her regular use; and B) not listed on the policy (an exception is would be a loaner car she has while her car is being repaired.) Her neighbors have made their car available to her to use anytime for a period of months. Consequently, if she’s involved in a multi-car pileup on the way home from work, and she is at least partly liable for the accident, her insurance will not cover her share of the liability. If the neighbors have insurance in force, it should cover the accident. If, however, they forgot to pay their premium and the policy has been canceled, there will be no insurance available.

Both Bob and Janet could use some additional low-cost coverage on their auto policies. This coverage, Extended Non-Owned Coverage–Vehicles Furnished or Available for Regular Use, extends the policy’s liability and medical payments coverages to cover situations like Bob and Janet’s. The coverage has two important features:

It applies only to the person listed on the policy endorsement unless indicated otherwise. If the endorsement shows only Bob’s name, then the policy will cover only him for the use of the company car. Otherwise, the policy will cover him, his spouse and any family member using the company car.

The coverage applies on an “excess” basis over other collectible insurance. This means that the insurance company will look to the vehicle owner’s insurance to pay first; if that insurance doesn’t apply or gets used up, then the individual’s policy will pay. For example, if Janet’s neighbors have a valid insurance policy, their policy will pay for the loss until the amount of insurance is used up; then Janet’s policy will pay. If the neighbors’ policy has lapsed, Janet’s policy will pay from the first dollar.

Individuals with situations similar to Bob and Janet’s should consult with a professional insurance agent about the cost of purchasing this coverage. For a relatively small cost, they can protect themselves while they enjoy the use of a vehicle someone else owns.

What the New Flood Insurance Maps Mean to You

Is your property at risk of damage from flooding? If you answered “no,” think again. Every property has a flood risk; some may have a more severe risk than others, but all have some risk. A home on a lakeshore has a pretty obvious exposure to flooding. So, however, does a building miles from a body of water, located on a street with storm drains on it and a steady water supply. Because standard homeowner’s and commercial property insurance policies do not cover flood losses, the federal government makes insurance available through the National Flood Insurance Program. The NFIP evaluates the risk (and determines the insurance premium) for each property in a participating community according to its location on that community’s Flood Insurance Rate Map. Recently, those maps have been changing, and some property owners have received big surprises.

For a variety of reasons, the Federal Emergency Management Agency, which administers the NFIP, has spent the past several years working with participating communities to update flood maps. Some areas have experienced development that has changed water flow and altered drainage patterns. Soil erosion has impacted other areas, while changes in hurricane activity have affected coastal areas. The new digital maps give more accurate flood risk information on a property-by-property level.

For every property, the flood map changes will produce one of three outcomes:

* The risk level changes from low or moderate risk to high risk;

* There is no change in the risk level

* The risk level changes from high to low or moderate.

According to the NFIP, a low or moderate risk means that the risk of flooding is reduced but not completely eliminated. Such properties are still vulnerable from floods resulting from heavy rainfall, rapid snowmelt, clogged storm drains, and other causes. Properties with a high risk have at least a one percent annual chance of flooding. This means that a property with a 30-year mortgage has a one in four chance of flooding sometime during the life of the loan.

When the NFIP issues new maps, it normally provides a six- to twelve-month period before the new maps take effect. This gives affected property owners time to understand the changes and prepare for their effects.

If your risk level has changed to high, the federal government will require your mortgage holder to verify that you have bought flood insurance. The cost of insurance will increase to reflect the higher degree of risk. The NFIP has “grandfathering” rules to help property owners who built in compliance with the maps in effect at the time of construction or who have maintained continuous flood coverage on the property. This can offset some of the additional cost. The owner of a building that is sufficiently high above the minimum height at which a flood is likely to occur may actually see a premium reduction.

If your risk level has changed to low or moderate, federal rules will no longer require you to buy flood insurance. However, you will still have some risk of flooding, so it may be wise for you to retain the coverage. According to the NFIP, 25 percent of flood insurance claims come from properties with low or moderate risks. You may be able to convert your standard flood policy to a Preferred Risk Policy, which carries a lower cost.

Even if your risk level has not changed, you should discuss your situation with a professional insurance agent, who can suggest ways for you to protect yourself financially from flood losses. The NFIP says that flood is the most common natural catastrophe in the U.S. The time to prepare is before that flood occurs.

Do You Have Coverage Wherever Things Go Wrong?

How is this for bad luck?

* Bob goes on vacation to Cancun. While he’s walking on a sidewalk one day, a car jumps the curb. He jumps out of the way and escapes injury, but his $2,000 camera gets run over by the car.

* To cheer himself up, Bob goes to a golf shop to try out some clubs. Forgetting where he is, he takes a practice swing; his back swing breaks the nose of the woman looking at putters next to him.

* Bob cuts his vacation short. He returns home to find snow and ice have accumulated on his driveway. The next day, he also receives an emergency room bill for the broken ankle suffered by a neighbor who slipped on the driveway while attempting to look in on his cat.

* Bob retreats to the hideaway cabin that he owns in the mountains. He chops some trees for firewood on what he thinks is his property. Actually, the trees are five feet on his neighbor’s side of the property line.

Bob has a homeowner’s insurance policy covering his house. Does it cover any of these losses? For three of the four losses, the answer is yes.

A typical policy covers an insured person’s personal property anywhere in the world. It also covers property that person is using, even if he doesn’t own it. The property is covered for losses caused by any of the perils listed in the policy, including fire, lightning, smoke, explosion, vehicles, and others. Therefore, Bob’s policy will pay to repair or replace the camera damaged by the car. However, the insurance company will subtract his deductible from the amount it will pay.

In addition to insuring property, a homeowner’s policy covers an insured person’s legal liability for injuries or damages suffered by others. It covers liability for all of the person’s actions anywhere in the world, except for types of losses that it specifically lists as not covered. Accidentally hitting someone in the face with a golf club is not on the list, so Bob’s policy will pay the amount he owes for the woman’s medical treatment.

Likewise, Bob has coverage for the neighbor’s broken ankle. Since he invited the neighbor to check on his cat, and his driveway was not in a safe condition on which to walk, he is legally liable for the injury. The policy covers liability arising out of an “insured location.” The term “insured location” has many definitions; one of them is the residence listed on the policy. Bob’s policy lists his home, so it covers losses that arise from the home.

Unfortunately, the next loss is where Bob’s luck runs out. His policy lists his home but not his cabin. It does not cover his liability that arises out of premises he owns, rents, or rents to someone else if that premises is not an insured location. Since he owns the cabin and did not list it on his policy, and it does not fit into any of the other definitions of “insured location,” the policy does not cover his liability for accidents that happen there. Consequently, he must either seek coverage under another policy, if there is one, or pay for the damage to the trees out of his own pocket.

It’s a good idea to have a periodic chat with a professional insurance agent about your life circumstances. If you have a place in the mountains, own significant amounts of special property such as jewelry, or conduct business out of your home, you need special insurance coverage. Make sure you have the right coverage before you have a run of luck like Bob’s.

Earthquake Protection – Do You Need Coverage?

When the threat of earthquakes arises, most Americans think only about California, or more recently Haiti.  For many years, the San Andreas Fault Line has been the recipient of much of the press concerning earthquakes in the U.S.  Furthermore, predictions concerning the ultimate cataclysm believed by many to eventually be centered there have given it a mythical stature unrivalled by fault lines elsewhere in the country.

Despite all the focus on the San Andreas Fault, California does not have a monopoly on earthquakes. The New Madrid Fault Line, centered in Missouri, has been cited by the U.S. Geological Survey as being a potential source of a significant earthquake threat.  The USGS also notes that earthquakes in the central and eastern parts of the country usually have a broader range than their western counterparts.  One such earthquake along the New Madrid Fault Line in 1811 rang church bells as far away as Boston, Massachusetts, about 1,000 miles away from the epicenter!  More recently, in April 2003, a quake measuring 4.9 on the Richter Scale hit Alabama.  A year earlier, a slightly more powerful quake hit Plattsburgh, NY.   In January 2002, a 5.0 quake hit Evansville, Indiana.  These quakes all shook neighboring states and caused significant damage to businesses, homes and infrastructure in and around their epicenters.

Although none of these quakes equaled the intensity and resulting damage caused by the Northridge Earthquake of 1994, they do serve to support the idea that it may be wise to consider adding earthquake coverage to your property policy even if you are not located in close proximity to a known fault line. 

Since earthquake insurance is generally an elective coverage, it may prove to be beneficial to do a quick review to determine whether or not it is a covered peril.  Also, look at any scheduled property endorsements or personal property floaters to see if specific items are covered for earthquake-related damage regardless of whether or not the earthquake coverage endorsement has been purchased.   If the answer is “no” to any of these questions and you would like to obtain a quote, contact your agent for details.

Thinking of Buying a New Car? Be Sure to Consider Insurance Costs

If you are in the market for a new car you have probably looked at the reliability ratings, fuel economy statistics and safety tests. But have you looked at the insurance rates for the car of your dreams? If not you may want to take a step back and consider what that new car will cost to insure. Before you sign on the dotted line it is a good idea to contact your car insurance company for a premium quote. Some cars are surprisingly expensive to insure, while others are surprisingly affordable. The key is to find out how much the premiums on your proposed vehicle will be before you commit to buying.

If you are currently driving an older vehicle it’s likely that you no longer carry full comprehensive and collision coverage on it. When shopping for a new vehicle consider that you will be upgrading to full coverage, which translates into higher premiums by itself. Be sure to factor these higher insurance costs into the equation when determining what kind of car you can afford. Many drivers just look at the monthly payment for the car and forget about the cost of insurance, regular maintenance and other important expenses. By comparing insurance rates on the vehicles you are considering you can avoid those unpleasant surprises and keep your transportation budget in check.

One good strategy is to narrow your choice of vehicles down to three or four by using the typical criteria – reliability ratings, government crash tests, cost of ownership and the like. After narrowing the field, contact your agent to determine how much it will cost to insure each vehicle. You may not be able to get an exact figure without the vehicle’s VIN number, but your agent should be able to at least give you a ballpark figure. You can then use those figures to determine the true cost of ownership for each type of vehicle you are considering. Depending on how the numbers work out the cost of insurance may be enough to tip the scales in favor of one model over another.

Shopping for a new car can be fun and exciting, but it is also serious business. That is why it is so important to consider all of the factors, including the monthly payment, the total cost of the car, the cost of ongoing maintenance and of course the cost of car insurance. By understanding all the factors that go into the price of that car and its operating cost you will be able to make an intelligent and informed decision.

Get the Motorcycle Insurance You Need without Sacrificing Coverage

Motorcycle owners may be a risky bunch by nature, but when it comes to motorcycle insurance, it is not a good idea to indulge that tendency. If you own a motorcycle, you need to have sufficient insurance coverage in place. Fortunately, there are some proven strategies motorcycle owners can use to trim their insurance costs, without sacrificing the coverage they need.

Ride Carefully – Keep Your Driving Record Clean

Perhaps the most effective thing you can do to keep your motorcycle insurance rates low is to be a careful and proactive rider. Keeping your driving record clean can significantly lower your insurance rates, so be sure to take safety into account each and every time you ride.

If you are a new rider, consider enrolling in a safe biking course. You can often find these courses at your local community college. Many insurance companies provide discounts for riders who successfully complete a safety course, so it may be worth your time and effort.

Choose Your Motorcycle Carefully

Some motorcycles seem to be irresistible to thieves and if you own one of these models you may end up paying the price. Before you shop for your bike, be sure to check theft records. Don’t forget – you can also contact us for a rate quote before buying your motorcycle.

Install an Anti-Theft Device on Your Motorcycle

Installing an anti-theft device can also reduce your premiums. Alarms make it that much harder for thieves to make off with your bike. Not only do they protect your motorcycle from theft, but they can lower your insurance costs at the same time.

Ask About Discounts

By having your homeowner’s, auto and motorcycle insurance with the same company, you may be eligible for a multi-policy discount. Be sure to ask your agent about any discounts that may be available.

In addition to multi-policy discounts, many insurance companies offer additional discounts for everything from a college degree to a safe driving record. Just like with your car, you may be eligible for additional discounts if you keep your motorcycle in a garage where it is safe from thieves and from the forces of nature.

Raise Your Deductible

Another excellent way to lower your monthly motorcycle insurance premiums is to raise your deducible. Deductibles and premiums move in opposite directions, so the higher your deductible, the lower your monthly premium. You can make this work for you by funneling the difference into a separate savings account that you can use to cover unexpected expenses in the event of an accident.

Make Sure You Know What Your Condo Insurance Policy Covers

Despite the slump in the real estate market in recent years, many people find condominiums an attractive alternative to owning a separate dwelling. Typically, the condominium association is responsible for much or all of the building’s maintenance. The selling price may be more affordable than free-standing homes in the same neighborhood. The structure may be younger and in better condition than separate dwellings in the same price range. For these reasons, owning a condo makes sense for many. Those who choose condos over separate dwellings, however, need to understand the proper way to insure their investments. While similar in many ways to homeowner’s insurance policies, condominium unit owner policies have some significant differences.

The most obvious difference is the subject of the insurance. A homeowner’s policy insures against damage to a house and other structures on the property, such as an unattached garage or a fence. A condominium policy insures against damage to the condo unit, including alterations, appliances, fixtures, and improvements in it and parts of the real property that the condominium agreement makes the responsibility of the unit owner. Therefore, the subject of the coverage is much more limited in a condo unit owner’s policy.

Unlike a homeowner’s policy, a condo policy does not cover structures that the owner rents or holds for rent to a person who is not a tenant of the building. However, there is coverage if the rented structure is a private garage. The policy also does not cover structures from which anyone conducts a business or which store some types of business property.

Another difference has to do with trees. A homeowner’s policy provides a small amount of coverage for removing a downed tree that has damaged an insured structure or that is blocking a driveway or ramp for a handicapped person. The condo policy covers removal of an owned tree only if the insured person is the sole owner of it; if all the unit owners in the building share ownership of the tree, the policy does not provide coverage. Also, it does not cover a tree that has not damaged the structure and is blocking a ramp or driveway.

An important difference is in the range of perils the policy covers. A homeowner’s policy provides “special” causes of loss coverage on the dwelling, meaning that it covers all perils other than those the policy specifically lists as not covered. In contrast, the condo unit owner’s policy covers the unit only for those perils that the policy lists as covered. It is possible that a loss covered by a homeowner’s policy would not be covered by a condo unit owner’s policy.

If the building in which the condominium unit is located becomes vacant for more than 60 days, the policy ceases to provide some coverages. For example, it will not cover losses caused by vandalism or malicious mischief, accidental discharge or overflow of water or steam, or glass breakage that occur after 60 days of vacancy.

If the unit owner’s personal property such as household appliances is damaged, the insurance company will pay the difference between the cost to replace it and the amount by which it has depreciated. Property that is part of the building, such as carpeting, awnings, and outdoor equipment, are covered for their replacement cost without depreciation. However, the owner must repair or replace the damaged items within a reasonable amount of time; otherwise, the company will deduct an amount for depreciation.

Coverage for additional perils and for replacement cost on personal property may be available for an additional premium. A professional insurance agent can help identify companies that provide the needed coverage at a reasonable cost. With the right combination of coverage and price, the new owner can enjoy her condo unit in financial security.

New Pool = Check Insurance Coverage

You’re having a new pool installed in your backyard, and you can’t wait to dive into a summer of swimming fun.  Of course, you may be so busy buying water wings, noodles and floats that you forgot to take care of one very important detail: your insurance. Now is the time to take a close look at your homeowner’s policy to see if you have sufficient coverage for your new pool.

Your first step should be to give your insurance agent a call right away and let them know you have a new pool. If you neglect to inform them of this important fact, it could cause problems down the road if someone is injured in your pool.

Here are a few insurance facts to keep in mind as you get ready for your pool opening:

Your pool is separate from your home

Homeowner’s insurance generally provides coverage for damages to your home and “other structures” on the premises. As far as your insurance company is concerned, your pool is considered a separate entity from your house—which means it is covered under the “other structures” portion of your policy, along with detached garages, sheds and gazebos.

With most homeowner’s policies, the maximum amount of insurance coverage for these other structures is 10 percent the amount of coverage on your home. In other words, if your insurance policy covers $100,000 on your home, the coverage you would receive for your pool and other structures would be $10,000 combined.

If you spent wads of money on a fancy new pool, $10,000 may not be enough to cover serious damages to it. Plus, if you have a shed and a detached garage in addition to a new pool, keep in mind that this amount will have to cover damages to all three structures. You may decide that you need to purchase additional insurance.

The type of pool damages your insurance will cover varies depending on your specific policy. Be sure to read the fine print and figure out exactly what your policy covers. Most policies do not cover damage caused by freezing, thawing, pressure or weight of ice water. Therefore, if you live in a particularly cold area, be sure to properly protect and “winterize” your pool before the colder months hit.

Protect yourself against pool liability issues

Insurance can also protect you against liability issues related to your pool. Obviously, there are serious dangers associated with pools, including injuries and drowning. As a matter of fact, about 45,000 swimmers are injured and 300 people drown in backyard swimming pools every year.

Although the liability portion of your homeowner’s policy will protect your assets if someone sues you, it may not be enough. Most homeowner’s policies pay up to $100,000 in coverage each time a person makes a legitimate civil claim against you for an injury that occurred on your property. When you install in a pool, you are increasing the chances that someone could be seriously injured or even killed on your property—and $100,000 may not be enough such a tragedy.

Therefore, you should consider purchasing additional liability coverage after you install your new pool. First of all, find out if you can purchase higher liability coverage limits on your existing homeowner’s policy. You may be able to increase your coverage from $100,000 to as much as $300,000 for a minimal premium.

However, this still may not be enough for a pool owner. You should also consider purchasing what’s known as a personal umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages. Umbrella policies typically pay up to a predetermined limit, which is usually $1 million, for liability claims made against you and your family.

Call your insurance agent and discuss how you can protect yourself from liability issues relating to your pool.

Follow pool safety rules

Another way you can protect yourself from liability issues is to create a safe swimming area and make sure everyone who takes a dip follows your pool rules. Here are a few safety tips to keep in mind:

  • Do not install a pool diving board or slide. (Many insurers will not even cover pools with these items because they are far too risky.)
  • Install a secure fence around the pool.
  • Never leave small children unsupervised near the pool, even for a few seconds.
  • Do not allow anyone who cannot swim into your pool.
  • Keep children away from pool filters. The suction from these filters can cause injuries or trap them at the bottom of the pool.
  • Do not swim alone or allow others to swim alone.
  • Do not allow people who are under the influence of drugs or alcohol to swim in the pool.
  • Check the pool regularly for glass, bottle caps and other hazards.

Keep a secure cover on the pool during the off-season.

Why Condo Owners Need Insurance

If you own a condominium, you may think you don’t need insurance protection. Think again. Although your condominium association offers a “master” insurance policy that covers the building and commonly owned property, this insurance probably does not protect your upgrades, furnishings and other belongings.

That means if a burglar breaks into your condo, a fire causes smoke damage to interior walls of your unit or a visitor falls and hurts himself inside your home, you will not be covered by your condominium’s general insurance policy. This is exactly why you need your own condo owner’s policy. This personal coverage could protect you in the event of theft, damage and personal liability situations.

Every condo is different

Before you purchase condo insurance, you should find out exactly what is covered by your condominium association’s master policy. Generally, these policies cover only the structure of the building, but it varies depending on your state and particular condominium. It’s important to do your homework and find out exactly what is and is not covered so you can make sure your personal policy covers the rest.

What kind of coverage do you need?

The type of coverage you need greatly depends on your unique situation. However, you’ll definitely want to protect yourself against theft, damage and personal liability incidents. Depending on where you live, you may also need flood insurance or other special coverage.

A professional insurance agent can help you figure out exactly what kind of coverage you need. You may want to ask yourself the following questions as you decide on the details of your insurance policy:

  • What parts of the condo am I responsible for according to my condo association’s bylaws?
  • How much would it cost to replace or repair my condo?
  • How much are all of my personal items worth?
  • Do I have especially valuable items in my condo, such as jewelry, antiques, fine art or collectibles?
  • Do I run a business out of my home or often work from home?

You should also think about liability coverage. Unfortunately, we live in a lawsuit-happy society today. So, if a visitor falls down your stairs and breaks his leg or slips on some water in the kitchen and throws out her back, they may ask you to pay for medical expenses, lawsuit costs and other compensation awards. That’s why it’s so important to make sure your insurance policy includes liability protection.

Don’t skimp

Whatever you do, don’t assume that your condo association has you covered. This assumption could cost you thousands of dollars in the long run. Do some research and find out exactly what kind of protection your association’s insurance policy provides. You’ll probably discover that it’s not nearly enough to protect your personal property and belongings.

An expert insurance agent can help you determine exactly what kind of coverage you need. She may be able to offer you special discounts if your condo has smoke detectors and central station burglar and fire alarms. You could also save by purchasing a home and auto insurance package through the same insurer.

After the Accident – Working with the At-Fault Driver’s Insurer

You have just emerged from a car accident, but the good news is that you are not at fault. Now comes the task of successfully dealing with the other driver’s insurance company. In order to begin, you must collect certain details at the site of the accident from the at-fault driver: their name, address and phone number, the name of their insurance company, their policy number, their claims number and their insurance company’s address. With this information you can begin the process by making a phone call to the company in question.

Now, it is the responsibility of the at-fault driver to tell their insurance company about the accident; unsurprisingly, many of them are reluctant to do so. Therefore, it is a good idea for you to make the call in case they do not. During the call, tell the insurance company that you were involved in an accident with one of their policyholders and also inform them of any property damage or personal injuries, if any. At this stage, it is only necessary to report the simple facts of the accident without telling them who was at fault. Your opinion is not necessary in order for the police to determine who was at fault, and for the insurance company to follow the police’s recommendation.

When you are involved in an accident, and you believe that you are not at fault, it is best to contact your own insurance company anyway. This is important because it establishes your own good faith. It is especially important if the other party or their insurer denies that they are responsible for the accident, because this can help you. The insurance company of the at-fault party is completely responsible for reimbursing you for any damages to either your person or your property. Nevertheless, there are certain strictures that must be followed in all situations.

The most important rule is never take the law into your own hands, under any circumstances. After you have informed both your insurer and the other party’s insurer, ask for an authorization for car repairs from the at-fault driver’s company. You will be asked to get an estimate of the necessary work from a local garage that you may choose. The majority of states only allow insurance companies to recommend garages and not only declare their services valid at one of their choice. Make the estimate known to the insurer as soon as possible.

Typically, this is an uneventful process, but sometimes the at-fault driver’s insurer can inform you to seek payment from your own insurer due to lack of evidence. Therefore, obtain the police report as soon as possible and notify your insurer at once. The report will clearly spell out who is at fault for the accident; taking a copy to the at-fault driver’s insurance company will probably clear up any remaining misunderstandings. As a matter of fact in most states it is against the law for the insurer to deny a claim when the liability is “reasonably clear.”

Insure Home Improvement Projects to Ensure Success

Although we all understand the importance of homeowner’s insurance, many homeowners never think about insuring their home improvement projects. Before you invest a boat load of money in home renovations, it’s critical that you insure your project. Otherwise, you could leave yourself vulnerable to some serious financial stress.

Before you don your hard hat and get to work on that home improvement project, take these four simple steps to make sure you’re protected:

1. Give your insurance agent a call.

There are so many things that can go wrong during a home improvement project. For example, what if your beautiful new kitchen cabinets are stolen from your backyard before you’ve had a chance to install them? What if a rainstorm causes damage to your floors during a major re-roofing project?

Your plain vanilla homeowner’s policy may not cover any damage done to your home during renovations. This is why it’s so important to call your agent and find out what’s covered during the construction process. You may find that you’ll need to change your insurance coverage temporarily until the renovations have been completed.

Tell your insurance agent exactly what kind of home improvement project you have planned. He or she can walk you through your short-term coverage options to make sure you’re fully protected.

You probably won’t need any additional insurance coverage if the project is relatively small. For example, if you’re simply switching out a couple of appliances in your kitchen or replacing fixtures in your bathroom, there’s probably no need to call your agent. However, if you’re spending more than $25,000 on a home renovation, you should definitely call.

2. Work only with insured contractors.

If you’re planning on hiring a contractor to work on your home renovations, you’ll need to look for more than just an experienced company. You’ll also want to make sure the company has general liability insurance as well as workers’ compensation for its employees. Ask the contractor for a certificate of insurance to confirm their coverages.

While you may be tempted to hire a cheaper contractor who lacks insurance, remember that you’re taking a huge risk in doing so. If something goes awry during the project, you could be stuck with a hefty bill. On the other hand, when you hire an insured contractor, you will not be held liable if a worker is injured during the project. Plus, you’ll be covered if the contractor causes any damage to your home during the project.

3. Obtain the proper permits.

Depending on where you live, you may need to obtain building permits before you begin your home renovations. Typically, permits are required if you are altering the structure of your home, such as adding on a room or a deck. Contact your city or county government offices to find out whether or not your home improvement project requires a building permit.

If a building permit is necessary, you or your contractor will need to apply for the permit and adhere to the specified building codes. Once the job has been completed, a building inspector will come by to check out the renovations and ensure that everything is up to code.

It’s extremely important to obtain the proper permits when necessary. If you add a room to your home and it does not meet your local government’s building codes, your insurer may not cover the extra room.

4. Update your insurance policy.

Once you have finished your home improvement project, contact your insurer to determine how much value the change has added to your home. This is extremely important. If you do not notify your insurance company about an expensive addition, you’ll be grossly underinsured if something happens to your home.

Your Mortgage Balance: The Wrong Way to Determine Your Insurance Needs

Although the housing market is in the midst of a prolonged slump, some experts believe prices are still higher than they should be. At least in the short term, homebuyers will take out large mortgages against their homes. Unfortunately, the mortgage amount sometimes brings the lender into conflict with the homebuyer’s insurance company. For example, the mortgage may be for $200,000, but the insurance company may be willing to insure the home for only $175,000. The lender will often threaten to not hold the closing if the borrower does not buy an insurance amount equal to the amount of the mortgage. This obviously leads to a very anxious homebuyer who has many other things to worry about. Who is correct here?

Most insurance policies provide coverage for the home on a “replacement cost” basis. This means that, if a covered cause of loss damages the home, the company will pay the cost to repair or replace it without deducting any amounts for depreciation. However, the company will pay the least of:

  • The amount of insurance covering the building;
  • The cost of replacing the damaged portion of the building with materials of similar kind and quality and for similar use; or
  • The necessary amount actually spent to repair or replace the damaged building.

Assume that a fire completely destroys the home mentioned previously. The homeowner bought $200,000 coverage to equal the mortgage amount. The most the insurance company will pay is $200,000 (the amount of insurance) or the reasonable cost of labor and materials to rebuild the house, whichever is less. If the contractors can rebuild it to a state reasonably similar to its prior state for $175,000, that is the amount the company will pay.

The mortgage, however, is based at least in part on market value. Market value reflects what someone is willing to pay for the house and related structures (garage, swimming pool, gazebo, etc.) and the land they sit on. The price someone is willing to pay for a building may be very different from the cost to rebuild it, because that price contemplates factors (school district, proximity to workplaces and shopping or bodies of water, etc.) that have no relationship to the cost of labor and materials. In addition, market value includes the value of the land, something no homeowner’s insurance policy covers, since land does not burn, explode, or otherwise suffer insurable damage.

While it is understandable that the lender wants to see its investment protected, requiring a borrower to insure up to the mortgage amount helps no one other than the insurance company. The lender and the homeowner will never collect more than the cost of rebuilding no matter how much more insurance the homeowner buys. The insurance company, however, gets to collect the premium for $200,000 worth of coverage but will never have to pay out more than $175,000.

Many states have laws or regulations that prohibit mortgage lenders from requiring borrowers to buy amounts of insurance greater than the cost of replacing the house. Arizona, California, Florida, New York, Tennessee, North Carolina and Virginia are just some of the states that restrict lenders’ insurance requirements. New York’s regulation, for example, prohibits mortgage lenders from requiring a borrower to “obtain a hazard insurance policy in excess of the replacement cost of the improvements on the property as a condition for the granting of a mortgage loan.”

Homeowners should review the amount of coverage on their homes with their insurance agents at least annually. The importance of having enough coverage continues long after the home purchase. However, it is equally important not to buy more coverage than necessary.

Thirteen Vehicles Named to The Insurance Institute for Highway Safety List of Safest Vehicles

Thirteen vehicles, including four cars, seven SUVs, and two minivans, earned The Insurance Institute for Highway Safety’s Top Safety Pick awards for 2007. The award is given to vehicles that best protect people in front, side, and rear crashes based on ratings in Institute tests. Winners are also required to be equipped with electronic stability control. Honda and Subaru each manufacture three of the 13 winning vehicles.

The complete list of winners for 2007 include:

·   Large car: Audi A6 manufactured Dec. 2006 and after

·   Midsize cars: Audi A4, Saab 9-3, Subaru Legacy equipped with optional electronic stability control

·   Minivans: Hyundai Entourage, Kia Sedona

·   Luxury SUVs: Mercedes M class, Volvo XC90

·   Midsize SUVs: Acura RDX, Honda Pilot, Subaru B9 Tribeca

·   Small SUVs: Honda CR-V, Subaru Forester equipped with optional electronic stability control

Pickups were not included in this round of awards because the Institute hasn’t begun to evaluate their side crashworthiness.

The Institute ratings of good, acceptable, marginal, or poor are based on each vehicle’s performance in high-speed front and side crash tests. Consideration is also provided for how well seat/head restraints protect passengers against neck injuries during rear impacts. For a vehicle to become a top pick it must obtain at least good ratings in all three of these tests.

A new electronic stability control requirement was added for 2007. This requirement was added because Institute research found that electronic stability control greatly reduces crash potential by helping drivers stay in control during emergency maneuvers. Single-vehicle crashes in general were reduced 40 percent with the addition of this feature. Fatal single-vehicle crashes declined 56 percent, and fatal rollovers decreased by nearly 80 percent.

Some manufacturers improved their vehicles specifically to earn the awards. The Institute noted that Audi redesigned the seat/head restraints in the A4 and A6 to improve performance in the rear impact test and Subaru stepped up its plans to offer electronic stability control on some versions of the Forester and Legacy in order to meet the new requirement.

Other vehicles are also in the process of being changed to make them eligible for an award. Ford will add electronic stability control to 2008 Freestyles. Most automakers have added standard side airbags with head protection, even though government regulations don’t require them yet. All 2007 winners have standard side airbags.

