630.516.9000 Like Us on Facebook Join our professional network on LinkedIn Join our cirlcles on Google+

FREQUENTLY ASKED QUESTIONS (FAQs)

Auto

No matter what type of vehicle you drive, if you’ve spent much time on any road surface in the past couple of years, you must have noticed an explosion. That momentous event is the WILD growth in popularity of larger vehicles called Sports Utility Vehicles, or SUVs. While such vehicles barely registered a blip on the vehicular radar screen when the 90s began, there are now well over sixty million such vehicles on America’s roads.

Sports Utility Vehicles (SUVs) Gain Popularity

No matter what type of vehicle you drive, if you’ve spent much time on any road surface in the past couple of years, you must have noticed an explosion. That momentous event is the WILD growth in popularity of larger vehicles called Sports Utility Vehicles, or SUVs. While such vehicles barely registered a blip on the vehicular radar screen when the 90s began, there are now well over sixty million such vehicles on America’s roads.

The Rulers of Personal Vehicles

SUVs have become popular for several reasons:

  • They have a very comfortable ride
  • They’re heavy and sturdy, making them safer in collisions
  • They’re capable of handling certain types of inclement weather better than smaller vehicles
  • They’re more stylish than pickup trucks and large vans, making them more attractive to female drivers.

The combination of power and safety have propelled these vehicles into a position of dominance in sales and, naturally, on the streets and highways.

Early word on SUVs was the substantially increased safety factor. Many insurance and safety experts initially hailed the arrival of such vehicles since they have helped to turn around the previous trend of smaller, lighter cars which were efficient fuel-users, but also very vulnerable to heavy damage in higher-speed collisions. The damage factor was a big contributor to serious driver injuries and fatalities. On the other hand, SUVs heralded the arrival of personal transportation that handled collisions better than the lightweights. Insurance companies originally shrank away from SUVs because of their high cost; but like everyone else, they warmed up to them, primarily because of their higher degree of safety. Manufacturers are still capitalizing on the size feature as they have announced plans to produce even bigger SUVs. Larger versions of these vehicles should spur even greater sales.

Sports Utility or Personal Assault Vehicles?

As the number of SUVs have increased, so has the amount of scrutiny from safety experts and the insurance industry. As with anything, SUVs appear to have a negative side. Ironically, one of the biggest issues is that they’re – well – BIG! Although SUVs make their occupants safer, it comes with a price.

Construction – SUVs are not only heavier than most private passenger vehicles, they’re also stiffer. SUVs react more like jeeps on wet roadways and on turns, having a tendency to rollover instead of experiencing increased rear-end motion (fish-tailing) in smaller vehicles. Further, with their heavier weight and stiffness, SUVs have bodies which don’t have as much "give" during impacts with other vehicles.

Collision – This means that smaller, lighter vehicles that collide with SUVs experience a higher level of damage upon impact. Naturally, the occupants of the smaller vehicles which collide with SUVs face a higher chance of serious injury or death. SUVs have front bumpers that are significantly higher than most vehicles and this can cause big problems. Instead of helping to mitigate the impact by making contact with the other vehicle’s bumper, it maximizes damage because the SUV’s hardest part makes contact with the more vulnerable body of a smaller vehicle. In fact, depending upon its speed, an SUV may actually run over the top of a smaller car.

Increased Liability – the nature of the construction elements of an SUV during accidents with smaller cars results in these types of vehicles inflicting more serious bodily injuries to other operators. This fact increases the likelihood of more lawsuits against SUV owners and operators. More claims increase the cost to insurers and results in higher insurance rates. In fact, a number of insurers have told the public to expect higher rates or perhaps premium surcharges for SUVs in order to make up for their greater exposure to causing serious accidents.

So, Is Bigger, Better?

Well, yes, but only up to a point. While SUVs may fit the needs of persons who put a premium on vehicle strength and safety, the positives are balanced by the fact that such vehicles inflict more serious damage on smaller vehicles and their occupants; this fact is going to result in increased claims and insurance costs. Further, as the number of SUVs on the road increases, there will be a diminishing return on their safety. Why? Because instead of colliding with smaller vehicles, the probability will increase that SUVs will crash into other SUVs. In the end, a person interested in buying and driving an SUV will just have to consider the positives and negatives and make a decision….oh, the responsibility of being a king of the road.

The cost of your car insurance may double by adding a young driver to your policy. This article focuses on ways to control a young driver’s impact on your insurance premium.
Reducing your insurance premiums

  • Have your child complete a driver training class, balancing its cost against premium savings and gaining a more competent young driver.
  • Ask your insurer if it gives discounts to students with good grades.
  • Find a company that bases its premium on the car your new driver usually drives instead of assigning him or her to the most expensive vehicle.
  • Does your child have to drive to school? If so, expect your company to charge a higher premium for the increased amount of driving.
  • Build a long-term relationship with your insurer. Some companies reward longevity by forgiving a driver’s first accident or minor traffic violation.
  • Make sure your new driver understands that poor driving habits can result in higher premiums or a canceled policy.
  • Increase your physical damage deductibles or, for older vehicles, eliminate this coverage.
  • If your child owns a vehicle, he or she should have a separate policy. However, if you share the cost of the car and its insurance, it may make sense to also own or co-own the vehicle. Your ownership interest lets you take advantage of a multiple-car discount.
  • Think carefully about giving a young driver his or her own car. Coverage for young drivers who have full-time access to a vehicle is very expensive. Make sure you balance convenience against cost.

Important: don’t pursue lower premiums blindly. It’s important that your young driver is protected from the financial consequences of causing a serious accident. Further, you may need to protect yourself since you could also be sued for an accident caused by your son or daughter. You might consider getting higher limits of liability by purchasing an umbrella policy. Talk to an insurance professional about more strategies to keep your new driver affordable.

A new driver can send a parent’s stress-level soaring. So let’s focus on ways to control a young driver’s impact on your peace of mind.

Keeping your young driver safer

  • Consider preparing your child with a course in defensive driving as a tool for avoiding accidents and increasing confidence.
  • Require your young driver to understand, sign and comply with the Youthful Operator Driver Safety Agreement.
  • Be a proper model by using seat belts and never using alcohol or drugs.
  • Provide your child with a well-maintained vehicle, equipped with safety devices such as air bags and anti-lock brakes. Also, avoid vehicles that are vulnerable to serious damage during collisions or to "rolling over."
  • Control your child’s driving privileges…don’t hesitate to curtail or revoke them in response to poor behavior.
  • Set high driving standards and test your young driver.
  • Be certain that he or she can properly pass vehicles, maintain a correct distance, park, merge and exit, change lanes make turns, obey speed limits and be aware of pedestrians.
  • Make sure your child understands traffic laws and has a healthy respect for the power of the automobile.
  • Don’t let your child become licensed until he or she passes YOUR driving test which must include the ability to drive under adverse conditions (dark, fog, rain, ice, snow, rush-hour traffic, etc.).

Another good idea is to talk to an insurance expert about other strategies to keep your new driver safer.

Revised: 08/01

COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 1998, 1999, 2001
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Does this sound familiar?

You’ve been a responsible driver for many years, but you notice an upsetting pattern; every year your car insurance premiums creep upward. What’s going on? What are you doing wrong? Well, the answer may be "nothing." Remember that the cost of providing insurance, as it is with other products and services, may increase for various reasons. Factors that can affect car insurance premiums include the following:

  • Your insurance company’s overall loss experience (due to a higher level of claims)
  • The increased value of newer model cars
  • Increases in judgment amounts awarded in auto lawsuits
  • Increased business processing and administrative expenses

What these items have in common is that they’re out of your control…so don’t worry about them. However, you do have some control over what happens with your premiums. It may be time to step back and take a fresh look at your car insurance.

How do I evaluate my situation?

A good first step is to gather your insurance records and any other car-related information. Next, determine if circumstances have changed since you last dealt with your coverage. Consider your cars or trucks, how they’re now used, who are the drivers and your driving experience. Once this information is handy it’s time to call your agent. What should you discuss? Well, here are some areas to consider:

  • If you have your home and auto insurance with the same company, are you getting a discount?
  • Does my coverage take full advantage of the discounts offered by my company?
  • I have more than one car; am I getting a credit?
  • How much premium can I save by changing deductibles? Determine the dollar amount of any loss that you can comfortably handle as an out-of-pocket expense.
  • Do my cars really need full coverage insurance? On an older car (over six years old) you may want to drop collision and/or comprehensive coverage and carry liability coverage only. Ask your agent what makes sense. IMPORTANT: you must maintain these coverages if you’re still paying off a loan on your car or truck.
  • Do lifestyle choices such as drinking or smoking affect my premium?
  • Does it matter that my daughter made the Dean’s List? Don’t think this information is bragging since your company may give discounts to young drivers with good grades.
  • Did you know that my car has anti-lock brakes; airbag; theft alarm system? (Some companies provide discounts for safety and anti-theft features)
  • Did you know that my son took Driver’s Education?
  • Does the company have accurate information on how often and how far I drive?
  • Am I with a standard carrier or do I qualify for any preferred program?
  • Is my vehicle charged an additional premium because of its type or performance?
  • Do I get a credit for my driving/claims history or for how long I’ve been covered? If applicable, find out if your company rewards a loss-free history or longevity.

Communicating with your agent

The best way to discuss your insurance needs is to be open and honest with your agent. Giving your agent accurate information puts him in the best position to make certain that you get the best available premium. Carefully answer your agent’s questions and provide complete details about any tickets, accidents, or violations in your driving history. This approach also applies to information about who drives your cars and how the cars are used. Finally, your agent is a terrific resource for handling errors about your account or which may be shown in your driver records. . . so use their expertise.

(Revised 10/98)


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

A driver who’s unlucky or careless can maim or kill other persons and severely damage or destroy property. This deadly potential is a primary reason for having auto insurance. In fact, most states have versions of financial responsibility laws which require proof that you are financially able to pay for any damage that you may cause while driving. Insurance policies are the most common method of complying with these laws. More specifically, drivers are typically required to carry liability insurance at some minimal limit which varies by state.

Bodily Injury Liability

This covers damage or injury that you may cause to other persons. The key is that it involves your being held financially responsible for injuries to other persons as a result of the way you operated your car. This coverage does not apply to your injuries.

Property-Damage Liability

This covers damage that you may cause to the property of others. The key is that it involves your being held financially responsible for property you may damage or destroy as a result of the way you operated your car. This coverage does not apply to damage to your property.

Uninsured motorist coverage

The limits and coverage details also vary widely by state. It typically pays for your expenses that result from an accident caused by an uninsured driver. Now be careful with this coverage. An uninsured driver must be the one who is responsible for causing the loss. "Uninsured" is typically defined to include a person who has no insurance; a person who can’t be located ("hit and run drivers");a person who has insurance, but their insurance company is financially incapable to provide coverage; plus other situations which may be considered to involve an "uninsured" motorist. IMPORTANT: The amount of protection under this coverage may depend upon state law. Payment under this coverage part may be controlled by the limits mandated by the state’s financial responsibility law. Or, a particular state may have specific uninsured motorist legislation that dictates what limit or limits must be offered to insurance consumers. In some cases, a consumer may choose to reject the coverage. Typically, the rejection must be in writing.

Underinsured motorist coverage

Although the coverage concept is similar to uninsured motorist, this coverage is for injuries caused by a driver who is inadequately insured. Basically, it operates as excess insurance, paying for your expenses which exceed the amount of insurance protection available from the other driver’s policy. For example. you are seriously injured by a person who carries a bodily injury liability limit of $25,000. Your injuries amount to $50,000. Your Underinsured Motorist Coverage limit is $100,000. If the loss circumstances qualify for coverage per the policy’s underinsured motorist provisions, your policy would pay the difference between $25,000 and $50,000, or an additional $25,000.

Remember that this is merely an introduction to complex policy coverages. Be sure to contact your agent for detailed insurance information. Please watch for Part Two of this topic which discusses other, typical auto policy coverages.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Here we continue our brief discussion of typical coverages found in an auto policy. Be sure to see Part One of this topic.

Cars are expensive to buy and repair and their high cost is a strong incentive for protecting them. If you borrowed money to buy your car, the lender was likely to make certain that you carried comprehensive (increasingly referred to as "other than collision") and collision coverages to pay for any damage to the vehicle.

Collision coverage

This covers damage to your own vehicle. The damage has to be the result of your vehicle running into (colliding with) another object, such as other vehicles, trees, light poles, mountains, etc.

Comprehensive or Other Than Collision coverage

This also covers damage to your own vehicle. The damage has to be the result of a specific cause of loss. Although causes of loss may vary by policy, some common causes include fire, theft, hitting an animal, vandalism, earthquake, flood or hail.

Remember that both Collision and Other Than Collision coverages are subject to deductibles. A deductible is merely the initial dollar amount of a loss which is paid by you, the policy owner.

Personal Injury Protection or Medical Expense

This coverage, the available financial limits, and the exact details of how such coverage operates vary by state. The coverage typically handles medical expenses for injuries to you, your passengers or people who are "around" you. It is usually a "per person" limit. It may also cover you and members of your household if you, as a pedestrian or while riding a bicycle, are struck by an automobile.

Towing and Labor coverage

This coverage is to help pay for your costs to deal with a disabled car. It could help pay for the car to be towed to a service station or for any repair that occurs at the location of the car’s breakdown. Again, this coverage is for labor and not the cost of any necessary parts. Typically the available coverage amount is minimal (often between $25-$75).

Rental reimbursement

This coverage reimburses you for the expense of renting a car as a temporary replacement. The car being replaced must be an insured car that’s unavailable for use because of that car being damaged or destroyed due to a covered cause of loss. Coverage is also available if use of the insured car is lost because of it being repaired or serviced.

Remember the above information only touches upon some typical auto insurance issues. It’s always wise to contact your agent and discuss your coverage questions and needs in detail. If you missed it, please see Part One of this topic which discusses other, typical auto policy coverages.


© 1998 The Rough Notes Company, Inc.

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language, and no matter what country, state or territory, is expressly forbidden without written consent of The Rough Notes Company, Inc.

Driving during a snow laden winter can take your breath away. However, the season’s beauty comes with equal peril. The elements that create stunning winter landscapes also bring driving nightmares. Driving safely during the months that include snow, blinding storms, ice and slush takes preparation and the proper mind-set. What considerations do drivers need to make during the coldest of seasons? Well, there are several areas that really need your attention. In part one we’ll discuss preparing your car and getting equipped for handling emergencies.

Preparing Your Car

Cold weather makes it necessary to make sure that your vehicle is ready to stand up to its rigors. A stalled car may be an irritating inconvenience in warm or moderate weather. However, the same circumstance could literally endanger a driver’s life when it occurs in a winter storm or during extremely low temperatures. Your goal should be to minimize the chances of a vehicle breakdown by having a qualified mechanic inspect the following:

  • Wipers
  • Tires (tread wear, alignment, and traction by maintaining air pressure)
  • Brakes
  • Radiator and coolant system
  • Transmission
  • All fluid levels
  • Hoses, clamps and belts

It is important that once checked (and any deficiencies corrected), a car owner be sure to periodically certify that these items remain in good order. This is especially crucial prior to long trips.

Preparation For Emergencies

Wintertime driving calls for drivers to be ready to deal with the hurdles represented by weather conditions and the likelihood of being stranded. Car owners should consider having the following items available to deal with routine and emergency winter driving situations:

  • ice scraper
  • first aid kit
  • snow brush and small shovel
  • heavy blankets
  • flares
  • flashlight
  • matches
  • metal cup or small container (in order to melt snow for drinking water)
  • small or basic tool kit
  • bag of cat litter or sand
  • candles
  • salt
  • extra clothing (coat, boots, gloves)
  • jumper cables and drive belts
  • extra gallon of antifreeze and windshield wiper fluid
  • extra quart or two of motor oil
  • car phone, cell phone or citizen’s band radio
  • non-perishable food
  • a dry support for a car jack such as small, sturdy wooden board

It is also helpful to keep plenty of fuel in your car or truck’s gas tank to avoid running out during weather related snags in traffic or if you must pull off the road.

Be sure to read Driving Though A Winter Wonderland? Part 2.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

In this part, let’s talk about making long trips, skidding, actions to take when you’re stranded and driving in the right frame of mind.

