Category: Insurance

Is Your Homeowner’s Coverage a Mystery to You?

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If you feel in a quandary when you look at your homeowner’s insurance, take heart; you are not alone. In fact, a recent study conducted by Harris Interactive for Travelers Insurance shows that a large number of American homeowners are unsure of their coverage specifics. Many of these homeowners are underinsured and the smallest disaster could send them into a financial hardship.

The researchers questioned more than 1,300 homeowners to determine exactly what they knew about their coverage. They also asked the study participants how often they reviewed their policy to ensure they maintained appropriate coverage and how they conducted their review.  According to the survey data, more than 44 percent of those surveyed had not examined their insurance coverage in the past year. Some respondents had not reviewed their insurance policy in the last 10 years.

The “Travelers In-synch Homeowner’s Insurance Study” also indicated that nearly 27 percent of these homeowners weren’t sure whether their policy would cover the cost of rebuilding their home. Thirty-six percent didn’t know whether their policy would cover damage caused by a hurricane. Forty-two percent were unsure if they had earthquake coverage. Twenty-six percent didn’t know if they had coverage against flood damage, and 37 percent didn’t know whether their policy would cover a prolonged hotel stay if their home were damaged.

Many items impact the amount of homeowner’s coverage you need. That’s why it is important to review your coverage frequently. Here are some criteria to use in your review:

 

  • Have you recently remodeled your home?

If you’ve improved your home, chances are you’ve increased its estimated replacement cost.

 

 

  • Has the inflation rate increased since your home was last appraised?

Certain conditions, such as severe weather, can increase the demand for labor and materials, which raises costs beyond the normal inflation level. It is important to update your coverage each year to account for changing inflation.

 

 

  • What factors influence building costs in your area?

Replacement costs are directly proportionate to factors, such as the availability of labor, the current demand for labor, and the cost of construction materials. Adjusting your coverage regularly can ensure your policy will provide the money you need to rebuild.

 

To determine whether you have adequate coverage you should know your home’s estimated replacement cost. Keep in mind that your replacement cost could be higher or lower than your home’s market value. You should also consider the building materials used to construct your home. The more difficult the building materials are to find, the higher your replacement cost. Your coverage needs to reflect these increased costs.

The best way to stay ahead of changing costs is to contact your insurance agent annually to discuss your current coverage and your changing needs. They can help you manage risk by updating your coverage so there won’t be any surprises should your home be damaged.

Your Driving Record and How It Effects Your Premium

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Your insurance company has the right to review your driving record at any time.  Typically, they’ll review your record when you apply for coverage, request changes to your policy, add a vehicle, or renew your policy.  This is to evaluate your risk potential, or determine if you are insurable at all.

Generally, what the insurance company will analyze is the number of points on your license.  When found guilty of a traffic violation (moving violations, parking tickets, at-fault accidents, etc.) you are assigned a certain number of points on your license. The more points you accumulate, the worse your record. The points on your driving record may or may not affect your insurance rate since each company has their own way of evaluating violations.

Insurers typically evaluate your points using their own system to determine the amount of your rate increase (if your rates increase at all).  Most companies, however, use the Safe Driver Insurance Plan, which lists the different types of violations and assigns a points value to each one, based on the severity of the incident.  Under this plan, as you accumulate points, your rates are subject to increase.

Your driving record isn’t the only information your insurer can use to underwrite your policy.  Insurers also use credit scores to determine rates. If you have a good credit score, your rates are likely to be lower than someone with a bad credit score. Insurance underwriters perceive a direct relationship between your credit score and the chances of you filing a claim. Someone with a history of being late on bill payments and who often opens and closes savings or credit accounts wouldn’t be viewed as a good insurance risk.

How Much Liability Insurance Is Enough?

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There aren’t many activities in life riskier than starting your own business. Two of the biggest risks any business faces are the loss of essential property and personal injury claims. In minor cases, these risks can cause loss of income, but in the worst-case scenario, they can bring your business operations to a screeching halt and force you to close the doors.

Obviously, your success is dependent upon keeping risks and losses to a minimum. Liability insurance helps you lower vulnerability to risk by transferring some or all of the risk responsibility to your insurance carrier. The more risk you can transfer, the less vulnerable you become. That’s why it is so important to evaluate your operation frequently to determine where there is potential risk. Through a risk analysis, you consider all possible risks and determine which are the most significant for your particular business.

There are many types of third-party liabilities that businesses should be covered against. In addition to property loss and personal injury, businesses should be protected against claims such as damage to the property of others, allegations of false advertising, and legal liability stemming from employment practices. In the event that a claim is filed against you, liability insurance will provide you with a legal defense. Should the judgment go against you, your liability insurance will pick up the tab for covered damages up to the policy’s limits. Keep in mind that liability insurance can also serve as the collateral needed to post an appeal bond. A large award can be potentially reduced or reversed on appeal. Without the ability to post a bond, however, your company will not be able to start the appeal process.