Seventeen other vehicles would have won awards with better seat/head restraint designs. Toyota would have earned nine awards, including three Lexus winners. Honda could have added four more awards, including one for an Acura. The Institute stated that rear crash protection is a safety area in which many automakers lag behind.

Taking Another Look At Flood Insurance

According to an August 2006 article published on SmartMoney.com, the Federal Emergency Management Agency reported that only 40 percent of all residents in the flooded areas hit by Hurricane Katrina were covered by flood insurance. The majority of those insured were required to have the coverage in order to obtain a mortgage.

The other 60 percent who didn’t have flood insurance fall into two main categories: renters and homeowners without a mortgage.

The uninsured group faced a serious problem. Standard homeowner and renter’s policies cover damage from wind or rain. These policies, however, don’t cover damage as a result of flooding. These individuals’ only recourse was to rely on federal disaster aid.

Flood insurance is available through the National Flood Insurance Program to any property owner living in an area with an established flood plan. This is used to gauge the community’s vulnerability by creating an area flood map. Flood plans also help lessen some of the risk by establishing certain zoning and building policies, which include types of allowed construction, elevation at which building is allowed, permissible building materials, and construction reinforcement techniques.

The National Flood Insurance Program offers three different types of policies:

·   The Dwelling Form – this insures one to four family residential structures and/or contents. This form can also be used to insure residential condominium units.

·   The General Property Form – this insures residential buildings housing more than four families as well as non-residential and commercial buildings.

·   The Residential Condominium Building Association Policy Form – this insures associations operating under the condominium form of ownership.

There is also a Preferred Risk Policy designed for residential and non-residential properties in low-to-moderate risk areas. The policy can be written with one of several combinations of building and contents protections:

·   Renters pay $39 per year for $8,000 of contents coverage.

·   Business owners can buy $50,000 of building and contents coverage for $550 per year per building.

·   Business owners who lease their space can purchase $50,000 of contents coverage for $145 per year.

Finally, keep in mind that flood insurance is easy to obtain. While the federal government may administer the program, it is sold through regular insurance companies. To find out more about flood insurance, call us today or log on to www.floodsmart.gov.

Insurance Institute for Highway Safety Says Death Rates Double for Minicars

Minicars have become increasingly more popular as fuel prices have risen. Because of their newfound popularity, the Insurance Institute for Highway Safety included them in their crash tests for the first time in 2006. The agency rated the cars for comparison of occupant protection in front, side, and rear crashes. What the Institute discovered from its testing is that driver death rates in minicars are higher than in any other vehicle category and more than double the death rates in midsize and large cars.

The results of the crash tests conducted by the Institute indicate which vehicles in each weight category provide the best protection in real crashes. This round of tests reveals big differences among the smallest cars.

Minicars weigh about 2,500 pounds or less. A typical small car weighs about 300 pounds more, and midsize cars weigh about 800 pounds more. A midsize SUV weighs 4,000 pounds or more, which is at least 60 percent more than a minicar weighs. In every vehicle category, the tests revealed that the risk of crash death is higher in the smaller, lighter models. This means that any car that’s very small and light isn’t a good choice in terms of safety.

Another objective of the testers was to find the minicars with the most crashworthy designs. The Nissan Versa scored best. It is slightly larger than the other cars tested by the Institute, which puts it in the small car classification. This is the next size class up from minicar. Still the agency included it in the minicar testing because the Versa is marketed to compete with minicars.

The Versa was the only car to earn the highest rating of good in all three tests. In the frontal test, its structure held up well, and there was minimal intrusion into the space around the driver dummy. The majority of injury measures were low. In the side test, the standard equipment side airbags prevented contact between the striking object and the heads of the crash test dummies.

The Honda Fit with its standard side airbags and the Toyota Yaris equipped with optional side airbags also earned good ratings in front and side tests. However, both cars failed to earn acceptable ratings for rear protection. The Yaris was rated marginal, and the Fit was rated poor.

The Hyundai Accent ranked lowest in overall testing. Researchers were especially concerned about its structural performance in the side test. Its standard airbags in front and rear seats provided good head protection. However, injury measures recorded elsewhere on the driver dummy revealed that a motorist in a similar type crash would be likely to sustain internal organ injuries, broken ribs, and a fractured pelvis.

Three Questions to Determine Whether Your Home Is Properly Insured

Homeowners are always being advised to update their property insurance annually because any home alteration or lifestyle change, such as marriage or divorce, can affect the amount of coverage needed. While it is important to complete that yearly review, it is equally important to know what questions you should ask your agent to ensure you have the right coverage for your circumstances.

According to the Insurance Information Institute (I.I.I.), there are three key questions you should always ask:

1.   Do I have enough insurance to rebuild my home? – Buying just enough insurance to meet your mortgage lender’s requirements could mean that you are inadequately covered should you need to rebuild your home at current prices. To have real protection, you need to consider the following types of coverage:

§      Replacement Cost Policy – A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.

§      Extended Replacement Cost Policy – This extends your coverage another 20 percent or more above your stated policy limits. This additional insurance can be extremely important if your home is one of many damaged in a disaster, because a widespread disaster can result in increased costs for building materials and labor.

§      Inflation Guard – This coverage automatically adjusts the policy limits for rebuilding costs as construction costs rise.

§      Ordinance or Law coverage – If your home is badly damaged and requires rebuilding under new building codes, ordinance or law coverage will pay a specific amount toward any additional costs involved in meeting the new code requirements.

§      Water Backup – This coverage insures your property for damage from sewer or drain backup. 

§      Flood Insurance – Standard home insurance policies do not include coverage for flooding. Flood insurance is available through the federal government’s National Flood Insurance Program (https://www.floodsmart.gov), but can be purchased from the same agent who provides your homeowner’s insurance. Make sure to purchase flood insurance for the structure of your house, as well as for the contents.

2.   Do I have enough insurance to replace my possessions? – Most insurers provide coverage for personal possessions equal to 50 percent to 70 percent of the amount of insurance on the dwelling. The best way to determine if this is enough coverage is to conduct a home inventory. A home inventory is a list of everything you own and the estimated cost to replace these items if they were stolen or destroyed.

You can insure your possessions in one of two ways:

a.            Cash Value Policy – This coverage pays the cost to replace your belongings minus depreciation.

b.            Replacement Cost Policy – This coverage pays the full cost of replacing your belongings at current prices.

3.   Do I have enough insurance to protect my assets? – Homeowner’s insurance provides you with basic liability coverage. This protects you against lawsuits for bodily injury or property damage that you, your family, or your pets may cause to other people. Liability insurance pays for the cost of your legal defense and for any damages a court rules you must pay, up to the stated limits of your policy. Most homeowner’s insurance policies provide a minimum of $100,000 worth of liability insurance. If the standard liability coverage isn’t sufficient, you may need an excess liability policy, which provides additional coverage over and above what is covered by your homeowner’s insurance policy.

The History of Insurance Throughout the World

Insurance has a history that dates back to the ancient world. Over the centuries, it has developed into a modern business of protecting people from various risks. The industry has been profitable for many years and has been an important aspect of private and public long-term finance.

In the ancient world, the first forms of insurance were recorded by the Babylonian and Chinese traders. To limit the loss of goods, merchants would divide their items among various ships that had to cross treacherous waters. One of the first documented loss limitation methods was noted in the Code of Hammurabi, which was written around 1750 BC. Under this method, a merchant receiving a loan would pay the lender an extra amount of money in exchange for a guarantee that the loan would be cancelled if the shipment were stolen. The first to insure their people were the Achaemenian monarchs, and insurance records were submitted to notary offices. Insurance was also noted for gifts of substantial value. These gifts were given to monarchs. By recording their gifts in a register, givers would receive help from a monarch by proving the gift’s existence if they were in trouble.

As the ancient world evolved, maritime loans with rates based on favorable seasons for traveling surfaced. Around 600 BC, the Greeks and Romans formed the first types of life and health insurance with their benevolent societies. These societies provided care for families of deceased citizens. Such societies continued for centuries in many different areas of the world and included funerary rituals. In the 12th century in Anatolia, a type of state insurance was introduced. If traders were robbed in the area, the state treasury would reimburse them for their losses.

Standalone insurance policies that were not tied to contracts or loans surfaced in Genoa in the 14th century. This is where the first documented insurance policy came from in 1347. In the following century, standalone maritime insurance was formed. With this type of insurance, premiums varied based on unique risks. However, the separation of insurance from contracts and loans was a major change that would influence insurance for the rest of time.

The first book printed on the subject of insurance was penned by Pedro de Santarém, and the literature was published in 1552. As the Renaissance ended in Europe, insurance evolved into a much more sophisticated form of protection with several varieties of coverage. Until the late 17th century, many areas were still dominated by friendly societies that collected money to pay for medical expenses and funerals. However, the end of the 17th century introduced a rapid expansion of London’s importance in the world of trade. This also increased the need for cargo insurance. London became a hub for companies or people who were willing to underwrite the ventures of cargo ships and merchant traders. Lloyd’s of London, one of London’s leading insurers, is still a major insurance business in the city.

Modern insurance can be traced back to the city’s Great Fire of London, which occurred in 1666. After it destroyed more than 30,000 homes, a man named Nicholas Barbon started a building insurance business. He later introduced the city’s first fire insurance company. Accident insurance was made available in the late 19th century, and it was very similar to modern disability coverage.

In U.S. history, the first insurance company was based in South Carolina and opened in 1732 to offer fire coverage. Benjamin Franklin started a company in the 1750s, which collected contributions for preventing disastrous fires from destroying buildings. As the 1800s arrived and passed, insurance companies evolved to include life insurance and several other forms of coverage. No type of insurance was mandatory in the United States until the 1930s. At that time, the government created Social Security. In the 1940s, GI insurance surfaced. It helped ease the financial difficulties of women whose husbands died while fighting in World War II. It wasn’t until the 1980s that the need for car insurance grew enough that steps were taken to make it mandatory. Although insurance is an established business, it is still changing and will change in the future to meet the evolving needs of consumers.

Hurricane Preparedness Best Practices

It’s only May, and the southeastern United States has
already experienced two named storms.

Hurricanes are destructive and potentially deadly storms
that can cause a tremendous amount of property damage and, occasionally, people’s
lives. Longtime residents of coastal Florida, the Carolinas, Texas,
Mississippi, Alabama and Louisiana are familiar with the drill – but there are
always new people and always procrastinators every year. Hurricane preparedness
takes time! Don’t leave it to the last minute. Here are some things to keep in

Hurricane season is normally June through November. But that
doesn’t mean the occasional storm can’t come early or late. Don’t get

  • Maintain situational awareness. Keep an eye and
    ear on national and local media, and monitor developing weather systems.
  • Track the projected path of storms, using
    websites like National Hurricane Center (www.nhc.noaa.gov).
  • Do a risk assessment for your home. Assess
    vulnerability to storm surge, wind damage, and flooding. A Category 5 hurricane
    could result in storm surge of 30 feet above ground level in some areas. You
    can find a storm surge risk map at https://www.nhc.noaa.gov/surge/risk/.
  • Plan on at least a three-day wait before substantial
    government assistance is in place. FEMA can’t put its trucks and trailers in
    the direct path of the storm. It takes at least three days for state and FEMA
    resources to be put in place.
  • Cut down large trees overhanging your house
    and garage. The tree could fall, taking out part of your house.
  • Expect a run on hurricane supplies in the last
    48 hours before the storm. Buy your batteries, bottled water, fuel cans,
    generators and other supplies before you need them.
  • Invest in hardened windows, shutters and doors.
  • Failing that, buy your plywood well ahead of
    time, along with a drill and screws to board up your windows.
  • Obey evacuation orders. If you receive an
    evacuation order, you are getting it because the authorities know they will not
    be able to reach you in an emergency. Many people in coastal communities are
    killed by hurricanes – or vanish forever – when they ignore orders to evacuate.
  • Keep your homeowners or renters coverage updated
    with the current replacement value of your home and belongings.
  • Inventory your belongings. You can use sites like:
    Lockboxer.com, Knowyourstuff.org (a creation of the Insurance Information
    Institute) and Stuffsafe.com. These
    resources are free or very low cost, and will facilitate compensation from your
    insurance company if your home is damaged or destroyed by a weather event.
  • Fill your gas tank. Many times, gas stations
    run out of fuel in the day or so before a storm. If you can’t fuel your
    vehicle, you can’t evacuate. And you may not be able to function.
  • Get a battery-operated radio. Don’t
    count on cell phones working for a number of days after a storm.
  • You may be without power for as long as two
    weeks and sometimes longer. Keep nonperishables, batteries and flashlights.
  • Keep your generator outdoors. Every year, people
    die from carbon monoxide poisoning because they moved their generator indoors
    to protect it from theft.
  • Understand your generator’s capacity. Generators
    have a limited load. This is especially important to know when you start up
    electrical items connected to the generator, because startups cause a spike in
    electrical demand.
  • Know your neighbors. Your neighbors may have a
    harder time preparing or evacuating from storms than you do, because of
    frailty, disability, young children, poverty or lack of reliable
  • Look out for family members of emergency
    responders. Police, fire department, National Guard members and medical
    personnel often have to concentrate on preparing for the mission, and have less
    time to attend to their own homes and families.
  • Know your community emergency management contacts.
    You can find an online listing at https://www.ready.gov/community-state-info
  • Don’t underestimate tropical storms. Just
    because it’s not a hurricane doesn’t mean it can’t do a lot of damage locally.
    Tropical storms can dump as much rain as a hurricane.

By understanding these guidelines, you can be an asset to
your community in the event of a hurricane, instead of a drain on emergency
resources. You will also have an easier time getting reimbursed by your
insurance company for any damage done, and be doing your part to keep overall
hurricane insurance premiums down.

Self-Insuring Workers’ Compensation Plans May Produce Premium Savings

Joining a workers’ compensation group self-insurance program may be a significant means for small and mid-sized employers to reduce operating costs. Such plans deliver savings by providing employers with considerable control over losses, medical care and rehabilitation, plus improving cash flow.

While some companies self-insure workers’ compensation programs individually, these are usually best suited for larger corporations with immense assets. For smaller and medium-sized businesses, a Group Self-Insurance (GSI) workers’ compensation plan is more suitable. A GSI is a non-profit association of employers formed for the specific purpose of providing workers’ compensation coverage. A GSI enables employers to assume a major portion of their risk and provides group purchasing power for excess insurance to cover individual losses or in the aggregate in excess of a specified amount.

Workers’ compensation is well suited for self-insurance plans because claims are typically of low severity but high frequency, which allows losses to be predicted with some accuracy. Further, payment for large claims can be spread over several years, which benefits a company’s cash flow. GSI programs enable companies to better manage safety programs and have more direct involvement in seeing that employees receive prompt medical care when injured, and employers are able to exercise closer monitoring of the return of the employee to work.

Requirements for joining or forming a GSI vary considerably from state to state. Some states do not allow GSIs and in other states, companies must meet certain solvency standards and provide financial and loss data to be considered. Also, if a company has operations in more than one state, GSIs must be setup in each state. A GSI in one state will not cover losses in another state.

Besides improved cash flow, the major benefits that come from joining or creating a GSI are enhanced loss experience through more effective loss prevention, loss control and managed care programs; reduced administrative costs, and interest income earned on premiums. GSIs in most states do not have to pay premium taxes and or be assessed for residual workers’ compensation market losses.

Members of a GSI pay a premium to the group based on their exposures, classification codes, payroll, experience modifications, and rates developed by a state’s workers’ compensation rate making bureau. At the end of the contract year, any surpluses from both the claims fund and the administrative expense fund can be returned as dividends to group members.

GSIs handle claims following guidelines of the state workers’ compensation laws. Often, third-party administrators handle loss prevention and control, case management, accounting, investment and actuarial services.

An agent can provide guidance to employers wanting to explore joining a GSI. An interested company should first seek management commitment as joining a GSI requires careful attention to the entire workers’ compensation program rather than shifting these responsibilities and duties to a private insurer. Also, an employer has to be willing to disclose detailed information regarding its finances, support systems and ongoing risks.

While GSIs offer important advantages, there are some disadvantages. Members of the group are usually jointly and severally liable for losses incurred by the entire membership. A bankruptcy or dissolution of a member does not release the remaining members from liability. If the GSI’s retention and excess insurance are exhausted by a catastrophic event, the group members must contribute their pro rata share of the total loss. And, if a GSI has a pattern of liberal underwriting for new members, it’s possible it will have financial deficiencies in the future.

If an employer understands the additional risks it assumes as well as the added reporting and administrative duties when it joins a GSI program, the end result could be a significant reduction in overall costs for workers’ compensation.

State Minimum Auto Liability Coverage is Inadequate

Sure, you’re a responsible driver. But is your state-minimum, bare bones auto insurance coverage really sufficient to cover your risks?

Yes, every state imposes a minimum on liability insurance coverage. This coverage not only protects you against having creditors forcibly seize your assets and land you in bankruptcy court; it also helps protect others around you, by ensuring that no matter what their medical issue or damages, there is enough liquidity on the table to make sure they are economically protected.

But state minimums aren’t designed for most individuals, especially the affluent and do not provide them with the real protection they need. State legislatures must set liability minimums low enough so that insurance coverage is affordable even for poor families – so at least they’ll get something rather than drive completely uninsured. State minimums are not designed to provide really adequate protection for drivers who have assets or make a decent income and are those who are targets for legal action.

The Owner is At Risk

Remember, even if you lent your car to someone else for the weekend – if he or she crashes it, and causes damage, it’s you, as the car owner, who is ultimately responsible. Owners are first in line, ahead of drivers, when plaintiffs’ lawyers start looking to collect on damages not covered by auto insurance.

How Big Can Judgments Be?

Judgments for damages in auto accidents are very frequently $50,000 and over and can range into the millions. We looked at actual judgments obtained by just one small law firm in Las Vegas, Nevada, and found instances like these:

  • $200,000 in liability for just one accident involving a motorcycle.
  • $265,000 for a T-bone auto accident.
  • $300,000 for a leg injury to a pedestrian.
  • $750,000 for a rear end accident with injury.
  • $2,000,000 for another rear-end accident with serious injury.
  • 2,900,000 for a wrongful death claim.

Your state-mandated minimum of $15,000 to $100,000 per accident should cover most fenderbenders, but it is woefully inadequate for the real risk. If you are sued, and the plaintiff wins, you will be held responsible for the whole judgment over the amount of your coverage.

Asset Protection

If someone involved in an accident sues you and wins, he will receive a payment from your insurance company, up to the limit of coverage.  When the payment is inadequate, they may take additional action. They may sue to seize your personal assets – your bank account, your vehicles, property, business and even your home in some jurisdictions. They may also file to garnish your wages. The fallout could easily force you into bankruptcy – and severely disrupt your life.

If you have any kind of hard-earned assets that are at risk of creditor action, you may want to consider buying extra liability coverage. The more assets you have, the more likely you are to be targeted. After all, plaintiffs’ lawyers know that judgments are easier to collect from the affluent than the poor. But even middle class people have a lot to lose by carrying inadequate liability insurance coverage.

Liability Insurance

You may consider two kinds of insurance: additional liability insurance for your car, over and above the state-mandated minimum, and umbrella coverage, which helps protect your assets against losses from a wider variety of sources. This can be especially important for parents of teenagers who are risky drivers and who may drive someone else’s car, or have a party at the house while you and other adults are out of town. When a youngster leaves the party at your house after drinking, and has a wreck, you could be held liable.

To assess your exposure, sit down with a licensed insurance professional, your attorney, or both. It’s easy to tailor a remarkably affordable plan to provide more realistic protection against the actual risks of liability – but you have to do it before the accident.

  • Fill your gas tank. Many times, gas stations
    run out of fuel in the day or so before a storm. If you can’t fuel your
    vehicle, you can’t evacuate. And you may not be able to function.
  • Get a battery-operated radio. Don’t
    count on cell phones working for a number of days after a storm.
  • You may be without power for as long as two
    weeks and sometimes longer. Keep nonperishables, batteries and flashlights.
  • Keep your generator outdoors. Every year, people
    die from carbon monoxide poisoning because they moved their generator indoors
    to protect it from theft.
  • Understand your generator’s capacity. Generators
    have a limited load. This is especially important to know when you start up
    electrical items connected to the generator, because startups cause a spike in
    electrical demand.
  • Know your neighbors. Your neighbors may have a
    harder time preparing or evacuating from storms than you do, because of
    frailty, disability, young children, poverty or lack of reliable
  • Look out for family members of emergency
    responders. Police, fire department, National Guard members and medical
    personnel often have to concentrate on preparing for the mission, and have less
    time to attend to their own homes and families.
  • Know your community emergency management contacts.
    You can find an online listing at https://www.ready.gov/community-state-info
  • Don’t underestimate tropical storms. Just
    because it’s not a hurricane doesn’t mean it can’t do a lot of damage locally.
    Tropical storms can dump as much rain as a hurricane.
  • By understanding these guidelines, you can be an asset to
    your community in the event of a hurricane, instead of a drain on emergency
    resources. You will also have an easier time getting reimbursed by your
    insurance company for any damage done, and be doing your part to keep overall
    hurricane insurance premiums down.

    Protect Your Business with Building and Equipment Insurance

    If you are a business owner, you have undoubtedly heard of building and equipment insurance, which covers your business’ buildings and all personal property under the care or control of your business.  Even so, you may not yet be aware of everything else this insurance covers, and just how important it can be to you and to your business.

    For instance, did you know that building and equipment insurance covers additions, alterations, and even repairs to your buildings?  This type of insurance also covers items and equipment used to maintain your business’ property.

    Giving this type of coverage a second thought now?  You should.  Building and equipment insurance also provides coverage for furniture, fixtures, equipment and machinery; stock; all other personal property you and your business own and use in the business; labor, parts, or service by your business on other’s property; and improvements you make to the building you or your business lease.

    Similar to the personal property you own, the coverage also includes personal property inside and outside your business’ buildings, or in vehicles within 100 feet of your buildings.  And, interestingly enough, payment for damages done to personal property owned by others goes to the account of the property owner and not to the actual insured business owner.

    There are a few types of property excluded from this coverage, and you should be aware of them.  The types of property excluded from this coverage include: waterborne personal property; animals (in most circumstances); automobiles for sale; bridges, roads, walks or other paved surfaces; contraband; costs for excavations; certain foundations; land, water, growing crops, or lawns; money; piers, wharves, or docks; retaining walls that are not part of the building; and underground pipes, flues, or drains.

    However, you can obtain additional coverage for your business’ outdoor property, valuable papers and records, the personal property or effects of others, personal property at newly acquired buildings, property temporarily off-premises, and newly built or acquired buildings.  Keep in mind, though, that several of the categories may have limitations about which you need to be educated.

    10 Essential Hurricane Claim Tips

    Hurricane Irene’s destruction has left many people facing extensive property damage. Individuals who must file a claim have several things to do. First, make any emergency repairs that are necessary to prevent further damage. Don’t attempt any non-emergency repairs until an insurance adjuster is able to assess the property. Be sure to take clear photos of the damage. Next, contact an individual insurance agent. If the number was lost in the damage, consult the Insurance Information Institute’s list of claim phone numbers for various insurance companies. Before contacting an agent, consider the following common questions and valuable claim tips.

    1. What To Do After Filing A Claim
    The most important thing to do is prevent further damage. Make sure property is secure, board broken windows, dry carpets and board damaged roofs. Don’t attempt any major non-emergency repairs until an adjuster can see the damage. Keep receipts for emergency repair supplies and temporary accommodations.

    2. How To Speed Up The Claims Process
    Keep in mind that priority is given to the most severe cases after a disaster. Larger claims are settled in steps. Try these following tips to help make the claims process quicker:

    •Get at least two repair estimates for the adjuster to review.
    •Take pictures of the damage. If photos of the property before the damage are available, make copies of them.
    •Construct a list of all damaged property. Include a description, original cost, age, purchase location and estimated replacement cost of each item. If receipts are available for any of these items, make copies of them.

    3. What To Do If The Property Is Uninhabitable
    Remember that most homeowners policies cover extra living expenses resulting from hurricane damage. As long as the policy has provisions for hurricane damage, the company should provide reimbursement for living expenses. If unsure whether this is included, consult the policy to review the exact provisions. Remember to keep all costs in line with regular living expenses.

    4. Food Spoilage Due To Power Outages
    Unfortunately, most policies don’t cover spoiled food. However, some companies provide limited coverage for food that spoils during a power outage. The amount is usually between $250 and $500.

    5. Coverage For Fallen Trees
    Unless a tree damages a house, fence or garage, there is no coverage for damage to trees resulting from perils of weather.

    6. Damage From Power Surges
    When the power comes back on after an outage, surges often damage electronics or other equipment. Most insurance policies have a provision for sudden or accidental damage from artificially generated electrical currents. This excludes computer chips, transistors and some similar items. This means televisions and computers are excluded.

    7. Claim Checks That Aren’t Enough
    It’s important to understand whether cash value or replacement costs are awarded. If the amount received is lower than expected, consult an agent to discuss individual provisions.

    8. When To Expect A Check
    After the adjuster visits and assesses the damage, he or she completes the paperwork for processing. Once it has been processed, the carrier issues a check to the claimant. The turnaround time for receiving a check varies depending on how many claims are being processed. Some companies provide status reports for claim progress. If the check is slow to arrive, call an agent to see if the company has any progress reports on the claim.

    9. Understanding The Difference Between Replacement & Cash Value
    Replacement cost is the amount it costs to replace or repair an insured item today. It doesn’t cover the full original value of the item. The only limits are based on the amount of coverage purchased. Cash value policies pay for the cost of replacement of the item minus depreciation.

    10. What “Underinsured” Individuals Should Do
    Sometimes an agent tells an individual that they don’t have enough insurance. This is usually because homeowners don’t review their coverage regularly. Adding a room or making another change can have a significant impact on a policy. Be sure to contact an agent when any improvement or change is made to the home.

    Keep in mind that agents are busy. If a copy of the policy is available, try to find the answers in the document before making a call. However, if there are questions that the policy provides unclear answers about, be sure to contact an agent. It’s important to file hurricane claims as quickly as possible.

    Electronic Delivery of your Insurance Policy

    Whether or not you have already received any of your policies via email in recent years, you will see more and more of your insurance documents delivered electronically, in most cases in a PDF file format. As insurance companies update their policy delivery procedures, they are updating their technology so that policies are delivered electronically and most have already implemented this. There are several different methods of electronic delivery and the best news is you are getting your policy faster than ever.

    The current trend of electronic delivery is through an email alert advising you of a new policy, a renewal or any updates. You would then log into your account online and retrieve your documents. Another method is that some companies are delivering this to the insurance agency, then the agency is turning around and delivering this to you as an email attachment. If you ever have a problem with retrieving your documents, you should immediately contact your agency. If you don’t already receive your policy electronically, it may be available on demand from your agency, and the best thing to do is to call your agency and inquire if the policy can be delivered electronically. Finally, some carriers give you the option; you can either go on their website to find out what the procedures are, or you can contact your agency.

    When you get your policy, the best options are to either save your policy on your computer or save it into an online cloud file account. If you have a backup service for your computer, saving on your computer may be fine. If you don’t have a backup service, you may want to consider getting a Google Docs, a Box.com or Dropbox account. Many online document storage services offer free accounts for the first so many gigabytes of storage. In addition, since many companies are giving you access online to these accounts, as long as you have your user name and password you should have access to your policy. Nevertheless, it’s always a good idea to download them and save these on your system.

    Online document delivery has been the trend for delivery in recent years for banking, financial brokerages, and delivery of billing statements and is now the trend for the delivery of insurance documents. While the available technology is the driving force behind this, it is also a green business practice that saves paper and energy. After twenty years since the internet has become commercialized, we continue to see more and more utilization of the benefits that it provides.

    Certificates of Insurance – A Prudent Means to Avoid Costly Claims

    More and more companies are hiring independent contractors to handle not only administrative matters, such as benefits and human resources, but also sales and distribution. With this delegation of authority to third-party suppliers comes less direct control over these operations, and greater becomes the need for clients to demand that vendors provide them with timely Certificates of Insurance (COI).

    The COI proves that the insured (the third party) has purchased the insurance coverages as required by the outsourcing client. But, the COI also states that the holder of the certificate has no legal right to be covered by the insurance described in the COI, nor does it amend, extend or alter the represented coverage. The COI only shows that the outside contractor has the insurance coverage as explained on the certificate. This protects the business that has contracted with the third party against liability for negligence caused by the independent contractor up to the limits of the policy.

    It is the responsibility of the independent contractor to provide the COI to the client that has hired the firm. Usually a COI is prepared by an agent/broker with a copy sent to the insurance company and the client for whom the third party has contracted to perform certain functions.

    The COI contains the name of the insured, the name of the insurance companies issuing the policies as stated on the COI, what specific coverages are contained in the insurance policies issued to the insured, and various descriptions of normal policy terms, exclusions and conditions.

    Most often COIs are obtained for commercial general liability to provide protection from liability arising out of the insured’s premises or operations, products and completed operations. Usually, a general form will provide broad, standardized coverage terms. In cases, where the coverage is more complex and of a higher risk, manuscript forms of a COI can be written specifically by or for an insurance company. These manuscript COIs should be reviewed carefully for the scope of coverage being provided.

    There are two types of general liability forms — claims-made and occurrence. The trigger that compels the policy to respond is the main difference between the two forms. In the occurrence policy, occurrences are covered that take place during the policy period, no matter when a claim is reported. A claims-made policy requires that the occurrence take place during the policy period and the claim be reported during the policy period. Most COIs use the occurrence form for all independent contractors as claims-made policies limit coverage.

    But simply having a COI in hand does not always mean that the independent contractor has the insurance coverage. A prudent practice is to have a system to audit, review and correct the certificates to reflect the provisions in the contracts. Some clients establish an auditing program in house, while others have the insurance agent or broker manage the program as part of their fee arrangement. This cost depends greatly on the workload.

    The consequences of not monitoring COIs of a third party can be costly for the firm that hired the contractor. Consider this sobering example. A business hired an independent contractor to provide distribution service for the company. An employee of the vendor had a serious car accident, and soon afterwards, the contractor ceased business. When the employee began submitting workers’ compensation claims, there was no coverage — the contractor had never maintained that insurance. Unfortunately, the company had not insisted on a COI from the independent contractor to verify this coverage. Casting about for payment of the claim, the court ruled that the vendor’s employee was a statutory employee of the company that hired the contractor. The workers’ compensation claims have totaled more than $100,000 with more to come.

    This is just one of many chilling cases of companies that have been caught with unexpected losses that came from not requiring proper COIs from independent contractors and auditing them to make sure they remain current and reflect the actual coverages held by the insured.