Preparation For Long Trips

Long distance trips by car or truck can be dangerous during the winter, so here are some suggestions for minimizing the chance of the trip becoming a tragedy:

  • find out about expected weather conditions at locations along your route
  • tune into local stations for information on road conditions
  • give persons on either end of your trip a travel itinerary including planned departure and arrival times and call these persons to let them know of your safe arrival
  • stop frequently for resting and re-fueling
  • travel as much as possible in daylight
  • be familiar with your route, carry recent maps and prepare alternate routes
  • be prepared for travel delays and be willing to pull over on the road or to stop at road shelters to wait out poor driving conditions

What To Do If You’re Stranded

  • pull your car over as far off the road as possible to avoid being hit
  • put on any additional clothing to keep warn
  • use phone or radio to call for help
  • it is better to stay with the car and run the engine periodically, not continuously
  • conserve your energy; over-exertion by trying to move your vehicle or shoveling too long endangers your health
  • melt snow for drinking water
  • move your arms and legs to improve your circulation and to keep warmer
  • before leaving your vehicle, consider the outside temperature. A person can freeze very quickly, especially if there is much wind
  • If you are stranded in an area where there is regular traffic, put on your flashers or raise your car’s hood to attract help

What to do if you start to skid

Above all, try not to panic. Abrupt or wild steering or braking will make things more dangerous. Skids occur when the car’s speed overcomes tire traction. If you do not have anti-lock brakes, gently pump your brakes until the car slows and traction (ability to steer) is regained. If you DO have anti-lock brakes, apply steady pressure until control is regained. If you are able, try to steer your car in the same direction in which you’re skidding. In other words, if you’re skidding to the right, turn your STEERING WHEEL (not your tires) to the right. This action should counteract the skidding.

Drive With A Winter Frame Of Mind

Winter driving often becomes frustrating due to having warm weather driving habits, expectations and behaviors. Cold weather driving becomes easier when you’re realistic. Winter travel takes more patience, care and planning. A 30 minute drive during clear, sunny and dry conditions is no longer possible under snowy, slick or icy conditions. Minimize your frustration and increase your chances for safe travel by doing the following:

  • allow more distance between you and the car ahead of you as safe braking distances are MUCH longer on slick roads
  • slow down
  • watch for icy conditions, especially on bridges and overpasses
  • keep your headlights on so that your car is more visible to other drivers
  • don’t start driving until your windows are clear of frost, snow, etc.
  • clear snow and ice from your vehicle’s lights
  • leave for destinations earlier, expecting that travel will take significantly longer
  • drive with a higher level of awareness of traffic and road conditions
  • clear snow from the top of your car so that it doesn’t later obscure the view of other drivers
  • use caution when approaching intersections
  • avoid sudden braking, turning, accelerating and lane changes
  • make it a habit to wash your car, including the underside, regularly to remove harsh chemicals and salts which are corrosive

Winter often does provide a beautiful backdrop in which to drive, but it helps if you’re patient, cautious, realistic and prepared.

Be sure to read Driving Though A Winter Wonderland? Part 1.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Why Do We Still Car Pool?

Environmental concerns, traffic congestion, convenience, desire to relieve driver stress, poor public transportation, lack or expense of parking are factors that contribute to commuters forming driver groups or car pools. Parents use such arrangements to transport children to school, sports events and extracurricular activities. It is also common for a student owning a car to carry classmates back and forth between home and school.

Regardless of the name, driver groups, share-the-ride arrangements or car pools are a permanent part of the American scene. Typically, several drivers take turns assuming the responsibility for driving their companions. It’s common for the turns to last a week and may be done on a rotating basis. These people frequently live in the same area and work in the same office or plant, taking turns driving or regularly riding in one car and paying the owner a reasonable fee to help pay for gasoline, maintenance and wear and tear.

The practice of a parent taking a group of children on an outing, to a Little League baseball game, and the like is commonplace. Other examples of group driving exposures are plentiful:

  • church group activities
  • book club members driving to their regular meeting or outing
  • coaches taking players to practices or games
  • employees traveling together to league games or practices, etc.

Liability Insurance Exclusion

Drivers involved in car pools and other group arrangements may wonder if the situation is covered under their auto policy. This concern is valid as many auto policies have restrictions. Typically, liability coverage under personal automobile policies does not apply to ". . . liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance." (A public conveyance is a vehicle used indiscriminately in transporting the public without being limited to certain persons or occasions. A livery vehicle is one that is offered for rental). There is slight variation in language among policies issued by various insurers, but the intent is the same, to exclude the use of a personal auto for transporting people or property for income. However, this exclusion does not affect coverage for car pool, driver group, and share-the-ride arrangements.

Why Isn’t Coverage Excluded?

Coverage is unaffected because the driving exposure is essentially the same. The common exclusion concerning "public or livery conveyances" is to prevent coverage for situations that involve a commercial or business exposure. Using an auto that is covered by a personal auto policy to transport people or goods for hire is unfair to insurers because, while the insurance company charged a premium based on personal use, "public or livery conveyances" are typically:

  • driven more miles
  • exposed to worse (i.e. high density) traffic situations
  • driven under more pressure to meet delivery schedules
  • exposed to poorer driving conditions

In other words, such use calls for more careful underwriting, different or special coverages and, more important, a higher commercial premium.

However, group-driving arrangements are not significantly different than the routine personal use of a car since personal auto premiums contemplate using the car for commuting, vacations, personal errands, etc. Most car pool arrangements are a form of personal use, so the "personal" premium compensates an insurer for the exposure.

Are There Other Coverage Considerations?

Yes. Car owners may worry if their insurance is affected if another member of a car pool is driving their car. The answer is that any person using the vehicle with the car owner’s permission is covered along with the car owner. Obviously, a car pool relief driver has the named insured’s permission, so coverage would still apply.

Persons who drive in carpools may want to discuss the details with their insurance agent. It’s important to discuss the details to make sure that coverage isn’t adversely affected or to be certain that their insurance limits are adequate. An insurance agent may recommend that you carry higher bodily injury liability insurance limits, especially if your policy contains sub-limits that apply separately to injured persons and to the total amount of losses. Higher medical payments coverage limits may also be in order. Providing full details can help an agent make sure that any fees involved in the arrangement represent coverage for the driver’s operating expenses and not additional income.

Conclusion

In most instances, the use of a covered car in a typical share-the-ride arrangement or car pool will not compromise or void either the liability or medical payments protection under the personal auto policy. The fact that passengers pay a small amount of money to help cover the expense of automobile operation is unlikely to eliminate their driver’s insurance coverage since the car is not being used as a "public or livery conveyance."

Insurance consumers should be encouraged by the flexibility of coverage under their personal auto policies. Participation in a car pool does not void automobile liability insurance provided the pool is not operated for a profit. There is no problem when the members of the pool use their respective cars approximately the same amount of time. If one of the members does not share the driving and pays a regular fee, the insurance protection of the owner of a car involved in an accident remains intact. However, any fees received by a driver from car pool passengers should only reflect a reasonable share of the gas and oil expense and depreciation on the car. Do you still have questions about your situation? If so, contact your insurance agent, a professional who’s in an excellent position to provide you with answers.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Standard Is As Standard Does

Depending on the type of car you own and your driving history of tickets and accidents, you are likely insured in the standard or preferred auto market. Standard and Preferred markets are nearly identical. They both cover typical car owners, driving typical cars in typical uses. Typical or average cars and operators allow insurance companies to use a comfortable set of assumptions on what to expect for the number or losses and the expense of repairing the losses so that premiums can be developed and charged. But what if you own a classic or antique auto? Well the above assumptions can be tossed out because you’re in a special coverage situation.

Coverage Needs

You may have to reach out to the specialty market for protection of your special auto. A classic auto is commonly considered to be an auto around 15 to 25 years old and, naturally, has appreciated in value. Specialty coverage is necessary because standard auto coverage rates are based upon a car losing value each year due to aging and normal vehicle use. The owner of a classic or antique car needs coverage for a vehicle that maintains or increases in value. Further, such owners have to deal with a carrier that has expertise in handling losses to their collectible cars as well as being experienced in making the necessary considerations to charge the right premium.

Rating And Eligibility Considerations

Specialty car insurers typically base their rates on elements such as:

  • car’s current value (often established by appraisal)
  • any special design or features
  • deductible
  • use (exhibition, touring, parade)
  • availability of storage in a locked garage
  • owner’s age (no youthful drivers)
  • whether spare part coverage is included
  • availability of another car for normal vehicle use
  • whether the car’s coverage includes automatic increases to account for inflation

If you have a special auto, talk to your insurance professional for advice. He or she shares your concern for having the right type of coverage.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

(Formerly: Warning! Car Stereos, Car Phones and Other Mobile Electronics. They May Not Be Covered.)

A basic auto policy is designed and priced so that it only covers certain vehicle features. It is important to understand that you might have need extra coverage to take care of expensive vehicle options such as custom or electronic property.

Factory Options

Factory installed vehicle options are included in the vehicle identification and symbol numbering scheme used by most insurance companies. (Note: if you’re not familiar with these terms, please read "Do You Know About Auto Symbols?"). While traditional features are accounted for and covered by an auto policy, manufacturers sometimes jump ahead of insurance policy designers. In the past, theft deterrent car radios installed by the factory (which are disabled when removed from the dash board) were not covered by many auto policies. It is important to read your particular auto policy to make sure that it doesn’t contain this gap in coverage.

Dealer Options

Factory installation does not apply to autos that are modified by a conversion specialist or an auto dealer before being displayed for sale. Car dealers frequently add options to make their inventory more attractive to car buyers (and more profitable). Spoilers, body side moldings, special wheels and hub caps, body paint, car phones, speakers and stereos, pin stripes and conversion packages can be added directly onto the dealer invoice. Insurers cannot adjust their premiums for these additional features unless they’re told about them, including how much they cost. If you’re not sure what is original and what has been added, ask your local dealer. If the information on options is not shared with the insurer, the unknown options may not be covered after a loss.

What Are Your Options?

You can ignore the whole issue, but you risk the chance that some of your valuable property may be uninsured. The prudent choice is to share your information with your local insurance professional. Together, you can take the steps to get the coverage you need. Remember, even when options aren’t covered by a basic policy, you can arrange to add the necessary protection.

Revised 05/00


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

An Emotional Start

How likely is it to get enraged while in your car or truck? Well, if you are a veteran driver, you probably know how emotions can affect driving. Long before starting your car, you’ve had to wake up, deal with home emergencies, perhaps get your kids moving, and worry about the upcoming work day. After all the hassle, you get behind the wheel and hope that you make it to work on time.

"Characters" Add To Road Experience

Now that you’re stressed out by the way your day may have started, your emotions may be fueled by having to deal with the following characters:

  • "Karl Kollision" cruising through the intersection on a brilliant red light
  • "Mary Me-First" making a quick left turn in front of oncoming traffic
  • "Larry Lane-Change" practicing his art six times in the space of two city blocks
  • "Tailgate Tommy" attempting to weld his car onto your rear bumper
  • "Mollie Make-Up" ignoring the changing light so she can get her mascara "just right"
  • "Charlie Cell-phone" almost sideswiping you because he’s trying to make a long distance call.

Such folks turn every day on the road into a test of patience and are a challenge to our civility, but there’s another perspective that drivers must consider.

The "Character" In Each Of Us

"Road rage" has become a popular way to refer to driving incidents involving aggressive or violent behavior. Various sources have blamed increased traffic accidents and fatalities on road rage. Others debunk the term as a "fad." and say that traffic statistics don’t reflect increased violence on the part of drivers.

Chances are, most instances of poor driving are isolated incidents. Every driver is guilty of an act that can be blamed on a momentary lapse in judgment. You or I may make a proper lane change or legally proceed through an intersection 99 out of 100 times. However, the drivers who witness our mistakes may assume that we’re hopelessly inept. Take a deep breath from behind your wheel and recognize that "Larry," "Mary," or "Karl" may be making a rare appearance in the guise of a "character," but actually may be someone who normally drives without making mistakes.

Why Be A Reasonable Driver?

It makes sense to give other drivers the benefit of the doubt. One reason is because it’s earned. Most drivers do a terrific job on the road. Especially when you consider the dangers inherent in driving; such as:

  • traffic congestion
  • poor weather
  • time-pressures
  • speed, etc.

A better reason for staying calm behind the wheel, is that cool-headed drivers make better decisions. They have a better chance of avoiding or minimizing accidents. Finally, you may run into serious problems if you cause an accident while acting too aggressive. There’s a greater chance of causing serious injury and a higher likelihood of legal consequences. You also increase your chances of being sued. Oh, and let’s not forget that insurers aren’t seeking to cover drivers who fail to use common sense.

Who Needs It?

Driving is tough enough without complicating it with rude or aggressive behavior and car insurance isn’t free, so start your car, give other drivers a break, and keep a cool head. It’s an attitude that creates the best chance for getting where you need to go….safely.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

The Problem

Car loans and leases used to be no longer than 36 months. Today, with vehicles now as expensive as small homes, the length of loans and leases are typically 48 months, 60 months, or even longer. No matter the type of vehicle, coupe, sedan, van, sports utility vehicle, etc., they share a tendency to depreciate very quickly in their first few years of operation. Compare this with the fact that loan and lease payments are spread over a longer period of time. In short order, the amount of the unpaid loan and lease agreement balance becomes much larger than the vehicle’s value. This disparity of values, or gap, exists over much of the loan or lease period. Making matters worse is that this gap is usually only discovered after a total loss. The insurer pays the actual cash value of the vehicle and, instead of being reimbursed for your total loss, you have to pay the bank or leasing company thousands of dollars out of your own pocket (and don’t forget you have to pay your deductible too).

A Solution?

Nobody is to blame for this problem-not the bank, leasing company, insurer or the car manufacturer; but there are a couple of solutions to the dilemma:

The Auto Loan/Lease Coverage Endorsement

This optional coverage is available in most states, from a variety of insurance companies.

Coverage Leased vehicles

Reimburses you for the difference between the amount due under the terms of the lease and the actual cash value of the auto in the event of the auto’s total loss.

Coverage Owned vehicles

Pays any outstanding indebtedness incurred by you for that financed new vehicle in the event that there is total loss or damage to the vehicle and the amount due under the finance agreement is greater than the actual cash value of the automobile.

Coverage Partial Losses

On partial losses, the company will normally pay to have the damages repaired or parts replaced, and the lease or loan gap coverage option is not a factor in the loss settlement

There are exclusions:

Generally this optional coverage excludes items such as:

  • Overdue lease payments.
  • Financial penalties imposed under a lease for excessive use, abnormal wear and tear, or high mileage.
  • Security deposits not refunded by the lessor.
  • Costs for extended warranties, credit life, health, accident, or disability insurance purchased with the loan or lease.
  • Carryover balances from a previous lease.

Auto Replacement Cost Coverage

This coverage is still fairly new to the insurance marketplace and its availability varies by state. For an additional premium, an owner of a new car may buy coverage to settle major losses according to the vehicle’s replacement cost rather than its depreciated, actual cash value. There are some coverage limitations such as:

  • the coverage is usually only available for cars up to six months old
  • there may be a maximum dollar amount that applies to a total loss
  • the coverage may only be available for the first few years of the car’s useful life.
  • Considering these limitations, this option is more suited to narrowing, rather than closing the lease/loan gap.

Again, companies usually restrict these options for persons who purchase the coverage soon after they acquire or lease a new vehicle. Companies may not offer this endorsement on used vehicles. The cost for these optional coverages is usually a percentage of an auto’s premium that’s charged for physical damage to your auto. If you have a newer vehicle and are concerned that you could suffer a large out-of-pocket expense if your car is totaled, you should talk to a qualified insurance professional to answer your questions and, if you choose, to seek the coverage for you.

revised 10/99


COPYRIGHT: Insurance Publishing Plus, Inc. 1998, 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

This is a brief discussion on a major factor that is used to develop your auto insurance premium: auto symbols.

Your Coverage Is Symbolic

Auto insurance collision and comprehensive coverage rates are based on several factors, such as a vehicle’s:

  • original cost new
  • horsepower, size, weight, other physical characteristics
  • year of manufacture (model year)
  • vulnerability to damage, and
  • sports features (speed, handling, styling, seat capacity)

The above items are represented in a Vehicle Identification Number (VIN). Besides being used as a sort of automobile fingerprint, each VIN is converted into a number between one and twenty-six. At this point, the number is called a "symbol." The higher symbols are assigned to higher end cars such as Mercedes, Ferrari, and similar vehicles which represent the ultimate in luxury, styling, sportiness, etc. Logically, the lower symbols are assigned to modest cars, but even the little Yugo has a symbol higher than one.

Other Characteristics That Affect Symbols

Insurance companies look at vehicle safety features, weight to horsepower ratios, body styling, utility of the vehicle and many other factors beyond the price of the vehicle when assigning a symbol. Generally, vehicles that are known for their safety features (Volvos, Saabs, etc.) receive lower symbols than comparably priced sedans and will cost less to insure. Two door, two-seater, high horsepower vehicles will generally receive a symbol much higher than their actual value because of their sport or high performance nature. Such cars are built to attract drivers who take advantage of the speed and handling ability of their cars.

An insurance company may actually increase or decrease a symbol based upon the claims and damage repair cost history of a vehicle. This can happen a few months or several years after a new model is introduced. Symbol changes may also be made for vehicles that are prone to special dangers such as vehicle rollover or gas tank explosions.

Why You Should Consider Symbols?