Evaluating your level of risk is a complex issue. Although young companies generally have a low level of liability risk, you should buy coverage with an eye toward the future. This is especially important if you are developing products with the potential to impact a large number of people. The greater the potential impact, the greater the possibility your company will find itself as the defendant in a class action lawsuit. Other factors you need to consider include the size of your company’s operations, geographic locations, industry trends, organizational structure, amount of capital at stake, you and your staff’s degree of experience and expertise in the field, and any general industry hazards.

Determining the amount of liability coverage you need should be considered a work in progress. As you expand, you will encounter situations that necessitate increasing your coverage. A review of your risk analysis should be done periodically, perhaps at each renewal. You should also review your insurance needs whenever you business changes in size, diversifies into new markets, or relocates.

Is Your Car a Thief Magnet?

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Everybody loves driving a nice car; but not everybody is willing to pay for one.  It is possible that a potential thief may be coveting your car even as you read these words. However, you don’t have to be left vulnerable. The savvy car owner knows that taking a proactive approach can lessen the likelihood of a vehicle being stolen.

The National Insurance Crime Bureau (NICB) is a non-profit organization whose mission is to fight insurance fraud and vehicle theft for the benefit of its member insurance companies, their policyholders, and the general public. As part of their public awareness campaign, they compile an annual list of the top ten most stolen cars. The list for 2003 by make, model, and model year included:

1.                  2000 Honda Civic

2.                  1989 Toyota Camry

3.                  1991 Honda Accord

4.                  1994 Chevrolet Full Size C/K 1500 Pickup

5.                  1994 Dodge Caravan

6.                  1997 Ford F150 Series

7.                  1986 Toyota Pickup

8.                  1995 Acura Integra

9.                  1987 Nissan Sentra

10.              1986 Oldsmobile Cutlass

The NCIB also discovered through its research that in 2003, 1,260,471 motor vehicles were reported stolen at an estimated value of over $8 billion. Since recovery rates are only about 65%, that means a tremendous number of vehicles are either cut up for parts, exported to other countries, or reappear as clones, the latest trend in an ever-growing list of fraudulent car schemes.

But the organization doesn’t stop at compiling statistics. It has formulated what it calls its “layered approach” to auto theft protection by putting together some suggestions to make vehicles less attractive to thieves. NICB’s four layers are:

  1. Use common senseand take advantage of what’s already available to you.  The first line of defense is to use the anti-theft devices that are standard on all vehicles  – the locks. Always lock your car and take your keys.
  2. Having and using a visible or audible warning device is another item that can abort a potential robbery before it happens.
  3. “Kill” switches, fuel cut-offs, and smart keys are examples of how technology can be extremely effective in stopping a thief in his tracks. Chances are, if your car won’t start, it won’t get stolen.
  4. The more expensive high tech tracking devices can alert you and law enforcement the moment an unauthorized driver decides to take your vehicle. Using one of these items will ensure that the local police will apprehend the car thief.

One final thing to remember about auto theft is that it doesn’t always happen when your car is use. It can happen when you take it to the garage for repair. Always be sure that when your vehicle is damaged, that you take it to a reputable repair shop. It is an unfortunate fact of life that some less than ethical garage owners can see your car as supplemental income by having it “stolen” and cut up for parts.  It is important to know whom you are entrusting your car to so that you don’t end up in the market for a new automobile.

Insuring Your Vacation Rental Car: How to Prevent Being Over or Underinsured

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While most people take the time before a vacation to research the best rates on rental cars, they generally forget to research insurance coverage for their rental car ahead of time. This can lead to costly mistakes either by being underinsured or by purchasing too much coverage. 

To prevent either of these scenarios, car renters should spend a few minutes before a trip to make sure they are adequately insured.  Your insurance company will inform you as to what coverage on your own car applies to rental cars.  Generally when renting a car for pleasure, your personal auto coverage applies to the rental car.  However, if you don’t carry comprehensive or collision coverage, you will not be protected if your rental car is stolen or damaged in a collision and you should consider purchasing the rental company’s collision damage waiver.

When paying for the rental with your credit card, the company and/or bank which holds the credit card may also provide coverage.  Call the 800 number on the back of your card for more information.  Generally credit card insurance benefits are secondary to personal insurance policies and any insurance offered by the rental car company.  Be sure to ask for a written copy of the credit card company’s insurance coverage information. 