    Boating and Your Money

    When it comes to boating, the only surprises you want are unexpected whale sightings. But we all know the unexpected happens – and that’s why we have boating insurance. But boating insurance doesn’t – and shouldn’t – protect you from everything. To avoid getting hit with unexpected bills and expenses, you have got to take initiative and understand your boat and your policy.

    • Keep policies current. That means you need to update your boat insurance policy to account for any refitting or major upgrades. The rule of thumb: If your upgrade or refit materially changes the market value of the boat, you need to upgrade your policy to reflect the replacement value of the boat. If you lost the whole boat, and everything in it, what’s the true replacement value?  Tip: Insurers take account of depreciation. Unless you keep careful records documenting every new upgrade or piece of personal property on the boat, they will assume everything is the same age as the boat itself. That’s tough when you just put a brand new engine on a 20-year old boat. They’ll pay for a 20 year old engine – and you won’t be made whole in the event of a total loss.

    For example: Many yacht owners have taken to installing high end home theater or AV systems in their boats. These installations can run tens of thousands of dollars and more – and are a frequent target for thieves. If you install an A/V system into your boat, and it gets ripped off, you will get a check for the verifiable damage to the boat – but not for the stolen A/V equipment, unless you get your policy adjusted so that the new system is covered.

    • Take care of the boat. Maintenance is a part of boat ownership. Maintenance costs, including periodic trips to drydock for a thorough hull scraping, should be figured into your overall cost projections. As they say, a stitch in time saves nine.

    You’d think people shouldn’t have to be told anymore, but boat owners frequently ask things of their boat engines that they’d never expect their cars to do. Like operate leak free even though the seals have dried out from weeks or months of disuse. Basic maintenance tasks like changing engine oil once in a while, and being sure to crank that motor up on a regular basis to keep fluids moving through the hoses and around the metal parts go a long way to reducing overall boat ownership costs, and preventing major repairs and the replacement of entire engines.

    • Store the boat properly. When you pull the boat out of the water, tilt the bow upwards a little, and remove the drain plug to allow any water that gets past your covers, if any, to drain right out of the boat.
    • Don’t forget your fishing gear. Many fishermen – professional and recreational – will buy a boat, insure it, and then spend thousands on tackle, mounts, swivels, chairs and the latest gee-whiz sonar fish locator system. If something happens to the boat, and you don’t contact the carrier and add that gear to your policy, it’s not covered.
    • Keep an inventory. Create a list of everything of value on the boat, by serial number. Photograph everything.  Keep your receipts. Hint: Don’t keep your receipts and inventory on the boat.
    • Document incidents. Take photos of any damage at the scene, as soon as possible.

    Remember, boat insurance is structured differently than auto insurance. Where auto insurance is designed to pay the full replacement value of a given make and model car, with a given amount of miles on it, boating insurance is much more variable. There’s nothing as reliable as a Blue Book to guide boat insurance adjusters, and the market is much less liquid. As a result, documentation is even more important for boat insurance than it is for auto insurance. Read and understand the policy, what it covers, what it doesn’t cover, and ensure any changes to your boat’s value or any additional property on the boat is documented. 

    Good Management Lowers Premiums

    How do insurance companies measure good management? And, how does this measurement affect policy premiums?

    Insurance companies judge management many ways, including attitude toward safety (cooperation with risk personnel), financially (credit checks), superficially (housekeeping, deferred maintenance), and in depth systems analysis (employee selection process). Positive results earn schedule credits, which reduce premiums.

    Schedule credits enable insurance companies to reward those conscientious managements that have a long-term commitment to reduce losses. The insurance company wants to partner with risk-avoiding management, so they lower premiums to attract these risks.

    Insurance companies use diagnostic tools to measure the quality of management. Accounting measurements, physical property surveys, human resource surveys, psychological tools and, of course, loss history data combine to paint an overall management picture.

    Accounting measurements include reviewing financial statements, credit reports, tax forms, and management control systems. Is everything up to date? Do all the data agree for an easy audit trail? Is the company candid about finances?

    Physical risk surveys include a report on management results. An untidy workplace suggests lazy management or an undisciplined workforce. Neither is good for business or loss prevention. If in-house automobile maintenance facilities are not kept neat, management attitude towards maintaining vehicles properly is questioned.

    Neat, orderly premises imply pride in ownership and professional management. Deferred maintenance and chaos suggest either poor management, the beginnings of bad credit or absentee, uncommitted ownership.

    Sincere interest in loss control surveys, suggestions and recommendations indicates cooperation. Safety is a function of cooperative efforts. Taking corrective actions when asked, keeping OSHA logs up to date, knowledgeable responses to claims questions and having safety equipment on hand and up to date all indicate a safety culture appreciated by insurance companies.

    How does the company handle employee recruitment and training, particularly drivers? If this system qualifies employees in terms of knowledge, skill sets and attitude, more appropriate employees will be selected. The insurance company wants evidence of ongoing training for job-specific skills and safety.

    The psychology of risk management involves assessing the company’s approach towards safety and loss control. Cooperation, responsiveness to recommendations, forthrightness in interviews, openness to inspections, commitment to safety and good record keeping contribute to management attitude.

    The company interested in long-term profitability does not skimp on loss control or maintenance. Easily administered systems remind employees and supervisors of their safety culture.

    All these data are collected and reviewed to determine the management input to insurance premium rating: schedule credits. These credits must be rationalized by the underwriter. Schedule credits can impact premiums up to 25%. Good management pays well.

    Schedule credits are earned by well-managed, safety-conscious companies. Unfortunately, poorly managed businesses earn debits, increases in premium, the same way.

    Take a look around your business today and think about how you can earn a few more credits. And remember, we’re here to help too. 

    Understanding How Bicycles Are Insured

    When the warm weather arrives, many bike owners dust off their bicycles and hit the road. Whether bike owners plan to participate in competitions or just take a ride around the block with the family, it is important for them to understand the rules of the road. It is also important to be adequately insured.

    Insuring A Bicycle
    Bicycles vary greatly in price these days. A simple model may cost several hundred dollars, and a racing bike may cost several thousand dollars. Personal property provisions in a homeowners or renters policy cover bicycles. This means bikes that are damaged or stolen are usually covered. Bikes stolen from cars are also covered under many policies. For personal property coverage, there are two options: Replacement cost coverage and actual cash value.

    Replacement Cost Coverage
    This type of insurance provides reimbursement for the cost of replacing a bicycle with a similar one at the current cost. Replacement cost coverage usually costs about 10 percent more than its alternative. However, it is still a wise investment.

    Actual Cash Value
    This option provides reimbursement for the actual value of the bicycle at its current age. This means a bicycle that is five years old would be valued at the cost of a comparable product. However, depreciation for the bike’s age would be calculated and deducted from that value.

    Liability protection is also granted in a homeowners or renters policy, so harm caused to others on their property will be covered. For example, if a policyholder crashes into a person on that person’s property and causes injuries, the policyholder’s insurance company will cover up to a specific dollar amount. It is important for all policyholders to know what their maximum coverage amount per incident is.

    Most people are insured for an amount between $300,000 and $500,000. However, some people purchase umbrella policies to expand that amount. The umbrella policy’s benefits kick in when the homeowners policy is maxed out. There is also no-fault medical coverage on a homeowners policy. This coverage usually ranges between $1,000 and $5,000. In the event of an injury, the injured party can simply submit a medical claim to the policyholder’s insurance company for hospital bills. Keeping a policy updated is the best way to avoid an expensive lawsuit.

    After purchasing a new bicycle, save the receipt. Call an agent immediately to notify him or her about the new purchase. Keep in mind that helmets, pumps, saddle bags, lights and special clothing should be included on insurance. People who own very expensive bicycles should purchase endorsements for their renters or homeowners policies. Many insurers have special endorsements for sporting equipment, and some even have specific endorsements for bicycles.

    Insurance is certainly one of the most important aspects of bicycle ownership. However, safety is equally crucial. To stay safe on the road this year, consider the following tips:

    – Always wear a helmet.
    – Make sure the bike fits properly and does not have any unsecured parts.
    – Ride on the correct side of the road, watch for traffic and use hand signals.
    – Learn and follow all the rules of the road.
    – Always stay alert, and be aware of surroundings at all times.
    – Avoid wearing headphones or a cellular headset while riding.
    – If necessary, take safety classes before hitting the road.
    – Be more visible by wearing bright colors, using lights and wearing reflective gear after dark.

    Is Your Intellectual Property At Risk?

    Intellectual property is the crown jewel of any business, no matter its size. That’s why R&D departments exist and also why companies incur great expense to obtain patents. In fact, the race to innovate has heated up dramatically. But as Tom Aeppel noted in an October 25, 2004 The Wall Street Journal article entitled “Patent Dispute Embroils Industries,” the growing drive to be first has also ushered in another phenomenon:

    “The number of U.S. patents issued annually has more than tripled over the last two decades to 187,017 in 2003 as companies try to distinguish themselves among other global competitors with new products or processes.  But patents are also the source of growing litigation. There were 1,553 patent-infringement lawsuits filed in 1993 in U.S. federal court, compared to 2,814 last year.”

    In the past, many businesses relied on the coverage provided under the advertising injury portion of their comprehensive general liability insurance to protect them if they were accused of violating intellectual property. The parameters of advertising injury in these polices included coverage for the unintentional acts of misappropriating advertising ideas, or the infringing upon copyright, title or slogan that occurred during the course of advertising goods, products, or services. However, since most companies’ activities go well beyond the scope of what could realistically be defined as advertising, the protection provided by commercial general liability is obviously too limited in this area to be of real value. Under the typical commercial general liability policy, infringement of intellectual property claims that resulted from activities other than advertising would not be covered. By the same token, intentional acts of infringement are also not covered.

    The gap between what is and what is not covered in terms of intellectual property infringement under commercial general liability presented a serious problem as competition increased. That’s why insurers developed a specialized type of coverage called Intellectual Property Insurance. This type of coverage has two forms. The most popular form is defense coverage. This is designed to underwrite both the cost of mounting a legal defense against an intellectual property infringement lawsuit and the cost of any settlements or judgments that result from it.

    The second type of coverage is called enforcement or pursuit coverage. This policy is for the party that has been wronged so that it can pursue anyone that has infringed upon its intellectual property. This type of coverage is especially appealing to a company that has a valuable patent, but may not be positioned in terms of its capital to exploit that patent’s potential as well as one of its larger competitors. Having this coverage safeguards the company’s intellectual property rights while it acquires the capital it needs and enables it to go after a competitor who violates those rights.

    Losing one’s intellectual property can mean the death knell in the current global economy. As companies find themselves having to compete both domestically and in emerging markets abroad, it’s clear that innovation is the only way to stay in front of the herd. If that’s the case, then it stands to reason that Intellectual Property Insurance is one more necessity for doing business in the new economy.

    Insurance Mistakes That Will Cause You to Lose Money

    Fear is an important motivator when it comes to buying insurance. We worry about what will happen to assets like cars or homes if they are involved in a disaster, so we buy insurance to help us maintain their financial integrity if something should happen.

    But in spite of the fact that insurance is designed for this purpose, sometimes it can’t give us the outcome we expect. That’s not because of something inherently wrong with the policy, but rather it is the result of human failure. When you bought your policy, you failed to take into consideration the level of coverage you really needed, and what you have isn’t sufficient to restore your assets to pre-disaster condition.

    That’s just one of the most common insurance mistakes that could end up costing you.

    Here are some others:

    ·   Thinking you’re saving money because you bought the cheapest policy you could find – Initially those low premiums will seem like a savings; but if the cost of an accident ends up being more than your policy coverage limits, the rest of the expense will be out-of-pocket. In addition, the other parties involved could sue you, and if you don’t have any coverage, you could end up losing a large part of your assets.

    ·   Failing to pay your premiums on time, or not at all – There could be a legitimate instance in which you don’t pay on time. However, when you don’t pay, your insurance company isn’t required to cover you. To avoid a disruption in coverage, set up automatic payments through your bank or insurer.

    ·   Making assumptions about what is covered – There are limitations to the coverage a homeowner’s or auto policy will provide for high-ticket items. You should never assume that all of your possessions are covered. What you can do is add extra coverage to your policy with an endorsement, which gives you higher limits on these types of items.

    ·   Overlooking the importance of umbrella liability policies – These policies got their name because they protect you from a financial downpour. They can be purchased separately or you can obtain one from the same company that insures your car or home. Buying from the insurer you already have usually entitles you to a premium discount on the liability coverage. Umbrella policies are usually sold in increments of a million dollars. Generally you would pay between $100 to $300 a year for the first million dollars worth of coverage and another $50 to $100 for each additional million. Keep in mind that when determining your premium, your insurer may take into consideration such factors as the number of traffic tickets you’ve received over the past few years, and your credit report.

    ·   Failing to inform your insurance agent about changes that could affect your coverage needs – If you’ve added on to your home, or purchased an expensive sound system, you need to contact your agent to see if the policy you have still meets your needs. Your agent can also find ways to help you save money on premiums that won’t affect the quality of your coverage such as enrolling in a driver safety class, installing a home security system, increasing your deductible, or taking advantage of multi-policy or good student discounts.

    When It Rains, It Pours: Why You Need a Personal Umbrella Policy

    In recent years, our society has become what some people call “lawsuit happy.” In other words, an increasing number of people are filing lawsuits for everything from emotional injury to property damage-and they’re suing for larger amounts than ever before. If someone were to file a lawsuit against you, you could end up losing hundreds of thousands of dollars or more, even if you won.

    While you may have some personal liability coverage through your homeowner’s or auto insurance policy, it’s probably not nearly enough to cover a major lawsuit. Fortunately, you can further protect yourself with what’s known as an umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages.

    Read on to learn more about these valuable policies:

    Umbrella policies: A liability coverage “extension”

    When it comes to lawsuits, the more assets you own, the more you stand to lose. A personal umbrella liability policy can protect you from these potentially devastating losses. These policies act as an extension to the current liability protection you probably have through your homeowner’s or auto insurance policy.

    Umbrella policies are typically sold in million dollar increments, and you can obtain a policy once your home and auto insurance policies meet a minimum “attachment point”-typically a liability limit of $250,000 or $500,000.

    What does it cover?

    Most umbrella policies covers the following:

    • Personal injury, including false arrest, mental anguish, malicious prosecution, libel, slander, defamation of character, wrongful entry or eviction, negligent infliction of emotional distress or invasion of privacy.
    • Bodily injury, such as physical injury or death. In some jurisdictions, this also includes emotional injury.
    • Property damage, including destruction of the property of others, cost of recreation and loss of use. However, it does not cover damages done to your own property.
    • Defense coverage, including groundless, false and fraudulent suits, bail bond costs, loss of earning and other “reasonable” expenses.

    Of course, it’s probably easier to understand exactly what an umbrella policy covers by putting it into real-life terms. Here are a few examples of what this type of policy could cover:

    • A deliveryman is hauling your new washing machine into your home when he trips on your door mat, falls and breaks his neck. Your umbrella policy would likely cover the hundreds of thousands of dollars worth of damages.
    • You’re driving down the road when an important corporate CEO steps into the crosswalk in front of your car. He sues you for millions of dollars in medical costs, lost earning and damages. Your umbrella policy can cover you for these damages.
    • Your daughter invites a friend over to play on her swing set. Her friend falls off the slide and suffers from serious injuries. When her parents sue you, your umbrella policy will cover the medical costs.

    How much does is it cost?

    The price of an umbrella policy depends on how much coverage you want, the number of properties you rent or own and the number of automobiles or watercraft you own. The cost associated with cars and watercraft are much higher than those associated with properties.

    Let’s say you are single, you own one home and one car, and you want to purchase a $5 million umbrella policy. You’ll probably pay somewhere between $270 and $550 a year. On the other hand, if you are married with two children, you own two homes, a rental property and three cars, and you want a $10 million umbrella, you’ll probably pay a good deal more-anywhere between $970 or $1,750 a year.

    Talk to your insurance agent to discuss whether or not an umbrella policy is right for you. In the long run, by paying a few hundred dollars per year, you could save millions.

    Consider Business Income from Dependent Properties to Insure Against Supplier Shut Down

    A business that suffers a major accident such as a fire or hurricane may have to shut down for days, weeks or longer for repairs. Often, the income lost during the shut down will exceed the cost of repairing or replacing the damaged property. Businesses can protect themselves against this severe financial loss by purchasing business income insurance. However, sometimes a business can suffer a significant income loss, not because of damage to its own property, but because of damage to someone else’s.

    Consider the following business situations:

    • A metal parts manufacturer derives 80 percent of its income from sales to four customers.
    • A restaurant located within a five-minute drive from a factory that employs 1,200 people.
    • An electronic components distributor that buys its products from three manufacturers.
    • A supermarket chain that sells milk under its own brand name but that outsources production of the milk to a dairy products supplier.

    In all of these examples, the businesses depend on third parties for supplies, purchases, or attraction of customers. If any of these third parties were to shut down, the resulting loss of income would devastate the business.

    A business that depends on a few third parties for a large share of its income may want to consider buying Business Income From Dependent Properties insurance. This coverage pays for income lost as a result of damage to the property of another business on which the policyholder depends financially. The form classifies these properties, called “dependent properties,” into four groups:

    • Contributing locations, which deliver materials or services to the business or to other businesses on the policyholder’s account. The three manufacturers that provide product to the electronic components manufacturer are examples of contributing locations. The form does not consider a supplier of utilities (water, power or communications) to be a contributing location. A separate coverage form exists to insurer these types of suppliers.
    • Recipient locations, which accept the business’s products or services. The four customers who provide 80 percent of the metal parts manufacturer’s income are recipient locations.
    • Manufacturing locations, which manufacture products for delivery to the business’s customers under a contract of sale. The dairy products supplier producing the milk for sale under the supermarket’s label is a manufacturing location.
    • Leader locations, which attract customers to the policyholder’s business. The factory near the restaurant is a leader location.

    Coverage applies if the dependent property suffers damage from a cause of loss that the policy would cover if it damaged the business’s own property. For example, a typical property insurance policy covers damage caused by fire or explosion, so this insurance will pay if the dependent property burns or explodes. However, since most policies do not cover flood damage, the insurance will not pay if a dependent property floods.

    The insured business has a choice of how to arrange the insurance. One option is to make the amount of insurance covering the business’s own property also apply to the dependent properties. The other option is to buy separate amounts of insurance that apply to each dependent property. Under either option, coverage begins 72 hours after the time the damage occurs.

    Virtually every business depends to some degree on other firms for parts of its operation. Dependent property income losses do happen; many businesses in lower Manhattan suffered these losses in the months following September 11. Discussion of the exposure to loss from dependent locations should be a regular part of a business’s review with its insurance agent. Standard coverage protects against loss to a business’s property, but the worst loss may come from damage to someone else’s.

    Protect Your Work in Progress with an Installation Floater

    The materials that a contractor brings to a job site are subject to numerous perils in a variety of locations. The contractor might take delivery of them at his main location and store them for a period of time. At some point, he will transport them to a job site where they may again sit in storage. Finally, he will cut, drill, weld, or otherwise process the materials until they become a finished part of the building. During all of these stages, the materials may suffer damage by fire, theft, flooding, or even damage in a traffic accident during transport to the job site.

    Commercial property insurance policies do not cover materials once they have been moved off of the business’s premises, and they provide little coverage for materials while in transit. To insure property that moves around, the contractor needs an inland marine policy, which is a policy that covers property that can easily move from one location to another. The inland marine policy that covers materials a contractor will install in a building is called an installation floater.

    Contractors may be familiar with a similar policy known as a builders’ risk policy. A builders’ risk policy insures an entire structure during the process of its construction. The structure’s owner or the general contractor in charge of the job might purchase this policy. An installation floater, while similar in coverage, insures only a specific type of property during the construction, such as the plumbing or electrical systems. Subcontractors, who ordinarily have a limited scope of work on the job, purchase installation floaters.

    An installation floater policy insures property used in a construction project. While the actual policy form will vary from one insurance company to another, it will typically cover materials, equipment, machinery and supplies owned by the contractor or for which he has responsibility. The property must be used in or incidental to the fabrication, erection or construction project described in the policy. One single amount of insurance applies to the property; the limit should be the highest value for that type of property during the job. When insurance companies establish the premium for these policies, they take into account that the value of the property will start out small and increase as the job progresses. For example, if a boiler installation contractor buys an installation floater with a $500,000 insurance limit, the company will adjust the premium to recognize that, for most of the project, $500,000 worth of boilers and related equipment and supplies will not be there.

    Installation floaters cover all causes of loss other than those specifically listed in the policy. They cover losses caused by fire, lightning, theft, explosion, and several other perils. Typical policies do not cover losses caused by extreme events like earthquakes and floods, but some companies will consider adding these coverages for an additional premium. Most policies will also exclude damage that occurs during testing of a building component or system (for example, testing of compressors). Some companies may consider adding this coverage as well, depending on the type of property and the nature of the testing.

    Beside the policy’s expiration, several other events may cause coverage to cease. Coverage ceases when the purchaser accepts the work, when the contractor’s ownership interest in the property ends, if he abandons the project, or within a stated number of days after he finishes work.

    Because every installation floater policy is different, contractors should carefully review their policies. They should discuss any deficiencies or confusing provisions with their insurance agents. Construction contracts often require this coverage, so it is vital for a contractor to make sure he has the proper coverage.

    Do You Need an Umbrella? Here Are Some Things to Consider

    Standard auto, homeowner’s and boat insurance policies cover liability a person may have for injuries or property damage suffered by someone else. Insurance companies design them to cover accidents for which the insured person may owe tens or even hundreds of thousands of dollars. However, sometimes the person may be responsible for an accident so catastrophic that the damages are $1,000,000 or more. To cover financially devastating events like these, insurance companies offer personal umbrella policies. These policies provide additional protection when an accident uses up the amounts of insurance provided by the other policies. They may also cover some types of losses these other policies do not cover.

    There is not a “standard” umbrella policy; each company’s offering will be different. Therefore, it helps to have a checklist of considerations when evaluating a policy.

    First, identify those things that could expose you to a catastrophic loss. How many cars do you own? Do you have inexperienced drivers in your household? Household attractions like swimming pools, trampolines, and swing-sets present an exposure to severe losses. Boats, like cars, can cause serious injuries and damage if the operators are inattentive, intoxicated, or inexperienced.

    Next, identify other exposures you may have that do not involve potential physical injury or illness or property damage or that might require different coverage. Do you or any members of your family participate in social media Web sites or online discussion forums? Does anyone coach a youth sports team, belong to the governing board of a non-profit organization, write computer code as a hobby, or give music lessons? These activities present different exposures to legal liability.

    Review your insurance policies. How much will your auto insurance pay for injuries to one other person? How much will it pay collectively for injuries to more than one? How much will it pay for property damage? How much will your homeowners policy pay for your personal liability for an accident? Does it cover any business activities? Does it cover family members accused of slander, libel, or defamation of character in online postings? Does it cover you for allegedly causing mental anguish to a kid who didn’t get much playing time on a team you coached, or trouble caused by a computer program you wrote? How much will your boat-owners policy pay for your liability for boating accidents? The answers to these questions will tell you where an umbrella policy can help.

    For example, if your auto policy will pay up to $250,000 for injuries to one person and $500,000 for injuries to multiple people, an umbrella with a $1,000,000 limit will give you insurance equaling $1,500,000 for injuries to two or more people. If your homeowners policy will pay up to $300,000 for your liability, the same umbrella will afford $1,300,000 if someone gets seriously hurt at your home. The umbrella limit of insurance also applies on top of the limit on the boat policy.

    In addition, the umbrella may cover things like volunteer activities, statements made online, and certain business activities that a homeowner’s or auto policy might not cover. Normally, the insurance company will require you to pay a deductible amount (such as $250 or $500) before it will pay for a loss that one of these other policies does not cover.

    A professional insurance agent can help you sort out what your current insurance does and does not cover and what additional coverages an umbrella will provide. It is important to compare all the coverages the policies provide and not just their prices. Fortunately, catastrophic accidents are extremely rare, but having an umbrella policy when they happen can make it easier to get through them.

    Spring into the New Season with a Flood Insurance Check

    The Insurance Information Institute (I.I.I.) is reminding homeowners that warmer temperatures not only signal the coming of spring, but they also contribute to snowmelts, which increases the risk of flooding in some parts of the country.  Hence, there is no better time than now to review your flood insurance to ensure you are adequately covered against flood-related damage.

    No region of the U.S. is immune from floods, including inland flooding, flash floods and seasonal storms. In fact, over 20 percent of all flood insurance claims are filed in low-to-moderate flood-risk areas. However, specific parts of nine U.S. states are especially vulnerable to flooding in the spring of 2007, according to the National Oceanic and Atmospheric Administration’s (NOAA) weather service. In these geographic areas there is either a high soil moisture level or an above normal snowfall over the winter months that is now melting. These regions include:

    ·            Southeastern Colorado

    ·            Northern Illinois

    ·            Eastern Iowa

    ·            Southeastern Minnesota

    ·            Southwestern New York

    ·            Northeastern Ohio

    ·            Northwestern Pennsylvania

    ·            Eastern South Dakota

    ·            Southern Wisconsin

    The I.I.I. is advising residents in these areas to be especially vigilant about their flood insurance coverage. It is also recommending that even if you don’t live in one of these locations, you should still consider purchasing flood insurance because 90 percent of all natural disasters in the U.S. involve some type of flooding. There is a 30-day waiting period for flood insurance policies to take effect, so it is imperative to apply before the season gets under way.

    The agency has established the following points for homeowners to consider if they are thinking about buying flood insurance:

    § Standard homeowner’s and renter’s insurance does not cover flood damage: Only a flood insurance policy, available to homeowners and renters through the federal government, will cover flood-related losses.

    § Flood insurance is easy to purchase: Federal flood insurance policies can be purchased directly from an insurance agent, and are available to communities that participate in the National Flood Insurance Program (NFIP). Nearly 100 insurance companies write and service NFIP policies.

    § Flood insurance is affordable: The annual premium for a residential NFIP policy starts at $112 per year, according to FEMA, and increases according to the level of flood risk and amount of coverage needed. The maximum coverage amount is $250,000 for the structure of the home and $100,000 for its contents.

    § It is easy to assess your flood risk: More than 20,000 communities in all 50 U.S. states and territories voluntarily participate in the NFIP, encompassing nearly all properties in the nation’s high-risk flood zones. Enter your address at https://www.floodsmart.gov/floodsmart/pages/riskassesment/findpropertyform.jsp to determine your level of flood risk.

    § Excess flood insurance policies add an extra layer of coverage: A growing number of private insurers have begun offering excess flood policies, intended to provide water damage protection to homeowners over and above the limits provided by the NFIP policies.

    § Without insurance, relief from floods primarily comes in the form of loans: If your community is declared a disaster area, no-interest or low-interest loans are usually made available by the federal government as part of the recovery effort. These loans are just that—loans—and must be paid back. Obtaining a flood insurance policy is the only way to protect yourself fully from the cost of flooding.

    NAIC Offers Tips to Expedite Your Insurance Claim

    Filing an insurance claim can seem like an overwhelming task, but it doesn’t have to be. The National Association of Insurance Commissioners has put together the following tips to help policyholders facilitate the process:

    • Know your policy – Your insurance policy is a contract between you and your insurance company. Know the terms of that contract, including what’s covered, what’s excluded and the amount of any deductibles.
    • File claims as soon as possible – Call your agent or your insurer’s claims hotline as soon as possible. Your policy might require notification within a certain time frame.
    • Provide complete, correct information – Be certain to give your insurance company all the information they need. Incorrect or incomplete information will only cause a delay in processing your claim.
    • Keep copies of all correspondence – Write down information about your telephone and in-person contacts, including the date, name and title of the person you spoke with and what was said. Also, keep a record of your time and expenses.
    • Ask questions – If there is a disagreement about the claim settlement, ask the insurer for the specific language in the policy that explains the reason why the claim was settled in that manner. If this disagreement results in a claim denial, make sure you obtain a written letter explaining the reason for the denial and the specific policy language under which the claim is being denied. If you have a dispute with your insurer about the amount or terms of the claim settlement, you should contact your state insurance department for assistance.
    • Make temporary repairs to protect property from further damage – Your auto/homeowners policy might require you to make temporary repairs. If possible, take photographs or video of the damage before making such repairs. Your policy should cover the cost of temporary repairs, so keep all receipts. Also, maintain any damaged personal property for the adjuster to inspect.
    • Don’t make permanent repairs – An insurance company may deny a claim if you make permanent repairs before the damage has been inspected.
    • Try to determine what it will cost to repair your property before you meet with the claims adjuster – Provide the claims adjuster with records of any improvements you made to your property. Ask the claims adjuster for an itemized explanation of the claim settlement offer.

    Don’t rush into a settlement – If the first offer made by an insurance company does not meet your expectations, be prepared to negotiate. If you have any questions regarding the fairness of your settlement, seek professional advice. 

    Do Your Employees Drive Personal Vehicles for Business-Related Purposes?

    If an accident occurs while an employee or volunteer is operating their personal vehicle for company business, your company could be held liable.  Even when an employee is just running an errand, such as making a bank deposit, dropping off a proposal or picking up a part, if an accident occurs your company could suffer as a result.   

    While you cannot insure a non-owned vehicle, there are other steps you can take to protect your company before a loss occurs. If your employees or volunteers use personal vehicles for company business, even if just occasionally, the following guidelines can help reduce your risk:

    1.   Determine a minimum level of auto liability insurance your employees and/or volunteers must carry.  Also consider what documentation should be provided to your company to demonstrate that proper insurance coverage is in effect.  For example, you might require that employees or volunteers submit a certificate of insurance each year that verifies coverage limits.

    2.   Driving records should be checked prior to an employee’s hiring.  Validate driving credentials and check for accidents and moving violations over the past 5 years.  All recruiters, managers and human resource people should be aware of this policy.

    3.   Avoid having youthful drivers, those with little driving experience, or drivers with more than one moving violation or accident use their vehicle for business-related purposes.

    4.   Periodically check driving records for new offenses and moving violations.  Introduce a procedure for how discovery of new offenses will be handled.

    5.   Develop a written policy on business use of personal vehicles and communicate to all employees. Managers, human resource personnel and recruiters should share this information with any potential new hires.

    6.   Be sure you remain in compliance with local, state and federal statutes while obtaining private information about your employees. 

    Insurance can play a role in helping to protect your business from this exposure. Non-owned auto liability insurance may be obtained on a stand-alone basis or in conjunction with your general liability coverage.  Coverage for hired vehicles may also be available, if needed.

    Insurance premiums for non-owned automobile liability depend on the frequency of personal vehicle use and how employees use their vehicles for your business. Premiums for this line of coverage are generally fairly reasonable.