First, it will affect your cost to insure a new car. Ask your agent about the differences that features make before buying a car. A simple decision such as ordering a 4 door vs. a 2 door could make the difference in hundreds of dollars in additional insurance costs over the years.

Second, insurance companies calculate their premiums based only on factory built cars containing factory installed options. Other dealer-installed options or aftermarket options (installed by custom auto shops) may not be covered unless you tell your agent. Sure you’ll have to pay additional premiums, but that’s better than the alternative of not having a feature repaired or replaced after a loss. Cars, trucks and vans are big investments that need to be properly insured. Talk your needs over with an insurance professional to make certain that you’re protected.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Maybe You Already Know

Have you or a friend ever owned a car that has suffered from diminished value? Are you familiar with the term? Well the concept, represented by the "diminution in value theory" is gaining strength as a major insurance consumer concern. The theory is that damage to an auto often results in a monetary loss in its market value. In other words, there is a monetary difference between a car’s pre-accident value and its value after accidental damage has been repaired.

Martha’s Tale

Martha Bye-lemun had a personal auto policy that originally covered her ’96 Buick Regal. Martha bought a ’99 Lexus and, instead of trading in her Buick, she decided to sell it. Martha notified her agent and both cars were listed on her policy.

Martha’s research showed that the car should be worth around $7,500. The evening of the same day that Martha put her Buick on her front lawn with a "For Sale" sign in its windshield, a very heavy branch from her oak tree fell and smashed the Buick’s roof. The Buick was repaired for $1,700. However, when Martha later sold the car; the most she could get was $6,300.

Types Of Diminished Value

Diminished Value may exist in several forms which are variously defined, including actual, real, perceived, psychological and others. The following terms describe different types of the Diminished Value (DV) concept:

Inherent DV: This is merely a general conviction that a vehicle which has been wrecked and is then repaired is less valuable. This belief is generally unaffected by:

  • having information on the scope of the repairs
  • whether there are any visible signs of repair

Example: Will Prudunt is ready to get a new car. Although his ’94 model has served him well, he’s ready for a change. Will finds his dream car and is now ready to make the best deal he can on his ’94. Will and the sales rep look over his ’94 and agree on a $3,950 trade-in. As they discuss the loan papers, the rep asks Will if the ’94 has ever been in an accident. Will slaps his forehead and says "Oops, I was rear-ended three years ago. My insurer paid about $2,000 in repairs." The sales rep then picks up the finance paperwork and says that he will have to re-figure the agreement. When he comes back, the rep says that they can only offer him $2,400 on the trade-in. Will points out that he’s never had any problems with the car and that it ran even better after the repairs…the rep won’t budge on the lower trade-in offer.

Claim Related DV: This is actual diminished value that places responsibility for the reduced value on an insurer. It refers to any instance where an insurer’s action or practice results in an inferior vehicle repair. Note that this term is subjective because there are various opinions about what constitutes an inadequate repair. What is considered a below-standard result that is created by an insurer may involve an insurer’s:

  • insistence upon the use of selected auto repair facilities
  • preference or requirement that a repair facility use after-market, rather than original, equipment and manufacturer parts
  • refusal to pay for additional repair procedures identified by a repair facility.

Repair Related DV: This is actual diminished value that places responsibility for the reduced value on a repair facility. It refers to any instance where a repair facility’s action or practice results in an inferior vehicle repair. Note that this term is also subjective because there are various opinions about what constitutes an inadequate repair. What is considered a below-standard result that is created by a repair facility may involve a facility’s:

  • completed work which includes below standard labor or improper procedures
  • completed repairs where below-standard parts were used when an insurer authorized standard parts
  • incomplete repairs when an insurer authorized that all needed repairs be performed.

Is Dimished Valued Covered?

This has long been a great debate among insurance companies, lawyers, state courts, consumers (including activist groups), auto parts manufacturers, auto repairs shops and others. The focus on whether such losses are covered concentrates on claims that a policyholder would make to his insurer for damage to his or her own car. Answering this question is only clear from one’s viewpoint. Supporters of the DV theory say that these losses are real and should be reimbursed under an insurance policy whenever there is accidental damage to a covered car. Other groups say that such losses are akin to depreciation and were never intended to be covered. Factors which affect this debate are numerous, including:

  • Can DV be accurately measured?
  • What are the financial stakes of the groups supporting each side of the issue?
  • Should DV be considered only when a vehicle is repaired and then sold?
  • How is an older car’s "pre-accident" value measured?
  • Should repair shops or insurers bear the responsibility for DV?
  • The wording of applicable insurance policies.
  • Current and pending state laws involving DV.
  • If DV is paid and a vehicle owner sells the car without a loss of market value, does the DV payment have to be returned to the insurer?

What To Do About DV

The only thing that is really important to you is your unique coverage situation. Depending upon the age and value of your cars, you may or may not have a concern over this issue. If you do, your best bet is to discuss your concerns with an insurance professional. You can find out what coverage options may be available or, at the very least, gain a better understanding of your existing coverage.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

What Is an SUV Compared to a Car, Van or Truck?

Private passenger vehicles include coupes, sedans, sports cars, pickups, vans, mini-vans, station wagons, jeeps and sports utility vehicles (SUVs). These vehicle classifications are based primarily upon the physical characteristics, driver use and performance. For example, sports cars are built low to the ground (low profile or clearance) for peak handling ability and speed. Pickup trucks have more powerful engines and open cargo areas for hauling and towing. SUVs have a high clearance or profile and have enclosed cargo areas. They are capable of handling off-road driving, accommodate more passengers (compared to trucks) and have a higher cargo-carrying capacity. SUVs could legitimately be considered as hybrids of other vehicle types. One thing SUVs have in common with other vehicles is that they have to be insured.

Insuring SUVs – A Rollercoaster

SUVs have come to dominate vehicle sales as well as the nation’s roads. Insurance companies have had to create a pricing and underwriting philosophy toward them. As it turns out, a pricing and underwriting approach is less of a philosophy and more of a rollercoaster ride. Why has it become a ride? Well, at first glance, it seemed to make sense to charge a LOT to insure an SUV! SUVs are big and very expensive, which translates into very expensive to repair or replace. Then it became apparent that passengers were safer in such heavy vehicles, so it would cost less to pay for their injuries in accidents. Then insurers recognized that something was overlooked: those big, safer vehicles inflicted higher damage to smaller cars during accidents, so more money is paid for injuries to other drivers and their demolished vehicles.

Insuring SUVs – Two Rollercoasters

Now there is more than one rollercoaster ride as insurers are focusing on different areas of these perplexing vehicles. One insurance powerhouse is focusing on the fact that SUVs are safer for their passengers. Since owners and riders don’t suffer as many injuries, it has announced a discount for the rates it charges for Medical Payments coverage (which pays for injuries to the persons named as insureds under an auto policy). Simultaneously, several other well-known insurers have publicized plans to increase SUV rates on liability coverages (which pays for injury or property damage caused by an insured driver).

Keeping Insurance A Mystery

An immediate result of these contrary approaches is to continue the industry’s strong tradition of being a mystery to consumers. How can the SUV-buying public understand how the same type of vehicle is being priced differently (for different reasons) by different insurers? The only thing that is clear is this: if you have questions about insuring an SUV run, don’t walk, to an insurance professional and talk about your needs.


COPYRIGHT: Insurance Publishing Plus, Inc., 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

The Homeowners 3 policy covers risks of direct physical loss coverage to the dwelling or other structures. With the Special Personal Property Coverage Endorsement you can get risks of direct physical loss coverage on personal property too.

Risks of direct physical loss only lists excluded causes of loss. Anything that happens to your property that is not otherwise excluded is covered. With risks of physical loss coverage, the insurance company must prove that an exclusion was the cause of loss before they can deny the claim. With a policy that names each individual covered cause of loss (named peril), you must prove to the insurance company that a covered cause of loss damaged your property.
Consider the Homeowners 3 policy with the Special Personal Property Coverage Endorsement if you own a home. If you rent or own a condo there is a Special Personal Property Coverage Endorsement available for your contents.

Here are a few examples of claims where risks of physical loss coverage made the difference and a claim was paid.

(1) A battery was left on a hardwood floor. The battery acid leaked out in such a manner that it was necessary to replace a large section of the floor.

(2) An insured tipped over a bucket containing ammonia for soaking a baby’s diapers. The solution ruined the wall-to-wall carpet in the room.

(3) A deer jumped through a picture window. It went wild in the house, denting walls and furnishings and bleeding as it ran. It eventually jumped through another window.

(4) A washing machine was running with a load of clothes when the clothes became unbalanced in the tub. As the machine entered the spin cycle, it shook and “walked” from its position into a brand new hot water heater poking a hole in the casing of the tank and breaking the glass liner.

(5) An insured was walking on the floor joists of his unfinished attic. The insured slipped off of the joists and fell through the living room ceiling, causing extensive damages.

(6) A two-year-old boy found a hammer and went on a spree through his parent’s house that resulted in substantial damage to several plastered walls, a toilet bowl, wash basin, dressing table and other items.

(7) A bucket of paint was spilled on an insured’s hardwood floors, getting into floor cracks and pores. It was necessary to replace much of the wood.

(8) Finally, an insured converted his oil burning furnace to gas without removing the oil input pipe at the outside of the house. On its regularly scheduled day, an oil company tank truck arrived and pumped 500 gallons of oil into the insured’s basement.


 

COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Youthful Operator Driver Safety Agreement

My Driver Safety Agreement

Driving is a privilege that I may lose by violating this agreement or may have suspended for other reasons such as (but not limited to) unsatisfactory school grades and violations of family trust.

  • I will obey any curfews or restrictions imposed by my driver’s license.
  • I will obey all traffic laws and speed limits.
  • I will not drink and drive, or use illegal drugs, or drive if I am taking ANY medication that may affect my driving.
  • I will not ride with anyone whom I know or suspect is under the influence of alcohol or drugs (legal, or illegal).
  • I will not permit any open or empty containers of alcohol, or transport anyone who I know or suspect may be carrying illegal drugs in any vehicle I operate.
  • I will not ride in any vehicle where I know that there are empty or open containers of alcohol or where anyone who I know or suspect may be carrying illegal drugs.
  • I agree not to drive with or transport anyone who is in possession of a firearm or other "weapon."
  • I will always wear my seatbelt and shoulder harness. I will not ride in any vehicle in which there are more people than seat belts.
  • I will make certain that I can always hear emergency vehicles and traffic sounds.
  • I will drive defensively, recognizing the driving dangers posed by other drivers.
  • I willI will not transport passengers unless they are properly secured by a seatbelt.
  • I will always wear a helmet if I am driving or riding on a motorcycle. I will not transport a passenger unless he or she also wears a helmet.
  • I will drive in a manner that respects the safety of myself, my passengers, other drivers and pedestrians.
  • I will ignore peer pressure. While driving, I am in control. I can stop and ask others to leave my vehicle and, as a passenger, I can ask a driver to stop and let me out.
  • I will not drive unless I feel safe and certain of my ability.
  • I will be especially alert during dangerous conditions such as rain, snow, sleet, wind, heavy traffic, construction zones, and accident scenes.
  • I will always lock every door and take the keys when I leave the vehicle. I will park in areas where I believe the vehicle will be safe from damage or theft.
  • I will obey the driving instructions of my parent(s) and of law enforcement officers.
  • Additional Conditions Required By My Parent(s)
  • ________________________________________________________________
  • ________________________________________________________________

I have read, understood and I will comply with this agreement.

Signed______________________ Witnessed_________________________

Date:_______________________

Revised: 08/01

COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 1998, 1999, 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


Claims or Losses

You take the time and money to identify what you need to insure, what company you wish to protect, reading and understanding the various policies that cover you and your possessions. Isn’t the importance of telling your agent or insurance company about a loss obvious? Surprisingly, no, it isn’t.

The Notification Obligation

Fulfilling the coverage promise of an insurance policy is all about communication. An insurer makes a promise to protect you against certain types of loss, but it can’t follow-through unless it knows about a loss. Prompt notification is so important that it is a formal policy provision and your failing to meet its requirements could result in you losing the protection for which you paid.

Depending upon the policy, items having to do with notification may be under a separate policy part or spread among several areas. However, a policy typically requires you to do the following:

Contact the agent or insurer as quickly as practical – the practical requirement replaced the previous use of “possible,” since some companies unreasonably denied coverage because notification was not instantaneous. The difference between words may seem minor, but it gives you some consideration for circumstances that could affect how quickly you contact your agent or insurer about a loss.

Identify Yourself – Perhaps one day your insurer will be able to recognize your voice over the phone and immediately pull up your file. Until then, be prepared to at least tell your insurer your full name (or, if different, the name the insurance policy is under) and the policy number.

Give adequate details – What, When Where, Why and How. It’s important that the insurer has enough information to take proper action, including giving you instructions on how to have your loss handled. This information forms the basis of opening a claim file, assigning the loss to a claims person and beginning investigation of the claim.

Give the insurer copies of any communications regarding a loss or possible loss (such as a threat of a lawsuit) – You should not guess about whether a legal notice or request to be paid for damages is important, even when an actual lawsuit has yet to be filed. Send a copy of the information to your insurer and let them decide.

Prompt Notification Helps Everyone

Complete and quick communication about losses gives you the best chance to get needed coverage and gives your insurer an opportunity to handle a possible claim efficiently. It also allows the insurer to control issues that could let lawsuits get out of control, such as the ability to offer payment for medical expenses or to contact and question witnesses.

Don’t hesitate! Contact your agent or insurer and get your loss handled.


COPYRIGHT: Insurance Publishing Plus, Inc., 2001
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

This is a brief discussion on mediation and arbitration, alternatives to resolving insurance policy disputes.

It’s Still A Contract

The insurance policy may cover your home, car, boat, life, airplane, jewelry or business, but one element remains the same, the policy is a contract. This written agreement is, at the core, a promise from the insurance company to pay you if a covered loss occurs. But, even when the promise is fulfilled, there may be a serious dispute over the amount of payment. Quite often the method used to resolve the problem is a courtroom.

Need For Alternatives To Lawsuits

In many instances, filing a lawsuit is unavoidable. For instance, when a person seeking coverage has his claim denied, a lawsuit may be the only action that is available. However, looking for satisfaction in court can be its own problem. Court calendars (dockets) are often backed up so it could take months or even years before a hearing can take place. When the trial begins, it can take a long time, possibly involving one or more appeals. The legal costs can be staggering. Depending upon the case’s complexity, it will involve court costs, filing fees, attorney costs, research costs, fees for expert witnesses and a host of other expenses. These factors increasingly act as incentives for finding other methods to resolve disputes.

Alternative Dispute Resolution

When disagreeing about the amount that should be paid for a loss, there are a couple of popular alternatives to suing your insurance company: mediation and arbitration. Each is a form of Alternative Dispute Resolution (ADR) since they can be tried as an alternative to going to court.

Mediation – This process involves the two parties meeting to discuss their situation with the help of a mediator. The mediator typically has special training and a legal, financial or similar background. As a disinterested party, the mediator studies information from both parties concerning the dispute. Once familiar with the situation, he arranges to meet with the parties. A mediation session often starts with each party having a chance to fully explain their position to the other party and the mediator. The facilitator then takes time to discuss each party’s position in private. Afterwards, the mediator shuttles between the parties and, probing and using the information he gains, he tries to reach a point where both parties can agree on a settlement. The most important features of mediation is that the process is voluntary and the disputing parties are actively involved in reaching a solution.

Arbitration – This is a method that is frequently required by a condition of an insurance policy. With arbitration, you and the insurer each select a representative (arbitrator). Once the arbitrators are selected, they agree on another arbitrator who acts as the arbitration judge. The three persons discuss the merits of the situation and, once any two of the three persons agree on a settlement amount, the process ends. Arbitration differs from mediation in two important respects. First, the disputing parties are bystanders, awaiting for a decision to be made. Second, arbitration is binding on both parties.

Is any course of action perfect? No, but sometimes it is good to know that, when a disagreement occurs, you have more than one option to get it settled. If you need more information, an insurance professional is an excellent source.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Be Safe, Then Act Quickly

Different sources such as salvage experts, property specialists and government agencies advise that quick action is critical. Many types of personal property can be saved if rescue attempts occur within 48 hours of the property suffering damage.

Before trying to save property, make sure that YOU are safe. Flooded buildings may have dangers that must be addressed. Make sure that there is no danger of electrocution by turning off power and avoiding fallen utility lines. Do not come in contact with water containing sewage and make sure the floor, ceiling and wall supports pose no danger.

Tips On Handling Personal Property

Photographs – Remove from plastic/paper enclosures or frames, carefully rinse with cool, clean water, DO NOT touch or blot surfaces. Air dry: hang with clips on non-image areas, or lay flat on absorbent paper. Keep photographs from contact with adjacent surfaces or each other.