Once this research has been conducted you should have a clear idea if you need additional coverage through the rental car company.  Costs and coverage varies from state to state, however, renters generally have the following products available to them:

Collision/Loss Damage Waiver
Costing between $9 and $19 per day, this “waives” financial responsibility for theft or damage to a rental vehicle other than for accidents involving such factors as speeding or driving while intoxicated. 

Liability Insurance
While rental companies by law must provide a minimum of liability insurance; the coverage is usually so low that it does not provide enough protection.  Supplemental liability insurance costs between $7 and $14 a day for $1 million in liability coverage.

Personal Accident Insurance
For $1 to $5 per day, this offers you and your passengers coverage for medical bills resulting from a car crash. Your health insurance or auto policy personal injury protection may provide adequate coverage. 

Personal Effects Coverage
For $1 to $4 per day, this insures against theft of items in the car.  Your home or renters insurance policy may also provide this protection.

Protect Yourself When Taking on a Remodeling Project

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Due to sustained record low interest rates, many homeowners have elected to take on major home remodeling projects.  According to the National Association of Home Builders, approximately 26 million Americans spend more than 180 billion annually on home improvements.   In many cases, however, homeowners are not updating their insurance at the same time, leaving themselves extremely vulnerable.

Making sure you are appropriately insured should begin at the very start of a project.   A contractor should not be hired if they cannot produce their certificate of insurance.   The contractor should provide you with a copy of their certificate, which shows the type and amount of their insurance coverage.  This should include general liability, workers’ compensation and auto coverage, and the policy must be current. 

It is equally as important to make sure that any subcontractors that your contractor brings in to the job are similarly insured.  This is particularly important now, as insurance rates for the construction industry have recently risen significantly.  You want to make sure a member of your remodeling team didn’t choose a coverage lapse over a premium increase.

When you choose to take on a remodeling project yourself, you must review your own coverage for liability and property damage issues, particularly when bringing in subcontractors to help with the work.  As the homeowner, you may be liable if they are injured during the scope of your project.  Even if your current policy covers any injuries related to the renovation, we often recommend that homeowners carry umbrella liability coverage, which would cover a claim beyond normal limits.

In addition to liability issues, it is key to increase your homeowner’s coverage based on the added value to your home.  Kitchen and bathroom renovations are the most common and tend to be quite costly.   They also substantially increase the value of a home.

Homeowners should use caution not to over-insure themselves.  Don’t increase your insurance based on the cost of the remodel.  You should determine how much it would actually cost to rebuild your home with the added improvements.  This replacement cost is the amount that needs to be insured.  The cost to remodel also includes tearing out old materials.  Therefore, in some cases, the cost difference to rebuild the home may be less than the actual renovation cost itself. 

The most important item to consider is to contact your insurance agent to increase your homeowner’s limits before, not after, a renovation project.  This will ensure that you are covered should any fire or damage occur during a renovation.

Avoid Sewer and Drain Damage to Your Basement

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Millions of dollars are spent every year repairing damage to basements caused by sewer and drain backups.  There are some ways these problems can be avoided, instead of having to repair the mess from a sewer or drain backup. 

Make sure your drainage systems are working properly.  The downspouts from your gutters should extend beyond the foundation of your home so that water is not left to trickle down basement walls.  Along those same lines, your yard should gradually slope away from the foundation, so surface water drains directly to the street.  Keep drain lines clear, especially if your gutters connect to storm sewers. 

There are several types of anti-backflow devices that can help reduce the chance of basement flooding.  Check-valve devices allow water and sewage to flow away from the drain, preventing backup into the drain.  Gate-valve devices close and shut off the flow of water and sewage, preventing backup.  Anti-backflow devices are either manually or automatically operated.

Sump pumps are another option to consider.  Single and dual-level sump pump systems are available, and a battery or generator can be used to power the pump in case of a power failure.  Sump pump systems should be checked monthly.  Check local building codes or consult your plumber to ensure your sump pump is connected properly.  Sump pumps should not be connected to your home’s waste plumbing system.

Despite your best efforts, sometimes water will still get in your basement.  Keep storage items off the floor and keep furniture on casters or shims, away from floor drains.  If your basement is finished, ensure that you consult plumbing and building professionals to design a drainage system that will prevent damage to your finished space. 

Despite the amount of damage backups can cause, many homeowners’ policies do not include coverage for sewer and drain losses.  Check with your agent to determine if an additional endorsement can protect you from this costly problem.

Take Three Steps to Controlling Your Workers’ Compensation Costs

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Controlling workers’ compensation costs is not as difficult as you may think. The secret is a three-step approach that is firmly grounded in common sense: avoid injury claims, use proper industry classification codes for your employees, and find an insurance agent with experience in workers’ compensation coverage.