    Another way to reduce risk is to eliminate the exposure.  If employees or volunteers are prohibited from using their personal vehicles for business-related purposes, it eliminates the possibility of an accident that will affect your company.

    In the meantime, while you are mapping out your risk reduction strategy, maybe you should consider making that bank deposit yourself…

    Simple Keys to Understanding Homeowner’s Insurance

    To make sure you have the right type, and right amount of homeowner’s insurance, you need to understand what it does, and doesn’t, cover. Regular homeowner’s insurance will cover damage from tornadoes, fires, and burglary; but it will not cover the calamity of hurricanes, floods, terrorism, or nuclear meltdowns.

    Basic Principles

    *Make sure to get enough coverage to re-build your home from bottom to top.

    *Choose “replacement cost” instead of “actual cash value.”

    *Regularly inventory your possessions and their replacement costs. Consider a special rider for valuables such as jewelry, furs, and family heirlooms.

    *Understand “loss of use” provisions. These provisions will dictate how long your insurer will pay rent while your home is rebuilt or repaired.

    Best Offerings

    *Look at on-line quotes and shop around, in general. Do some research to make sure the company is financially sound.

    *Consider the possibility of raising your deductible to keep rates low.

    *Get discounts by purchasing homeowner’s and auto insurance from the same company.

    *Consider an umbrella policy to protect against lawsuits.

    *Ask if special discounts are available. Some companies offer discounts to longtime customers, seniors, and non-smokers.

    *Monitor and maintain a good credit score

    *Unless you plan to file a claim, don’t report damages.

    What Isn’t Covered

    *Home office equipment

    * Damage from neglect and poor maintenance practices

    *Losses caused by pests such as insects, rodents, and pets

    *Sewer backups and mold

    In Case of Disaster

    *Get in touch with your insurance company as soon as possible.

    *Begin checking for damage and take photos to document calamity. Make quick fixes and temporary repairs to mitigate further damage.

    *Be cautious of repairmen charging exorbitant rates and con artists impersonating insurance adjusters.

    *Read the fine print before signing anything! Be careful not to sign away future compensation upon receipt of the first check.

    *If a settlement offer is clearly unfair, don’t accept it.

    Learning a few simple principles in advance can save you a bundle, should disaster strike.  Speak with your insurance agent to gain a better understanding of your homeowner’s insurance needs. 

    Are You Liable? Protect Yourself from Home Worker Lawsuits

    As the housekeeper is vacuuming your living room, she trips over one of your daughter’s toys and seriously injures her back. While your neighbor’s teenage son is mowing your front lawn, he steps in a large hole and sprains his ankle. Will your homeowner’s insurance cover you if one of these workers decides to file a lawsuit?

    Many homeowners do not realize that they could be held financially liable if a maid, landscaper, nanny or another house worker were to suffer from an injury on their property. Here are some things you should keep in mind before you hire a home worker:

    Is that worker an employee or a contractor?

    When you hire someone to help out around the house, you should figure out whether he or she is an employee or a contractor. This is one of the factors determines whether or not you are liable for a worker’s injury. So, how do you know if the worker is considered your employee or a contractor? It all comes down to how much control you have over the worker.

    Let’s say you hire a nanny named Lisa to take care of your children and do some light cleaning in your home. Lisa follows your instructions about how to care of your kids and how to complete certain household tasks. You supply Lisa with the supplies and tools she needs to do her job. Because you have control over how Lisa works, she is most likely considered your employee.

    On the other hand, let’s say you hire a professional landscaper named Bob to fertilize and mow your grass, trim the hedges and plant flowers in your yard. Bob uses his own lawn mower and yard tools and he does yard work for other homeowners, as well. Bob also has a team of workers who help him with his business, and he pays these workers. In this case, Bob would be considered an independent contractor.

    Of course, these are two fairly simple examples. If you are uncertain about whether a worker in your home is considered a contractor or an employee, consult a lawyer or tax professional.

    Understanding worker’s comp insurance

    Some states require that homeowners who have house worker “employees” to carry workers’ compensation insurance coverage for them. However, even if your state does not require this, you should still consider purchasing this insurance for your employees. Why? Because if one of your employees is injured on your property, you may have to pay for their medical bills and other expenses out of your own pocket. However, with workers’ compensation coverage, the insurance company will cover the costs.

    Alternatively, if you hire a house contractor, such as a landscaper, carpenter or plumber, they should be covered by their own workers’ compensation insurance. If a contractor is injured while doing work on your property, he or she will be covered under that policy. If the contractor doesn’t have enough coverage, you may be held financially liable. However, depending on the circumstances, you may be able to file a lawsuit against the contractor as they are required by law to have sufficient workers’ compensation coverage.

    If you are looking to hire a house contractor, it’s important to ensure they are covered for worker injuries, property damage and uninstalled materials. Don’t just take their word for it. Ask for written proof that they have a contractor’s license, workers’ compensation insurance for themselves and any subcontractors and general liability coverage.

    Know what your homeowner’s insurance covers

    When it comes to coverage for home workers, every homeowner’s insurance policy is different. Depending on your home state, your policy may include a provision that provides limited coverage for minor workers performing lawn mowing or other tasks that require the use of power tools on your property.

    On the other hand, your policy may specifically exclude domestic workers such as nannies or maids. Your policy may cover the injuries of household employees, but only after a lawsuit is filed against you. Because homeowner’s policies vary widely, it’s important to read through your contract and talk to your insurance agent before you hire a home worker.

    Consider an umbrella policy

    If you discover that your homeowner’s policy offers limited or no liability coverage for workers, you may consider purchasing additional liability insurance. While you may have some personal liability coverage through your homeowner’s policy, it’s probably not nearly enough to cover a major lawsuit from a home worker. If someone were to file a lawsuit against you, you could end up losing hundreds of thousands of dollars or more-even if you win.

    You can further protect yourself with what’s known as an umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages. Umbrella policies are typically sold in million dollar increments, and you can obtain a policy once your home and auto insurance policies meet a minimum “attachment point”-typically a liability limit of $250,000 or $500,000.

    Check with the Better Business Bureau

    Before you hire a home worker, you should contact the Better Business Bureau for more information. They can tell you if any consumers have filed complaints against the worker. Visit the bureau’s website at www.bbb.org.

    Construction Vehicle Classification Can Affect Your Wallet

    Several factors influence how much a contractor pays for business auto insurance. The amount of insurance bought, the firm’s loss history, employees’ driving records, the condition of the vehicles, deductible levels – all of these have a major effect on the policy premium. However, the way the insurance company classifies the vehicles also impacts the premium in very significant ways.

    Under the rating rules for business auto insurance, insurance companies use three factors to classify a vehicle: Its gross vehicle weight, how the business uses it, and the normal radius of its operation. The size classifications are:

    • Light – 0 to 10,000 pounds gross vehicle weight;
    • Medium – between 10,000 and 20,000 pounds;
    • Heavy – between 20,000 and 45,000 pounds;
    • Extra-heavy – More than 45,000 pounds.

    The heavier a vehicle, the higher its premium due to the increased potential for severe losses.

    The use classifications relevant to contractors are:

    • Service – Vehicles used to transport the business’ personnel, tools, equipment and supplies to or from a job location. Only vehicles that the business parks at job locations for most of the working day or uses to transport supervisors between job locations get the service classification.
    • Commercial – Construction vehicles that are not eligible for the service classification.

    Service vehicles, because they are parked for most of the day, qualify for a lower premium than do commercial vehicles.

    The radius classifications are:

    • Local – Not regularly operated beyond a 50-mile radius from where the business garages them;
    • Intermediate – Operated within a radius of between 50 and 200 miles;
    • Long Distance – Operated within a radius of more than 200 miles.

    The larger the radius, the more miles the vehicle is likely to be driven and the higher the premium.

    The rules also contemplate the type of contractor that uses the vehicle, though the rating factors tend not to vary greatly from one type to another.

    The rating rules have charts showing the mathematical factors that apply for different combinations of size, use and radius. The insurance company multiplies these factors by its basic premium for the vehicle. For example, the factor for liability insurance for a light service vehicle (a pickup truck) with a local radius might be 1.0. The company will take the basic premium for a truck (for example, $500) and multiply it by 1.0. Conversely, the factor for a heavy commercial vehicle (a dump truck) with a local radius might be 1.50. Multiplying this factor by the $500 basic premium produces a premium $250 higher. This vehicle is on the road more than the pickup and has the potential to cause more severe injuries and damage in an accident, so the premium is higher.

    Different factors apply to the premiums for comprehensive and collision coverages, and the effect may be the opposite of that for liability coverage. For example, the factor for the pickup truck might be 1.0 but the factor for the dump truck might be only 0.80. This is because a heavier vehicle should be able to withstand a crash better and sustain less damage than the lighter one. The rules base comp and collision premiums on the original cost of the vehicle, so the dump truck’s higher initial value will offset the lower factor to some extent.

    It is important that a business provide accurate information about its use of a vehicle to the insurance company. Vehicles that spend most of the day on the job site should get the lower-rated service classification. Insurance companies can verify a vehicle’s weight through independent sources and its radius by examining lists of work on hand, but they will rely on information from their agents for the use classification. The business that gives its insurance agent detailed information about all its operations is a business that will pay a premium that accurately reflects its loss potential.

    Longevity Is Key When It Comes to Lawyer’s Professional Liability Claims

    Retirement usually means not only leaving your job, but everything associated with that job. However, when a lawyer retires, this isn’t necessarily the case. Whether they are no longer practicing law, or starting an entirely new career, lawyers may find themselves haunted by liability claims arising from their past work.

    For this reason, it’s important for departing lawyers to confirm that liability coverage will remain intact for past work. To accomplish this goal, you should review the partnership agreement, the firm’s professional liability insurance, and any recent claims. Keep in mind that partnership agreements and insurance coverage vary from firm to firm. When you review the agreement, you may find an absence of provisions for the firm’s ongoing indemnity or insurance obligations towards former members.

    When reviewing the firm’s professional liability policy you’ll probably find that is written on a “claims made” basis. This means that coverage is provided for any claims made during the policy term, even if the events that precipitated the claim happened before the policy’s effective date. Even if your firm has a claims made policy, it can still have coverage gaps that significantly affect you once you decide to leave. For example, the insurer may have included provisions that limit or exclude coverage of the firm’s activities in certain practice areas. Or with claims made policies, if an exclusion is added in the future, it is applicable to all past and future work in that practice area.

    Your policy review should also include an examination of its coverage limits. Since these limits cover all claims made and reported within the policy term, there may not be funds available to cover a retiring lawyer if the firm has already submitted a substantial number of claims or even just one large one.

    The next step in your evaluation is a determination of how the policy defines “insured.” In some attorney-client relationships, a lawyer may be considered an employee or independent contractor. Under some policies, coverage for employees and independent contractors is either limited or non-existent.

    You should also review the conditions regarding the firm’s responsibilities for policy renewal and reporting claims. Don’t assume that the firm will continue to operate as a going concern after you are gone, or that it will continue to renew its liability policy. In fact, in the case of smaller firms, dissolution is often the outcome after a key partner retires.

    If the practice is dissolved, it is important that the firm and its former partners maintain insurance coverage. And since time is a crucial factor in a dissolution scenario when it comes to coverage, it is important that you meet as soon as possible with your insurance representative to discuss your coverage status and appropriate options.

    Questions You Need to Ask Before Buying Commercial Auto Insurance

    Purchasing commercial auto insurance may be one of the most important insurance decisions that a business owner makes. Anyone who purchases or uses a vehicle for business use, be it a singular vehicle or multiple vehicles, will have to purchase commercial vehicle insurance. To get the best coverage at the best rate, you should ask yourself a number of key questions before you meet with your insurance broker.

    Here are some of the most vital questions you need to ask yourself and the reasons why they are so relevant:

    Do You Know What Defines Commercial Vehicle Usage?

    Although you may use a vehicle infrequently for commercial purposes, your personal auto coverage invariably excludes using a vehicle for commercial purposes. Also, each policy clearly defines what is meant by commercial use, so you need to be very clear on the differences so you do not end up having a claim denied.

    How Many Total Drivers and Vehicles Does the Company Require?

    Insurers who provide commercial auto insurance may distinguish the available coverage options depending on both the number of drivers and the number of vehicles. Multiple vehicles and drivers may best be served by fleet insurance. Different insurers will vary in how they base their rates and will do so based not only upon the number of vehicles insured but also the class of the vehicles involved. The best insurance option may be to consider purchasing fleet insurance as opposed to having the vehicles insured individually. It all depends on your needs.

    What Strategies Can You Use to Reduce Your Commercial Vehicle Premium?

    There are a number of other questions and measures that can help lower your premiums for either individual vehicle usage or fleet use.

    Do You Know Your Drivers’ Records?

    Drivers with multiple claim records or violations are clearly going to cause your premium rates to increase. Ensure that you are aware of the driving records of any new or current employees who will be driving the vehicles. Have all employees who drive report any and all accidents or driving infractions immediately. Make it company policy.

    What Kind of Car Are You Buying or Leasing?

    Although it might seem like a good idea to have the luxury or sports car to make a statement, just remember that you are going to pay for such vehicles. You may want to get a great looking mid-sized sedan that has a superior safety rating because an insurer is most definitely going to factor in the types of vehicles driven.

    What Anti-Theft and Safety Devices Will the Vehicle(s) Have?

    Vehicle theft is still a major concern, especially in urban settings. When insuring your vehicle(s), an insurer is going to consider several things:

    ·  The location of your business, because not all parts of an urban setting are necessarily treated the same. High crime areas will most often lead to higher premiums.

    ·  Whether or not alarms or GPS devices are installed in the vehicle(s).

    ·  What the vehicle has for air bags and other safety devices such as beepers, sensors, or cameras.

    What Kind of Deductible Can You Afford?

    The amount of deductible you are willing to absorb can also have a dramatic impact on your premium because all insurers pretty much adhere to a simple formula: The higher the deductible – the lower the premium.

    Will Federal or State Laws Impact Your Coverage?

    Certain vehicles and what they transport can also be affected by federal laws and, in some instances, can be state-specific. Check out any legislative requirements which impact what you need to do beforehand.

    Teens Drinking at Parties = Insurance Issues

    Every spring brings with it the prom and graduation party seasons. Unfortunately, these events often become occasions for teens to drink alcohol. Teens at unsupervised parties risk harming themselves and others when they drink. Parents who host these parties may bear responsibility for what happens there and for injuries or damages occurring after the guests leave. While their liability insurance may cover any financial damages, the circumstances of the accident determine which policy will respond, and this will affect how much coverage the parents have.

    Assume that a guest consumes several beers at the party, drives off in his car, and gets into an accident, injuring himself and a passenger. The parents of both injured teens sue the parents who hosted the party, who in turn notify their homeowner’s insurance company. However, the policy’s personal liability coverage does not apply to an insured person’s legal liability for:

    • The occupancy, operation, or use of a motor vehicle by any person
    • The entrustment of a motor vehicle by the insured person to anyone else
    • The insured person’s failure to supervise or negligent supervision of any person using a motor vehicle
    • The actions of a minor involving a motor vehicle.

    Because of this, the homeowner’s policy will not cover the parents’ liability or defense costs. Their personal auto insurance policy may cover them, however. The policy’s liability insurance covers the individuals named on the policy and household residents who are their relatives for their liability for bodily injury from an accident arising out of the use of any auto. Therefore, even though the parents were not actually operating the vehicle involved in the accident, their policy will cover their liability. In addition, the auto policy that applies to the car involved in the accident (the guest’s insurance, or, more likely, his parents’) will also cover the hosts’ liability for the passenger’s injuries. The hosts’ policy will step in if the owners’ policy either does not apply or pays out its maximum limit of insurance.

    Now assume that the guest consumes the beer, but a sober guest gives him a ride home. Rather than go straight to bed, the young man goes for a swim in his parents’ pool and drowns. His parents sue the hosts, alleging that his judgement was impaired because the hosts allowed him to drink. In this situation, the homeowner’s policy should pay for the the hosts’ liability and legal defense. Because this accident did not involve a motor vehicle, and no other policy provisions that would remove coverage apply, the policy will cover this claim.

    While one policy or the other may apply to a liquor liability claim, there could be significant differences between the amounts of coverage the two policies provide. Most homeowner’s policies provide personal liability coverage of at least $100,000 for each occurrence; many provide limits of $300,000 or $500,000. Auto policies may provide much less coverage. Most states have laws setting the minimum amounts of liability coverage that an auto policy may provide, but those limits are relatively small. For example, New York law requires minimum limits of $25,000 for injuries to one person and $50,000 for injuries to two or more people (higher amounts apply for death claims.) Should a young person become seriously injured or killed, the damages claimed could well exceed these amounts. Parents should consider buying as much liability insurance as they can afford; they should also think about buying an umbrella policy, which pays for damages that surpass the amounts payable under homeowner’s and auto policies.

    Of course, the best course of action is to properly supervise parties, so that everyone has a good time and lives to have another one someday.

    Know Your Commercial General Liability Insurance Limits

    A commercial general liability policy (CGL) lists six different limits on the policy’s declarations page. While the limits may be listed separately, it’s important to understand that they are all interrelated. That means that payment of damages for one limit will affect another limit.

    To illustrate how these limits interact, it is necessary to examine each one in detail:

    The General Aggregate Limit  – The maximum amount the insurer will pay during the policy period for all damages including bodily injury, property damage, personal and advertising injury except for any amount paid as damages because of bodily injury or property damage included within the products-completed operations hazard. The definition of the products-completed operations hazard is outlined in the policy and a separate aggregate limit applies to this type of claim. Also included within the general aggregate are damages paid for medical payments.

    Products-Completed Operations Aggregate Limit – The maximum amount the insurer will pay for damages because of bodily injury or property damage included within the products-completed operations hazard. The specified hazards are those described within the definition of the products-completed operations hazard and are limited to bodily injury or property damage that:

    1.             Occurs away from the insured’s premises.

    2.             Caused by the insured’s products that are no longer in the insured’s possession or an insured’s work that has been completed.

    Personal and Advertising Injury Limit – The maximum amount the insurer will pay if legally obligated to pay damages due to personal and advertising injury offenses. The personal and advertising injury limit applies separately to each person or organization that sustains damages because of a covered offense. However, regardless of the number of persons or organizations claiming damages, or the number of offenses claimed during the policy period, the insurer is only obligated to pay up to the general aggregate limit.

    Each Occurrence Limit – The maximum the insurer will pay for the sum of all damages due to bodily injury, property damage and medical payments. Keep in mind that there is an aggregate limit for bodily injury and property damage claims that arise from the products-completed operations hazard and a separate limit for all other bodily injury and property damages. However, the each occurrence limit does apply to all sums paid for medical payments.

    Damage to Premises Rented to You Limit – This coverage is actually an exception to certain exclusions found in the bodily injury and property damage coverage. The first exception provides coverage for property damage to a premises and its contents, rented to the insured for 7 or fewer consecutive days if an insured is legally obligated to pay for such damage due to any cause except fire.

    The second exception provides coverage for damage to the premises only if an insured is legally obligated to pay for property damage due to fire. However, if an insured is held liable solely due to an agreement to be responsible for the property or for damage to the property, there is no coverage. Liability has to be imposed on the insured as the result of a lawsuit in order for coverage to apply.

    The Damage to Premises Rented to You limit applies to any one premises. Any property damage paid under this limit will reduce the each occurrence limit for that same occurrence and will also reduce the general aggregate limit.

    Medical Expense Limit – The medical expenses coverage is a separate insuring agreement that obligates the insurer to pay reasonable medical expenses for bodily injury, caused by an accident, without regard to fault. Medical payments are subject to the medical expense limit. The medical expense limit applies separately to each person. However, medical payments will reduce the each occurrence limit for that same occurrence and will also reduce the general aggregate limit.

    Cutting the Cost of Your Teenager’s Car Insurance

    Auto insurance for teenagers has always been expensive, and that will probably never change. It’s common for most parents to add their teen as a named driver to the family auto policy because it is usually the most affordable alternative.

    However, less expensive doesn’t mean cheap. That’s because insurers calculate their rates based on the likelihood of a driver getting into an accident. The National Safety Council says that drivers between the ages of 16 and 17 are three times more likely to be killed in a traffic crash than drivers between the ages of 25 and 64. Statistics like these make drivers under the age of 25 bigger risks in the eyes of auto insurance companies, so expect your premium to increase anywhere from 50 to 75 percent.

    There are some other important factors that affect how much you will pay when adding your teen to your insurance:

    • Gender – Teenage boys are considered to be more reckless and bigger risk takers than teenage girls. All of that bravado comes with a price, higher rates than for teenage girls.
    • Experience – Lack of driving experience translates into higher premiums because insurers assume that inexperience makes the driver more prone to accidents.
    • Geography – Driving in a high-traffic geographic area is another rate booster because it increases the probability of getting into an accident.

    While the deck seems to be stacked against you, there are ways you can lower premiums:

    • Buy them an older model car – Older cars cost less to insure than newer models.
    • Avoid the extrasAll of those add ons that teenagers love, like chrome rims and big stereo systems, will increase the rate you’ll pay.
    • Lower/drop collision coverage on older cars – If the value of the car is less than the product of your annual premium times 10, think about dropping the collision and/or comprehensive coverage portion of your policy.
    • Raise your deductible – A higher deductible can lower your auto insurance rate by 15 to 30 percent.
    • Enroll the teen in a defensive-driving class – This could result in a premium decrease.
    • Obtain car insurance from the same company that provides your homeowner’s or renter’s insurance – Many insurers will offer a 10 to 20 percent discount for multiple lines of coverage.
    • Maintain your credit score – Insurers base your premium in part on your credit score; the higher it is, the lower your rate will be.

    Ask about low mileage discounts – As gas prices increase, many people aren’t driving their car as much. If you drive less than the annual average miles allotted by your insurer, see if you can qualify for a low mileage discount.

    New Building Codes Can Leave You Under-Insured

    The owner of a commercial building may believe that replacement cost insurance coverage on the building is sufficient to protect her from financial loss. After all, she took the insurance agent’s advice and bought enough insurance to pay for repairing or replacing the building if it were completely destroyed. However, this may be a false sense of security, particularly if the building is an older one. While the building may not have changed greatly over the years, local building codes undoubtedly have. Even codes in effect at the time the building was constructed may affect your insurance coverage.

    Many local governments have ordinances that require the demolition of a building when more than 50 percent of the building has been damaged. These ordinances require the reconstruction of the building in accordance with current building codes. Zoning and land use codes may have changed over the years prohibiting the reconstruction of that type of building at the same site. This could require the owner to rebuild somewhere else or with a much different building design. Laws and codes requiring buildings to be easily accessible to handicapped people may affect rebuilding if the building previously lacked ramps, doors that can be opened remotely, wheelchair-accessible toilets, and other accommodations.

    All of these requirements may significantly increase the cost of rebuilding. Unfortunately, standard commercial property insurance policies provide very little coverage for these higher costs. Most will pay either 5 percent of the amount of insurance on the building or $10,000, whichever is less, for the increased cost of construction resulting from a local ordinance or law. Therefore, the amount of insurance available for a building insured for $150,000 is $7,500; the amount available for a building insured for $500,000 is $10,000. The costs of demolition and rebuilding up to new codes or at a new location can quickly use up this relatively small amount.

    Building owners should consider buying additional insurance to cover this possibility. Many insurance companies offer ordinance or law coverage for an additional premium. This coverage will pay for the additional costs of demolition and construction unless the costs result from failure to comply with previous ordinances or from the release of pollutants. Included are three distinct coverages for the specified building:

    • Coverage A – Loss to the undamaged portion of the building
    • Coverage B – Cost of demolishing the undamaged portion of the building
    • Coverage C – Increased cost of construction or repairs to comply with ordinances or laws

    The amount of insurance available under Coverage A equals the amount of insurance covering the entire building. Separate amounts apply to Coverages B and C. There is no coverage if the damage results from a cause that the policy excludes. For example, most policies do not cover flood damage, so the policy will not pay if the law requires the owner to demolish the building after a flood. Also, the insurance will pay only the amount necessary to meet the minimum requirements. The insurance will not pay for the cost of exceeding requirements during rebuilding.

    This insurance covers the owner only for the cost of repairing or replacing the building, not for income lost during additional reconstruction time. Separate coverage is available for this exposure.

    An insurance agent can advise building owners on the types, amounts, and costs of coverage they may need to meet updated codes. Whether or not they ultimately decide they need the coverage, they should give it careful consideration. The last thing any owner wants is a surprise uninsured expense after a disaster.

    Insuring Your Student Away at College

    Sending a child off to college is always an exciting and anxious time for parents. They worry about their child’s safety, whether she has everything she needs, how she’ll get along with her roommates, and whether she’s ready for independent living. Between making sure that textbooks and supplies have been purchased, tuition bills paid and course registrations completed, it’s natural that parents won’t think about insurance considerations. However, accidents can happen at college just as easily as they can at home, so it’s worth taking a few minutes to think about insurance coverage.

    A homeowner’s insurance policy may not cover a part-time student or one over a certain age. For example, policies often state that a person has coverage if she is a full-time student and was a resident of the policyholder’s household before moving out to attend school. They also limit coverage to students who are either under the age of 24 and related to the policyholder or in the policyholder’s care and under the age of 21. This could become an issue when the child is attending college at a later age, or at graduate school, law or medical school, where students are often in their mid-twenties. The parents should discuss this with an insurance agent and consider asking for a change to the policy that would eliminate these restrictions.

    A typical policy covers the student’s belongings while at college, but limits coverage to 10 percent of the amount of insurance covering the parents’ personal property. For example, if the policy shows a limit of $100,000 for coverage of personal property, it will cover the student’s property up to a maximum of $10,000. If this amount of insurance is too low, parents should consider higher limits.

    Many colleges require students to own a laptop computer. A standard homeowner’s policy will cover a laptop, but only for a small number of causes of loss. These include perils like fire, theft, lightning, explosion, and vehicle damage. The policy does not cover damage from someone dropping the computer, spilling a beverage on it, or damage to its circuitry from a power surge. However, many insurance companies offer special computer coverage that will pay for damage from these types of accidents. An agent can explain to the parents what the coverage includes and how much it will cost.

    The homeowner’s policy will also cover the student’s liability for any injuries or damages she may cause to others while at school. For example, the policy would pay for repair or replacement of dormitory furniture that she may accidentally damage.

    If the student brings a car to college and the parents’ auto insurance policy lists it, the student will have coverage for its use. Of course, the student could also buy her own policy. If she does, she should buy liability coverage in an amount at least equal to what the parents have. Purchasing only the minimum limits required by state law could leave her owing a large amount out of pocket if she causes serious injuries to others in an accident. If she doesn’t bring a car with her, the parents’ policy will cover her while using someone else’s car unless it’s regularly available to her. The car owner’s policy should also provide her with coverage.

    Parents’ insurance policies will automatically cover many student situations. However, parents should read their policies to verify the coverage they have. A discussion with an insurance agent is in order if anything is unclear or appears inadequate. A little bit of advance checking can save a lot of worry and expense later.

    Utilizing a Wrap-Up Program for a Large Scale Construction Project

    Large construction projects are often difficult to finance because of high costs and increased risk. One way to decrease the cost of the project and lessen the risk is through “wrap-up” insurance programs.

    Under this type of program, one group of insurance policies covers all parties involved in the project for the length of time it takes to complete the project. This insurance is underwritten for the specific exposures of the project and it protects the project owner, contractors, and all subcontractors. Most wrap-ups include workers’ compensation, general and excess liability, and builder’s risk coverage. Wrap-ups can also include professional liability, environment liability and other essential coverages.

    These wrap-up programs can be initiated either by the project owner or the general contractor. When the owner controls them, they are referred to as “owner controlled” insurance programs (OCIP). When the general contractor intiates the program, it is called a “contractor controlled” insurance program (CCIP). The minimum size for a wrap-up to make sense is generally $100 to $150 million in hard construction costs.

    The most common reason that wrap-ups are used is for potential cost savings. Subcontractors always include in their bids the cost of insurance for a project. Depending on the type of work the subcontractor performs and location of the work being performed, the subcontractor’s insurance cost could add several percentage points to their bid amount. By insuring all of the subcontractors under one insurance program, the owner/general contractor can realize a substantial savings.

    Wrap-ups not only save money on premiums, but additional cost savings can be gained through the design of the insurance program itself.  Many wrap-ups are written using risk sharing techniques, such as larger deductibles or retrospective rating. Retrospective rating is a premium calculation formula in which the final premium is not determined until the end of the coverage period. The insurerreviews the owner/general contractor’s losses after the policy ends, and adjusts the premium based on those losses.However, the premium is subject to a maximum and minimum. If a project is well run, this can result in a significant premium reduction. Wrap-ups have also been written at fixed rates for the duration of the project.

    Another reason for a wrap-up is that it enables an owner/general contractor to fulfill Minority Business Enterprise (MBE) and Women Business Enterprise (WBE) requirements on public projects. If the controlling government authority of a project requires that minority contractors must be hired, a wrap-up may be the only way to meet this standard. That’s because many minority contractors may not be able to afford the level of coverage required by the government authority and would be unable to bid on the project. If the owner/general contractor is providing all necessary coverage, this removes the obstacle of being unable to pay for insurance that would prevent an MBE or WBE from bidding.

    Aside from potential cost savings, wrap-up programs can also provide a measure of asset protection for owners.  With most construction projects, contractors are individually required to secure and maintain the minimum insurance required under their contract.  While owners may have a certificate of insurance to verify coverage, there is no guarantee at the time of a loss that the insurance will be in force, the coverage will be sufficient, or the necessary limits will be available due to the contractor’s claims activity at other projects. This is a critical aspect that is often overlooked during the decision making process.

    Separate Households: Whose Insurance Covers the Kids’ Accidents?

    Michael and Maureen divorced after 18 years of marriage and agreed to joint custody of their three children. Their 11 year-old son Mikey is riding his bike one afternoon with some friends and not paying full attention to the road in front of him. A five year-old child chasing a ball runs into the road and Mikey strikes her with his bike, causing her to fall and break her arm. The child’s furious parents sue both Michael and Maureen for compensation for her injuries and trauma.

    Not long after, their 16 year-old son Mark gets his drivers license. One evening while driving home, he swerves to avoid a deer in the road, loses control, and plows into two parked cars. Both cars are relatively new; the repair bills come to thousands of dollars.

    Because Michael and Maureen now have separate households, they each have their own auto and homeowner’s insurance policies. Are both parents responsible for the children’s actions? Is only the parent who had custody at the time of the accident responsible? And whose insurance pays for the damages? Will either policy pay? With the increasing prevalence of two-household families and blended families, the question of which parent (and, therefore, which insurance policy) is responsible for a child’s actions has become more common. The answer is not always clear.