Paintings – Remove from frames in a safe, dry place. Do NOT separate paintings from their stretchers. Keep paintings horizontal and paint-side up with nothing touching the surface. Avoid direct sunlight.

Books – If rinsing is necessary, hold book closed. Partially wet or damp: stand on top or bottom edge with covers opened to 90° angle; air dry. Very wet: lay flat on clean surface; interleave less than 20% of book with absorbent material; replace interleaving when damp.

Paper – Air dry flat as individual sheets or in ¼” or smaller piles, with absorbent paper placed between each wet sheet (interleaving). Do not unfold or separate individual, wet sheets. Keep coated papers wet by packing in boxes lined with plastic garbage bags; freeze (maps or manuscripts), sponge water out, pack loose flat sheets in flat boxes or plywood covered with plastic sheets. If too many items for air drying: interleave (by groups or individually) with freezer or waxed paper; pack papers or files, standing up in sturdy containers; pack containers only 90% full and freeze.

Tapes – Disassemble case and remove tape; rinse dirty tapes, still wound on reel, in clean, lukewarm water; support vertically on blotting material to air dry; reassemble and copy.

Diskettes – Remove diskette from casing and bathe in clean distilled water, dry with lint-free towels and insert diskette into new casing and copy.

Clothing/Fabrics – Brush off all loose, dried dirt. Rinse thoroughly in cold water as soon as possible until as much mud as possible is removed. Repeat if necessary. Do not use hot water as it sets stains from red or yellow clay. Machine wash when no more dirt can be rinsed out.

Wood Furniture – Rinse/sponge surfaces gently to clean, blot, and air dry slowly. If any painted surfaces are blistered or flaking, air dry slowly without removing dirt or moisture. Weigh down or clamp veneers in place while drying; separate weight from veneer with protective layer. (Finishes may develop white haze; treat later with wood cleaning product.)

Upholstered Furniture – If antique or VERY valuable, get professional estimate on cleaning/restoring.

Metal – Use gloves to handle, rinse/sponge and blot metal object, air dry. If object has applied finish, do not clean. Air dry; keep flaking surfaces horizontal.

Leather (including shoes) and Rawhide – Rinse/sponge with clear water to remove mud, drain and blot to remove excess water, pad with toweling or unlinked paper to maintain shape, air dry. Manipulate tanned fur skins during drying to keep skins flexible.

Baskets – Rinse, drain and blot to remove excess water, stuff with clean paper towels or cotton sheets to retain shape and absorb stains, cover with clean towels and air dry slowly, regularly changing blotting material.

Be Practical And Prioritize

Often it is impractical or impossible to try to save everything, so prioritize. Get to the property that is MOST important to you and start with the type of property that’s most vulnerable to permanent damage. One practical consideration is to forget about fully upholstered furniture and mattresses. Such property is usually impossible to properly dry and is often contaminated.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Duties after an accident or loss

Insurance policies are called “conditional” contracts because, in order for the insurer to pay for a loss, the insured has to meet a number of conditions. One of the most important obligations concerns your actions after a loss. Once a loss occurs, the covered person’s (insured’s) duties include the following:

Notification

The insured must give the insurance company the accident details as soon as possible. The notification may be to an agent, and, ideally, should include the identity and addresses of any people hurt in the accident, as well as information on any witnesses to the accident.

Notification is critical! It initiates the entire claims process, and it gives the insurer its first and best opportunity to control the expense of the claim.

Assisting The Insurance Company

If an insured wants coverage, he must assist the insurer in the claim’s investigation and settlement, as well as help with defending against any claim or suit. The covered person must immediately send the company copies of ANY material received that’s related to the accident (such as letters from any other person involved in the accident or legal papers).

Assistance includes agreeing to attend as many physical exams, involving doctors selected by the insurer and/or interviews under oath, as are reasonably requested by the insurer. These requirements are at the insurer’s expense. You must also permit the insurer complete access to medical and other records that relate to the accident as well as give the insurer any requested proof of loss.

Your assistance allows an insurer to evaluate whether a loss payment is due and how much has to be paid. This area has a lot of potential for straining relations between you and your company since you may, at times, differ over what is “reasonable,” especially when the insurance company makes repeated requests for help or information. Although companies have the right to thoroughly investigate losses, the responsible company balances their right against their customers expectation of fair treatment and right to privacy.

Preserving The Damaged Property After A Loss

This is extremely important and the following example helps explain why.

Tina returns home early in the morning in her convertible and hits a very large landscape rock that’s in front of her house. The damage is minor, but it includes damage that makes it impossible to close the convertible top. Instead of moving the car into the garage or covering the car, it’s left in the driveway during the day, sitting exposed to a downpour that severely damages the interior and the car’s electrical systems. This situation creates a need to tow the car to have the damage inspected (when, originally, it could have been driven), and it complicates the adjustment and settlement.

Having any damage repaired or getting rid of the damaged property without it being examined by the insurance company is a serious breach of contract on the part of the insured. Such actions could easily result in an insurer’s refusal to make payment. If the insured vehicle is repaired or disposed of, the insurer loses its right to evaluate whether coverage was due, or to determine how much was due.

Remember, this is just a generalization. You must read your own policy for details about your duties after a loss. If you have any questions, your insurance agent is an excellent choice to help you properly understand your insurance policy obligations.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

The Problem

The complexity of insurance policy can put you at a severe disadvantage when it is time to file a claim. Requesting payment for a loss is under your home, auto, boat or other policy is what insurance is supposed to be about. You’ve paid your premium with the assurance that, should an eligible loss occur, you or your property will be protected. Faithfully handling your premium payments gives you the expectation that your insure will perform.” Performance” of the insurance contract refers to the insurance company’s obligation to investigate and, if applicable, pay for a loss, including associated expenses for settling a loss or handling the defense of a lawsuit.

It’s unfortunate, but sometimes an insurance company may not have an attitude toward paying claims that meets your expectations. In fact, a company may actually deal with you in a manner that is unfair. Your right to fair dealings is protected by the efforts of individual state governments. States agencies, typically via a special insurance or commerce division are responsible for seeing that insurance companies and agents are true to the commitment represented by the insurance policy.

Most states actively enforce the requirement that all insurers fairly settle valid claims against their policies. The insurance companies and agents operating within a state are also provided with complete information regarding unacceptable claims practices. A state’s rules on claims are based on the National Association of Insurance Commissioners (NAIC) Unfair Trade Practices Model Act. The guidelines developed from the original act, and other regulations (which vary by state) are meant to shield you from practices that are misleading, unfair or deceptive.

For more information on such practices, please see Part Two of this article.


COPYRIGHT: Insurance Publishing Plus, Inc. 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Examples of Unfair Claim Practices

Here are some examples of such practices:

  • Attempting to settle a claim based on an application which the company has changed without the insured’s knowledge or permission
  • Delaying a claim investigation by requiring unnecessary reports or documents which contain substantially the same information
  • Failing to act promptly after receiving information concerning an insurance claim
  • Failing to adopt or comply with standards that define what is meant by a prompt claims investigation
  • When applicable, failing to pay a claim quickly, fairly and equitably
  • Failing to promptly settle claims where liability is reasonably clear under one portion of the policy to influence settlement under any other portion of the insurance policy coverage
  • Failing to promptly and clearly explain the basis in the policy or the law for either denying a claim or offering a compromise settlement
  • Attempting to persuade insureds not to take advantage of the arbitration process
  • Misrepresenting significant facts or insurance policy provisions
  • Refusing to tell an insured what is happening with a loss within a reasonable time after receiving a completed proof of loss statement
  • Denying claims without a reasonable loss investigation
  • Offering very low settlements to encourage insureds to sue
  • Settling claims for less than the amounts a reasonable person would expect

Of course a good way to avoid problems is to deal with reputable agents and companies who have a strong commitment to properly serving their insurance customers. Your insurance agent would be happy to discuss your concerns and/or expectations about making an insurance claim. Take advantage of his or her expertise.

For more information on claims handling, please see Part One of this article.


COPYRIGHT: Insurance Publishing Plus, Inc. 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Some Things Still Aren’t Covered

Having an auto insurance policy is a good thing. It shows that you’re a responsible driver and it likely fulfills your state’s requirements concerning the legality of your sharing the road with other drivers.

However, even if you have auto insurance, there are a number of instances where your automobile policy won’t provide coverage. Such instances are called EXCLUSIONS. Why should exclusions exist in an insurance contract? Actually there are quite a few different reasons. Some fundamental reasons are that exclusions:

  • help maintain the expense of providing insurance
  • prevent coverage under one policy when it should be covered elsewhere
  • prohibit coverage for losses that are against public policy

Let’s look at these reasons a bit more closely and provide some examples.

Help Maintain The Expense Of Providing Insurance

If an individual’s auto policy could be counted on to respond to every imaginable loss, it would also have an unimaginable premium. Auto insurance premiums are affordable only if insurance companies can exert some control over the losses their policies can be expected to cover. Therefore, automobile policies generally contain exclusions similar to the following example:

This automobile policy does not provide coverage for accidents which involve:

  • injuries caused directly or indirectly by a nuclear weapon, reaction radiation or contamination; or by war, civil war, insurrection, rebellion or revolution
  • injuries involving any vehicle inside a facility designed for racing while preparing for, or competing in a race

The first instance involves losses that are beyond any insurance company’s ability to control and such losses would likely be far beyond the ability of most insurance company’s to pay.

The second instance involves losses that are strictly under an individual’s control. Insurance companies certainly want to avoid situations where their customers choose to put themselves and their cars in an excessively dangerous position.

Prevent Coverage Under One Policy When It Should Be Covered Elsewhere

Most automobile policies won’t provide coverage for a loss or injury which:

  • happens while being in a vehicle that has fewer than four wheels
  • occurs while the vehicle is being used to transport persons or property for profit
  • happens while the vehicle is in place and being used as a premise or residence
  • occurs while on the job, and workers compensation coverage is either available or required for the bodily injury
  • happens while an insured is occupying, or is hit by, a vehicle that is owned or is regularly available to an insured, but the vehicle is not listed on the automobile policy
  • occurs while in a vehicle that’s being used in an insured’s “business.” Coverage still applies if the insured is in a private-passenger auto, an owned pickup or van, or a trailer being used with such vehicles.

These limitations are fair. Their purpose is to make sure that coverage which you purchase for your own car, van or truck listed on your policy does not also provide coverage in situations which are better covered by:

  • another person’s policy
  • worker’s compensation or a business policy
  • specialty coverage (such as racing events coverage)

other types of policies such as mobile home, recreational vehicle, motorcycle or business coverage.

Prohibit Coverage For Losses That Are Against Public Policy

Some examples of this reason are when coverage is denied for losses:

  • occurring when the injured person is occupying a vehicle knowing that she or he does not have the vehicle owner’s permission
  • that were fraudulently staged by the vehicle’s owner in order to collect insurance for “phantom” injuries

Insurance would quickly be impossible to buy if policies were expected to pay for injuries to car thieves or people who fake accidents and injuries.

So remember, without reasonable exclusions, you or I would not be able to enjoy the protection and security that is offered by automobile insurance. If you have questions about exactly what is excluded by your policy, talk to your insurance agent.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

You’ve Got A Contract

Ownership of an insurance policy means that you have a contractual relationship. Paying a premium to an insurance company creates an obligation on their part to provide coverage. The terms of the coverage is defined by the policy and most companies try to be clear about what you can expect for your premium dollars. It’s up to you to understand the critical points of your policy, such as the following:

  • Who or what is protected?
  • How does coverage take place?
  • When is coverage effective?
  • How much coverage is provided?
  • What are my responsibilities for reporting losses?

As is typical of most contracts, both parties are expected to deal fairly with each other, under the contract terms. As far as an insurance contract, you the policy owner (or insured) and the insurer are partners in the insurance transaction. Partners often learn to understand and work with each other quite well. However, sometimes disagreements occur and you should be aware of how you may look to your policy for help.

Arbitration And Appraisal

Two common areas of disagreement are over whether coverage exists and how much should be paid for a covered loss. Arbitration is a tool for addressing the former issue, while the latter is frequently handled by appraisal.

A policy owner may be in a position where, after filing a claim, it is rejected by the insurer. The insurer, in most cases, should offer an explanation for declining coverage. (Of course, if no explanation was given, the policy owner’s first step should be to request this information.) The insured and insurer may discuss their viewpoints and, failing to reach either an understanding or a compromise, may choose arbitration. This process typically requires each party to:

  • select their own qualified arbitrator
  • permit the two arbitrators to select a third arbitrator to act as a judge
  • allow that agreement among any two of the three parties stands as the decision
  • each party pays for its arbitrator and share the expense of the judge

The appraisal process is often similar or even identical as both parities usually:

  • select their own qualified appraiser
  • permit the two arbitrators to select a third appraiser to act as a judge
  • allow that agreement among any two of the three parties stands as the decision
  • each party pays for its appraiser and share the expense of the judge

Items that can have a big impact on either process are any local or state laws, the actual provision wording found in the applicable policy and certain rules regarding arbitration/appraisal procedure that may vary by locale.

IMPORTANT: Depending upon the type of policy or the provider of the policy, the terms being discussed here may either be called by another term OR MAY NOT APPLY. Please read your policy carefully.

Last Resort

Of course, sometimes arbitration or appraisal fail to settle differences. In such instances, legal action may be the last resort. Note that many insurance contracts also have provisions on seeking legal action. Typically an insured is prohibited from filing a suit unless it’s done within a certain time period and only after the insured has exhausted other avenues for resolving the conflict. While lawsuits between contract partners are sometimes inevitable, it’s important that insurance consumers be aware of alternatives in resolving conflicts. It’s even more important to take advantage of discussing your insurance coverage with a qualified insurance professional. Their expertise can be invaluable in dealing with complex insurance situations.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc


EMPLOYEE BENEFITS

The Medicare program began in 1965 to provide health insurance coverage for people age 65 or older. Today, Medicare is the nation’s largest health insurance program, covering more than 45 million people age 65 and over and those under age 65 with certain disabilities. Original Medicare (Parts A and B) has traditionally provided coverage for health care services such as hospital stays,
skilled nursing facilities and doctor visits. Medicare helps with health care costs but does not cover all medical expenses.

What Are The Enrollment Timeframes?

 

  • Initial Enrollment Period – If you are eligible for benefits when you turn age 65, you can sign up during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after you turn 65.  If you wait until the last 4 months of your Initial Enrollment Period to sign up for Part A and/or Part B, your coverage will be delayed.

 

  • General (Open) Enrollment Period – If you don’t sign up for Part A and/or Part B (for which you pay monthly premiums) when you are first eligible, you can sign up between January 1 – March 31 each year.  Your coverage will begin July 1.  Late enrollment penalties will apply.

 

  • Special Enrollment Period – If you do not enroll when you are first eligible because you are covered under your employer’s group health plan, your enrollment must be during the 2-month period that begins the month after the employment ends, or the group health plan insurance based on current employment ends, whichever happens first.

 

NOTE: COBRA & retiree health plans aren’t considered coverage based on current employment.  You’re not eligible for a Special Enrollment Period when that coverage ends.  To avoid paying a higher premium, make sure you sign up for Medicare when you’re first eligible!

Medicare Part A – Hospital Insurance

  • Part A helps pay for inpatient hospital care, skilled nursing facility care, home health care and hospice care.

Medicare Part B – Medical Insurance

  • Part B helps pay for medically necessary doctor services, medical testing, and many medical supplies.

Medicare Part C – Medicare Advantage Plans

  • Part C is a type of Medicare Supplement* which can be an HMO or PPO, but is distinguished by its replacement of Original Medicare.

Medicare Part D – Prescription Drug Coverage

  • Part D helps cover the cost of most medications.

Navigating Medicare options for the first time can be daunting.  An insurance agent can be a wonderful resource for those who have questions, or are looking for a discussion of the many options!   Carol Hopkins at The David Agency specialize in Medicare Supplements and RX coverage.

If you want to do some of your own research first, the Annual Medicare and You guide is a great reference tool and available in printed format and on the Medicare.gov web-site.  We would be happy to direct you to the appropriate information in the guide to answer any questions.

www.SocialSecurity.gov can take you through a simple online application for Medicare if you are ready to enroll.  If you are currently employed with health insurance benefits through your employer, you will want to speak to the personnel or HR office to determine how signing up for Medicare will affect you.

We suggest you discuss your enrollment in Social Security Benefits with your tax advisor, or your local Social Security office, since when you enroll will determine the amount of your future benefits.  You may also wish to discuss the current and future implications of enrolling under spousal benefits as opposed to your own.

The web-site www.Medicare.gov (The Official U.S. Government Site for Medicare) is a good place to do further research if you have access to the internet.  As with any site, it cannot anticipate all questions for all people.  It just makes sense to call Carol Hopkins if you want to ask questions or need a simple guide through the Medicare maze.


FINANCIAL PLANNING

What Is A Beneficiary?