It sounds like a clichГ(c) to say that avoiding claims is a way to control costs. It’s such a simple concept, but it is actually made up of several complex components. The first is properly training new employees to perform their jobs safely. This requires developing a written program that is presented to all new hires during their initial orientation. This can be a difficult process, especially if you don’t have someone who is trained to design and implement training.

If you need help to develop a program, you can find it through OSHA’s Outreach Training Program. This is a voluntary train-the-trainer program through which OSHA develops trainers who are authorized to teach construction and general industry occupational safety and health standards and policy. For information regarding trainer certification requirements for the construction industry, course guidelines, training tips etc., visitwww.osha.gov/fso/ote/training/edcenters/index.html. You can also find information about locations offering this certification training.

Once you have conducted the initial training, it’s important to maintain safety awareness. You need to continually remind your employees to practice safety by posting reminders in common areas and holding meetings to discuss the specific issues affecting workers. These meetings are a good way to discover emerging problems and to brainstorm possible solutions. Employees who are part of the solution development process are more likely to buy into the process.

The other element you need to incorporate into a program that will successfully lower the number of on-site accidents is responsibility. Safety is the job of every employee, regardless of job title. Keep in mind that in the majority of states, workers’ compensation is “no fault.” Injuries that occur in the workplace are covered by workers’ compensation insurance no matter what caused the accident, including employee negligence. It is essential that you continually create an environment where employees take ownership for maintaining a safe workplace. A good way to encourage this is to provide incentives like raises or extra time off for employees who make it a habit to work safely.

The second step in the three-step program is to properly classify your employees. There are more than 600 job classification codes and each one is associated with the level of risk necessary to perform that job. Never use one code for all of your employees and always use the most recent edition of the classification codebook for your state. If you don’t take the time to properly classify your employees, you may actually increase your workers’ compensation rates by assigning codes that have more risk than your employees face.

The last step in the strategy is to find an insurance agent that specializes in property and casualty insurance, particularly workers’ compensation. This person will be able to design a program that not only meets state mandates, but also offers you the best value for your premium dollar.

Tips to Reduce Insurance Premiums for Your Teenage Driver

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While most parents would prefer to keep their teenagers off the road, you probably won’t have much success encouraging them to withhold from getting that long awaited ticket to freedom. 

Unfortunately, because teenagers are at a higher risk for traffic accidents and tickets, their insurance rates can easily be 50 to 75 percent higher than their parents.  Furthermore, premiums for teenage drivers generally won’t be significantly reduced until they turn 25, get married or both.  In the meantime, they’ll stand to save money by having themselves added to your insurance policy instead of getting their own policy.

Here are some ways to reduce car insurance premiums, courtesy of the Independent Insurance Agents of America:

  • Make sure your teen stays in school and studies to make good grades. Many insurers offer discounts to good students.  A “B” average or better in school carries a lot of weight in keeping insurance costs down.
  • Sign up your teen for a supplementary driver’s education course.  Many insurers will offer a discount to offset your investment.
  • If your teen will be driving a family car, designate one vehicle he or she will drive.  Otherwise, the insurance company will calculate the premium based on the highest risk vehicle covered by your policy.
  • Consider a higher deductible. Moving from a $250 to $500 or $1,000 deductible can save you 10 to 20 percent on your premium.  Consider whether you can absorb the extra out-of-pocket expense in the event of an accident.
  • Reward safe driving.  More than anything else, an accident- and ticket-free driving record will keep your premiums at their lowest.

Do Not Fall Prey to a Staged Auto Accident

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As if it wasn’t painful enough to be found at fault in an auto accident, imagine finding out that it was not an “accident” after all.  Each year thousands of drivers become victims of staged auto accidents, and most never realize it.  Criminals plan the accident to appear as the innocent driver is at fault, and then file claims for vehicle damage and personal injury to the at fault driver’s insurance company.

The CPCU Society and the National Insurance Crime Bureau offer the following safety tips to help avoid these scams:

 

  • When driving look beyond the car in front of you. If you see traffic slowing, start applying the brakes – don’t wait for the car in front of you to brake first.
  • Allow plenty of space between your car and the car ahead of you so you have time to react to sudden stop.  The general rule is one car length for every ten miles per hour traveled.
  • Be especially careful when turning into a lane that allows for two vehicles to turn left simultaneously. People committing staged collisions often prey on cars that cross the center line, purposely sideswiping the victim’s car.
  • Call the police to the scene and get a police report, even if damage is negligible. If the police report describes the resulting damage as minimal, it will be harder for the criminal to inflict further damage to their car afterwards and collect a larger claim.
  • Carry a disposable camera in your glove compartment and take as many pictures of the other car and its passengers as possible.
  • If you suspect a scam, call the NICB hotline at (800) TEL-NICB.