    A standard homeowner’s policy covers the people named on it (the named insureds); household residents who are either relatives of the named insureds or under age 21 and in the care of a named insured or relative; and full-time college students who are either relatives of the named insureds and under age 24 or others in the care of a household resident and under age 21. A standard auto policy covers the named insureds and “family members” (residents of the household related to the named insureds by blood, marriage, or adoption, including ward or foster children.) Michael and Maureen have joint custody of their children. In which parent’s household are the children residents?

    State laws and courts have answered this question in a variety of ways. For example, states such as New York have established “dual residency”; that is, a person can be a legal resident of multiple households at the same time. However, other states such as Montana have laws prohibiting dual residency. Some courts start with the custody awarded in the divorce decree but also consider how the parents are actually handling custody. A New Jersey court found that a child had dual residency, despite the mother having legal custody, because both parents had actual custody at different times. The judge ruled that both parents’ homeowner’s policies applied to the child.

    Other states have ruled that no one factor determines residency; a court must look at multiple factors. A Georgia court devised an approach that measures custody time and focuses on whether there is in fact more than one household. New Jersey courts look at both measurable factors and qualitative factors, such as whether people in the household function together as family members.

    If Michael and Maureen live in a dual residency state, both their homeowner’s and auto policies may cover the accidents their children have. Policy terms explain how they share loss payments for these incidents. In other states, the solution may be more complicated. A court may weigh several factors and assign residency to only one of the households, requiring one parent’s insurance to pay for the loss. Since the outcome in these situations is uncertain, the best thing for divorced parents to do is to make sure they have plenty of insurance provided by financially strong companies.

    Specialized Insurance Available for Green Construction

    Weather patterns have become increasingly erratic over the last several years. Heat waves, droughts, mudslides, and increased hurricane activity have become the norm. In 2004, four major hurricanes pummeled Florida; the Gulf Coasts of Louisiana, Mississippi and Alabama are still recovering from 2005’s Hurricane Katrina and its ensuing floods. Between these disasters and increasing attention from politicians and the media, the problem of global climate change has become a major issue. As a result, the insurance industry has begun to devise new products and strategies for dealing with this problem.

    Some insurers are beginning to offer specialized “alternative energy insurance” policies. For example, one company is writing policies to cover alternative energy system performance. This policy insures against the risk that a deficiency in the design of alternative energy technology will result in the under-performance of a facility. The company designed it to help owner-operators of facilities meet the needs of lenders concerned about their investments. Another company has broadened its coverage for commercial buildings to include alternative energy systems. It also will insure against loss of income when alternative energy systems suffer damage and extra expenses when the building owner must buy power from the grid while the system undergoes repair.

    At least one insurer offers special coverage to encourage commercial building owners to replace destroyed buildings with new ones using green technology. It gives the property owner several green technology options, including:

    • Non-toxic, low-odor paints and carpeting
    • Energy-efficient electrical systems
    • Interior lighting systems that meet independent energy efficiency standards
    • Water-efficient plumbing systems
    • Enhanced roofing and insulation materials to reduce heat loss.

    Anticipating less severe and less frequent losses, the same company offers rate credits to green building owners. It has found that most losses in traditional buildings are from electrical fires, heating and air conditioning system fires, and plumbing leaks. The company expects green technology to make these events less likely.

    Another insurer has introduced for commercial building owners a new policy that encourages green building. It features coverage for:

    • The increased cost of green building alternatives
    • The expense of re-engineering and re-certifying green buildings
    • Vegetative roofs, and
    • Additional time to restore operations so that building repairs can include green alternatives.

    Insurers are also educating their clients about the implications of climate change. Recognizing that courts could hold businesses liable for future environmental damage, insurers have worked with corporate boards and officers to encourage planet-friendly business practices. Their hope is that actions taken now will reduce the number and size of future liability insurance claims.

    While only a small number of insurers offer specialized policies for green construction now, the success of these products will encourage other companies to follow suit. Also, as green building technologies become widespread, the desire to attract and retain business will force insurers to compete with policies of their own. Insurance agents can identify companies that offer these coverages and make coverage recommendations to property owners.  As businesses and households everywhere take steps to reduce their carbon footprints, make certain that your insurance coverage is keeping up with those steps.

    Dog Bite Prevention

    If you own a dog, you should be aware that it is not completely unlikely that your dog may bite. According to 2009 figures from the CDC, approximately 4.5 million Americans are bitten by dogs every year. Of these bites, about one in five result in wounds that require medical attention. Furthermore, the property/casualty industry pays out hundreds of millions of dollars to satisfy dog bite claims each year. But you can take steps to make it less likely that your dog will bite.

    Prior to bringing a dog into your household:

    * Speak with a professional such as a veterinarian, animal behaviorist, or a responsible breeder to find out which breeds of dogs are the best fit for your household.

    * Dogs with aggressive natures are not appropriate for households with children.

    * Pay attention to cues that a child is apprehensive about a dog. If a child seems fearful of dogs, wait before bringing a dog into your household.

    * Before buying or adopting a dog, spend time with it. Exercise caution when bringing a dog into a household with an infant or toddler.

    If you decide to adopt or purchase a dog:

    * Spay or neuter your pet since this action reduces aggressive tendencies.

    * Don’t ever leave young children or babies alone with a dog.

    * Don’t play aggressively with your dog. Avoid wrestling or tug-of-war games.

    * Teach your dog submissive behaviors such as rolling over to expose the abdomen, and giving up food without growling.

    * Seek professional advice from a veterinarian or responsible breeder if the dog develops aggressive or other unwanted behaviors.

     Teach children special safety precautions to take around dogs:

    * Children should not approach an unfamiliar dog

    * Don’t run from a dog or scream

    * If an unfamiliar dog approaches, remain motionless

    * If knocked over by a dog, roll into a ball and lie still

    * Report stray dogs or dogs displaying unusual behavior to an adult.

    * Avoid making eye contact with a dog.

    * Do not disturb a dog that is sleeping, eating, or caring for puppies.

    * If bitten, immediately report the bite to an adult.

    Be a responsible pet owner and protect yourself and others from dog bites, pain and suffering, as well as insurance claims!

    Cover Your Home Office with Necessary Business Insurance

    If you run a business from your home, don’t make the error of believing your current homeowner’s insurance policy covers the loss of expensive business equipment. Although many homeowner’s policies offer a small amount of insurance coverage for inventory, there are strict exclusions for liability claims arising from any “for-profit” activities.

    While some office-only types of businesses can be insured against liability claims under the homeowner’s policy, professional liability insurance needs would not be included. Insurance packages created specifically for in-home businesses are available at a moderate cost.

    An average homeowner’s policy provides only $2,500 coverage for business equipment, which frequently is not enough to cover all business property. You may also need to consider coverage for liability and loss of income. Be aware that insurance companies differ quite a bit in the types of business operations they cover. Taking the time to shop around for coverage options, as well as pricing, will pay off in the long run.

    No matter what type of policy you choose, if you’re a professional working out of your home, you probably need professional liability insurance. Depending on the type of in-home business you operate, special policies may be required. You have three basic insurance choices, depending on your specific business:

    Homeowner’s Policy Endorsement

    In order to double your standard coverage for business equipment, such as computers, you may be able to add a simple endorsement to your existing homeowner’s policy . For as little as $25, you can increase the policy limits from $2,500 to $5,000. Some insurance companies will permit you to increase your coverage up to $10,000 in increments of $2,500.

    In-Home Business Policy/Program

    An in-home business policy renders more comprehensive coverage for liability and business equipment than a homeowner’s policy. These policies, which are also referred to as “in-home business endorsements,” differ substantially depending on the insurer.

    What if you have additional employees working in your home? Some in-home business policies allow a certain number of full-time employees, usually up to three. In-home business policies include extended liability insurance for higher amounts of coverage. For example, they may provide protection against lawsuits for injuries caused by your product and/or service offerings.

    Business Owners Policy (BOP)

    Developed specifically for small-to-mid-size businesses, a Business Owners Policy is an excellent tool if your home-based business operates in more than one location. A BOP covers business property and equipment, loss of income, extra expense, and liability. These coverage plans are offered on a much broader scale than the in-home business policy.

    Check Your Insurance Before Climbing into the Cockpit

    Nearly 600,000 Americans are active certified aircraft pilots, according to Federal Aviation Administration estimates. These pilots fly everything from helicopters to commercial jets. Some own the aircraft they fly. Whether you own a plane or fly rented or borrowed aircraft, you should be aware of what your insurance can and cannot do and the insurance coverage you need.

    A typical homeowner’s insurance policy does not cover the policyholder’s legal liability for bodily injury or property damage arising out of any of the following:

    • The ownership of aircraft
    • Its maintenance, occupancy, operation, use, and loading or unloading by anyone
    • Entrustment of it to anyone
    • Poor or no supervision of a person using it
    • Its use by a child or minor

    Personal umbrella liability policies typically contain similar provisions. Consequently, it is essential for aircraft owners and renters to purchase aviation insurance. A relatively small number of insurance companies offer these policies, and the coverage details vary from one company to another. However, they all cover legal liability for injuries or damages. Coverage applies to the policyholder, anyone riding in or using the aircraft with the policyholder’s permission, and any other person or organization responsible for the aircraft.

    Aviation policies normally contain several provisions that limit or eliminate coverage, such as:

    • No coverage for liability that the insured assumed by signing a contract.
    • No coverage for damage to property the insured leases, occupies or has control of, though some insurance companies cover damage to leased hangars.
    • No coverage for losses occurring when the aircraft’s Certificate of Airworthiness is not in effect.
    • No coverage for injury or damage that occurs while the aircraft is being used for an illegal purpose.
    • No coverage for a loss that occurs when the number of passengers exceeds the maximum stated in the policy.
    • No coverage when a pilot who does not meet certain conditions is operating the aircraft. These conditions may include having a valid pilot’s certificate, having logged a minimum number of flight hours, and having flown that make and model of aircraft a minimum number of hours.

    Policies usually cover the use of substitute aircraft while the insured aircraft is out of service for maintenance or repair. Also, policies issued to an individual or couple often include coverage for the occasional use of aircraft they do not own.

    Aviation insurance also covers damage to the aircraft itself. Policies typically cover damage from all causes other than:

    • Wear and tear, mechanical breakdown, and related causes
    • Damage to the tires
    • Depreciation or loss of use of the aircraft
    • Embezzlement
    • Government seizure of the aircraft
    • Change in ownership of the aircraft

    Discuss how you use aircraft with an insurance agent to make certain that you have the proper coverage and amounts of insurance large enough to adequately protect you. Personal aircraft can be a great convenience for their owners. The right insurance can give you financial peace of mind when you jump in the pilot’s seat.

    Will Your Insurance Protect you from a Facebook Lawsuit?

    Mostly everyone knows that the use of social media has grown by leaps and bounds over the past decade.  What many people don’t realize are the unique risks that come along with social networking. Anyone using Facebook, MySpace, LinkedIn, or other social networking sites should exercise extreme caution in what they decide to say on-line.

    As an example, in 2009 a teenager in New York sued some of her classmates and their parents, accusing the classmates of bullying and humiliating her in a Facebook Forum.   Whether or not the allegations are true, the teenagers and their parents require legal resources to pay for the possible judgments against them.

    Many people believe a standard homeowner’s insurance policy will cover them in such a situation.  In fact, it probably will not provide the necessary coverage.  A standard policy covers bodily injury or property damage done to someone else.  It defines bodily injury as sickness, harm or disease, and it defines property damage as destruction of or injury to physical property.  Neither definition includes publishing or saying something that injures another person’s reputation. Hence, the policy is not likely to cover a Facebook post.  In other words, the policy is unlikely to cover the act of making someone else feel miserable due to social networking.

    A good source to consider for additional coverage is a personal umbrella policy.  This kind of policy provides additional insurance in circumstances where a loss has depleted the amounts of liability insurance offered under a homeowner’s policy.  Umbrella policies usually have a deductible of $250 to $500; but have the potential to protect the policyholder from financial devastation.  

    As Americans become more exposed to risk through social networking, they should choose their words carefully on any social networking site.  Additionally, they should speak with an insurance professional to see if an umbrella policy is a good match for their insurance needs in an increasingly risky world. 

    Protect Your Officers with Drive Other Car Coverage

    Mary is a junior partner in a law firm and drives a car that the firm owns and insures. She is unmarried and her children are not old enough to drive, so she does not carry a personal auto insurance policy. The firm’s auto insurance covers her as a partner and she doesn’t own another car, so she sees no need to have her own policy. Most of the time, this is not a problem. However, spring break comes and she takes her kids to DisneyWorld. She rents a car at the Orlando airport and never gives a thought to whether her firm’s insurance will cover her if she has an accident with the rental. In this case, a phone conversation with the firm’s insurance agent would have been a good idea.

    While driving back from the Magic Kingdom one night, Mary accidentally rear-ends a new Lexus. The damage to the other car is extensive; Mary looks to her firm’s auto liability coverage for the cost of repairing it. The ISO Business Auto Policy covers the person or organization shown in the policy declarations (the information page at the beginning.) In this case, the name shown in the policy Declarations is the name of Mary’s firm. The policy goes on to say that, for liability insurance, the firm is an insured and so is anyone else using, with the firm’s permission, a covered auto the firm owns, hires or borrows, with some exceptions. Unfortunately for Mary, the firm didn’t rent the car; she did. She rented the car in her name. Consequently, the firm’s insurance will not cover her liability for this accident. She will be forced to pay for it out of her own funds.

    However, there are a couple of policy changes that the firm can buy that would solve Mary’s problem. The first is an endorsement called Drive Other Car Coverage-Broadened Coverage for Named Individuals. The insurance company will require the insured to list the names of one or more individuals on the endorsement. The change extends several of the policy’s coverages so that they apply to the listed individuals and their resident spouses. This endorsement comes with some significant limitations:

    * It extends to the listed individuals coverages that the policy already provides; it does not add coverages not provided. If the firm’s policy does not provide collision coverage on any its vehicles, Mary will not have collision coverage on a car she rents.

    * It covers the named individual’s spouse only while a resident of the same household. If Mary is married to Jim, Jim automatically has coverage for a car he rents in his name. If they separate, however, Jim loses that automatic coverage because he no longer resides in the same household as Mary.

    * The only family member it automatically covers is the resident spouse. It will not cover any other family members in the household unless the endorsement specifically lists their names.

    An alternative to this endorsement is to list individuals’ names in the policy declarations along with the firm’s name and attach an endorsement called Individual Named Insured. It covers the individual listed in the declarations and automatically covers the person’s resident spouse and family members. It also covers these individuals should they injure another of the firm’s employees.

    These policy changes affect several coverages, including liability, uninsured motorist, medical payments, and physical damage. An organization should consult with a professional insurance agent to discuss the endorsements’ details and identify the one that will best insure the concerned individuals. With the right coverage in place, Mary can enjoy her vacation without having to worry about who will pay for the fender-bender.

    National Council on Compensation Insurance Says Younger Workers Are More Accident Prone

    According to a study conducted by the National Council on Compensation Insurance, younger workers have more injuries and illnesses than older workers; but older workers have higher costs per claim. The researchers discovered that age is an important factor in overall claim costs, but the significance of age on claims frequency has lessened. This has been interpreted to mean that age may not play an important role in future frequency trends. However, the relationship between age and claim severities is basically unchanged.

    Factors associated with age, such as average wages, claim durations, lump-sum payments, injury diagnoses, and number of medical treatments, comprised a large part of the reason for the differences in the severity of claims between younger and older workers. The differences in wages and duration of claims were the principal reasons for the differences in the amount of payouts between younger and older workers. Differences in wages accounted for approximately one third of the differences in the amount of payout, while the differences in the duration of claims accounted for almost one half the difference.

    Older workers experience more high cost injuries, such as injuries to joints like rotator cuffs and knees. These were more commonly experienced by workers aged 45-64.  Workers aged 20-34 more commonly experienced ankle sprains. Carpal tunnel syndrome and injuries to the lower back are among the top 10 diagnoses for workers of all ages. The researchers pointed out that the differences in the types of injuries only comprised about a quarter of the difference in medical severities between younger and older workers. The real factor influencing the difference in medical severities between older and younger workers was the significantly higher number and different mix of treatments within a diagnosis. This alone accounted for 70 percent of the difference.

    Less than 10 percent of the difference in medical severities is due to a slightly more costly mix of treatments for older workers. This was reflected in small differences in the average prices of different types of medical services. The greater number and different mix of treatments also contribute to the longer duration of payments for older workers.

    As for trends in loss costs, the researchers noted that the baby boomers’ impact was apparent when the data was viewed historically, but the major impact of this aging workforce has probably already occurred and employers should not anticipate that the aging workforce would present a major problem in terms of future claims costs.

    Understanding the Benefits of Insurance Scoring

    Most people realize their credit affects their ability to get mortgages, car loans, and other types of debt. However, businesses use personal credit histories in many other ways. Employers use it when considering job applicants. Landlords use it to evaluate prospective tenants. Increasingly, insurance companies are using it to develop an “insurance score,” a number that reflects the quality of a customer’s credit history. The companies’ research has shown  that people with good insurance scores tend to submit fewer insurance claims than people with poor credit histories. Because of the predictive value of credit history, many insurers now obtain an applicant’s insurance score during the underwriting process.

    Some consumers are concerned about insurers using their credit information in this way. However, the use of scoring actually has many benefits for insurance consumers.

    Insurance scoring speeds up the underwriting process. Before insurers began using scoring, underwriting decisions could sometimes take days. Internet technology allows an insurance company to obtain your score within seconds, which cuts the decision time down to just a few minutes. Many insurance agents are able to obtain a company’s approval almost instantly.

    Scoring uses the facts about a person’s credit history to enable underwriters to make objective decisions. Scoring does not take into account a person’s race, nationality, gender, marital status, or other factors that the person cannot control. It focuses only on how that person has used credit in the past. The insurance application still asks about factors such as gender and marital status, but the insurer uses those answers only to correctly classify the person and ensure that it charges the proper rate. Scoring looks only at numbers, resulting in decisions that are much fairer. People of widely differing incomes and backgrounds who have similar insurance scores are treated the same way.

    Scoring recognizes that a person can make up for past mistakes. Just as he can improve his driving record by becoming a more careful driver, a person can improve his insurance score by reducing debt and making payments on time. Old mistakes lose importance as time passes; scoring gives more weight to recent actions than it does to older ones. As the score improves, the person can benefit from lower rates and more companies interested in insuring him.

    Scoring also increases the availability of insurance. Many companies use different pricing “tiers,” built around specific policyholder criteria. Scoring makes the use of tiers easier because it is an objective factor. If a company has five pricing tiers, and an applicant’s score is too low to qualify for the best one, the company might be able offer insurance to that person in one of the other tiers. It gives companies alternatives to simply rejecting the application.

    Because scoring is an automated process, it makes the underwriting process more efficient for insurers. This lowers their costs and allows them to charge lower rates. Also, because it allows insurers to more accurately predict losses, they can control their losses and keep their rates lower.

    Studies have shown that most people have good credit scores. Because of this, most people benefit from insurance scoring. They pay lower rates for home and auto insurance then they would otherwise. People who want to earn better rates can more easily fix their credit history than they can fix their driving records, which generally keep traffic violations for at least three years. Scoring gives insurance companies another tool to ensure their rates are fair, so that customers more likely to file claims pay more for their insurance.

    At What Amount Should I Set my Auto Insurance Deductible?

    While almost everyone would like to save on their auto insurance, it can be a big mistake to be penny-smart, dollar-foolish. The dollar amount you set your comprehensive and collision deductibles at will be one of the most important decisions you make during the purchase of auto insurance. In turn, the deductible amounts you set will be one of the main determining factors in the amount of your monthly premium.

    Any insurance policy covering comprehensive and/or collision will contain a deductible. Most deductibles are $1,000, $500, $200, or $100 dollars; but deductible amounts do vary by state. Deductibles are the cost you will pay out-of-pocket during an insurance claim. For example, let’s say that your deductible is $500 and you’re involved in an auto accident that causes $4,000 dollars in damage to your vehicle. You will be responsible for paying the initial $500 and the insurance company will then pay the remaining $3,500. On the other hand, if your deductible is $100, then you will only pay $100 before the insurance company pays the remaining $3,900. As you can see, a higher deductible means you pay more out-of-pocket and a lower deductible means you pay less out-of-pocket after an accident. As a general rule, lower premiums are associated with higher deductibles and higher premiums are associated with lower deductibles.

    It can be difficult to weigh what premium amount you’re willing to pay now against what deductible amount you’ll be willing to pay for any future claim. Be sure to take into account your comfort level; income, savings, and credit lines; driving history; and your vehicle’s value as you make your decision on the deductible amount.

    Choosing a high deductible/low premium or low deductible/high premium will greatly depend on what you can reasonably afford. Imagine that you had an auto accident today – would you have funds from your household income, credit lines, and/or savings to use as your deductible? If so, what financial impact would using funds from these sources have on your family and how much would you be comfortable using to pay the deductible? If the deductible you have in mind (or already in place) is higher than what you have available or feel comfortable using, then it should be lowered. On the other hand, if you have the funds easily available to pay a higher deductible amount, then you can raise the deductible and save money on your premiums.

    You also need to ask yourself how much risk you are willing to assume. Will you continue to be prepared to cover the deductible amount you set? If not, are you willing to risk having a high deductible and bet on not getting into an accident?

    How often you expect to make a claim on your insurance is another factor to consider. While accidents are unpredictable and no driver wants to think they’re a bad driver, your driving history speaks for itself. If you’ve had a history of frequent fender-benders or accidents, then it could be best for you to opt for the higher premium/lower deductible option. On the other hand, the lower premium/higher deductible could be a better option if your driving record is excellent or only has a few infrequent driving incidents. You might also consult your insurance agent on what the average deductible is for your driving experience and the age of your vehicle.

    Don’t forget to review your auto insurance deductible at least once a year. Ask yourself if your financial situation has changed since the deductible was set and if the deductible amount is still something you could comfortably pay if you had an auto accident today.

    The bottom line is this: don’t let purchasing car insurance confuse or overwhelm you. Take your time to assess your finances and circumstances to figure out what you feel comfortable with paying on both a monthly basis and at any given time an accident should occur. If you have any questions or concerns, don’t hesitate to consult your auto insurance agent.

    Getting a Handle on Your Insurance Company’s Stability and Strength – A Brief Guide to the Rating Agencies

    Long before 9/11, insurer stability was an important but overlooked factor in the insurance purchase decision.   Now, after 9/11, it can no longer take a back seat to issues like coverage or price.  Insurer insolvencies are on the rise as old liabilities such as asbestos come back to haunt some companies, and newer exposures such as corporate scandals, accounting irregularities and toxic mold threaten to keep actuaries busy for years to come.  With the above in mind, how does one factor the financial strength of insurance companies in to the buying decision? 

    The answer lies somewhere between Standard & Poors, Moody’s, Duff & Phelps, Fitch and the granddaddy of them all, A.M. Best. All the aforementioned companies provide some kind of measure of insurer stability and financial strength.  All use different scales, different factors and somewhat different terminology in their analyses.  Invariably, all the rating agencies use a mixed bag of criteria to develop their ratings and they all do comprehensive analyses of the companies with a “Readers Digest” version often available online for free. 

    Let’s take a quick tour of the A.M. Best rating structure just to get a taste.  As always, your agent is a good source of information regarding the companies you are insured with or contemplating insuring with, but feel free to browse the Best, S & P or any of the other websites for your own edification as well.

    A.M. Best (https://www.ambest.com)

    A.M. Best provides ratings according to financial strength and size.  There are sixteen distinct financial strength ratings which are further boiled down to ten general descriptors, such as “Superior”, “Excellent”, “Very Good”, etc.  It’s worth noting that many in the insurance industry consider anything below “Excellent” to warrant caution, especially if it is the result of a recent downgrading from a higher rating.  Such a downgrading often precedes a further downgrading so it is important to look into the history and see what the rating has been over the past two or three years or longer.

    In addition to the above general descriptors, there are further categorizations within the A.M. Best rating structure.  The “Superior”, “Excellent” and “Very Good” rating descriptors and their respective ratings all comprise the “Secure” category of ratings.  Everything else gets lumped into the “Vulnerable” category.

    A.M. Best also has financial size categories that measure the company according to factors such as statutory surplus, a measure of the capacity of the company to pay claims.  Larger companies with higher statutory surplus will end up on the higher end of the scale, which tops off at XV (15) while smaller, less well-heeled companies will end up on the lower end, starting at I or 1.   A company with an A++(XV) rating by A.M. Best receives top honors and would appear to be the “best” bet for the long haul.  Though financial stability is an important factor, other factors, like a good reputation for paying claims should weigh in the decision making process.  Again, talk to your agent and find out more about the companies you are considering purchasing coverage from.  They will be happy to give you insight into the history of the company and point you in the right direction to access available resources to help you make an informed decision.  While there are no crystal balls that can predict the future outlook for your insurer of choice, there are certainly benefits to making an informed purchase decision. 

    Naturally Occurring Substances Can Expose Construction Firms to Environmental Liability

    What do silica, mercury, arsenic, pyrite, and asbestos have in common? They all are recognized as toxic substances, or contain toxic substances as defined by the U.S. Environmental Protection Agency. Their very presence on a construction site presents a serious exposure for a construction contractor.

    There are potentially hazardous consequences when these toxic substances are uncovered during construction:

    ·   Mercury – is a human neurotoxin; meaning it acts specifically on neurons or nerve cells. It is most hazardous to developing fetuses and small children. Eating mercury-contaminated fish is the way most humans become exposed. When mercury enters water, certain conditions can cause it to convert to methyl mercury. Methyl mercury is ingested by aquatic creatures and becomes more concentrated as it moves along the food chain. Humans receive the highest forms of concentration because they are at the end of this food chain.

    ·   Pyrite – has a high sulfur content, which if exposed to oxygen or water will form sulfuric acid. When a construction project releases significant amounts of pyrite into the surrounding area, it can result in high amounts of acid drainage, which enters surrounding bodies of water. The acid drainage contaminates streams and water wells of area residents.

    ·   Asbestos – has little or no impact on the environment and human health if left undisturbed. However, when construction releases natural asbestos fibers into the atmosphere, it exposes workers and residents of the surrounding area to respiratory hazards. Asbestos is known to cause cancer of the lungs and of the lining of internal organs.

    ·   Silica – is most dangerous in the crystalline form known as silicon dioxide. People who have been exposed to silica and contract silica-related respiratory conditions usually have inhaled tridymite or crystobalite contained in the dust released during construction. Although all forms of crystalline silica are different in chemical structure, all can eventually be deadly.

    ·   Arsenic – has been linked to cancer of the bladder, lungs, skin, kidney, nasal passages, liver, and prostate. Non-cancer effects can include thickening and discoloration of the skin, stomach pain, nausea, vomiting, diarrhea, numbness in hands and feet, partial paralysis, and blindness.

    What specific implications does the presence of these toxic substances have on environmental liability insurance?  Many of these policies contain wording that excludes these naturally occurring substances from the coverage. In Contractor’s Pollution Liability Insurance (CPL), there are several ways exposure to naturally occurring hazards may be excluded. For example, the insurer could include a specific exclusion for naturally occurring substances in the exclusions section of the policy. No coverage would apply to claims based upon any naturally occurring substances in their unaltered form, or in an altered form due to naturally occurring processes.

    A second way to exclude these substances from coverage is to exclude them by definition. In the policy’s definition of covered pollution conditions, the definition does not include naturally occurring substances. Pollution conditions are defined as the emission, discharge, dispersal, release or escape of pollutants, which are not naturally occurring. This negates coverage for these substances.

    Does this mean you shouldn’t purchase a CPL policy? The answer to that question would be “no.” There are a number of different policy forms. Talk to your insurance agent to get the one that is best suited to your needs.

    Ensure Your Boating Experience Is a Real Pleasure Cruise

    Published reports from the U.S. Coast Guard show that boating deaths and injuries increased for the second consecutive year in 2006. Aside from the disturbing trend in boating deaths, the biggest change was actually in the amount of property damage, $43 million in 2006 as compared with $38 million in 2005.

    These statistics should serve as a powerful reminder to all watercraft owners to review their insurance coverage. Owners of canoes, small sailboats, and small engine powerboats generally have limited coverage for physical damage included with their homeowner’s insurance policy, but liability coverage has to be added as a policy endorsement. Physical damage coverage is typically equal to 10 percent or less of their home’s property value. If you find the coverage limits offered by your homeowner’s policy to be insufficient, you’ll likely need a separate boat insurance policy.

    Since no coverage exists under a homeowner’s policy for larger boats, yachts, jet skis and wave runners, a separate boat insurance policy is a must. Coverage for physical damage includes the hull, machinery, fittings, furnishings and permanently attached equipment up to pre-determined amount. Such policies also provide additional protection for:

    • Injuries to another person
    • Damage to someone else’s property
    • Legal expenses incurred by someone using the boat with the owner’s permission
    • Injuries to the boat owner and other passengers

    Even though you may have solid insurance coverage, the Insurance Information Institute (III) offers the following suggestions to help you avoid having to file a claim:

      1. Check weather forecasts before heading out.
      2. Let someone know where you’re going and when you expect to return.
      3. Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
      4. Carry one or more fire extinguishers, matched to the size and type of boat. Keep them readily accessible and in condition for immediate use.
      5. Equip the vessel with required navigation lights and with a whistle, horn or bell.
      6. Don’t overload. Distribute weight evenly.
      7. Don’t stand up or shift weight suddenly in a small boat; and don’t permit riding on the bow, seatbacks or gunwales.
      8. Be sure you bring paddles or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio.
      9. Make sure that every person on board wears a life jacket.
      10. Never operate a boat while under the influence of alcohol or drugs.

    Who Rates Insurance Companies – Finding the Best

    It’s no longer enough to choose an insurance company simply because they offer what appears to be the best coverage or lowest rates. You also have to know the financial security of the company especially in these challenging economic times when even the largest companies might be teetering on the edge of insolvency.

    Additionally, you want to know something about the company’s track record when it comes to paying claims and overall customer satisfaction. Not all insurance companies are the same and you should take a hard look at your prospective insurer before handing over a big premium check.

    How can you find this information? Well, it’s easier than you think because there are several major companies that rate insurance companies. Each offers a detailed rating service and most of these services are free.