In the world of life insurance, beneficiary is an important, common term. It refers to a person or entity who is named by the life insurance policy to receive the policy’s benefits. The benefits (or proceeds) received after a policyholder dies are generally cash, but sometimes benefits are in the form of services or other types of awards. Entities are included because, besides people, business partnerships, corporations, trusts, churches, schools/colleges/universities, or charities may all be selected as beneficiaries.

Beneficiary Types

Beneficiaries are not all alike. Life insurance policies are designed to protect persons/entities that are important to the life insurance policyholder. These policies may use different types of beneficiaries to fit a policyholder’s preferences and/or to comply with legal or tax issues. The types of beneficiaries also have a LOT to do with the control of the proceeds and the beneficiary’s rights. Here are the most common types of beneficiaries:

  • Absolute Beneficiary – please refer to Irrevocable Beneficiary.
  • Contingent Beneficiary – the party named to receive policy benefits, but only in the case of death of the primary beneficiary. Contingent Beneficiaries are often called secondary beneficiaries.
  • Irrevocable Beneficiary – a beneficiary whose right to receive the insurance proceeds may not be changed UNLESS that beneficiary gives the policyholder his written consent to do so. Also known as an absolute beneficiary.
  • Primary Beneficiary – typically, the party named to be first to receive the policy benefits and proceeds. If any others should be listed, they are considered contingent or secondary beneficiaries.
  • Revocable Beneficiary – any beneficiary for which the policyholder retains the right to change. These beneficiaries exist at the whim of the policyholder.
  • Secondary Beneficiary – please refer to Contingent Beneficiary.

Note that several of these beneficiaries can be combined, i.e. Revocable, Primary Beneficiary or Absolute, Secondary Beneficiary.

Other Methods For Designating Beneficiaries

Class Designation – refers to when a group is chosen to share equally in a policy’s proceeds. The class designation has an advantage of providing equal benefits to a group that may change between the time the designation is made and when the proceeds are paid. Commonly a policyholder’s children, grandchildren, or siblings are selected as a class.

Specific Designation – typically means that a beneficiary selected by his or her name and relationship to the policyholder, such as Gwenna Mygirl, daughter of the insured.

Per Capita Designation – this method of designation permits greater flexibility than a straight class designation. For instance, a policyowner can name his children to share the proceeds equally and, in the case of a child’s death; the deceased beneficiary’s children may receive in EQUAL (per capita) shares with the surviving policyowner’s children. Example: Joe designates his children, Bill, Trudy and Stan, to equally share $3 million in policy proceeds on a per capita basis with any children who survive them. Joe dies in a car accident and Bill dies in the same tragedy. Therefore, Bill’s children, Gary, Paulie and Pam become equal participants in the proceeds ($600,000 apiece). If only Joe had died in the accident, Joe’s children would have received $1 million apiece.

Per Stirpes Designation – this method is the ultimate contingency plan. It allows the policyowner to pass the proceeds equally to his direct heirs and, in the event of any person’s death, that particular share is passed on to any descendants. Example: Joe designates his children, Bill, Trudy and Stan, to equally share $3 million in policy proceeds ($1 million a piece). Joe dies in a car accident and Bill dies in the same tragedy. Therefore, Bill’s children, Gary, Paulie and Pam become EQUAL participants in Bill’s share of the proceeds. In this instance, Joe’s surviving children each get $1 million while Bill’s children share the amount that Bill would have received (roughly $333,000 apiece).

If you need to discuss your plans on providing for your loved ones, an insurance professional is a great place to start.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

There are several different types of cash value life insurance policies from which to choose. They are all designed to provide living benefits as well as the death benefit.

The principal objective of cash value life insurance is the same as with term insurance: to create an immediate estate should the insured die. The cash value in the policy can also be accessed through loans or withdrawals for emergencies or other needs. It is important to remember that loans or withdrawals of a policy’s cash value will reduce the policy’s death benefit.

  • Whole Life Insurance
  • Universal Life Insurance
  • Variable Life Insurance

Whole Life Insurance

Whole life insurance offers a number of guarantees made by the issuing insurance company. The following are typically guaranteed with whole life insurance:

  • death benefits
  • cash values
  • level premiums

Sometimes dividends are also guaranteed.

Whole life insurance can be a good tool for long term life insurance needs.

Characteristics of Whole Life Insurance

  • Tax-deferred growth of cash value
  • Cash values are guaranteed
  • Premiums are guaranteed
  • Can withdraw or borrow cash value
  • Dividends are tax free

Universal Life Insurance

With a Universal Life policy, both premium payments and death benefits can be flexible, within limits.

When premiums are paid, part of the premium goes to pay for the term insurance and part of the premium is put into a side fund upon which interest is paid.

If the premium paid is not enough to cover the cost of the insurance, the additional amount needed is taken from the side fund.

The policyowner has a number of options with regard to premium payments. Within limits, premiums can be adjusted up or down. Premium payments can also be skipped entirely if there is enough cash value in the policy to make the payments. Also, the death benefit of the policy may be adjusted up or down. However, a request to increase the death benefit may require proof of insurability (such as updating some health questions or even submitting to a physical examination).

Characteristics of Universal Life

  • Tax-deferred growth of cash value
  • Interest rates are competitive
  • Access to cash value through loan or withdrawal
  • Premiums are flexible
  • The policy’s death benefit may be adjusted (higher or lower)

Variable Life Insurance

Variable life insurance is a flexible life insurance product that is offered by a prospectus.

Variable life insurance has a term insurance foundation and an investment fund. The policyowner gets to choose which type of investment vehicle in which the cash value will be placed. The following are types of investment vehicles from which the policyowner can choose:

  • Money Market Account
  • Corporate Bond Portfolio
  • Common Stock Portfolio
  • Government Securities
  • Fixed Account

Insurance agents must be properly licensed to sell securities in order to sell variable products which are sold by prospectus. Be certain that you CAREFULLY read the prospectus before purchasing any variable product.


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

If there is a charity in which you would like to really make a difference, you might want to consider the option of leaving life insurance proceeds to a favorite charity.

What are some of the advantages?

  • With a life insurance policy, the proceeds are guaranteed. Of course, it is very important to remember that any guarantee is based solely on the assets and financial ability of the company that issues the insurance policy.
  • You pay the premium in monthly installments which can may be tax deductible as a charitable contribution.
  • A small outlay creates a meaningful amount.
  • Your other assets are not affected.
  • Life insurance proceeds are not subject to federal taxes or included in probate.

If this sounds like an interesting idea for you to pursue, discuss it with your professional insurance agent or financial planner. You may also need to seek the advice of an attorney.


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

A disability policy is designed to replace lost income when a policyholder is unable to work due to a covered accident or illness.

Disability policies generally have:

  • A waiting period-A waiting period in disability insurance is like a deductible on your car insurance. The difference is that while a deductible for auto insurance is expressed in dollars ($250, $500, etc.), a waiting period for disability insurance is expressed in time, such as 60 days, 90 days, or longer. It is the amount of time that you must wait before benefits will be paid. The longer the time period, the lower the premium.
  • A benefit period-A benefit period can be two years, five years, etc. The most comprehensive policy is one that pays benefits to Age 65.
  • An occupational classification-Depending on the occupational classification, the premium and the benefit period will be determined.
  • A monthly benefit amount-A monthly benefit amount can be up to 60% of the present income. Benefits are tax free on an individual policy. The older you are, the more disability insurance will cost, but once a premium has been established, it is likely to stay the same throughout the life of the policy.

How Do I Determine How Much Disability Insurance I Should Buy?


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Where Small Businesses Are Vulnerable

In a small to medium-sized business, the death of a partner or key officer/shareholder reduces the value of its business assets (as well as legally terminates a partnership). In order to preserve the partnership assets, the survivors must liquidate the partnership with care. The partnership’s reformation must deal with different needs. Typically, the surviving partners wish to continue the business without the deceased partner’s heirs. The deceased partner’s family is most concerned with income replacement.

The death of a stockholder in a small, closely held corporation also creates a substantial risk of business failure. At best, the corporation may face a serious loss of business, reduction in asset values and the loss of jobs.

All of the above consequences may be avoided with a carefully planned buy-sell agreement.

Buy-Sell Agreement

A popular method of keeping a business in operation after the death of a partner or a major officer/shareholder is the use of the Buy-Sell Agreement (also known as a Business Continuation Agreement).

A typical buy-sell agreement between the partners allows the surviving partner to purchase the interest of the deceased in order to keep the business operating and keep it out of the deceased’s estate and probate. A buy-sell agreement stipulates that if one partner dies, the other partner will have the right to purchase the deceased partner’s share of the business at a predetermined price or according to a specified formula.

In a small business where money is often tight, finance is the critical piece of the buy-sell scenario. The purchase of a life insurance policy is an ideal way to fund the agreement.

For purposes of illustration, let’s assume that we have two partners who formulate a buy-sell agreement. In the formulation of the policy, they agree that each will take out a $100,000 policy on the other. Their small corporation purchases the life insurance. Upon the death of one, the other will have the money to pay to buy out half of the business.

Cross-Purchase Plans

If the two partners were to personally purchase the life insurance on the other, the arrangement would be referred to as a Cross-Purchase Plan. Let’s assume for a minute that we have multiple partners. If we have six partners and try to do a cross-purchase plan, then each partner would own 5 policies on the other partners for 30 total policies. While this may be a life insurance salesperson’s dream, it certainly isn’t a practical arrangement. In this situation, we would be more likely to use the entity agreement. In an entity agreement, the partnership owns life insurance on each partner, and the partnership agrees to purchase the share of the business that belonged to the now deceased partner. This requires 6 policies rather than 30.

The Advantages

While the life insurance premiums are not tax deductible, the proceeds are not subject to federal income tax. Further, a funded buy-sell agreement offers other advantages, including:

  • A fair market value for the business is established
  • Funding ensures that the surviving family is financially compensated
  • The agreement legally binds the partners
  • Each partner’s interest in the business is determined
  • The partnership gains greater security
  • The employees’ jobs at the business become more secure
  • The money is available to implement the agreement

It’s extremely important to involve both an attorney and an accountant when arranging a buy-sell agreement since the written terms vary with the structure of the business.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

What could happen to my business if I lost a key employee?

A key employee may be a specialist who has knowledge that is critical to your organization (such as a programmer) or he or she may be a generalist who has key contacts, is highly efficient and/or drives production or sales. Regardless, losing such a person could result in:

  • lost sales,
  • unexpected termination or delay of important projects,
  • a loss of lines of credit,
  • a slowdown in productivity, or
  • increased business expenses.

Can I protect my business against the loss of a key employee?

One popular method for protecting your business is life insurance. Your organization can buy coverage, often called key employee or key man insurance. Such a policy can minimize the potential for disaster since the following are among its benefits:

  • provides funds for recruiting and hiring a replacement employee;
  • creates a tax-free source of cash to help offset lost profits; and,
  • assures customers and creditors that business will continue with as little disruption as possible.

What if my insured key employee lives until retirement?

While the key person works for you, the life insurance can still be valuable. The cash value life insurance can:

  • provide a reserve fund;
  • reinforce your business’ credit worthiness;
  • strengthen your key employee’s loyalty; and
  • (at retirement) be used to create or supplement retirement income.

How does Key Employee Insurance work?

Remembering that you will definitely need the help of your insurance agent and your attorney, it goes like this:

  • a corporation purchases an insurance policy on the key employee’s life,
  • the amount of coverage is typically based on an estimate of the employee’s value to the company,
  • the business pays the premium and is the owner of the policy,
  • the company appears as the beneficiary, collecting the benefit in a lump sum in the event that the key employee dies.

Making arrangements with an insurance or benefits professional and a lawyer is critical, since key employee insurance has legal and tax implications.

Revised 12/00


COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Long-term health care includes much more than just nursing home care for the elderly. Today’s long-term care may also refer to a variety of protection, such as:

  • health care
  • rehabilitative services
  • personal care
  • social services

However, there is a common theme among the different types of coverage: they all feature care for people who, due to illness or disability, need special assistance with daily activities. A common reason for use of a convalescent nursing facility is when a patient has been discharged from a hospital but still needs continued medical care and rehabilitation therapy while recuperating from an illness or injury. However, it important to know that LTC can be provided in either a special care facility or in the home.

What’s The Cost And Type of Long Term Care?

The cost for a convalescent center stay can rise as high as $40,000 annually. Some experts predict that the cost may exceed $80,000 by the year 2010. Of course the cost is greatly affected by the level of care involved, such as:

  • Custodial care – where the (licensed or non-licensed) caregiver assists a person in performing routine activities typical of daily life such cleaning, bathing, eating, dressing, etc. These services are often referred to as Activities of Daily Living (ADLs).
  • Intermediate care – generally involves care provided several times weekly by nurses or aides to help restore a person’s health or physical capabilities. The care is typically supervised by a physician.
  • Skilled care – involving care that is 24 hours a day and 7 days a week. The treatment is always supervised by a physician and is administered by licensed health care professionals.

What About Medicare and Medicaid?

Medicare policies contain only a limited amount of coverage for skilled nursing care and nothing for care that is considered intermediate or custodial.

Medicaid is a federal and state program that covers medical bills for the needy. If you qualify, it will pay for your long-term care expenses. In order to qualify for Medicaid, you will have to have essentially no assets.

Benefits Of LTC Insurance

Because of the length and cost of long term care, LTC insurance policies may provide you with a number of critically important benefits, such as:

  • enabling you to keep your assets
  • protecting your spouse’s quality of life and independence
  • protecting your family home and estate
  • protecting your business and other personal property
  • allowing you to maintain your independence
  • providing cash so that you may choose the long-term care options that you feel are most suitable for you

Are There Different LTC Policies?

Technically, no. It would be more accurate to say that all LTC policies have the intent of providing coverage for extended care, with each policy providing some level of reimbursement for the following:

  • nursing home stays
  • home health care
  • nursing home stays and home health care

Coverage may be provided by an individual policy or a group policy. Further, the policy may qualify for tax benefits. It is important to work with an experienced insurance professional when purchasing this type of insurance.

(Revised 8/00)


COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

A 401(k) plan is a qualified employer-sponsored retirement savings plan. Employee participation is up to each individual employee. There are definite benefits to both the employer and the employee.

For an employer, a 401(k) helps retain good employees at a relatively low cost. The plan is simple to set up and maintain and has modest administration costs. The plan is flexible both in the design and in the choice of investment choices. Employees discuss their plans and it can boost employee morale and loyalty.

If your employer has a plan available and you are not participating, you might want to reconsider. The contribution that you make reduces your taxable income so that so pay no federal tax, social security tax, Medicare tax, etc. (The government sets a maximum contribution amount each year…check with your plan administrator at work.) Your contributions are 100% vested immediately. If you leave the company, you are entitled to all of your own deposits plus interest, if applicable. When you leave a company, you can roll your 401(k) money into another qualified retirement account and incur no penalties. Your money is invested how you choose (within the parameters of the plan) by professional investors.

Many employers will match the contributions that you make with additional money. This makes the plan even more attractive! Check with your human resource representative to see what choices are available. If you are an employer, check with your insurance agent to see if your agent can set up a 401(k) plan.


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Term life insurance provides a death benefit only. It does not build cash value.

Three Types of Term Insurance

Annual Renewable Term

Death benefit remains level. Premium increases annually since there is an increased likelihood of death.

Level Term

Both the death benefit and the premiums remain level for a predefined period of time; usually, five, ten fifteen, or twenty years.

Decreasing Term

The death benefit decreases each year even though the premiums remain level. This type of term is often used to cover a mortgage or other loan with a decreasing balance.

Characteristics of term insurance

  • Low cost in the beginning
  • Premiums increase over time
  • Can help to meet specific short-term needs.
  • Has no cash value
  • Lasts a specific period of time…no more; no less.

COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


GENERAL

What Is Fraud?

Every person who assumes the responsibility of carrying insurance to protect against their liability to other and to protect their property is affected by insurance fraud. While you and your insurer may disagree about a number of issues; when it comes to fraud; you are both victims. But you are not helpless victims. As an insurance consumer, it is important for you to know some basic information that may protect you from becoming a victim of insurance fraud.

The American Heritage College dictionary defines fraud as:

A deception deliberately practiced to secure unlawful gain.

In common terms, insurance fraud is lying to or deceiving an insurer in order to make money or to become insured. Some common fraud schemes include:

  • "padding" (inflating the true amount of) a claim
  • lying or hiding (concealing) important information when applying for insurance
  • submitting false claims
  • "staging" accidents
  • faking theft claims
  • engaging in arson for profit

As a consumer, fraud should concern you since the cost is passed directly on to you in the form of higher insurance rates. You can play an important role in reducing fraud.