    The rating system for each of these rating companies is based on a letter grade system such as “AAA”, through “NR.” However, you should note that there are both subtle and significant differences in the letter grade system. A “C” rating might mean an average score for one rating company but might also suggest the insurance company is experiencing significant financial challenges with a different insurance rating company. Make sure you fully understand the rating system for each of the companies before jumping to an erroneous conclusion.

    Some rating companies only rate the top 200 insurers, while others offer more comprehensive data.

    Here is a brief summary of the major companies which rate insurance companies. 

    1. A.M. Bestwww.ambest.com

    This rating agency is the only one which specializes in banking and insurance companies, reinsurers and covers the total insurance market spectrum including international markets such as the U.K and Canada. Also offers a comprehensive article base and in depth commentary.

    2. Fitch Inc. – www.fitchratings.com

    Provides a global rating service on insurance products through combining both local and international expertise on contemporary insurance issues and trends. Also offers a monthly newsletter dealing with specific insurance issues called “Insurance Insights.”

    3. Moody’s Investor Services – www.moodys.com

    You have to register to log in with this company before you can access their info. Covers title insurers, life, mortgage and property and casualty. Mainly focused on the financial health and outlook of insurance companies and overall realm of the financial market.

    4. Standard & Poor’s – www.standardpoor.com

    Must be a subscriber. Offers international rating services on property and casualty, life, annuities, health, title, mortgage, bond and reinsurance. Rating services include link market solutions and both the derivative product and financial subsidiaries.

    Self-Insured Retentions vs. Deductibles: Your Skin in the Game

    Self-insured retentions (SIR) and deductibles are the two conventional mechanisms insureds use to reduce both premiums and loss ratios in liability policies.  Those insureds must strike several careful balances in order to sustain affordable coverage while protecting assets.

    First, an insured must analyze cash flow and balance sheet statements in order to make an informed decision as to which approach, if either, is best.  Using either simply to reduce premiums is foolish, and could prove to be very dangerous.

    A self-insured retention means that the insured carries a fixed amount of risk, including adjusting and legal expenses.  The insurance policy, whether a primary or umbrella contract, is excess coverage above the SIR.  The insurance carrier will impose reporting requirements on the insured in order to monitor the development of claims that may impact the liability limit to which the company is exposed.  For example, the insured, typically, must report claims that involve fatalities, amputations, third-degree burns, brain injuries, and any other claim for which the insured sets a reserve of 25% or more of the SIR amount.  The carrier will require that adequate, proven risk management staff be in place, whether native or contracted.  SIRs are rarely smaller than $100K, and can be $1M, $3M or higher for large companies with good controls and substantial liquid assets.  Some states have legislation in place to regulate such “attachment point” business.

    Finally, the SIR normally has no effect on the amount of insurance available under a liability policy.  Such tools are available, though, with permission for company intervention, in which case the form-they are unique as to carrier and insured-may provide for loss adjusting and defense expenses that do not erode the insured’s liability.  In other words, if the carrier chooses to “drop down,” and take over management of a given claim, those expenses fall on the carrier even though the claim may settle within the SIR.

    A deductible, on the other hand, is a portion of an insured loss borne by the insured.  The carrier will typically pay the entire claim, and then be reimbursed by the insured.  Unlike an SIR, a deductible erodes the limit of liability in the insurance policy.  A policy with a $1M limit of liability and a $25K deductible, then, exposes the carrier to $975K.  Loss adjusting and legal expenses typically further erode the limit.

    Deductibles are commonly used with risks that have a frequency of smaller claims.  Daily auto rental or taxicab fleets (lots of minor fender benders), contractors with multiple job sites, supermarket chains (lots of slip-and-fall activity)-are typical of the kinds of risks that can benefit from deductible treatments.  Deductibles almost always include loss adjusting and defense expenses.  All claims are reported per the policy’s terms, and the carrier is involved in the adjusting process immediately.

    Collateral instruments for these management tools include escrow accounts, by which the insured maintains a cash reserve with the insurance company (which may or may not pay interest on it), and evergreen letters of credit.  Escrow accounts are more frequently used with frequency-prone risks (think deductible), while a letter of credit is typically more suitable to an insured that carries a substantial SIR.

    While the fine points these mechanisms provide differ in practice, their common goal is to reduce loss ratios and premiums for quality insureds who pay attention to their own risk/reward postures, and who share the character and values of the carriers that provide their coverages.  An insured that has the ability to manage claims, and to therefore manage risk, should be very attractive whatever the condition of the insurance market.

    Is Your Cyber-Policy Really Covering Your Technology-Related Exposures?

    As businesses become increasingly reliant on technology to store sensitive information, the incidences of security breaches are becoming more prevalent. Each security breach increases the risk that a lawsuit or regulatory action could financially ruin a company and permanently damage its reputation. The situation is so bad, that some retailers and financial institutions targeted by litigation and regulatory actions are trying to hold their technology vendors accountable so they can transfer some of the fallout.

    Many companies find themselves financial victims because they don’t buy insurance that addresses the many exposures related to security breaches. In some instances, a breach can trigger the need for a number of coverages, including crime, errors and omissions, employment practices liability, general liability, property and directors and officers liability. The so-called “cyber” policies address only one aspect of the exposure, the theft of information, money and identities through the Internet. That’s because these are major problems that are on the rise. According to Privacy Rights Clearinghouse, since February 2005, there have been more than 260 major security breaches involving nearly 100 million personal records. But if a company has only this basic coverage, they may not be prepared if disaster strikes. They should consider a more company-wide approach that includes insurance coverage for all possible exposures associated with a breach.

    At the very least, your cyber policy should provide coverage in the following general risk areas:

    ·   Defense Coverage – Some policies limit the insurer’s duty to defend to actual lawsuits. That means that the insurer isn’t required to defend the insured against a claim, which may or may not result in a lawsuit. Others extend the duty to defend to all claims. You should look for the provision to defend against all claims in a cyber policy. You also need to review the policy in terms of who has the right to choose the attorney who will defend the claim. Many insurers can provide a choice of counsel provision that allows the company to make that choice. Talk to your insurer about having this provision incorporated into your policy.

    ·   Business-to-Business Coverage vs. Business-to-Consumer Coverage – If you want coverage for either or both of these risks, you have to make this known to your insurer. You need to be sure that the various exclusions and/or conditions necessary to minimize gaps in either coverage are present in your policy. These include electric/mechanical breakdown exclusion; breach of security exclusion; bodily injury/property damage exclusion; and employee malicious conduct exclusion.

    ·   Intellectual Property Infringement Coverage – All cyber insurance policies provide some level of intellectual property infringement coverage. However, some policies offer less coverage than others. Some even exclude coverage for software copyright infringement. Review the policy before you purchase to understand how much protection you have in this area. Most insurers are willing to insure software copyright infringement risk for an additional premium.

    Remember, cyber insurance is like health insurance, you should customize your coverage to suit your company’s needs. Your best defense is to talk with your insurance agent to develop a plan that is right for you.

    Do I Need to Make an Accident Report?

    The first few moments following an auto accident can be an extremely confusing, emotional, and frightening time. As such, it may be difficult to know what accidents need to be reported and what your insurance may require.

    There are some types of accidents that will always need a response from one of the local law enforcement departments, such as Highway Patrol, Police, or Sheriff. Each law enforcement department will have a jurisdiction, meaning that which department responds and takes the report will depend on where the accident occurred. For example, an accident within the city limits will most always be handled by the Police. Regardless of the responding department, you should always make a report when an auto accident involves elements like an injured person, severe damage to any vehicle, and/or a driver flees the scene of the accident.

    Your insurance company may also require you stay on the scene and report the accident, even in cases where the other driver flees the scene of the accident. Some insurers will accept a counter report. A counter report may be provided by the responding officer for you to fill out, or you might need to go to the nearest station to complete the form off scene. Counter reports are fairly commonplace in larger jurisdictions when the responding officer sees that the vehicles involved are still in working order and no one is injured. In any event, just make sure to remember to get a copy of the counter report for your insurance carrier.

    Even if the accident doesn’t involve one of the above elements, there are certain situations where it can be very helpful to have a law enforcement response and accident report. For example, the other driver might admit blame and offer you cash for your damages, but refuse to give you his/her insurance information or contact information. Even if the other driver does offer you his personal contact information in such a situation, you still have no way of knowing if the information being provided is factual. Another example would be you forgetting to collect all the important information and crucial details of the accident because you’re stressed or confused from the accident.

    Making a police report can be very helpful in any of these situations since it will involve the law enforcement officer collecting/verifying the driver’s name, address, phone number, car tag, insurance information, accident details, injury details, and so forth. Basically, most any detail that would be needed in court or by the insurance adjuster will be documented in the police report.

    Lastly, even though a police report will be necessary or needed for many accidents, you should still always try to remember to write down all the information yourself. Depending on the jurisdiction, it can often take weeks to months for the insurance adjuster to request and obtain a copy of the accident report. On the other hand, the adjuster can initiate the investigation immediately when you’re able to provide the insurance information on the other driver(s).

    Beware of the Scam of Fake Auto Accidents

    Many think of fraud as a non-violent type of crime. In reality, vehicle insurance scams, including the staged traffic accident, are far from non-violent. Aside from costing honest consumers hundreds to thousands of dollars in added insurance premiums, this steadily growing form of fraud has resulted in countless injuries and deaths to the innocent victims of the scams.  In fact, data from the NICB (National Insurance Crime Bureau) shows that staged traffic accidents have rapidly become a leading source of insurance fraud across the U.S.

    How Does It Work?

    These criminally staged collisions frequently involve several suspects driving a car. The victim is the driver of another vehicle that’s being targeted by the suspects staging the collision for their own financial gain.

    The suspects will most often use one of two techniques:

    1. Swoop and Squat

    Two or more suspects drive two different vehicles. They target an unsuspecting vehicle, most often an older model that only contains one victim. This is done so that there will not be any witnesses to the collision. The one or two suspects in the squat vehicle position their car in front of the vehicle driven by the victim. They slow to create a smaller space gap between themselves and their victim. Then, the swoop vehicle suddenly changes lanes to cut in front of the squat, thereby causing the squat vehicle to throw on breaks and stop. As a result, the innocent victim rear-ends the squat. Meanwhile, the swoop vehicle is long gone and the squat vehicle is claiming that an unknown vehicle cut them off and forced them to brake.

    2. The Drive Down or Wave On

    In this version, the suspect(s) are stopped at the entrance to a parking lot or an intersection. They wave on or yield the right-of-way to the victim. When the victim proceeds, the suspect intentionally accelerates to collide with the victim.

    What Can Drivers Do To Reduce The Risk Of Being A Victim?

    * Stay aware of your surroundings, paying close attention to what the vehicles several in front, behind, and beside you are doing and maintaining sufficient room between you and all other vehicles.

    * Use caution when making a turn in front of another vehicle, even if they yield the right-of-way.

    * Since suspects tend to look for innocent drivers that accidentally cross the center line and then sideswipe them, pay close attention to staying within the lines of a lane.

    * After any accident, count the number of passengers and get their personal information. You may find that more people are listed on the insurance claim than actually in the accident.

    * Avoid driving when you’re stressed; preoccupied with a cell phone, map, or food; or lethargic. All of these lessen the care at which you drive and your concentration abilities, thereby increasing your vulnerability.

    * Have a camera in your vehicle to take photos of the scene, license plates, and the occupants of the other vehicle you have an accident with.

    * Always call the police and get a copy of the police report. If the damage to the other car is minor, then ask the officer to specify this on the report, as this will make it more difficult for the other party to create more damage for a larger claim.

    * Alert the authorities if you feel the accident was staged.

    In closing, these staged traffic accidents often have criminal elements that reach far beyond just the suspected drivers. It’s often a criminal collaboration between unscrupulous doctors and attorneys that willingly and knowingly assist in the fraudulent insurance claim process.

    More Workers’ Compensation Claims Made As the Result of Work-Related Traffic Accidents

    According to the Network of Employers for Traffic Safety, both on- and off-the-job motor vehicle crashes cost employers $60 billion annually from 1998 through 2000. The problem is so widespread, that in a recent study, the National Council on Compensation Insurance Inc (NCCI) noted that traffic accidents are the leading cause of accidental deaths in the United States. The study also said that workers’ compensation claims resulting from motor vehicle accidents are more severe than the average claim. Although they make up approximately 2 percent of all claims, they account for more than 5.5 percent of all losses because they cover a disproportionate share of the most severe claim types.

    While workers’ compensation claims from motor vehicle accidents are growing, their frequency is declining but at a slower pace than for workers’ compensation claims in general. There are some other important characteristics about these claims that the NCCI noted in its study:

    ·   They almost always involve time lost from work.

    ·   Neck injuries are the most frequent diagnoses in these claims.

    ·   The average duration for a motor vehicle claim is 70 percent longer than for other types of claims.

    ·   They are three times as likely to involve a claimant attorney as compared to other types of claims.

    The leading cause of these claims is a traffic accident that happened because the driver became distracted. The study revealed that almost 80 percent of the crashes and 65 percent of the near crashes resulted from the driver becoming distracted within three seconds of the event. The chief causes of the distraction were drowsiness and cell phone use.

    The researchers had some specific suggestions regarding the steps employers can take to reduce the frequency and severity of these claims:

    ·  Encourage your employees to use seat belts – Failure to use seat belts cost employers roughly $2.1 billion yearly from work-related crashes between 1998-2000.

    ·  Be sure your employees never drive under the influence of alcohol – During 1998-2000, work-related crashes that resulted from drivers being intoxicated cost employers $3.1 billion annually.

    ·  Encourage employees to take defensive driving courses – These courses teach drivers how to react during an emergency so as to lessen the severity of the accident or avoid it all together.

    ·  Provide internal driver’s education courses – Teach employees good driving practices like pre-planning the trip route, realistically estimating how long the trip will take, being sure the vehicle is in good condition before hitting the road, and informing colleagues about travel plans.

    There Are Good Reasons Why Your Insurance Doesn’t Cover That Loss

    Every insurance policy has a section popularly known as “the fine print,” though its actual title is “Exclusions.” Exclusions are provisions in an insurance policy describing losses that the policy will not cover. For example, a homeowner’s policy does not cover losses caused by the use of cars, and a business auto policy does not cover injuries caused by a bulldozer on a construction site. While it may appear at first glance that the insurance company includes these provisions to get out of paying claims, the reasons are more complex and less insidious than that. There are very sensible reasons why no insurance policy covers everything.

    First, not every person or business has the same exposures to loss. Most homeowners do not own a dump truck used in a business; the owner of the dump truck might not have employees to insure for jobsite injuries; the employer with a dozen employees might not own the building it occupies. Imagine if there were one insurance policy that covered all of these exposures — it would be hundreds of pages long and very complex. Therefore, over time insurance companies have developed different policies for different exposures — auto, home, business liability, and so on. The homeowner’s policy excludes losses that the auto policy should cover, personal policies exclude losses that business policies should cover, and vice versa.

    Related to this are the issues of cost and choice. Standard insurance policies contain coverages that apply to large groups of households and businesses, but they do not cover every possibility. Those with additional needs have coverage options to choose from. For example, homeowner’s policies do not cover damage caused by water backing up from an overflowing sump or drain, but households that have basements with sumps or drains have the option of buying this coverage. Households without a basement do not have to buy it. This affords the buyer choices but does not force coverage on those who do not need or want it.

    Furthermore, exclusions reduce the cost of the insurance policy. Every coverage comes with an associated cost — the company must factor in the costs of potential claims, expenses and profit for that coverage. The more coverages a policy provides, the higher its premium will be. Without exclusions, people and businesses would be forced to pay for coverages they do not need. Exclusions help keep the premium affordable.

    Finally, certain types of losses are uninsurable. Insurance companies cannot accurately predict when certain types of losses will happen, and the potential loss amounts are too large for them to absorb. For example, almost all policies exclude losses suffered as the result of a war or a nuclear accident. These events would cause massive losses beyond the abilities of insurance companies to pay. Other losses are not insurable as a matter of common sense. Because the purpose of insurance is to pay for losses from accidents, it will not cover most losses that a person intentionally causes.

    Because every household or business’s circumstances are different, standard policies might not provide all the coverage necessary for proper protection. Properties in flood-prone areas, businesses that have a lot of contracts with other businesses, and individuals who post to online message boards may all lack important coverage. Consultation with a professional insurance agent will help determine whether more coverage is needed, whether it is available, and how much it will cost. The time to find out the availability and cost of coverage is before the loss occurs.

    Four Rules of Thumb to Follow When Purchasing an Auto Insurance Policy

    There probably aren’t very many, if any, drivers that look forward to buying auto insurance. If you’re like most people, you feel that you have an overwhelming task when it comes to sifting through dozens of companies and agents to find the ideal insurer for your vehicle and unique financial situation. The process can leave you feeling unrewarded and irritated as you think about writing a check for a policy that you hope you’ll never need to use.

    On the other hand, you know that having auto insurance is a necessity that can be the difference between a financial catastrophe and enduring a minor inconvenience if you were to have an auto accident.  Furthermore, there are steps you can take that make the act of buying insurance less painful and complicated.

    The following four rules of thumb can help you drastically simplify the process, while still getting the best auto insurance policy for your needs:

    1. Don’t forget to consider the size and type of vehicle you drive when you choose your limits.

    Insurers will not sell you a policy that is less than the minimum requirements for your state. However, that doesn’t mean that you should mistakenly opt for auto insurance limits based on the minimum amount required. Depending on the size and type of vehicle you drive, the bare minimum may not be enough to fully cover you if you should have an auto accident. For example, let’s say that you’ve selected the $10,000 minimum property damage amount set by your state, you drive an SUV or large truck, and you hit and cause $22,000 in damage to a brand new Mercedes. Since you’re only covered for $10,000, you will pay the remaining $12,000 out of your pocket.

    2. Be forthcoming and honest with insurers.

    Even if you think it won’t be favorable on your premiums, it’s extremely important for you to just tell it like it is when you’re asked about your driving history. You can choose to be less than truthful regarding your moving violations and auto accidents, but you won’t be given an accurate quote. This wastes both your time and the insurers, as all insurers will check your driving record themselves and make adjustments to the quote based on your actual driving record. Be honest from the start and you will save time by getting accurate quotes that you’ll be able to compare side-by-side.

    3. Look at the whole picture.

    It’s tempting to opt for the insurer offering the lowest rate, but cheapest isn’t always the best deal. Know exactly what you’re getting for your insurance dollars and pay careful attention to the fine print in the contract. Unusually low rates have a catch. Would you rather pay low rates with an insurer offering substandard service, or slightly higher rates with an insurer offering an attractive package and reliable 24/7 customer service? Are options on repairs and parts an important option to have? Is it price or convenience that’s at the top of your priorities? These are questions only you can answer in choosing your insurer.

    4. Don’t waste insurance dollars on duplicate coverage.

    Look at all your auto coverages and ensure options aren’t being paid for twice. For example, AAA members most likely have their towing costs already covered and wouldn’t need a policy with roadside assistance.

    Finding the best auto insurance policy isn’t always fun or easy. However, by following a few rules of thumb during the selection process, you can certainly save yourself a lot of money, frustration, time, and regret.

    Where is Your Coverage When the Lights Go Out?

    In the aftermath of a blackout that left some 50 million American and Canadians powerless and, others stranded, many people are asking how and why the August 2003 Northeast Blackout occurred.    While most were merely inconvenienced by the effects of the blackout, some significant property losses undoubtedly were suffered.  What property loss might occur as a result of a blackout?  What factors might come in to play to limit coverage availability or applicability? What types of coverage are typically available?

    First and foremost, it is advisable that you look into whether your insurer offers any kind of coverage for food spoilage or other loss caused by failure of power that originates outside of the insured premises.  In lieu of such an endorsement to the policy, most property policies exclude claims arising out of loss resulting directly or indirectly from power failure that does not emanate from the covered property.  In other words, if the power loss occurs somewhere within the vast and complex grid that powers your home or business, it is not covered.  The London Financial Times noted that companies most likely to hold such coverage “are those with perishable goods they need to protect, such as supermarkets, other grocery stores, florists and restaurants. Theatres, hotels and restaurants suffering perhaps from loss of business in cities last night were unlikely to have any chance to make a claim.”* 

    It is important to note that there are many different potential causes of blackouts.  A power crisis in California in 2001 was caused by a confluence of factors which were foreseen long before the rolling blackouts occurred, making them very different from the August 2003 Northeast Blackout, which occurred despite largely adequate power supply and with no advanced warning.   These differences may impact upon the coverage afforded for any given claim as the California scenario may be argued by your carrier to be a “known” hazard, which was foreseeable and preventable, thus excluded.

    In addition to the limited types of coverage available under homeowners and commercial property policies, “Power Plant Insurance” may be available under a Boiler & Machinery or SMP (Special Multi-Peril) policy.  If you have or need such a policy to cover your business, check with your agent as to whether or not this endorsement is available and if so, for what additional premium.  Note, however, that such coverage often comes with time constraints for the blackout duration.  For example, a blackout that lasts for less than 24 hours may not be a qualifying trigger for coverage, despite whatever losses have been incurred.

    Last but not least, what about the disruptions at airports that left travelers stranded during the Northeast Blackout?  Coverage may be available on your travel insurance policy – if you purchased one.  If you are planning a trip in the near future look into this valuable coverage, but be prepared – some companies offer a dizzying array of products for just about every type of travel possibility.  It can be confusing even to the well informed.  Check the fine print before you purchase as there is a great deal of variability in coverage.  Certainly, if a blackout caused you to miss a flight connecting you to a cruise, it would be reasonable to expect that travel insurance would reimburse you for the lost money spent on the cruise, but again, check the fine print for any power failure exclusions. Some policies will reimburse you a set amount per day for having to make alternate travel arrangements due to an unforeseen delay.   On the other hand, if you are unable to find a hotel room and you find yourself lying in a cot in the airline terminal as many hapless travelers did during the Northeast Blackout, you may just have to grin and bear it. 

    What Coverage Do You Get under a Contractor’s Equipment Policy?

    Contractor’s equipment insurance is an essential part of any construction firm’s insurance program. Commercial property insurance covers a business’s personal property while it is at a location listed on the policy, but it does not cover property that moves among different locations. Business automobile insurance does insure property that moves around, but it does not cover “mobile equipment” — property such as bulldozers, loaders, digging equipment, and power tools that the business uses off its own premises. Power tools may cost only a few hundred dollars, but large pieces like backhoes and excavators may be worth tens of thousands of dollars. To properly insure such property, the firm needs contractor’s equipment insurance.

    A typical contractor’s equipment policy will cover the insured’s owned pieces of equipment listed on its declarations page or a separate schedule. It will also cover equipment that someone else owns and that is in the insured’s care, custody or control. For example, the policy will cover a loader that the insured borrows from another contractor on a job site or that it rents from an equipment dealer. It may also provide one amount of insurance to cover a group of less expensive items, such as power hand tools. For example, it might provide $10,000 coverage on tools but no more than $500 for any one item. It will not cover automobiles, trucks, aircraft, watercraft, contraband, and it may not cover equipment the insured uses in underground mining operations or equipment rented or loaned to others.

    The policy will cover equipment for a variety of losses, including fire, explosion, vandalism, theft, collision with other equipment or objects, and overturning. Unlike standard property insurance policies, contractor’s equipment insurance often covers losses caused by floods and earthquakes.

    Insurance companies usually offer several coverage options, such as:

    • Rental reimbursement coverage, which covers the cost of renting a temporary substitute when a covered cause of loss damages an insured item.
    • Reimbursement of income the insured loses when it cannot complete a project because a covered cause of loss has damaged an insured item.
    • Blanket coverage, which insures all covered equipment under one large amount of insurance instead of insuring each item under its own individual amount.

    To purchase the proper amount of insurance, the firm must determine the values of each piece of equipment. A typical policy covers equipment for its “actual cash value,” which is the difference between the cost of replacing the equipment and the amount by which it has depreciated. Published equipment pricing guides, advertisements in trade magazines, and local equipment dealers are good sources of information on equipment values.

    In addition to the other options available, an insured must consider factors such as:

    • Whether to pay extra to insure the equipment for its replacement cost without depreciation. This may depend on both the firm’s budget and the ease with which the firm can obtain used equipment should it need to.
    • Whether the policy has a coinsurance clause, which penalizes the insured if coverage on the damaged item is less than its value at the time of the loss. Some companies may offer “agreed value” coverage, which eliminates the coinsurance clause and requires coverage up to some agreed amount.
    • Whether to buy a higher deductible to decrease the premium.

    Contractor’s equipment insurance is not just for contractors; municipal governments and any other organization that uses this type of equipment need it as well. A consultation with a professional insurance agent will reveal the organization’s coverage needs and the appropriate insurance companies to meet them. Because the equipment is so expensive, the buying decision should be based on coverage and a company’s reputation, not just the premium.

    What is the Difference Between Occurrence vs. Claims Made Forms?

    All the property and casualty insurance policies you buy fall into one of two categories – “occurrence” or “claims-made.”   This distinction may impact drastically on:

    1.      Whether or not your policy will respond to a claim;

    2.      What your responsibilities will be in the event of a claim;

    3.      How much your policy will cost up front and in subsequent years, and;

    4.      How much it will cost to keep the coverage in effect, in the event of cancellation.

    With all this riding on the type of coverage form you purchase; it helps to understand the pros and cons of each so that you can make an informed decision if options are available.

    “Occurrence” form coverage is the simpler of the two.  Most property and casualty insurance policies fall into this category.  Quite simply, “occurrence” form coverage means that the policy responds to events that occur during the policy period regardless of when the claim is made.  Once the policy period is over, the policy will respond to covered claims, even if the claim is made many years after the triggering event (accident, wrongful act, injury, etc.). 

    The far more complex “claims-made” coverage form responds only to claims that are made during the policy period, though the triggering event may occur prior to the policy period if there is a “retroactive date” on the policy.   The key to “claims-made” policies is maintaining continuous coverage.  Without “continuity,” insurers will not give you that all important retroactive coverage.

    “Claims-made” coverage came into vogue in the sixties and seventies as professional liability policies gained a foothold and underwriters sought to contain the volatile nature of the “tail.”  In property and casualty insurance lingo the “tail” refers both to the optional coverage that may be purchased to extend the policy for reporting purposes, and to the typical length of time between the triggering event and the claim.   Asbestosis, which often takes years to develop, is considered a “long tail” exposure.  Libel and slander lawsuits, on the other hand, usually occur right after the triggering event, i.e., libelous newspaper article or news broadcast.

    “Claims-made” policies are becoming more popular in commercial lines because soon after the policy year is over, actuaries will have a pretty good idea of how many more claims might be reported.  Subsequent claims, even if the triggering event occurred during that earlier policy period, will be charged to the later policy period when the claim is made.  The ability to “close out” policy years quickly, is a palpable benefit to insurers of the “claims-made” form.

    How do you identify “claims-made” or “occurrence” policies?  “Claims-made” policies are easier to identify because they will typically advise you in the declarations or the first page of the policy:  “THIS IS A CLAIMS-MADE POLICY.”  Additionally, you can search for Extended Reporting Period, aka “tail” option, provisions in the form.  A space for “retroactive date” on the declarations page is another telltale sign of “claims-made.”

    “Occurrence” policies are more difficult to spot.  While some policies might herald the occurrence nature of the form, in other cases it will be the lack of “claims-made” language and provisions that will provide the clues.

    While “claims-made” might seem more onerous than “occurrence,” for the buyer there are some benefits that warrant mentioning.  First and foremost, there is the pricing issue.  The first year of “claims-made” coverage should typically cost somewhere between 40 and 85% of an “occurrence” policy.  The price automatically increases in subsequent years as the “claims-made” exposure increases.  Usually, after three to five years, a “claims-made” policy is thought to be roughly equivalent to an “occurrence” policy and should cost about the same.  In addition to the cost savings enjoyed early in the early years of coverage, in a competitive marketplace insureds can benefit as underwriters discount the step factors that bring up the price.  Also, although Extended Reporting Period options can be quite costly, it is rare that an insured will need to exercise such an option unless they retire or are unable to find retroactive coverage from another carrier.  Still, it’s a good idea to compare Extended Reporting Period options if you are presented with quotes from different carriers.  How long are the “tail” options and how expensive? 

    While “claims-made” coverage can be confusing, it’s clear this coverage form is here to stay as the preferred choice for insurers across an increasingly broad array of product lines.  So get used to the concept now and be prepared to explore all the options carefully.

    Third Party Coverage Is a Key Coverage of Employment Practices Liability Insurance

    The purpose of third-party coverage in an Employment Practices Liability (EPLI) policy is to protect an organization and its employees from accusations of wrongful acts committed against customers, clients, vendors, and suppliers. Some EPLI policies also cover wrongful acts committed by third parties against the insured’s employees.

    Harassment and all forms of discrimination are covered under wrongful acts. Discrimination claims include discriminatory practices against a person based on their race, religion, age, sex, national origin, disability, pregnancy or sexual orientation. Harassment involves unwanted sexual advances or requests for sexual favors. Both verbal and physical conduct, as well as other forms of harassment that create a hostile or offensive work environment, are covered. Some policies also cover accusations of mental anguish, emotional distress, humiliation and assault.

    If your organization has a lot of interaction with the public, it is especially vulnerable to third-party claims like those described above. In some cases, EPLI carriers may not provide third-party coverage to firms with a high potential for claims. What they might offer instead is limited coverage, such as covering accusations of discrimination, but not harassment claims.

    To protect your organization from third-party claims, you need to go beyond just purchasing coverage. You must implement policies and procedures that address discrimination and harassment issues, both from the standpoint of an employee’s actions and the actions of third parties. EPLI insurers are increasingly requiring employers to implement these practices before they will issue a policy.

    Having policies in place will offer little help to stop third-party claims if employees aren’t adequately trained. New employee orientation programs should include a presentation outlining the organization’s harassment/discrimination policies. The training must also include how to report and handle a third-party claim. However, hearing the information once is not enough to insure compliance. Employees must be periodically retrained through departmental meetings. To maintain the effectiveness of departmental training sessions, be sure that supervisors are provided with copies of all policy updates and procedural changes.

    One important caveat to keep in mind is that most EPLI policies don’t provide third-party coverage for accusations involving the violation of the Americans with Disabilities Act. Nevertheless, you should review your EPLI policy’s definition of a claim to determine the policy’s interpretation. Many policies define a claim as a “demand for monetary damages.” This definition can present a problem in an ADA claim, because many of these claims are asking for reasonable accommodations, not monetary awards. That’s why it is important to ensure that your policy’s definition of a claim includes claims for non-monetary damages. A policy with this expanded definition will cover defense costs and indemnity connected with an ADA claim, but will not provide the funds to bring your organization into compliance with the provisions of the law.

    Fire Insurance Coverage: Know What You Have and Understand How it Works

    The extensive and costly damage caused by California wildfires over the last couple of years should serve as a reminder on why it’s vital to both know how you should proceed after finding yourself victim to a large-scale fire, and fully understand your fire insurance coverage before you need to call upon it.

    Once the immediate danger of a fire is over, you will need to assess the situation and the resulting ramifications. If you find that the disaster has created large-scale destruction, then just the number of people impacted and the vastness of the destruction itself will most likely impact the cost and tempo of your rebuild. For example, available building materials will be depleted quickly and additional materials will be in high demand. Likewise, contractors will be available in limited numbers and be in high demand. The result – premium prices for supplies and contractors.

    Given the above circumstances, it’s necessary for you to insist your insurance adjuster and contractor work together and reach an agreed price for your reconstruction. You might ask both parties to meet with you simultaneously at your home during the cost estimate of the reconstruction.

    In addition to knowing how to proceed after a disaster, you also need to fully understand your insurance coverage. Do you know how much of the damage your insurance would cover?

    If you opted to insure your home for 100% of its estimated replacement cost when you purchased your policy, then it should pay the cost to rebuild up to that estimated replacement cost. You can add at least an additional 25% if you opted for an extended replacement cost endorsement in your policy. Furthermore, a supplemental building ordinance endorsement in your policy will cover between 10% and 100% of the cost to bring your home up to code if there have been any new or changed construction codes since it was first constructed.

    You will need to make an inventory of your home’s contents that were destroyed in the fire to receive compensation from your insurer. To make the settlement process go quickly and smoothly, make sure to provide the description; total cost of replacement, including sales tax; life expectancy; and age of each item. Don’t forget to verify the replacement cost by including the retailer’s name and phone number and salesperson’s name -or- the web addresses for any prices you obtained online. The average percentage of depreciation can be figured by dividing the age of the item by its average life expectancy. You will be paid the withheld depreciation difference on your destroyed items when you replace them with comparables if your policy only covers replacement value.

    Additional living expenses, such as rent or a comparable furnished living area, may also be paid under your policy. Of course, this will be minus those expenses, such as mortgage payments and utilities, not directly resulting from your home having been destroyed. Coverage is usually a maximum of 20% of your home’s insurance limit and will generally continue for 12 months or less. Even if your home isn’t damaged, your living expenses may still be covered if your home is uninhabitable by government order. This coverage will end when the government allows you to return to your home.

    The right coverage can ease some of the trauma a fire disaster causes to your life. However, you must know what you have and how it works to determine if you have the right insurance coverage in place to met your needs.

    Do You Really Need Full Replacement Insurance on Your Current Building?

    The owners of a new company found a building on the market for an affordable price, so they bought it. Built in the 1940’s to manufacture aircraft for the war effort, the metal structure had a large open space. The company occupying this space was in the software development business and the building was much larger than it needed, but the price made it seem like a sensible move. However, the owners got a surprise from their insurance agent about property coverage. Insurance companies base limits of insurance on the cost of replacing a building exactly as it was before the loss. The cost of reconstructing this old building was much higher than both its purchase price and that of other suitable properties. The company did not need that much insurance, and paying the higher premium for it would have been wasteful, so the owners asked the agent for alternatives. What if, they asked, we don’t rebuild our building as it was?

    After a fire or some other catastrophe destroys a building, its owners may decide not to rebuild or replace with a similar structure for a number of reasons.

    • As was the case with the software company, the current building’s design may be impractical. The company bought the building because of a good price, not because of its large open space. A software developer ordinarily does not need that much space; if it were to rebuild, it would almost certainly choose a smaller building with a different layout. Also, very old buildings often include materials that builders do not commonly use today, such as plaster and lathe. Reconstruction with these materials is expensive and often unnecessary for the continued operation of the business.
    • The company may decide to consolidate the operations of two locations into one. The second location may have the capacity to absorb the first one’s operations, and management may feel that it will gain efficiencies by consolidating.
    • Depending on the building’s age, it may not meet current building codes. The local government may require any new buildings to meet expensive new codes.

    The standard business property insurance policy states that the insurance company will pay “actual cash value” — the cost of replacing the property minus an amount for depreciation. However, it offers the option of valuing a loss at replacement cost without deduction for depreciation. A business that chooses this option will need to purchase the amount of insurance equal to the cost of replacing the building “as is.” The company will pay the difference between the actual cash value and the replacement cost only if the property owner actually rebuilds or replaces the property, and then only if he does so as soon as reasonably possible after the loss. The policy also provides a small amount of additional insurance (typically the lesser of five percent of the insurance on the building or $10,000) to cover the increased cost of construction resulting from changes in building codes.

    Businesses like the software company, who do not need an exact replacement of their current buildings, should ask their agent about adding a “functional building valuation” endorsement to their policies. It establishes a limit of insurance somewhere between actual cash value and full replacement cost and allows the property owner to replace the building with one that fulfills the same function as the old one at a lesser cost. The discussion with the agent should also include increased “ordinance or law” coverage to provide additional insurance for increased costs from new building codes. With the right attention to detail, a business can get the property insurance it needs without having to waste money on unnecessary coverage.

    Buying Insurance with Minimal Stress

    Some might call it an understatement, but most people do not thoroughly enjoy the insurance buying experience.  As your agent, we try our best to instill the peace of mind that should come from the sometimes cumbersome process of insuring your home, auto or business.   These tips should help make your insurance buying experience less stressful:

    ·Work toward common anniversary dates for your coverages.

    Although most people buy insurance when they need the coverage, it is a good idea to shoot for common anniversary dates for all your policies.  Here are three reasons:

    1. You kill several birds with one stone (apologies to ornithologists and the ASPCA).  That leaves the rest of the year to enjoy your freedom from the mundane aspects of applications and check writing (unless you finance your premium). 
    2. You have a designated time of the year to think about insurance, decreasing the likelihood that something will fall between the cracks.  If February 13th is the common anniversary for all your coverages, it becomes less likely that you will forget to renew your policies on time.
    3. Just as it becomes more compartmentalized for you, the same goes for us.  While we are always thinking about your needs, it is easier for us to evaluate your entire portfolio and make suggestions if you are renewing your coverages all at once. 

    ·Avoid common industry crunch times, like mid-year or year-end anniversary dates that strain the resources of workers in the industry. 

    Think about it, from Thanksgiving to New Year’s more people take vacations than just about any other time of the year, no matter what the industry.  The insurance industry is no exception.  You can usually work on changing your expiration date, either by elongation, i.e., exceeding an annual policy term (not all insurers allow this) or by what is called a “cancel/rewrite” whereby your old policy is cancelled midterm and a new policy is issued.

    ·Reduce the number of payments as much as possible. 

    While financing business coverages may have tax benefits that offset some of the interest you will pay, in most cases, both personal and business, it’s beneficial to reduce the number of payments you have to make.  This reduces the likelihood of forgetting to make a payment, or if your payments are made via credit card or check, it reduces the likelihood that there will be a disruption in coverage due to a change on the withdrawal account, i.e., inadvertent cancellation or suspension of the account.

    ·Renew early.

    Do not wait until the last minute to renew your policy.  Depending on your degree of involvement in the process, it is usually best to tackle renewals early.  Often, underwriters request that all information is in their office at least 30 or 60 days in advance of the renewal of the policy.  This ensures that there will be no surprises for you (or for the underwriter).

    Generally speaking, it is best if you think ahead, both in the initial purchase and in the renewal of your policy.   While your primary concerns should be purchasing the broadest possible coverage at the most affordable price, consider these tips the next time you are in the market for an insurance policy. 

    Don’t Let Your Hard Work Get Washed Away

    Just because you don’t live anywhere near a body of water doesn’t mean you don’t need flood insurance. No one’s home is flood-proof. In fact, the Federal Emergency Management Agency (FEMA) says that 25 percent of all flood insurance claims are paid to homeowners in low or moderate risk areas. That’s because it doesn’t take a body of water, or even a major storm, to cause a flood. Anything from a broken sewer line to a slow moving rainstorm can be a culprit.

    Flood damage isn’t covered under your homeowner’s policy, so you must purchase a separate flood insurance policy. FEMA is the only provider of this type of coverage; however, they make it available to the public through insurance companies. That means you can purchase a policy from the same insurance agent that wrote your homeowner’s insurance.

    There are two types of coverage:

    • Standard Flood Insurance Policies – If your home is in a high-risk zone, you need this policy. The cost starts at about $500 a year but can run to almost $1,500, depending on a number of factors.
    • Preferred Risk Policies – If your home is in a low or moderate risk zone, your may qualify for a low-cost Preferred Risk Policy. Premiums start at just under $119 a year.

    To get specific information about premiums, you can log on to the FEMA web site at https://www.floodsmart.gov/floodsmart/.

    Flood insurance policies provide two types of coverage: one for the structure and another for its contents. They can be purchased separately or together, and the FEMA website will show the premiums if you buy them individually or in combination. There is a 30-day waiting period before both of the coverages take effect.

    The structural coverage is “replacement cost” coverage, which means the insurer will pay what it costs to replace or repair the structure with materials similar in type and quality to what was originally used when the structure was built, without deducting for depreciation. The maximum amount of structural coverage available for one-to-four family homes is $250,000.

    Contents coverage is “actual cash value,” which means the insurer will pay what the item is worth after it has deducted depreciation. The maximum amount of contents coverage is $100,000. Renters can also purchase contents coverage.

    In addition to purchasing flood insurance to protect the contents of your home, you can also protect your valuables by taking individual photos of each item, or by taking a video of your home and zooming in on everything of value. This is extremely important if you need to provide your insurer with a detailed list of your possessions.

    Keep the photos or video, along with any receipts you may have for the merchandise, in a safe location outside of your home, like a bank safe deposit box. This will ensure that your documentation isn’t lost if a flood or other natural disaster destroys your home.

    Stop and Think Before Purchasing Insurance Online

    Online shopping has become an American pastime, and can be an exciting adventure. For nearly everyone, it is enjoyable to receive surprising new packages and offers in the mail. But would you want your insurance coverage to be a surprise? You may want to ask yourself some essential questions before making the decision to buy insurance online:

    • What questions should I be asking before making the purchase?
    • Am I certain about exactly what coverages I need?
    • Have I researched the insurance company, and are they legitimate?
    • Will the personal information I provide online be secure?
    • Will there be real savings in both time and money by making an on-line purchase?

    When buying insurance, it is important to be confident about exactly what coverages you need. Since insurance varies widely from state to state, it is necessary to have a knowledgeable resource that understands your individual needs. If you need to file a claim, you want to be certain that the insurance you purchase will protect you. If you make the decision to use an online company that does not personally involve themselves with your insurance needs, you run the risk of being left without coverage. Take the time to ask questions. Additionally, an online insurance company should be asking questions of you, to ensure they are recommending the proper coverage.

    Buying insurance online could endanger your personal security. You will be required to fill out long forms providing personal information about you and your family, including social security numbers and personal property information. The forms are sent over the Internet where there is a risk that they may fall into the wrong hands, especially if the online company does not take proper security precautions. Furthermore, how will you verify that the insurance company you select is legitimate? Despite the fact that one must have a license to sell insurance, there is no license required to establish a website that is designed to sell insurance online.

    After studying insurance information such as your state insurance regulations, coverages you will require, and the security and legitimacy of an online company, you obviously will not be saving much time in making an online purchase. And, there is no guarantee that you will save money either. It may be convenient for the insurance company since they will not have to meet with you, but they will still need to provide you the proper coverage for the dollar amount of protection you need.

    An insurance purchase should take place only after careful consideration, and should not include surprises. The decision to shop online may result in uncertainty about what you really get. Selecting a professional agent to prepare a personal insurance policy is a more reasonable choice. When you work with an independent insurance agent, you receive the benefit of their expertise and their industry knowledge. An independent insurance agent will help you get the protection you need based on your individual requirements, rather than taking a one-size-fits-all approach.

    Uncovering Common Misconceptions About Flood Insurance Coverage

    According to the National Flood Insurance Program (NFIP), flooding is this country’s most prevalent natural disaster. In the years between 1995 and 2004, flood losses in the U.S. averaged $867 million annually. There are about 4.7 million citizens who have taken advantage of the government’s flood insurance protection, however large numbers of at-risk Americans still refuse to find coverage.  After hurricane Katrina last summer, when nearly 80% of New Orleans was underwater, it is surprising that people would not seek such coverage, since their homeowner’s policies do not insure them against floods.

    Part of the problem stems from the innate sense that if it’s offered by the federal government, applying for it must be: a) tied up in red tape, and b) too complicated due to all the exclusions. Both of these statements, however, are not true. Let’s examine some of the commonly held beliefs about flood insurance:

    ·   You can’t buy flood insurance if you are in a high-risk area.  Flood insurance is available to all homeowners and businesses in any community that participates in the NFIP. You can check to see if your community participates by visiting https://www.fema.gov/fema/csb.shtm. The only issue which would prevent you from obtaining flood insurance is if you reside in a Coastal Barrier Resource System location, or a location that is designated as an Otherwise Protected Area. Land that falls under these two categories are undeveloped areas along coastlines. The flood insurance program doesn’t provide coverage in these areas to discourage settlement where there is an extreme risk not only for flooding, but potential loss of life.

    ·   You can only get flood insurance if you are a homeowner.  Condominium/co-op owners, apartment dwellers, and commercial/non-residential building owners can purchase NFIP coverage. There is a maximum of $250,000 worth of coverage on a one-family residential building. The maximum per-unit coverage limit on a residential condominium/co-op association building is also $250,000. Contents coverage for any residential building is limited to $100,000. Commercial/non-residential structures can be insured for a maximum of $500,000. You can also insure the contents of commercial buildings up to $500,000.

    ·    You have to wait 30 days for flood insurance protection to take effect. Usually there is a 30-day waiting period from the time a policy is purchased until you are covered. However, there are some exceptions. There is no waiting period if you already have a flood insurance policy, but need more coverage to increase, extend or renew a loan, such as a second mortgage, home equity loan, or refinance. Coverage is effective immediately, as long as you pay the premium at or prior to loan closing. There is a one-day waiting period when additional coverage is requested because of a map revision. This applies when the NFIP revises the map so that a non-Special Flood Hazard Area becomes a Special Flood Hazard Area. Coverage must be purchased within 13 months following the map revision to be applicable for the reduced waiting period.

    ·   You can get Federal Disaster Assistance even if you don’t have your own flood insurance policy.  The Federal Disaster Program will only provide coverage to uninsured individuals or businesses if the affected area is declared a federal disaster area, which occurs less than 50% of the time.  Statistics show the awards average about $4000 dollars and most are made in the form of a Small Business Administration Loan, which must be paid back with interest.  Furthermore, the award recipient must carry flood insurance for the duration of the loan.

    To learn more about the terms of flood insurance coverage, log on to https://www.floodsmart.gov/floodsmart/pages/faq_policy.jsp.

    Source: FEMA Publication F-216 (08/04) and www.floodsmart.gov

    Does Your Builders Risk Policy Cover Soft Costs?

    Work on the new office complex was progressing on schedule. The owner had lined up tenants for two-thirds of the space and was in talks with several others. The general contractor expected to finish construction on time. All that changed when fire broke out on the first floor late one afternoon. It spread from a stack of drywall awaiting installation to a pile of scrap plywood, where the wind picked up the flames and carried them to the structure. Drywall, insulation and plastic wiring all soon ignited. Firefighters were able to contain the blaze and limit the damage. However, it would now take an additional two months to complete the project because the contractors would have to clean up the debris from the fire and ensuing water damage, order replacement materials, and re-do much of the first floor’s construction. The owner faced the certainty of thousands of dollars in lost rents and additional interest on the construction loans.

    The owner and general contractor had purchased a builders risk insurance policy to cover damage to the project. They would have coverage for the lost rents and interest expenses if the policy included special protection known as “soft costs coverage.”

    Soft costs are costs or reduced income resulting from a delay in a project’s completion. They include expenses such as:

    * Lost rents

    * Additional interest on loans

    * Additional real estate taxes

    * Additional advertising costs

    * Additional insurance premiums

    Some builders risk policies have this coverage built in, while others provide it only if the insurance company adds it and charges an additional premium. The insurance covers the named insured for loss of income and additional expenses that result from direct physical loss of or damage to the covered property. There is no coverage unless the peril causing the loss is one that the policy covers for direct damage. For example, the policy will cover losses caused by fire but not losses caused by faulty workmanship. The lost revenue and extra expenses must accrue during the period starting a specified number of days after construction would have been complete if no loss had occurred and the date construction actually was complete. Some policies limit this period to no more than six or 12 months.

    Soft costs coverage may provide one limit of insurance that applies to all covered losses, or it may have separate limits for different types of losses. For example, one company’s policy defines “soft costs” as loss of rental income, loss of gross earnings, additional interest and finance expenses, and additional expenses. The policy could have separate limits for each of these categories. A waiting period deductible applies, though some policies may apply a dollar deductible to losses that occur in a lump sum, such as legal fees. Some policies may also set a maximum amount that they will pay for any one month. They do not cover certain types of losses, such as those caused by strikes, breach of contract, design errors and omissions, lack of funds for repair or reconstruction, building laws and ordinances, and others.

    The insurance company will determine the value of a loss by calculating the actual amount of income lost or extra expenses incurred during the delay period because of the delay. It will pay the amount of the loss or the amount of the insurance purchased, whichever is less.

    A contractor should work with a professional insurance agent or broker experienced in arranging builders risk insurance. To make sure that the coverage terms and limits are appropriate, the contractor and broker should review the building contract, financing agreements, construction schedules, and other related documents. The type and amount of coverage will vary from one project to another, so it is important to give careful attention to each job’s particular circumstances.

    The Impact of Moving Violations and Driver’s License Points on Your Insurance Premiums

    Americans love to hear about point systems. After all, many involve us earning desirable rewards, discounts, and freebies. However, not all point systems are about earning something desirable.

    In most states, you earn points on your driver’s license after being ticketed for moving violations like running a red light or stop sign, illegal u-turns, unsafe lane changes, and so forth. While no driver relishes the thought of paying moving violation tickets, the financial implications are actually much broader when the points accumulate. This could be in the form of higher insurance premiums or even the suspension of your driving privileges. The details of the point system vary by state. For example, some states assess points to drivers that are at fault in an auto accident. That said, most point systems will assess points one of two ways:

    1. One point per basic moving violation, with two points being assessed for speeding violations that involve the driver substantially exceeding the posted speed limit. Drivers assessed either eight points over three years, six points over two years, or four points over one year will have their license suspended.

    2. Two points for incidences like slightly breaking the speed limit, an illegal turn, or other minor driving violation. Drivers with more serious moving violations, such as running a red light or stop sign, will be assessed three to five points. Drivers that are assessed 12 points within a three year period will have their license suspended.

    Should you get a moving violation ticket, you’ll want to look for the vehicle code violation number on the front of your ticket and contact your state department of motor vehicles. Be sure to ask the number of points, if any, the violation carries; how many points you already have; and how many points will result in a license suspension.

    These points can cause your insurance premiums to increase by 20% to 30%. Most insurers will regularly review the driving records for all their customers. Depending on your insurer’s policy and state’s laws, some insurers may be able to raise your premiums for just a single point. Most insurers will allow one moving violation every couple of years before they raise your premiums, but check with your insurer to determine their specific policy.

    Can I Avoid/Remove Points?

    You can contest the ticket. This may be especially prudent if your points are nearly suspension levels. Keep in mind that contesting the ticket is an iffy proposition in that avoiding the point will depend on you being successful.

    An option that offers more certainty in avoiding the point is paying the ticket and attending traffic school. However, some jurisdictions will not allow anyone ticketed for driving fifteen m.p.h. or more over the speed limit to attend traffic school. If you’re eligible, then you may need to attend anywhere from once a year to once every two years, depending on your jurisdiction. Some states will require a court appearance or visit to the court’s clerk to enroll in the class, while other traffic schools are completed online. Some traffic schools give you the basic information with a splash of humor to make it less boring, while others may require you to sit through eight hours of lecture and films on gruesome accidents. In any case, it shouldn’t be too big a sacrifice when you consider the alternative higher insurance premiums from the point(s) going on your record.

    Driver education courses, such as a defensive driving class, can help you remove existing points from your license. The department of motor vehicles for your state can give you a listing of applicable options.

    In closing, insurers typically either avoid risk or charge exorbitant premiums to take it on. Having a number of moving violations is a strong indicator that you have habits that could lead to costly accidents and claims, and would therefore be a risk to insure. Most insurers do understand that humans err occasionally, but you’ll have the best chance at keeping your rates down by avoiding traffic violations altogether. 

    Taking the Mystery Out of Surplus Lines

    It is probably safe to say that most people do not know the difference between “surplus” (also referred to as Non-Admitted, E & S or Excess & Surplus) and “admitted” lines.  However, understanding the important similarities and differences will help make you an informed insurance consumer.

    Many insurance consumers are completely untouched by the surplus lines marketplace.  Still others purchase coverage from surplus lines carriers unaware of that fact.  If you buy coverage from a Lloyds of London syndicate, you may think you are simply buying from a foreign insurer, but in fact, you may be buying coverage from a US based subsidiary of a large insurance company. 

    Surplus lines insurers operate in hard and soft markets, but they thrive when admitted companies withdraw from the marketplace leaving them to fill the void in certain coverage lines.  According to the National Association of Professional Surplus Lines Offices, Ltd.(NAPSLO), while the property/casualty industry grew by 11% during 2001, the surplus lines portion of the industry grew by nearly 35%, reflecting the hardening of the market and the contribution of the events of 9/11.    

    Following are a few highlights of the differences between surplus lines and admitted:

    ·        Admitted insurers usually have to file and receive approval for their rates and policy forms in most states in which they operate.  Some states only require that rates be filed, others require only forms.  Some require the insurer to withhold a product from the marketplace until they have received approval. Other states allow what is called “use and file” meaning the insurer is free to use the form and rates, but must file them with the state and if necessary, make any changes that the state requests in order to comply with its rules and regulations.  Surplus lines insurers do not have to go through this rigorous process and can react more quickly to changing internal and external conditions and events.

    ·        Surplus lines insurers must work with surplus lines brokers to comply with certain state required filings such as surplus lines taxes, which vary, but usually range between 2 – 4% of the premium.  Surplus lines brokers also file affidavits acknowledging what is called a diligent search that states the insured risk was submitted to the admitted market but received declinations from those specific carriers.  Admitted insurers bear the responsibility of paying whatever state taxes are required.  These taxes are figured into their pricing models so the premium you pay includes any tax payable to the state.  In the case of surplus lines, all taxes and fees are built on top of the basic premium.

    ·        Admitted carriers must comply with state requirements for policy language, most notably, cancellation and non-renewal requirements.  While most admitted policies require a 30 or 60 day notice to the insured if the carrier intends to cancel or non-renew the policy, most surplus lines insurers reserve the right to cancel or non-renew for any appropriate reason.  Despite this difference, and the language to this effect built into the admitted policy, surplus lines insurers are in many states required to adhere to the same standards. Despite the freedoms they enjoy, there are a myriad of rules and regulations that surplus lines insurers must contend with, including a rigorous and costly state licensing system that puts the insurer on the map as a “white-listed” carrier.

    ·        Probably the most noticeable difference between the two insurance types is the availability of funds to pay for claims should the carrier become insolvent.  If you buy a policy from a surplus lines insurer, you should be aware that the state guaranty funds will not apply should your carrier’s insolvency leave you stranded when a claim occurs.  Not so with admitted carriers.  However, NAPSLO points out that in 2002, as has been the case in previous years, the median Best’s Rating for surplus lines carriers was A, versus the industry as a whole, which maintained a median rating of A-.   Naturally, it becomes more important to monitor your carrier’s rating with a surplus lines policy.

    While the differences are many, the nuts and bolts of both types of policies are virtually identical.  Different compliance endorsements attached to admitted or surplus lines policies will be the only differences you notice.  While the preference, all other things being equal, should always be admitted, there are many reasons to feel comfortable with a surplus lines policy, particularly if it is backed by a financially sound and stable insurance company.  Many surplus lines companies have been paying claims for decades, and in some cases, centuries!

    Just Because You’re a Renter Doesn’t Mean You Don’t Have Insurance Needs

    Many renters mistakenly believe that they don’t need renter’s insurance or view it as an expensive luxury. However, insurance needs aren’t negated just because one happens to be renting their home.

    For those not familiar with renter’s insurance, it’s an insurance coverage that protects the renter from property losses from damages like water and fire. It also provides protection for liability risks, such as lawsuits brought by the landlord of the property, pet attacks, falls and slips, and guest accidents. This type of coverage is available in most areas and has an average $20 monthly premium rate for around $500,000 dollars worth of liability coverage and $20,000 dollars worth of property coverage.

    Trusted Choice, a network of financial and insurance service firms, recently found in a survey that almost 25 million American home renters didn’t have any insurance coverage to protect themselves from losses and that most renters have limited, if any, knowledge of renter’s insurance.

    Eight percent of the respondents without renter’s insurance had never heard about renter’s insurance before. Meanwhile, 17% said they weren’t aware that they needed renter’s insurance and 26% percent felt that renter’s insurance was too costly.

    According to the study, some renters also mistakenly believed that their insurance needs were covered under the insurance policy held by their landlord. In reality, landlords don’t typically insure anything other than the building and infrastructural elements like HVAC systems and elevators. Other losses incurred will be directly on the renter’s shoulders. Even negligent actions caused by one tenant, such as a fire, that affects other innocent tenants in the building aren’t typically covered by the landlord’s insurance.

    Other key findings of the study included:

    * Fifty percent of the surveyed renters owned pets. Thirty-two percent of the non-pet owners had renter’s insurance. Although renters that own pets have a higher liability exposure than renters without pets, a mere 26% of the pet owners had renter’s insurance.

    * Eighty-nine percent of the surveyed renters owned at least one expensive electronic device, such as a computer, camera, digital recorder, or home theater system. This group was more likely to have a renter’s insurance policy than those that didn’t own such devices.

    * Fifty-three percent of the surveyed renters owned at least one form of exercise or sports equipment, such as a skis, bicycles, or a home gym system. This group was more likely to own renter’s insurance than those that didn’t own such equipment.

    * Only thirty-one percent of the renters operating a home business from their apartment, condo, or other type of rental unit had renter’s insurance.

    What Should You Consider When Shopping for Lawyer’s Professional Liability Insurance?

    Controlling expenses is an important consideration in the management of any law firm, so it isn’t unusual that a firm shopping for liability coverage would take premium rates into consideration. However, even though rates are important, they shouldn’t be the overriding factor in your decision to purchase a particular policy. There are a number of other aspects you should consider to ensure you receive the best coverage for your premium dollar.

    The first of these considerations is whether your policy has eroding coverage.  In some liability policies, the coverage limits include defense costs. When you file a claim, the amount of coverage for settling the claim or paying a judgment against you decreases as you incur defense costs. This type of policy is referred to as having defense costs “inside” the policy. There are policies in which the defense costs are “outside” the policy, which means they are not subtracted from the amount of coverage. In some cases, policies with outside defense costs have a cap after which the defense costs are subtracted from coverage limits.

    The second consideration is whether the policy deductible includes defense costs. If the deductible is only applied to liability, the insured firm doesn’t have to pay it until there is a settlement/judgment. However, if the deductible includes defense costs, the insured pays as soon as defense expenses begin to mount until the deductible is paid in full.

    Another condition that you will want to note is whether your carrier can settle a claim without your consent. Some policies have what is known as a “hammer” clause that prevents the insurance company from settling without the consent of the insured. There is an extenuating circumstance to this clause in that, if the insured refuses to consent, the carrier is only liable for the amount for which it would have settled.

    You also need to determine if your policy gives you the right to select your own defense counsel. More than likely, if you are a small firm your carrier will retain the right to choose your defense counsel. This doesn’t mean that you won’t have any input at all. Most insurance companies have a panel of defense attorneys and generally allow the insured to select from this panel. Larger firms can typically select their own counsel but the carrier must approve.

    All current Lawyer’s Professional Liability policies are issued as “claims-made” policies, which means that a claim must be made and reported to the carrier within the life of the policy. To prevent coverage gaps if your firm is changing policies, you should select a new policy that has a “prior acts coverage” clause. This will extend your coverage so that any claims that existed before the new policy started will be covered. If you don’t have prior acts coverage, your former claims-made policy will not cover claims that developed after it expired and your firm will be without coverage for those claims.

    A number of changes in both federal and state court procedures have made sanctioning more commonplace. The cost to defend your firm against a sanction or to pay the monetary penalty associated with it can be extremely expensive. That’s why you will want to ensure your liability policy provides coverage for these occurrences.

    The final consideration is whether the policy requires a new deductible if there are multiple claims made in the same policy year. Some policies only require the deductible to be applied to the first claim made in a given policy year. Other policies treat the deductible on an aggregate basis. The policy will stipulate a specific deductible dollar amount per claim, with a cap on the total deductible dollar amount in the aggregate that the insured will have to pay before coverage begins. If neither of these scenarios is spelled out in your policy, your coverage most likely requires applies deductible for each claim.

    Don’t Forget Insurance for Your Organization’s Cyber Risks

    The federal Internet Crime Complaint Center received over 330,000 complaints in 2009, and more than a third of them ended up in the hands of law enforcement. The damages from those referred to the authorities totaled more than a half billion dollars. The Government Accountability Office estimated that cyber crime cost U.S. organizations $67.2 billion in 2005; that number has likely increased since then. With so much of business today done electronically, organizations of all types are highly vulnerable to theft and corruption of their data. It is important for them to identify their loss exposures, possible loss scenarios, and prepare for them. Some of the questions they should ask include:

    What types of property are vulnerable? The organization should consider property it owns, leases, or property of others it has in its custody. Some examples:

    * Money, both the organization’s own funds and those it holds as a fiduciary for someone else

    * Customer or member lists containing personally identifiable information, account numbers, cell phone numbers, and other non-public information

    * Personnel records

    * Medical insurance records

    * Bank account information

    * Confidential memos and spreadsheets

    * E-mail

    * Software stored on web servers

    Different types of property will be susceptible to various threats, such as embezzlement, extortion, viruses, and theft.

    What loss scenarios could occur? The organization needs to prepare for events such as:

    * A fire destroys large portions of the computer network, including the servers. Operations cease until the servers can be replaced and reloaded with data.

    * A computer virus infects a workstation. The user of that computer unknowingly spreads it to everyone in his workgroup, crippling the department during one of the year’s peak periods.

    * The accounting department discovers a pattern of irregular small funds transfers to an account no one has ever heard of. The transfers, which have been occurring for almost three months, were small enough to avoid attracting attention. They total more than $10,000.