Fighting Auto Insurance Fraud

Persons attempting to commit insurance fraud often do so by deceiving innocent drivers during actual accidents or by involving innocent drivers in "staged" accidents. Do the following in order to minimize this risk:

  • Drive defensively, keeping space between you and surrounding cars,
  • When traffic slows, begin braking before the car in front of you does,
  • Be careful when turning into a lane that allows two or more autos to turn left at the same time. Victims of insurance fraud are often people who float across the line when turning and then are intentionally sideswiped by a person who is "staging" an accident.
  • If you are in an accident, write down license numbers of all cars involved in the accident, get the names and contact information of all persons involved and their insurers. Count the number of passengers in the other cars and get their names, addresses and any other pertinent information.
  • Call the police and get a police report even if the damage is minimal. DO NOT let another driver talk you out of calling the police.
  • Carry a disposable camera in your glove compartment and take pictures of the damage to the vehicles and of all drivers and passengers in the cars.

Fighting Homeowners Insurance Fraud

It is far more difficult to involve an innocent party in homeowner fraud. However a homeowner can help himself and help deter fraudulent claims by properly maintaining their home; removing or repairing items that could present trip hazards to outside parties. Also, if someone is hurt in your home or premises, be certain that you get full information and make certain that a person gets any needed treatment. Carefully document any incident, including all impressions about likely injury. Have a healthy skepticism over any information on medical bills or claims.

Report suspicious actions such as a friend who asks you to store valuable property and you then find that the person has reported a theft to his insurer or a fire has occured at their home.

Think of insurance fraud as money out of your pocket-because it is. According to the US Chamber of Commerce, fraud adds 25% to property and casualty insurance rates.

If you are involved in an accident and you are suspicious that fraud may be involved, call the National Insurance Crime Bureau at 1-800-835-6423.

Revised 01/00


COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Today, communication can be performed faster, more efficiently and more conveniently than ever before…but we all still struggle with communicating effectively. In many respects our true accomplishment has been to spread confusion at cyber speed. One thing that remains the same, regardless of technology, is the need to be sure that the people who receive our message understand it as well. However, when people get together, the speaker often takes it for granted that the listener understands, even when the topic is complex. Fortunately there is a technique that we can borrow from early mankind to aid our communication efforts… storytelling.

While it’s common to see short stories or examples used in training, schools and textbooks; examples are rarely used in important business discussions; particularly insurance discussions. Any person who wants to understand their policy needs, coverages and exclusions, should just ask for examples. Insurance policies are contracts and, like other legal documents, can be complex and confusing. Often an illustration is more useful than an overly detailed discussion of policy language. Instead of trying to dissect how one clause modifies or makes exception to another, ask the speaker if they can demonstrate their point.

A person who can create a good example is someone who has a thorough understanding of his subject and that understanding can be passed along to the listener. The listener often appreciates the work it takes to create examples and this can ease future communication. So take an active role whenever you communicate with an insurance professional and ask: Can you give me an example?


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Two Distinct Obligations

Consumers who have any significant experience with buying insurance protection for their auto, home and other property are likely to understand how coverage is provided for their liability and/or their property. Conversely, few may be aware of the role that an indirect coverage plays in the obligation owed by an insurer to its customers.

A liability insurance policy, either vehicle or personal liability, is designed to protect you against your legal obligation to pay others because you have caused them personal injury, damaged their property, or have done both. Further, such insurance policies also promise to defend you against claims or lawsuits that are filed against a policyholder. In other words, besides paying for claims or suits, a liability policy also pays for the legal costs and fees associated with liability losses.

What Is Covered Under Defense Costs?

The defense costs generally include:

  • attorney fees (including cost of legal staff and expenses)
  • court costs of the applicable jurisdiction
  • costs of filing necessary legal papers
  • if applicable, costs of expert witnesses
  • costs associated with investigation, etc.

Is Defense Provided Within The Insurance Limits?

Defense Coverage can be offered in two ways. It can be provided as part of the insurance policy’s liability limit or as a separate coverage. You must read your policy’s insuring agreement(s) carefully because the method has a huge impact on the amount of your insurance protection. Let’s say that Policy A and Policy B both provide liability insurance limits of $100,000; Policy A provides defense coverage as part of the insurance limits while Policy B gives separate protection. Now let’s see what can happen:

Example: Jay Lowcare is sued by his son’s teacher, who came to his home to deliver some homework for Valiant Lowcare (who’s suffering from strep throat). When the teacher started down the wooden stairs of the Lowcare’s front porch, the second stair broke. The teacher suffered cuts and compound fractures to his left leg. Jay Lowcare knew that the stairs had been weakened by termites, but hadn’t bothered to replace the stairs or warn anyone. The damages (medical and rehab costs) totaled $95,000 and the defense costs were $18,000. Here’s how each policy would handle the costs:

Expense Policy A Policy B

Defense Cost $18,000 $18,000

Damages $95,000 $95,000

Total Paid $100,000 $113,000

If Jay Lowcare’s protection worked like Policy A, Jay would be personally responsible for paying the remainder of the damages because the defense costs ate into his insurance limits. Policy B’s method of providing coverage offers the most protection.

If you’re not sure how your policy handles the cost of your legal defense, talk to an insurance professional and make sure you get the coverage you need.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

What do those letters behind my agent’s name mean?

Are you confused by seeing an insurance agent’s name towing a long string of letters? Well, that’s understandable. The public is familiar with the abbreviations used by lawyers, professors, scientists and doctors. Although not as well-known as M.D. or PhD, Insurance Land has its share of such abbreviations, called professional designations. These designations indicate that the individual has completed different courses or programs. The insurance business is complex and full of changes, so it’s very important that agents try to keep up to date on subjects that affect their business and their customers.

Driven To Learn

The need to keep current is so important that an agent’s pursuit of knowledge is mandatory. Most states require that an agent be licensed in order to sell insurance policies or even to give insurance advice. Different states also require that its licensed agents maintain a long-term commitment to learning. In such states, agents must complete a number of hours of training or education in order to have their licenses renewed.

Another incentive for continued learning is provided by certain insurance programs. Once a participant qualifies for a designation, he or she may also be required to pursue continuing education in order to remain in good standing. Finally, many agents are personally motivated to keep current in their insurance knowledge. Naturally, these factors result in agents who have completed programs which award designations.

Common Insurance Designations

The following is a short reference of the more common insurance designations. We won’t attempt to describe them here in order to give you and your agent something else to talk about:

ACSR Accredited Customer Service Representative

AIC Associate In Claims

AIM Associate In Management

ARM Associate in Risk Management

AU Associate in Underwriting

CFP Chartered Financial Planner

ChFC Chartered Financial Consultant

CIC Certified Insurance Consultant

CLU Chartered Life Underwriter

CPCU Chartered Property Casualty Underwriter

CPIW Certified Professional Insurance Woman

FLMI Fellow Life Management Institute

What If I Don’t See Any Designations?

This brief article is just to share a tidbit on designations, not to distract you from what is important. There are persons with designations who, for various reasons, decide not to use them. Further, while a designation MAY indicate a greater level of expertise, the bottom line is experience. A trail of letters behind a person’s name is not nearly as important as whether that person helps you with your insurance needs. So talk to your agent, ask plenty of questions and listen to the responses. If the agent has helped you understand something about insurance or has helped you get affordable protection against losses….then you have had contact with an insurance professional.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

First, let’s admit that this article title and question is tricky; but the answer is yes. Not only is discrimination practiced by every insurance company; discrimination is absolutely critical to the industry. The practice is also quite legal and rightfully so! Before going further, let’s remember that discrimination can have more than one meaning. How may discrimination be defined? Let’s use a very large dictionary, say Webster’s Encyclopedic Unabridged Dictionary Of The English Language (Deluxe Edition):

1. the act or an instance of discriminating.(differentiating or noting differences), 2. Not applicable, 3. treatment or consideration of, or making a distinction in favor of or against, a person or thing based on the group class or category to which that person or thing belongs rather than on individual merit.

Unfair Discrimination?

The confusion over the desirability or legality of discrimination arises out of unfair discrimination. Unfair discrimination stems from the latter definition mentioned earlier. A choice that is based on a group, class or category. Choices that revolve around a distinction that is irrelevant to offering insurance coverage is unfair discrimination. The best (or worse) example of this is to deny coverage based upon an arbitrary difference such as race or religion.

Fair Discrimination

Insurers are constantly involved in discriminating because they are always studying persons and situations to see if they are in a position to offer insurance coverage. In other words; they note differences and make choices among the requests they constantly receive for coverage. The distinctions made among their insurance applicants are important. Insurers design their insurance programs based on assumptions on the type of persons, property and situations they wish to cover.

Market Selection and Pricing

When an insurance company does business, it has to make decisions about the type of market it wants to serve. For example, in the car market, does it wish to insure only regular cars and drivers with pristine records or expensive sports cars and drivers with a few blemishes? In the homeowner’s market, does the company wish to target very expensive homes, such as those with a value over $300,000 or might it decide to exclusively write mobile homes?

Once their market niche is selected, a company has to implement matching prices. What components must a company consider? Well, an insurer must charge premiums that reflect the:

  • dollar amount of losses paid to all parties filing valid claims
  • company’s costs to investigate and settle claims
  • insurer’s operating expenses (including compensation to employees and agents)
  • premiums charged by their competitors

A company’s premiums also consider their ability to invest their income and, of course, they must also consider what rates, particularly changes in rates, are approved by state insurance regulators.

Underwriting

In the next step after market selection and pricing, a company has to create and follow rules on selecting and keeping the type of business that matches its market and which is supported by their premiums. The rules and practices that a company follows in selecting and rejecting business is called underwriting. In other words, via underwriting, an insurer must discriminate or choose among persons and kinds of property that fit its insurance program. If a company doesn’t apply their selection standards consistently; it will eventually lose the ability to do business. What is a quick method to learn what a company considers to be valid factors to do business? The company’s application(s). If the information is important for underwriting, it should show up on the application. This is true no matter the type of insurance or market targeted by the insurer.

Discriminating Conclusion

Remember, the decisions made by an insurer in writing and renewing coverage must validly affect their market and prices. When the decisions are not based on these factors…unfair discrimination takes place.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

Insurance regulation is dominated by state laws due to insurance not considered to be a tangible good. If it were, it would be commerce which is regulated by the federal government. Since insurance was defined as an intangible good, its regulation fell to the individual states. Following are some key events that helped create the regulatory status of the insurance industry.

Paul vs. Virginia

In the 1860s, a New York insurance agent extended his dealings to Virginia. Legal action was filed against the agent for failing to comply with Virginia law. The case made it to the U.S. Supreme Court, which had to address whether individual states maintained the right to regulate insurance. The court preserved the assumption that insurance was not interstate commerce and should stay under each state’s jurisdiction.

Southeastern Underwriters

In 1943, the Department of Justice sued a group of insurers known as the SouthEastern Underwriters Association (SEUA) for violating the Sherman Anti-trust Act. The SEUA members’ agreement to use uniform insurance rates amounted to price fixing, a violation of federal law. The association’s defense contended that insurance was not commerce, so it was not subject to federal law. The case was appealed to the U.S. Supreme Court and in June of 1944, the Court reversed itself and ruled that insurance was commerce and, therefore, subject to federal regulation.

McCarran-Ferguson Act

This act was passed In 1945. Through this law, Congress reaffirmed the power of individual states by permitting the states to continue to regulate insurance. However, in order to maintain regulatory control after July 1, 1948, each state had to enact the same type of anti-trust laws used by the federal. All of the states eventually passed their own anti-trust laws, keeping insurance regulation at the state level.

Gramm-Leach-Bliley

A recent law’s impact on insurance regulation is currently evolving. In late 1999, President Clinton signed the Gramm-Leach-Bliley Financial Services Modernization Act. This law removed long-standing distinctions that existed between insurance companies, banks, and investment services. The law was in response to marketplace and technological developments that blurred the traditional roles of different financial service providers. The law’s primary goal is to allow players in the financial services market to offer more complete services to consumers more efficiently and at less cost. The act also has created serious obligations on the use of information gathered on financial service consumers. The impact of this important act will likely be more insurance regulation at the federal level.

Revised 04/01


COPYRIGHT: Insurance Publishing Plus, Inc. 1998, 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


HEALTH

The Medicare program began in 1965 to provide health insurance coverage for people age 65 or older. Today, Medicare is the nation’s largest health insurance program, covering more than 45 million people age 65 and over and those under age 65 with certain disabilities. Original Medicare (Parts A and B) has traditionally provided coverage for health care services such as hospital stays,
skilled nursing facilities and doctor visits. Medicare helps with health care costs but does not cover all medical expenses.

 

What Are The Enrollment Timeframes?

 

  • Initial Enrollment Period – If you are eligible for benefits when you turn age 65, you can sign up during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after you turn 65.  If you wait until the last 4 months of your Initial Enrollment Period to sign up for Part A and/or Part B, your coverage will be delayed.

 

  • General (Open) Enrollment Period – If you don’t sign up for Part A and/or Part B (for which you pay monthly premiums) when you are first eligible, you can sign up between January 1 – March 31 each year.  Your coverage will begin July 1.  Late enrollment penalties will apply.

 

  • Special Enrollment Period – If you do not enroll when you are first eligible because you are covered under your employer’s group health plan, your enrollment must be during the 2-month period that begins the month after the employment ends, or the group health plan insurance based on current employment ends, whichever happens first.

 

NOTE: COBRA & retiree health plans aren’t considered coverage based on current employment.  You’re not eligible for a Special Enrollment Period when that coverage ends.  To avoid paying a higher premium, make sure you sign up for Medicare when you’re first eligible!

Medicare Part A – Hospital Insurance

  • Part A helps pay for inpatient hospital care, skilled nursing facility care, home health care and hospice care.

Medicare Part B – Medical Insurance

  • Part B helps pay for medically necessary doctor services, medical testing, and many medical supplies.

Medicare Part C – Medicare Advantage Plans

  • Part C is a type of Medicare Supplement* which can be an HMO or PPO, but is distinguished by its replacement of Original Medicare.

Medicare Part D – Prescription Drug Coverage

  • Part D helps cover the cost of most medications.

Navigating Medicare options for the first time can be daunting.  An insurance agent can be a wonderful resource for those who have questions, or are looking for a discussion of the many options!   Carol Hopkins at The David Agency specialize in Medicare Supplements and RX coverage.

If you want to do some of your own research first, the Annual Medicare and You guide is a great reference tool and available in printed format and on the Medicare.gov web-site.  We would be happy to direct you to the appropriate information in the guide to answer any questions.

www.SocialSecurity.gov can take you through a simple online application for Medicare if you are ready to enroll.  If you are currently employed with health insurance benefits through your employer, you will want to speak to the personnel or HR office to determine how signing up for Medicare will affect you.

We suggest you discuss your enrollment in Social Security Benefits with your tax advisor, or your local Social Security office, since when you enroll will determine the amount of your future benefits.  You may also wish to discuss the current and future implications of enrolling under spousal benefits as opposed to your own.

The web-site www.Medicare.gov (The Official U.S. Government Site for Medicare) is a good place to do further research if you have access to the internet.  As with any site, it cannot anticipate all questions for all people.  It just makes sense to call Carol Hopkins if you want to ask questions or need a simple guide through the Medicare maze.


HOME, RENTAL, CONDOMINIUM & CONTENTS

If you take the time to read your homeowners insurance policy, you should find at least six different sections of coverage. The names of the coverages may vary by insurance company, but they typically are referred to as Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments coverages. These coverages are usually presented as sections of the policy and are often labeled Coverages A through F. In Part One, we discuss coverages A, B, and C, which protect property.

Coverage A – Dwelling

The homeowner policy’s first coverage section protects your house and any attached structures, such as garages, decks or fences. The typical policy covers your home when it is damaged by most common hazards (also referred to as perils or causes of loss) including fires or storms. However, the following causes of loss are usually excluded from coverage under the homeowners policy:

  • Earthquake
  • Flood
  • Faulty maintenance
  • Damage from insects or vermin
  • Wear and tear, gradual damage or deterioration

Coverage B – Other Structures

This coverage section protects structures that are not attached to the home, such as a detached garage, storage or utility shed, playground equipment and swimming pools.

Coverage C – Personal Property

This covers your possessions, whether they are at your home or away with you on vacation. Personal property is often covered on a named peril basis. This means that only the causes of loss listed in the policy section are covered. The coverage is also subject to limitations and exclusions. Types of property having significant value, such as jewelry, fine arts, collectibles, etc., may require special protection. Talk to your agent about scheduling (adding ) coverage on a floater which broadens and extends coverage for higher value possessions.

Actual Cash Value vs. Replacement Cost

Coverage under sections A and B is usually granted on either an actual cash value or a replacement cost basis. Actual cash value is defined as replacement cost minus depreciation. Replacement cost is the actual cost to replace the structure, regardless of depreciation. Check your policy to see which type of coverage you have. Coverage under section C is usually provided on an actual cash basis. However, your agent may be able to add replacement cost to your possessions just like that found in Coverage A.