    * A vendor’s employee strikes up a casual conversation at a worker’s cubicle and stays long enough to memorize the worker’s computer password, written on a post-it note stuck to her monitor. Two weeks later, technology staff discover that an offsite computer has accessed the human resources database and viewed Social Security numbers, driver’s license numbers, and other personal information.

    In addition to taking steps to prevent these things from happening, the organization should consider buying a cyber insurance policy. Several insurance companies now offer this coverage; while no standard policy exists yet, the policies share some common features. They usually cover property or data damage or destruction, data protection and recovery, loss of income when a business must suspend operations due to data loss, extra expenses necessary to maintain operations following a data event, data theft, and extortion. However, each company may define these coverages differently, so reviewing the terms and conditions of a particular policy is crucial. Choosing an appropriate amount of insurance is difficult because there is no easy way to measure the exposure in advance. Consultation with the organization’s technology department, insurance agent and insurance company may be helpful. Finally, all policies will carry a deductible; the organization should select a deductible level that it can afford to pay and that will provide it with a meaningful discount on the premium. Once management has a thorough understanding of the coverages various policies provide in relation to the organization’s exposures, it can fairly compare the costs of the policies and make an informed choice.

    Computer networks are a necessary part of any organization’s environment today. Loss prevention and reduction techniques, coupled with sound insurance protection at a reasonable cost, will enable an organization to get through a cyber loss event.

    The Many Colors of Insurance Fraud – And How to Prevent It

    According to the Coalition Against Insurance Fraud, a division of the Insurance Resource Council, one in five Americans or 45 million people say it is okay to defraud an insurance company in certain circumstances.  Furthermore, according to a 2008 Four Faces study by the IRC, consumer tolerance of of specific insurance schemes has increased over the past ten years. To be more specific, the study says there is a decline in the number of Americans who believe it is unethical to:

    • misrepresent facts on an insurance application to lower their premiums (82 percent today, down from 91 percent in 1997);
    • file a claim for damage that occurred before the damage was covered (85 percent, down from 91 percent);
    • inflate a claim to cover the deductible (84 percent, down from 91 percent); and
    • misrepresent an incident in order to be paid for an uncovered loss (84 percent, down from 92 percent).

    Insurance fraud comes in many different shapes, colors and sizes.  The one common denominator is that, regardless of the form it takes, it costs insurers, and ultimately you, the consumer, billions of dollars per year.  What are some of the different types of fraud that take place and what can be done to prevent it?

    Insurance fraud cuts a broad swath through the insurance industry and can occur anywhere in the insurance transaction from fraudulent applications for coverage to fraudulent filing of claims.  Insurance fraud is not only committed by the insurance buyer, but by attorneys, physicians, and other third parties to the insurance transaction.  Even insurance company employees have been caught bilking their employers. Following are some sobering statistics:

    • Fraudulent and abusive auto-injury claims are a costly problem. Fraud and “buildup” added $4.8 billion to $6.8 billion in excess payments to auto injury claims in 2007. That means 13-percent to 18-percent increases in payments under private-passenger auto policies from 2002. (Insurance Research Council, Nov. 2008)
    • Auto insurers lost $16.1 billion due to premium rating errors in private-passenger premiums in 2007. Premium rating errors account for 10 percent of the $166 billion in personal auto premiums. Fraud accounts for a portion of these losses. Some drivers will seek to lower their premiums by schemes such as deliberately misrepresenting mileage driven, how the vehicle is used and where it’s registered. (Quality Planning Corporation, 2008)
    • More than $2.4 billion in recoveries for fraud, waste and abuse in federal healthcare programs are expected for the first half of FY 2009 (October 2008 through March 2009). Some 1,415 individuals and organizations also were excluded from federal programs for fraud abuse; 293 criminal actions were brought, as were 243 civil actions. (Semiannual Report to Congress, Office of Inspector General, Department of Health and Human Services, Office, 2009)
    • Medicare and Medicaid lose an estimated $60 billion or more annually to fraud, including $2.5 billion in South Florida. (Miami Herald, August 11, 2008)
    • Medical identity theft comprises about 3 percent (249,000) of 8.3 million overall victims of identity theft. (Federal Trade Commission, Identity Theft Survey Report, 2007)

    With the advent of the Internet, an aging population, and other trends making insurance fraud a lucrative business, it will be difficult to completely eradicate the problem. Federal and state authorities, insurers, and consumer watchdog groups are all working diligently to stem the tide of insurance fraud.  Here’s what you can do:

    1. First, and most obvious is to not commit fraud.  The temptation to lie on an insurance application to get a better rate, an example of what is called soft fraud, should be tempered by the fact that it increases the risk of insurers canceling or even rescinding coverage upon evidence of the fraud, not to mention the legal implications.
    2. Ask for detailed medical and repair bills and examine closely for unusual or suspicious charges.
    3. If you are involved in or witness an accident that appears to be of a suspicious nature, and you feel that it may have been staged, report the incident to local law enforcement.
    4. Report fraud when you become aware of it.   If your state does not have a hotline, your insurance company probably does.  So does the National Insurance Crime Bureau.  A hotline exists for Medicare and Medicaid, and you can go on the Coalition Against Insurance Fraud’s website for further information on reporting fraud (www.insurancefraud.org).
    5. As with credit card and social security numbers, guard your insurance identification card numbers and report any theft.

    In It for the Long Haul

    The market for trucking insurance, like most other insurance markets, has taken a hard left turn since 2001. Under the circumstances, it is best to know and understand what underwriters are looking for when sifting through insurance applications.  Knowing what looks favorable, what looks bad and what looks just plain ugly, can be the ticket to affordable quality coverage. 

    One thing that has remained fairly constant over the years is the importance underwriters place on a company’s financial shape.  Motivated in part by concerns about the capacity of insureds to pay high deductibles, underwriters prefer to see solid financial strength.  But there are other reasons too.   The consensus among underwriters is that there is a correlation between financial strength and stability, and attention to detail.   In other words, if you have the financial resources to pay employees more and put more into the upkeep of your fleet, you will experience fewer problems leading to fewer accidents or other types of covered claims. 

    It is a simple concept, but one that is complicated by some of the facts of life.  Depending on your company’s size and structure, your financial goals might not be in sync with what underwriters expect to see.  For example, if you choose a Subchapter S corporate structure, your goal might be to show as little profit as possible – a possible red flag to an underwriter.   A financial statement is a snapshot and your accountant, preferably a CPA, is not only your photographer, but your stylist as well.  Look to them for recommendations about balancing your financial goals, tax strategies and the need to present your company in the best possible light.

    Because financial analysis of trucking companies can be tricky, there is a company that provides the service to underwriters. Formed as a subsidiary of a Manhattan based truck insurance defense law firm in the 1970s, it uses a select grouping of key financial indicators to rate companies on a six-point scale from “Satisfactory” to “Unsatisfactory.”   This system is not that different from the ratings companies, such as AM Best give insurers.  

    How do they get financial information for trucking companies?  For large, public companies like Old Dominion, this data is readily available from public financial disclosures.  For privately held companies, it often comes through voluntary disclosures from trucking firms who are aware of the need to provide such data to secure coverage.

    Whether you provide the financial data to your agent, the carrier, or to a third party, the quality of the financial information is as important as the quantity.   A CPA audited financial statement is costly, but the best source of data because it is viewed as the most credible.  An alternative to the audited statement is a CPA compilation, which follows a less rigorous standard, but is the next best thing to an audited statement.  For underwriting purposes, the most important elements of the financial statement are the income statement and balance sheet.  If you have no other alternative, your most recent tax return should have all the elements needed for the review. 

    Besides financial statements, providing complete details on your loss history is important.  This might not always be easy, especially if you have been insured with a company no longer in business or that has exited the marketplace.  Ask your agent for help in securing these loss runs or determining alternative formats to provide accurate information.  

    Insurers are also swayed by loyalty.  Underwriters may reject a submission out of principle if the trucking firm has been shopping for the best price each year and continually moving around from one insurer to the next.  Exceptions  are granted for the obvious forced move, i.e., insurers exiting the marketplace. 

    Besides the above, insurers look for good safety and loss control programs, tight control of owner-operators, if applicable, and a well-maintained fleet of trucks with experienced drivers (with clean driving records).  These are the elements that will invariably get you to the finish line safely and in record time year after year.  

    Workers’ Comp Employer Costs Rose Faster Than Benefit Payments in 2004

    According to a study released in July 2006 by the National Academy of Social Insurance, employer costs for workers’ compensation grew faster than combined cash and medical payments to injured workers in 2004, the most recent year for which data is available. Combined benefit payments for injured workers increased 2.3 percent in 2004 compared to prior year levels, while employer workers’ compensation costs rose by 7.0 percent for the same period.

    Combined benefit payments fell by 3 cents for every $100 of covered wages, from $1.16 to $1.13. The chief contributor to this decline was the state of California, where benefits dropped by 10 cents per $100 of covered wages. Nationally, premiums paid for workers’ compensation insurance rose by 3 cents per $100 of covered wages, to $1.76 in 2004. The increase was the smallest annual increase since 2001.

    Despite the recent rise in costs, both costs and benefits in 2004 remain far below their peak levels. Total benefits were at their highest in 1992 at $1.68 per $100 of covered wages, 55 cents higher than the 2004 figure. Employer costs were highest in 1990 at $2.18 per $100 of covered wages, 42 cents higher than in 2004.

    Since 2000, the rise in benefit payments has resulted from increased spending for medical care. Spending for medical treatment rose from 47 cents in 2000 to 53 cents per $100 of covered wages in 2004. Spending for cash payments to workers remained the same during this period at 60 cents per $100 of wages.

    There are specific actions employers can take to curb workers’ compensation costs. The first step is to examine accident records for the past three years. Take each year’s reports and examine as a whole. While reviewing look for specific accident causes and note hazards that should be remedied. You should also be looking for injury repetition and in which department injuries frequently occurred.

    The next step is to conduct a physical analysis of the workplace. Utilize your health and safety committee as the catalyst, but be sure workers are also involved. Look for equipment hazards that need replacement or repair. Then search for environmental hazards such as chemical exposures, noise, temperature and ventilation issues.

    The third step is to look for task or ergonomic hazards. Request employee input to encourage workers to take ownership of safety in their departments. When workers provide input, make sure actions resulting from their suggestions are documented in health and safety committee minutes and posted on bulletin boards in common areas. If employees do not feel their suggestions matter, they won’t bother to suggest improvements in the future.

    Home Buyers: Make Securing Homeowner’s Insurance a Top Priority

    At long last, your loan package has been approved, your closing date is just days away, everything you own has been packed, and all that remains is a quick call to your insurance agent to line up a homeowner’s policy. That’s when the bad dream can begin. 

    Your agent may inform you that your new home is uninsurable because of a history of insurance claims filed by the previous owner. Despite home inspections and various required real estate disclosures, this could happen to you.

    Securing homeowner’s insurance used to be one of the last tasks a buyer undertook before closing. In reality, it should be one of the first.

    Before issuing a policy, insurers always check a property’s claims history. Water damage claims are red flags, of course, but homeowners can also set off alarms simply by inquiring about their coverage, without ever filing a claim.

    Most insurance companies research past claims through a shared database called CLUE, which stands for Comprehensive Loss Underwriting Exchange. When you apply for homeowner’s insurance, the insurer will request a CLUE report to ascertain whether you or the seller have filed any claims during the past five years. Even if you currently own a home and have a squeaky-clean claims history, if you buy a house with multiple claims filed against it, you may not be able to obtain insurance coverage.

    Regrettably, you cannot order a CLUE report if you are not the homeowner. However, you can ask the seller to order a copy of the report as a contingency to your offer.

    If you are ever denied insurance because of past claims, you can request a free copy of your CLUE report. In the event of a dispute with your insurer, you have the right to ask that your account of the events be included in the report. If you are simply curious about your home’s history, you can order a copy from ChoicePoint, the company that manages the CLUE database.

    It pays to spend the time and effort to educate yourself about homeowner’s insurance when seeking affordable coverage. Consider the following ideas: 

    • Learn the rules regarding homeowner’s insurance renewals in your state. Regulators of some states exercise   control over when an insurer can refuse to renew your coverage.
    • Pay for small losses yourself. Insurers take notice of customers submitting frequent small claims.
    • Think twice before calling your agent or insurance company. When you place a call, the insurer opens a claims file on you regardless of whether you actually file a claim.
    • Increase your deductible and consolidate insurers. To reduce your homeowner’s insurance premium, consider raising your deductible. Also, most insurers offer discounts if you insure both your car and home with them.

    Examine your credit record. In addition to your past claims history, insurers often use your credit score to determine whether to issue you a policy.

    Protect Yourself from the Risks of Yard Sales

    With the arrival of warm, balmy weather, yard sales begin to pop up everywhere. While a yard sale may transform your spring cleaning chores into a profitable day of getting rid of unwanted items, it can also create a setting for a legal nightmare. For example, you’re legally liable if someone at the yard sale slips, trips, or falls and injures themselves. Such scenarios are exactly why you must know what your homeowner’s insurance covers before you take on the responsibility of inviting yard sale-goers onto your property.

    Most standard homeowner’s policies will provide $100,000 dollars worth of liability coverage for property damage or bodily injury that is caused to others by those living in the home. The coverage amount can be used to cover your legal defense and any resulting monetary judgments against you.

    No-fault medical coverage is another feature of your homeowner’s insurance liability protection. It usually provides between $1,000 to $5,000 dollars worth of coverage. This feature can help you avoid lawsuits from a person injured on your property since it will allow them to directly submit their medical-related bills to your insurer for payment.

    The above may seem adequate enough for a yard sale, but given today’s litigious mentality, it may be prudent for you to add to your liability protection. You might consider raising your homeowner’s policy’s liability coverage to at least $300,000 to $500,000, depending on your specific needs and property. An excess liability or umbrella policy can provide additional protection and won’t typically cost more than $350 a year for $1,000,000 worth of coverage.

    The Insurance Information Institute has an excellent guide on the insurance needs for various types of yard sale events:

    * Charity or fundraiser event – your homeowner’s insurance policy will most likely be adequate coverage during an event to raise money for a charity or non-profit. However, you might also consider contacting the entity to ask if they have any insurance protection to extend to you for the event.

    * Occasional or one-time events – the occasional yard sale that’s designed to sell personal items that you no longer want is also typically covered under your homeowner’s policy, but do consult your insurance agent to ensure you’re adequately covered.

    * Multiple, frequent yard sales – a separate business liability or in-home business policy should be considered if you’re planning to have multiple yard sales.

    When Good Employees Go Bad: Why You Need Employee Dishonesty Insurance

    An employee in a high school’s finance department steals $279,000 to support her gambling habit and cover her mortgage payments. A bank employee in Pennsylvania allegedly embezzles $750,000. The former CEO of a Colorado insurance brokerage pleads guilty to stealing $353,400 from the brokerage’s employee benefits plan. The office manager of a Texas law firm gets four years in prison for forging checks and depositing client payments in her personal bank account.

    When people become desperate, they may succumb to temptation and turn to crime. The FBI reported that one in 28.2 employees was caught stealing from an employer in 2007, and that was before the worst of the recent economic downturn. Vendors’ employees and other visitors to an organization’s premises may also have the opportunity to steal computer equipment or network passwords.

    Most business property insurance policies cover losses resulting from some types of crime. For example, they will cover the cost of cleaning up graffiti that vandals spray paint on an exterior wall or the value of merchandise burglars steal, plus the cost of repairing the damage they did breaking into the store. However, insurance companies did not design these policies to cover money stolen from a cash register or deposits never made to a bank; in fact, the policies almost never cover employee crime. For this reason, every organization should consider buying crime insurance.

    Employee dishonesty insurance, often called fidelity coverage, pays for losses due to employee theft of money, securities, and other property. It covers property the organization owns or leases, property of others in the organization’s custody, and property for which the organization has legal liability. Insurance companies can provide one amount of insurance that applies separately to each loss, regardless of how many employees were involved in the theft and regardless of whether the employer can actually identify the responsible employees. Alternatively, the policy can contain a list (known as a schedule) of either employee names or positions with a separate amount of insurance listed next to each one. The policy can cover permanent, temporary and leased employees for up to 30 days or more after they terminate employment. Some companies will extend coverage to certain non-employees who may have the opportunity to commit theft, such as equipment support technicians, consultants, and vendors.

    Many policies include a “prior dishonesty” clause. This immediately cancels coverage for an individual employee if the organization discovers that the employee has committed a dishonest act, including acts other than theft and acts he committed prior to his current employment. Even relatively minor dishonest acts will eliminate coverage for that employee. Some insurance companies will amend the policy to cover certain individuals on a case-by-case basis, so the employer should work with the insurance agent and company to arrange coverage.

    Insurance companies offer this coverage either as a separate policy or as part of a package policy. If it comes as part of a package, the employer should carefully review the policy to determine whether the amount of insurance provided is adequate. Package policies often come with certain insurance limits built in, and they may or may not be enough for a given situation. For example, a package policy that automatically provides $100,000 coverage may be fine for the smallest of businesses, but it would have been way too small to cover the losses described at the beginning of this article.

    Employees can either make a business successful or drag it down. No organization wants to believe that its workers would steal from it, but unfortunately some of them will. To make sure that they have adequate protection, all employers should work with a professional insurance agent and purchase employee dishonesty coverage. With the right insurance, the organization and its trustworthy employees will survive a large loss caused by the untrustworthy few.

    Traffic Violation Cameras and Your Auto Insurance Premium

    With the sudden presence of traffic violation cameras (red light, speeding, aggressive driving) in states across the country, many Americans feel that their privacy is violated.  Others believe that this is a government ploy for fundraising, or to replace the local police department.  Many people are curious as to the effect a red light camera violation will have on their insurance premium.

    Since initiating the program a few short years ago, participating cities have seen very promising results from their investments.  Many have seen a 40% decrease in violations since starting the program.  Fines can be anywhere from $35 to $200, depending on the city in which the violation was issued and the speed over the legal limit at the time of the photograph.

    If you are found in violation, the cameras take a picture of your car, with a motion-triggered shutter, which captures an image of you in your vehicle in addition to a zoomed-in image of your license plate.  Some cameras even take a few seconds of video.  Once the data is analyzed, you are issued a ticket through mail.

    Some drivers have contested that if the vehicle owner is not the driver at the time of the violation, they should not have to pay the fine.  Most cities allow residents to appeal the citation in this situation.  Other states, however, hold the vehicle owner responsible regardless of who was driving.

    There have been a few reports that suggested the cameras increase traffic accidents.  This is both true and false.  As the lights change from green to yellow, drivers begin to panic.  To avoid receiving a traffic violation, they are inclined to stop much more suddenly, which could cause minor rear-end collisions, and fender-benders.  However, more serious side-impact and head-on collisions caused by drivers speeding through red lights have significantly decreased.  As these crashes were much more hazardous, and resulted in far more injuries, the cameras are still viewed as a positive implementation.

    Since violations are usually issued as a civil penalty, in most cases they do not result in changes to your insurance premium or points on your license, except in extreme cases.  Driving safely, however, will always result in better insurance rates.

    A Quick Guide to Understanding Insurance Policies

    There is little disagreement among policyholders that an insurance policy is an insanely boring piece of literature.  Too often we get our policy and until we have a claim, it is filed with barely a second glance. Is there a way to make reading insurance policies more interesting and more productive?  Let’s try.

    To make your policy interesting to read, we are going to go on a scavenger hunt.  Find a pen, pencil, or highlighter; open up your policy; and let’s begin.  We will break down the typical insurance policy into the following parts:  1.) Declarations, 2.) Definitions, 3.) Covered Perils, 4.) Exclusions, 5.) Conditions, and 6.) Endorsements or Riders. Get used to looking in this particular order, regardless of how your policy is arranged.  Because of the nature of insurance policies, you will not overlook anything by going out of the policy’s inherent order; so do not worry about jumping from page to page.

    1.      Declarations – The declarations page(s) comprises the who, what, when, and where of your policy.  Look for the named insured, the address, limits of coverage, deductible or retention levels, and listings of forms that might apply to your coverage as well.  Make sure that all the personalized information is correct and all the forms match the ones quoted with your policy.  This should always be your first stop. 

    2.      Definitions – Not all policies have a definition section, but most have defined terms.  Hunt down the definitions in your policy, see what the defined terms mean, and to be truly thorough, find those defined terms as they are used in the policy to see if the definitions make sense. 

    3.      Covered Peril(s) – Regardless of what type of policy you have purchased, it will always have a specific covered peril or list of covered perils.  It may be called “Coverage Agreement,” “Covered Perils,” or something similar.  (NOTE:  A typical auto policy has as many as six distinct coverages, each with their own terms, conditions, exclusions, and so on.Coverage agreements can also include additional coverages related to the covered peril, i.e., legal defense and other expenses paid by the company in a liability policy. 

    4.      Exclusions – Virtually all policies have exclusions, which are usually found in a section entitled “Exclusions” or “What We Do Not Cover.”  Common exclusions include exposures that are deemed uninsurable by law or uninsurable by the insurance company.  Punitive damages, for example, are not insurable in some states because of the act that precipitated the punitive damages. Other exposures, such as asbestos liability, are simply undesirable to the insurer and excluded accordingly. Often, policies have “carve outs” built into the covered peril section or elsewhere in the policy, so look for these exclusions too.  For example, the policy might have a definition section with a definition for “Damages” or “Covered Damages.”  Damages might be stated to include monetary loss suffered by a third party (for a liability policy) and defense costs, but not to include fines, penalties, or punitive damages assessed against the insured. 

    5.      General Conditions – All policies have what are called general conditions or common policy conditions if there is more than one coverage section to the policy.  Typical conditions that apply are “Policy Territory,” “Cancellation,” and “Other Insurance” clauses. 

    6.      Endorsements or Riders – Many policies have endorsements or riders added to the basic policy to account for variations by state, updates to the basic form, or elements that are peculiar to your situation and require tailoring of coverage. 

    Now that you have gone through your policy, the final step is to ask questions.  If there are no questions, move on to the next policy, start with the declarations and don’t stop until you hit the riders.  I guarantee it will be a page-turner!

    Worker Found Eligible for Compensation from Seizure Related Injury

    In an August 2006 ruling, Connecticut’s Supreme Court ruled that the claimant in the case of Michael G. Blakeslee Jr. vs. Platt Brothers & Co, who was injured when co-workers tried to help during a seizure, is entitled to workers’ compensation benefits. Typically, workplace injuries caused by a seizure wouldn’t be eligible for compensation because the injuries arise from the medical condition itself and not from conditions in the work area. In the Blakeslee case, the claimant received two dislocated shoulders on February 13, 2002, when three co-workers tried to restrain him during his seizure. He had fallen near a large steel scale, and then started flailing his arms and legs as he regained consciousness.

    The claimant filed a workers’ compensation claim contending that because the actual injury resulted from the restraint, and not the seizure itself, the shoulder injuries should be covered. The claimant argued that an injury received during the course of employment is eligible for compensation even if infirmity due to disease originally set in motion the final cause of the injury. The claimant also asserted that an injury inflicted by a co-employee is eligible for compensation, unless the injured employee engages in unauthorized behavior or the injury is the result of an intentional assault.

    Initially, a workers’ compensation commissioner decided that Blakeslee was not entitled to workers’ compensation benefits. The commissioner determined that the claimant’s injuries resulted from a chain of events set off by a grand mal seizure unrelated to his employment. A workers’ compensation review board agreed with the finding. The review board stated that there is a prerequisite requirement for eligibility for compensation, which the claimant overlooked. The cause of the injury must arise out of the employment and work conditions must be the legal cause of the injury. The review board contended that the claimant’s seizure caused the need for first aid, which caused the injury. There was no element of the claimant’s employment involved.

    Five out of seven Supreme Court justices reversed the board’s ruling. They were not persuaded by the argument posed by Platt Brothers, and the employer’s insurer, Wausau Insurance Co., that finding for the defendant would be in direct opposition to public policy because it would prevent employees from assisting co-workers in future medical emergencies. The majority noted that the co-workers restrained Blakeslee to keep him from harming other employees as well as himself. Their actions benefited the employer. The action was directly related to the employment and would therefore be eligible for compensation.

    The two dissenting justices argued that the Supreme Court should not have accepted review of the case.

    Renter’s Insurance – A Small Investment for a Potentially Large Benefit

    If you’re currently renting a house or apartment, you should strongly consider an investment in renter’s insurance. No one likes to think about the possibility of a fire or a burglary, but these are real possibilities. 

    Burglars can break in while you’re away and steal your computer, entertainment system, jewelry, and other valuable items. Without renter’s insurance, you will have thousands of dollars in out-of-pocket costs to replace the stolen items. By contrast, if you have renter’s insurance, you will promptly receive a check that covers either the replacement costs for the stolen items or the current value of the items-depending upon which type of insurance policy you’ve purchased.

    Maybe you believe there is little risk of a burglary in your geographic area, but what about the risk of fire? Fires strike randomly and can begin in electrical wiring over which you have no control. It’s unpleasant to contemplate, but you could come home to find that everything you own has been destroyed. With renter’s insurance, you would have a check in hand quite soon to begin refurnishing your life.

    Yet another scenario for which renter’s insurance can be of enormous benefit is personal liability. If a visitor is injured in your home, for example, by falling down the steps, you could be liable for her medical bills. Renter’s insurance would cover this liability.

    Some renters are under the impression that their possessions are covered by their landlord’s insurance. This is rarely true. Typically, the landlord’s insurance covers loss or damage to his property, not yours. Your landlord’s insurance also covers his liability in case anyone is injured on the property, though not always injuries inside your apartment.

    Most renters can get comprehensive coverage for a few hundred dollars per year, depending on where they live. Considering the risks covered by renter’s policies, this is a low cost for the potential benefits.

    Before speaking with an agent about renter’s insurance, look around your house or apartment and take an inventory of items you would need to replace in the event of a catastrophe. Take note of high value or difficult to replace items such as antiques, furs, jewelry, or expensive art. Before you get a policy or immediately thereafter, you should record information on all your high value items, including details about the make, model, serial number, age, and costs (both purchase and current replacement). It may also help to have photos of these items for identification purposes.

    A basic policy usually pays only for the actual cash value of your items at the time they were lost. In other words, they would be valued not at what you paid for them originally or what it would cost to replace them, but at their actual value as used items. So a 3-year-old computer would be covered for its initial cost minus depreciation. Since computers depreciate quickly, yours may be worth little by the time it’s 3-years-old, so your insurance proceeds will be limited.

    If you have expensive items like electronics that are subject to depreciation, you should consider replacement cost coverage. With this type of policy, you would be reimbursed for the current cost of buying a new equivalent item. Thus, in our example of the $2,000 computer at 3-years-old, you would receive a check that would enable you to buy a new computer. Of course, replacement cost coverage is more expensive. It’s up to you to decide which type of coverage-actual value or replacement cost-best fits your needs and budget.

    Like most other insurance policies, your renter’s policy will have deductibles. A deductible is an amount of loss you will have to absorb yourself before receiving any money from the insurance company. For example, let’s say you have a policy with a $500 deductible. You have cameras you bought for $2,000 several years ago. If you have replacement cost coverage and the cameras are lost in a fire, you would receive a check for $1,500 from the insurance company. Of course, you can lower your insurance premium by accepting a higher deductible, but this means if there is a loss, you must absorb more of it from your own pocket.

    Renter’s insurance usually does not cover damage from floods or earthquakes, but you may be able to get endorsements for these and other “acts of God.” An endorsement extends the perils covered by your policy. Obviously, you must pay an extra premium for the extra coverage.

    Be sure to discuss any special high value items, such as antiques, furs, and jewelry with your insurance agent, since you may need extra coverage for these.

    As mentioned, a basic renter’s policy includes liability coverage should someone be injured in your rented home or apartment. As with car insurance, there is a per-incident limit on this coverage, and you should make sure this is high enough to protect your assets.

    Don’t Get Stuck Paying for Costly Storm Clean-Ups

    Following a damaging fire, thunderstorm, hurricane, tornado, ice storm, or other disaster, one of your first concerns will be the structural damage your home has suffered and how to repair and restore it back to its original condition. In most cases, your homeowner’s insurance policy will pay for the labor and materials to repair your home and for you to temporarily live somewhere else while your home is uninhabitable.

    But, what about the mess that the disaster has left behind? You may have anything from destroyed furniture and appliances to soaking wet insulation and lumber that must be cleaned up and disposed of somehow. Of course, this certainly isn’t an expense or a task that a homeowner wants to be worried with after a disaster. The good news is that your insurance policy may also pay for the expensive cleanup and disposal process.

    A typical insurance policy will cover a reasonable expense for you to remove the debris from your property, but the damage must be caused by one of the causes of loss that your insurance policy insurers against. For example, let’s say your insurance policy covers fire and a fire has damaged your master bedroom, closet, and entry hallway. In the process, your clothes and bedroom furniture were also destroyed by a combination of fire, smoke, and water. Since your insurance policy covers fire, it will also pay for all your belongings and building materials destroyed by the fire to be removed from your property. On the other hand, do keep in mind that most typical insurance policies don’t cover losses caused by earthquakes. Depending on your insurer, this coverage may be added for an additional premium.

    The cost of debris removal is included in the insurance amount covering your home, but if the amount of home damage and debris removal exceeds what your policy will pay, most policies will usually provide an additional amount for you to remove the debris.

    A typical policy will also cover the cost to remove fallen trees on your property. The amount is usually up to $1,000 for multiple fallen trees and up to $500 for a single fallen tree. However, the coverage only applies with certain circumstances. Removal of fallen trees owned by you, the policyholder, are usually covered if they fell as a result of a windstorm; the weight of snow, sleet, or ice; or a hail storm. Removal of a neighbor’s tree that has fallen on your property is usually covered if it fell from fire; wind and hailstorms; vandalism; the weight of snow, sleet, or ice; and such. The fallen tree must have damaged a structure that is already covered by your policy, such as your home, fence, garage, or porch, for the coverage to pay for the removal. There are a few limited exceptions to this rule, such as if the fallen tree is blocking the driveway to the home or a handicapped person’s accesses to the residence. Otherwise, a fallen tree on your property will be your financial responsibility to remove.

    Keep in mind that homeowner’s insurance policies can vary from insurer to insurer. Be sure to review your policy carefully to make certain you have the extent and amount of coverage you need. Don’t forget to confirm that you have enough insurance to cover both repairs and removal. If any of the provisions in your policy aren’t perfectly clear to you, then you should ask your insurance agent to thoroughly explain it. If your agent can’t explain your policy to your understanding, then it might be time to look elsewhere for coverage.