Remember that this is merely an introduction to complex policy coverages. Be sure to contact your agent for detailed insurance information. Please watch for Part Two of this topic which discusses other, typical homeowner policy coverages.


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Here we continue our brief discussion of typical coverages found in a homeowner policy. Be sure to see Part One of this topic.

In Part One, we discussed the homeowner policy’s main sections for protecting the buildings and structures you may own (and which are used for residential purposes).. In Part Two, we discuss coverages D, which is also a property coverage; as well as coverages E and F which involve injuries to people.

Coverage D – Loss of Use

This provides reimbursement for the cost of additional living expenses while your home is being repaired due to a covered cause of loss. Additional expenses normally include food, housing, and transportation. However, the expenses must exceed what your family normally incurs.

Coverage E – Personal Liability

This section provides coverage if you are found legally liable for causing property damage or physical injury. Protection includes paying for your defense costs and any resulting judgment for covered incidents. Check with your agent for specific coverages since certain incidents are excluded from coverage.

Coverage F – Medical Payments

This coverage provides immediate rapid reimbursement for small injuries to guests in your home. This coverage does not apply to resident members of the family. For example, if your child and your neighbor’s child are both slightly injured while playing and need to go to the emergency room, this coverage will pay for your neighbor’s expenses but not for your own child. Keep in mind that most coverages are subject to a deductible and have conditions and exclusions.

This is a brief overview of homeowners insurance. All of the coverage provided by the homeowners policy is subject to various limitations such as exclusions, policy limits, basis of coverage and deductibles. Further, the policy has a number of other conditions and duties which affect coverage. It’s important that you discuss the details of coverage and any other insurance questions with your insurance agent. If you missed it, please read Part One of this topic which covers other typical homeowner coverages.


© 1998 The Rough Notes Company, Inc.

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language, and no matter what country, state or territory, is expressly forbidden without written consent of The Rough Notes Company, Inc.

There’s something happening with candles?

If things haven’t got complicated enough for persons concerned with protecting their homestead, it appears that the soft, soothing glow of a candle’s flame may disguise some problems. Specifically, the use of candles may result in:

  • reducing the internal air quality of your home
  • increasing the chance of fire losses
  • damages by particulate deposits on interior and exterior walls, carpets, furniture, appliances, window treatments, floors and other surfaces.

Further, their use may also contribute to health problems from inhaling particulate matter or ingesting harmful chemicals.

What’s the problem?

Actually, there are a number of problems and they have been accentuated by a change in the market for candles. The last few years have seen an explosive growth in the popularity of candles. They are increasingly used for their traditional, decorative purpose and they are now marketed as scented candles for deodorizing and for a health-related purpose called aromatherapy.

Of course, to boost sales, candle-makers find that they have to offer products with an intense scent. This is accomplished by adding scented oils into their wax mixture. This often causes the candle to burn improperly and increase the production of soot.

A Sooty Situation

It looks like soot, which is a carbon residue produced by burning, can create a large, expensive problem. Since soot is particulate matter that can be carried through the air, it can seriously stain walls, carpets, and personal property. Studies show that electronic and plastic components are also vulnerable to soot damage. Unfortunately, soot produced by improperly burning candles bonds very strongly, making it difficult to impossible to clean. Further, soot may contaminate a home’s heating system, including ductwork. The soot can then be spread throughout a home, creating widespread damage that is difficult to repair. Property stained by soot may have to be cleaned by professionals and, often, the property has to be replaced.

What’s in those things anyway?

You may have assumed that the only materials found in candles were the wick and some type of wax. Surprise! Here’s a list of ingredients which may either be found in a candle or may be created during combustion:

Acetone Benzene Trichlorofluoromethane

Carbon disulfide 2 Butanone 1 1- Trichloroethane

Trichloroethene Carbon tetrachloride Tetrachloroethene

Toluene Chlorobenzene Ethylbenzene

Styrene Xylene Phenol

Cresol Cyclopentene Lead

Another surprise is that the candle-making industry is not required to tell consumers about the ingredients used in their products, including when a wick is used which contains a lead core.

Poor candle design or practices

Besides the use of oils and chemicals, candle-makers sometimes create problems because they make other mistakes. Candles may also burn improperly (causing soot) because a candle’s wick may be off-center or there may not be a proper amount of air in the candle mixture. A candle may have a higher likelihood of causing a fire loss due to:

  • an improper candle mixture which results in intense heat or high flames
  • improper holders (glass that shatters or spills flammable liquid)
  • wood holders that catch fire
  • flammable items imbedded in the candle mixture such as potpourri

Coverage under a Homeowner policy?

Damage to a home or personal property due to soot can create serious problems for both an insurer and a homeowner. Losses involving soot can create thousands of dollars in damages. Depending upon the details surrounding a loss and the wording of the particular homeowner policy, coverage for the damage may not be available. Why? Because the source of loss might be considered the result of pollution, which may be excluded. Another reason for rejecting a claim may be an assumption that the damage was gradual instead of sudden, so it wouldn’t be considered accidental and sudden damage. A claim could even be affected by the knowledge of the insured. For instance, even if the policy covers soot-related losses, a claim could be denied if a homeowner knew that the type of candle they used could cause damages.

Since the damage is caused by matter that is invisible to the naked eye, it could be difficult to prove that the loss was sudden. Tests can be used to determine the cause of stained or discolored property, but the testing can be expensive and the cost may have to handled by the homeowner.

What To Do?

It’s all up to you. You might wish to ask more questions about the type of candles you use or curtail your use. You can also discuss whether coverage is available under your homeowner policy with an insurance professional. If you do use candles frequently, you may also want to check your home thoroughly for any stains or discoloration, including any contamination of your heating system. Candle, candle, burning bright? Not if you cause a claim tonight.


 

COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

Do I Need Flood Insurance?

The simplest way to answer this question may be to walk to the nearest mirror. If the person you see in the mirror owns any significant amount of property that can be damaged or destroyed by water, then you should seriously consider buying flood insurance. Most persons may buy coverage offered by the National Flood Insurance Program. If your community doesn’t participate in the program, you’ll have to look into coverage from private insurance companies.

What’s The Likelihood Of Suffering A Flood Loss?

The chances of your business, home or personal property being damaged by a flood depends primarily upon where you live. A flood loss also depends on other factors such as: how much of a flood warning you receive, the level of flood precautions that are taken by yourself (such as moving personal property from lower levels to higher levels), and the precautions taken by your community (such as the use of flood controls in construction standards or sandbagging threatened areas).

Since floods are related to weather conditions and tend to have widespread effects, your chances of a flood loss are significantly higher than experiencing many of the types of losses that are covered under your homeowner policy, such as fire or windstorms. Many people have the obsolete belief that flood insurance is only needed if you live in a flood prone area.

I Live In A Flood Zone?!

If you have ever heard the term "flood zone," you may think that it refers to locations that are particularly vulnerable to flooding. The truth is that, wherever you live in the USA, you live in a flood zone. While your area may have a lower chance of flooding than a coastal area or a location situated near a body of water, your area could still experience flooding. A very dry part of the country can be susceptible to flash floods; hilly locations may be harmed by drainage; snowy locations may suffer from heavy snow thaw; other areas may suffer deluges or flooding due to a heavy rain season which has soaked the surrounding soil. So, if you’ve insured yourself against fire, wind and other causes of loss, it certainly makes sense to also protect yourself from the potential of a flood loss.

Why Worry When Disaster Coverage Is Available?

You may believe that, even if you suffer from a flood, your loss may be taken care of when the government declares your location to be a disaster area. However, you’re still taking a couple of large risks. First, your flooded locale may not be deemed a disaster area. Second, being designated as a disaster area is not a bargain. Disaster area status only gives citizens access to government disaster loans. IF you qualify for assistance, you have replaced insurance protection with an obligation to pay off a large, long-term loan. Is it worthwhile to gamble on an opportunity to pick up more debt? You’ll find flood insurance to be a cheaper and much more valuable alternative.

Don’t Be "All Wet"

You don’t have to leave yourself unprotected. Your agent, an insurance professional, can help you with detailed information on the National Flood Insurance Program. You can also ask for help in getting the coverage you need to "keep dry" and secure in the face of a flood.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

Why Renters Don’t Buy Insurance

People are renters for different reasons. Regardless whether renting is because of financial necessity or a lifestyle preference, renters often decide that insurance isn’t necessary. Renters frequently choose not to insure for reasons such as:

  • Insurance isn’t necessary because there’s no home, garage or similar property to worry about
  • There’s coverage automatically provided by my landlord, host or relative with whom I’m living
  • I can’t afford it
  • I don’t have enough possessions to insure
  • There’s little chance that anything will happen to my possessions

Busting Renters Insurance Myths

The only thing true about the above reasons for not getting renters insurance is that they can cause real misery from an uninsured loss. Renters need to consider the following:

  • possessions are purchased over time. This fact makes it less obvious that a renter may own tens of thousands of dollars worth of property that needs to be insured
  • Many belongings are very high-value. Renters should consider what jewelry they own and pay particular attention to their electronics situation (stereos, CDs, CD players, game systems, speakers, computers, etc.) Even modest living areas can hold lots of expensive property.
  • Renters insurance is affordable, often well under $200 per year.
  • Insurance policies carried by landlords typically offer little or no coverage for property that is owned by tenants and guests.
  • The same things that can damage a building can damage the property in the building, particularly natural disasters and fires; so a building’s contents are very vulnerable to loss

What about being sued?

Renters who don’t carry insurance should remember that they also need protection for their legal obligations to others. What if you’re on a softball team with your friends and you smash a line drive into the face of another player? Emergency treatment and cosmetic surgery is expensive.

If you rent and you don’t have insurance…then you have a very good reason for contacting an insurance professional to get you covered….now!


COPYRIGHT: Insurance Publishing Plus, Inc., 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

  • The first step toward correctly insuring your condominium or co-op begins with a review of your condominium unit owners association document or co-op incorporation papers. Be sure you receive a copy of the document before purchasing the condominium or co-op. Have your agent review the document if the agent is not already familiar with your condominium or co-op by-laws. Important items to review:
  • What property is your responsibility to insure? From inside the walls? The internal walls? The appliances? Your separate and detached garage?
  • What is the potential for loss assessment after a fire? Does the association or corporation insure the buildings owned by the association to replacement value? How high is the association’s deductible? What is not insured?
  • Are there any coverages, limits or additional interest endorsements you must add to your policy as required by the association agreement or incorporation document?

Find a company that wants to insure your condominium or co-op. Some companies do a better job with new construction, and others excel in reconstructed warehouses or factory loft-type condominiums.

There are two types of coverage: Named causes of loss or risks of physical loss.

  • Named causes of loss coverage is just that. The policy only covers for certain kinds of causes of loss to your property. You must prove to the company that one of the covered causes damaged your property.
  • Risks of physical loss covers all causes of loss except those that are excluded. The company must prove that one of the excluded causes of loss damaged your building.

Many companies offer risks of physical loss coverage for that portion of the building or real property that is “yours” and named causes of loss coverage for your “stuff.” Other companies will offer risks of physical loss coverage for virtually all of your covered property. Risks of physical loss costs more, but here are some claims that would not be covered under named causes of loss policies:

  • The washing machine in the spin cycle danced across the room and broke the water heater, causing water to cascade throughout the home.
  • A guest injured herself and bled all over the couch and carpet.
  • While the insured cleaned the imported crystal chandelier, the chandelier fell, shattering into pieces.
  • While working on the attic floor joists, the insured slipped and put his foot through the ceiling.
  • A two-year old boy went on a rampage with a hammer, smashing the bathroom toilet, sink, walls, etc…
  • The insured dropped a storm window. It tumbled through the home, down the stairs, damaging walls along the way.
  • The insured was cleaning the bowling ball in the bathroom sink – the bowling ball slipped and shattered the sink.
  • The insured’s lawnmower kicked a rock through the exterior air conditioner.
  • The insured slipped and threw a full paint can into the room; the spatters hit virtually everything in the room.
  • Freezing and thawing of ice on the roof caused a break in the wall and water damage to the interior of the home

The policy name for named cause of loss coverage for condominium or co-ops is often referred to as Homeowners Form 6. To add risks of physical loss to personal property and the part of the real property (building and fixtures) for which you are responsible under Form 6, you must have the Homeowners 17 31 and Homeowners 17 32 endorsements.

NOTE: Your state may have restrictions or natural disaster cause of loss problems. Coastal states face wind problems. California and certain Midwestern areas have severe earthquake problems. Some western states have brush-fire problems. Other areas face hail damage. Each state and company has its own rates and philosophy on how it will insure these common causes of loss. Be smart. Check around.

Basic homeowners coverages common to all homeowners form that insure both condominium or co-op real property you are responsible for, and personal property:

  • Real property: Coverage for the structural part of the condominium or co-op you actually own. Usually, the interior walls, appliances, fixtures, plumbing, heating and electrical that services your property, carpeting, flooring, Jacuzzi’s, possibly private garages, and other improvements you make to the property that do not become a part of the building that is owned by the association at large. You work with the agent to establish the replacement cost of your real property. You must insure to 80 or 90% of replacement value to avoid any kind of “under-insurance” penalty if you have a loss. These penalties can include reduced payment, or change from payment on a replacement cost basis to actual cash value. Actual cash value means depreciation. Work with your agent to make sure you insure to value.
  • Coverage for personal property (“stuff”) is often combined with your real property insurance. Most people who live in a condominium or co-op have personal property values similar to people who own free-standing homes. How much “stuff” do you own? Is it new, is it of superior quality?
  • Loss assessment. After a fire or other covered cause of loss, the condominium or co-op association may assess all of the owners for the repairs to the property to reimburse the association or corporation for deductibles, under-insurance or even no insurance. The standard Homeowners 6 policy give you only $1,000 loss assessment coverage. If you need more coverage you can add more to your policy.
  • Additional living expense coverage is usually a percent of your personal property limit of insurance (20-40% or even no limit or actual loss sustained). Additional living expenses covers the additional cost of temporary housing, food and other increased costs of living when you are forced from your condominium or co-op by a fire or other covered cause of loss. If you have a tenant, the condominium or co-op form can cover your loss of rents if rent payments (by contract) do not continue after a covered loss. For most customers, the limit of coverage provided by the standard policy will be adequate; but if your condominium or co-op will take a long time to repair or the loss occurs in the dead of winter, you may not have enough to pay the extra living expenses. If you are in a disaster prone area (tornadoes, hurricanes, earthquakes, wildfires), we have seen recent occurrences where it has taken 2-3 times the normal time to repair property because materials and workers were overwhelmed with work or unavailable. Actual loss sustained coverage is best, for there is no limit to worry about.
  • Endorsements: Sump pump, ordinance or law, business in the condominium or co-op. Companies make available literally hundreds of endorsements to provide additional coverage not found in the standard condominium or co-op policy. This is where you need a good agent who specializes in condominium or co-op insurance. Let the agent ask you a lot of questions. The agent needs answers to build the right policy for you. Condominium or co-op unit owner policies are not cookie-cutter forms. Every family’s needs differ and a good agent can help you design the correct plan for you.
  • Theft limitations. This brief article is not the forum in which to discuss every limitation and exclusion under the condominium or co-op form. However, you need to know that certain “target” items have limited coverage for theft. The limit shown is the average limit in the market. Your company may provide less or more. Increase coverage by endorsement to the policy.
    • Jewelry and gems ($1,000)
    • Furs ($1,000)
    • Gold, silverware, pewterware ($2,500)
    • Guns ($2,000)
    • Building supplies – no coverage for theft
  • Other property limitations. The following property is subject to certain maximum limits of coverage. The limit shown is the average limit in the market. Your company may provide less or more. Increase coverage for most by endorsement to the policy.
    • Electronics used in an auto ($1,000)
    • Money ($200) including coin collections – face value only.
    • Stamps ($1,000)
    • Business personal property ($2,500 on, $250 off premises)
    • Other than boat trailers ($1,000)
    • Boat trailers ($1,000)
    • Boats – anything bigger or more valuable than a canoe – purchase a separate boat or yacht policy.
    • Credit card forgery ($500)
    • Fire department service charge ($500)
  • Fine arts, antiques, Persian rugs, Hummels and other collections should be appraised and listed separately in a personal articles floater or endorsement.
  • Your personal property “stuff” can be covered for replacement cost. That five-year-old refrigerator that is only worth $100 but would cost $600 to replace could be covered for $600 for this endorsement. Ask for replacement cost contents coverage. When you add this endorsement, make sure your limit of insurance is adequate to cover all of your “stuff” for replacement cost.
  • Liability coverages are usually identical from form to form. Some companies will have special endorsements to improve coverage. Liability covers you for your negligence in injuring other people or property on your premises (those accidents for which the condo association is not responsible) or through actions related to many of your hobbies. The policy also provides defense coverage, including hiring and paying for a lawyer (if necessary) and paying most court costs. Covered claims include slips and falls, baseball beans the neighbors’ child, you hit the foursome in front with your errant hook shot. Homeowners insurance does not provide you with any car insurance for any car you drive. High limits of insurance are recommended, and you should ask your agent about an umbrella policy to increase your coverage to $1,000,000 or more.
  • Why high limits of liability insurance? Anyone can sue for any limit. If your policy covers you for $100,000 liability insurance and you are sued for $200,000, your insurance company will advise you that you need to hire a lawyer. If the insurance company pays out the $100,000, its obligation is over, but the lawsuit may not be settled. Courts are backed up. The high cost of lawyers, whether good or bad, is not exaggerated. The injured party may not have to pay a dime in attorney’s fees until the lawsuit is won. You don’t have that option. Your defense lawyer will want to be paid from the day of hire, often for each hour worked – even if you eventually lose the case.
  • Medical payments coverage is for minor injuries to people other than residents of the household. You don’t have to be sued or be negligent. Example: Aunt Bertha from 200 miles away comes to visit for a few days. The day she arrives she slips on your transom and breaks a hip. The insurance company will pay up to the medical payments limit ($1,000 to $10,000 normally) for the medical expenses incurred. After the medical payments limit is used up, you must be negligent and/or sued by the injured in order for that person to be reimbursed for the expense.
  • Cutting costs? Deductibles save money. Combine your auto and condominium or co-op insurance with the same company. Many companies offer discounts on both auto and home when you insure them together (not available in all states). Some companies offer combination auto/condominium or co-op policies which usually provide superior coverage at a lower price than if you were to cobble all the coverages together using many policies (not available in all states).

COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

If you live in a climate that includes a cold winter season, you probably know that winter creates special challenges for homeowners. Regardless of the amount and types of insurance you carry, it makes more sense to avoid a loss rather than to have to replace or repair your property. We’re going to discuss ice dams in part 1 and then talk about winter heating and liability situations in part 2.

Dang those ice dams

Ice dam describes the formation of ice along a roof’s edge. It occurs when snow accumulates on a roof and then there is a long period of cold weather. Under these conditions, an area of the roof, warmed by interior heat, melts the snow and the water runs down until it meets a colder area. The water first freezes, creating a dam. The dam of ice blocks additional water and the pooling water backs up and finds pathways into a home’s interior. If the amount of water is significant, it can cause deterioration and decay to interior wood and plaster. Once an ice dam has forced water to find ways to escape inside a home, the roof becomes more susceptible to future ice dams and water damage.

Ice dams are often blamed on clogged gutters and downspouts. In some instances, this occurence can be a source of an ice dam. Another common scapegoat is the perception of a faulty roof design or roofing materials. However, roofing systems are designed to shed water, not to protect a home from water that collects and pools. Water is insidious and, given sufficient volume and time, it will defeat the newest, best designed roof and find ways into a home. Rather than the result of clogged gutters or faulty roofing, ice dams are most frequently caused by too much heat escaping outside and warming the roof. The warming occurs unevenly with the warmer area at the higher part of the roof melting the snow and then the cooler, lower area, particularly the roof edge, permitting the water to refreeze and then accumulate. The heated roof is usually caused by poor insulation or improper ventilation. Inadequate insulation lets too much heat escape into the attic and this creates a warmer roof. Improper ventilation creates moisture and heat buildup due to the lack of air movement.

How to detect a problem?

Compare the way the snow is melting from the living area of your home with how snow appears on the roof over an unheated area such as a garage or shed.

Compare how your snow covered roof looks with your neighbors’ homes.

Look for icicles. These are pretty to look at but heavy icicle buildup means that interior heat is melting a lot of snow and may contribute to ice dams.

How to prevent ice dams.

There are a number of ways to help prevent ice dams:

  • Clear excess snow from the roof. However, in order to minimize damage to the roof and roofing, hire a professional to remove the snow.
  • Add rubberized or special roofing adhesives to help prevent pooled water on the roof from finding entry into the home’s interior. Be careful with this since it is just a temporary measure.
  • Inspect the attic and roof for cracks, holes or joints which permit warm air to escape to the roof, and seal or repair these areas.
  • Add the recommended amount of insulation to the attic and exterior walls of your home to minimize escaping heat (this also reduces your heating costs).
  • Reduce your home’s thermostat and throw on warmer clothing during extended cold spells.
  • Clear your gutters and downspouts and make sure that they are installed properly to let water escape from the roof.

How about installing heating cables on your roof? This remains a popular alternative for preventing ice dams, but it’s a debatable method. These devices may only result in ice dams forming above the heated area. Further, the cables use more energy and often deteriorate, becoming brittle due to age and exposure to cold weather.

If you have more questions, an insurance professional is your logical choice to discuss your concerns and coverage needs. Remember to see part 2 of “Is Your Home Winter Ready?”


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

In part 1, we discussed the problems that may lead to ice dams. In this part we discuss a different physical source of loss; but first let’s look at an important legal responsibility created by the winter season.

Creating A Clear Liability

Snow doesn’t show favoritism. Instead of conveniently falling onto unused areas, it covers homes, sidewalks, driveways, roadways and everything else. As a responsible homeowner you need to arrange to make the travel ways on your property safe. This calls for clearing your walkways of snow and ice. It is also important to clear your property of items such as rakes, shovels, tools, toys and similar items. Remember that it takes only a small amount of snow to hide items that, during clear conditions, are easily seen and avoided. So make sure that you move such property and make repairs to uneven or cracked pavement. Keep in mind that clearing walkways (including stairs) is an invitation for pedestrians to use the path. So, once you clear an area, make sure that you keep it clear, especially from ice. Also, don’t create piles of snow that can obscure either a driver’s or a pedestrian’s view. Finally, be sure that your property is safe for children who are enjoying winter. Don’t allow children to slide around without being aware of pedestrians or motorized traffic and don’t let anyone throw snow or iceballs at cars.

Don’t forget the inside of your home. Visitors should be kept safe from harm by making sure you keep insides stairs and floors clear of slippery water. Keep things dry and consider providing mats that provide good traction and an area where folks can clear snow and ice from their shoes or boots.

Firing Up A Hearty Loss

Do you own a fireplace, woodburning stove or portable heater? What about a gas or electric furnace? If so, you need to take steps to make sure that they are safe and used properly.

Have your furnace inspected to make sure that it will operate properly in cold weather. Clean filters and vents will go a long way to keep your furnace a source or warmth rather than a cause of a fire loss. An inspection should also make certain that your furnace is not a source for dangerous carbon monoxide buildup.

Fireplaces and woodstoves should also be inspected and, if necessary, thoroughly cleaned. A byproduct of burning wood, creosote, builds up in chimney and stove flues very quickly. Even a single wood-burning season could produce enough buildup to create a fire or severe smoke hazard. Don’t do the inspection yourself. It’s worth the cost to have a professional inspect and clean your fireplace or stove. Also, make sure that you don’t burn soft wood or paper. Using anything other than hard woods exposes your fireplace or stove to quicker creosote buildup (soft wood) or more intense heat (paper) which could clog or contribute to cracking a flue or liner.

Be very careful with the use of portable heaters. Depending upon the type, they can be prone to malfunction or could be a hazardous source of burns, especially for children. Further, many types can be easily tipped with the combination of heat source and fuels, creating a serious fire hazard.

Finally, make sure you have fire/smoke and carbon monoxide detectors properly installed and in good working order. Test them and put in new batteries. Small expense; big payoff.

As always, an insurance professional is a valuable source of safety and insurance information. Don’t hesitate to contact an agent to discuss your questions. If you haven’t had the chance, please be sure to read part 1 of “Is Your Home Winter Ready” which discusses ice dams.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Most companies protect renters by using a homeowner policy that is designed especially for tenants. Typical policies cover your possessions for common causes of loss, additional living expenses related to making other living arrangements, medical expenses for treating people injured on your premises and, of course, lawsuits.

Property Coverage

Protection under the standard tenants policy is on an actual cash value basis (item’s replacement cost less depreciation). Example: Stewart’s kitchen catches fire and his five year old refrigerator is destroyed. A new model of the refrigerator costs $750. His insurance company pays him $95, the difference being five years of deteriorating value. Most companies offer coverage on a replacement cost basis if you purchase a separate endorsement.

Additional Living Expenses

A typical tenant policy provides a limit equal to 20% of your contents insurance limit. If your contents limit is $15,000, then your additional living expenses limit will be $3,000.

Theft Limitations

Certain types of property are quite vulnerable to being stolen, therefore very limited coverage is available for items such as jewelry, furs, gems, gold, silverware, pewterware, money, securities, guns and accessories. Protection can be increased by adding additional coverage to the tenant policy or by purchasing a personal article floater policy.

Liability Coverages

Liability insurance covers you for damage you cause to others or their property. The policy also provides for the cost of a lawyer (if necessary) and most court costs. Examples of liability claims include: slips and falls; beaning a neighbor’s child with a baseball; hitting a golfer with your errant hook shot; or a friend breaking her hip when she trips on a skateboard your child left on the stairs.

Revised 04/01

COPYRIGHT: Insurance Publishing Plus, Inc. 1998, 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

A hobby is an activity a person does for fun or relaxation. If you have a hobby and you haven’t thought about how it may affect your insurance needs, consider this an invitation to do so, immediately. There may be some aspect of the "fun" activity you do which should be thought through. Most hobbies involve a lot of personal time, but that’s not an insurance concern. However, hobbies often require a large investment in tangible property and may even create some legal responsibility to other persons or their property.

Hobbyists: Collectors and Activists

Hobbies tend to involve either collectors or activists. A collector is more likely to be concerned with gathering property with a characteristic in which he or she has an intense interest. Examples include people who collect stamps, art, coins, autos, antiques (which is a world of its own), comic books, baskets, dishes, glassware, sports memorabilia, etc. The key is that the collection of the class of property is the primary goal of this type of hobbyist. An "activist" (this writer’s term) is a person who may also collect a certain type of property. However, the activist’s primary goal is to purchase the equipment necessary to participate in the activity. Note that there’s a fine line between such a hobbyist and a sports enthusiast. Examples are hunters, musicians, painters, sculptors, cyclists, and enthusiasts of many types, such as fans of model or radio control planes, helicopters, etc. Activists often have an interest in special pieces of property, such as a guitarist who also owns a guitar used originally by Chuck Berry. However, their investment in special property has much more to do with acquiring property, including extra parts, that facilitate their interest. An example is a ham radio operator who has an extensive inventory of radio parts for building and maintaining the tools of his hobby. With collectors, the focus should be placed on the nature of the property being acquired. With activists, besides attention to the property exposure, there should be equal emphasis on the liability exposure that’s inherent in their activity.

Coverage Needs Created By Your Hobby

Property Coverage – If you’re spending the time to buy or trade for property that has special meaning, you should take a little more time to be sure that it’s properly insured. Most homeowner policies may, at best, provide minimal protection for the types of property involved with most hobbies. Why? Items such as coins, stamps, antiques, guns, etc. are very vulnerable to loss, especially theft. Also, such property is very valuable in relation to its size. The value of collectibles kept in one room may be more valuable than all of the rest of your home’s contents. Finally, even when collectible property is eligible for a policy’s full coverage, that may not be enough. You may want your special property to be covered from more causes of loss than your family room couch. It may be worthwhile to buy an endorsement to add additional coverage for your collectibles to your homeowner policy. Depending upon the type and value of your collectibles, you may even have to consider specialty coverage.

Liability Coverage – if your hobby is more hands-on, then you must be sure you’re protected against any legal liability related to your activity. You may want to ask yourself the following:

  • Are there any liability dangers associated with the hobby?
  • Does the hobby involve frequent travel to sites or meets?
  • Does the activity attract frequent visitors to your home?
  • Do you publish hobbyist newsletters or give advice to others?
  • Do you actively sell or trade property on or away from your home?
  • Does your activity involve equipment that’s inherently dangerous to others?

Get Serious About Your Hobby

Fortunately many aspects of a hobby, especially legal liability, are covered by a homeowners policy. However, your activity may need special or even business coverage. The way you spend your leisure time should be a diversion from your routine responsibilities. Don’t let your enjoyment be interrupted by not being properly covered. Discuss your special interest with an insurance professional. An insurance professional has a special interest in making sure your coverage needs are met.

COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Properly valuing your personal possessions is very important but can often be both tedious and difficult. However, the task is nearly impossible if you don’t have good documentation of what you own.

The following list could be very helpful in identifying what you own and, more importantly, used as proof of loss in case disaster strikes such as a serious storm, theft, or fire. If you print and complete this list, make a couple of copies, keeping one or two at a location away from your home. If you also want to keep a copy at your home, use an insulated safe (small ones are sold for in-home storage of important papers). Another good location is to put a copy in a plastic bag and keep it in your freezer (which can offer extra protection for non-food items).

Besides listing what you own, it’s also good to do the following:

  • take pictures of and/or videotape your possessions
  • keep your sales receipts
  • keep your warranty information
  • get appraisals and keep them current (appropriate for expensive property)

For items which you don’t have receipts or product information, include information on when and where you bought the property.

It may seem like a lot of work, but you’ll be happy to have this gold mine of information to assist your insurer in giving you protection against loss of your possessions.

General Personal Property

Inventory completed by______________________

Date completed____________________________

$__________Sofa, couches, etc.

$__________Chairs

$__________Tables, end tables, etc.

$__________Desks, secretaries

$__________Chests, cabinets

$__________Cupboards, buffet, etc.

$__________Lamps

$__________Pictures, wall hangings

$__________Clocks

$__________Decorations

$__________Books

$__________Draperies, curtains, blinds

$__________Rugs

$__________CD players, DVD players and accessories

$__________Radios

$__________Televisions

$__________VCRs, Camcorders

$__________Home entertainment accessories (speakers, digital equipment)

$__________Computers, scanners, copiers, monitors, printers, speakers

$__________Other computer accessories

$__________Table linens

$__________China, chinaware

$__________Crystal, glassware

$__________Kitchen appliances

$__________Small appliances

$__________Cookware

$__________Cutlery, utensils, etc.

$__________Beds, mattresses

$__________Dressers, vanities

$__________Bedding, blankets, linens

$__________Bath towels, linens

$__________Suits (men’s, women’s)

$__________Coats (men’s, women’s)

$__________Dresses

$__________Jackets, sweaters

$__________Skirts, slacks

$__________Shirts, blouses

$__________Hats, gloves

$__________Purses, billfolds

$__________Costume jewelry

$__________Robes, lounging wear

$__________Shoes, boots, slippers

$__________Luggage

$__________Sports equipment

$__________Miscellaneous effects

$__________TOTAL

Valuables and Treasures

$__________Fine jewelry (list items separately at the bottom of the page)

$__________Valuable furs (list items separately at the bottom of the page)

$__________Art treasures

$__________Silver, silverware

$__________Camera equipment

$__________Guns and accessories

$__________Musical instruments

$__________Stamp collection

$__________Coin collection

$__________TOTAL

$__________GRAND TOTAL OF ALL ABOVE

List specific items and value below:

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

$__________ item__________

Revised 10/00


COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Vacant Or Unoccupied?

First, there IS a difference. Webster’s Encyclopedic Unabridged Dictionary of the English Language has the following to say:

Unoccupied: without occupants, but not devoid of furniture or other furnishings.

Vacant: having no tenant or contents; empty, void.

The difference between the two is a matter of time and intent. While not being occupied is a temporary condition and an exception to a residence normally having occupants, vacancy generally represents abandonment of property. So what’s the point? Well, either condition may affect your coverage under a typical homeowner policy. It is quite important to understand the consequences of either condition in order to keep your coverage intact.

Peeking At A Homeowner Policy

Generally, a homeowner policy has a couple of areas that may be affected by a home’s occupancy status: damage caused by freezing, or certain property and loss due to vandalism. Let’s talk about them in detail.

A homeowner policy usually protects a home from any loss that is caused by a frozen:

  • plumbing system
  • heating system
  • air conditioning system or
  • appliance

Example 1: Fern Guddyson and her family leave their home in Minnesota in January. They’ll spend the next 10 weeks in Miami because Fern is teaching a graduate course in Zen awareness at Palm Leaf University. During a bitter cold spell at their home at the end of March, the water line to their refrigerator (for its ice-maker) freezes and breaks. Later, when the line thaws, it overflows and, eventually, soaks all of the home’s oak flooring and carpets. Fern makes a claim to her insurer when the family returns home from Miami. The insurance company’s claims department rejects the claim when they find out the home was unoccupied for more than 30 days before the loss.

Unfortunately for the Guddysons, most homeowner policies will not cover freeze-related losses that occur during an extended period in which the home is either vacant OR unoccupied. But this loss of coverage can be avoided if the homeowner takes precautions to help avoid such losses. Precautions usually involve either draining any systems or appliances of water and shutting off the home’s water supply, or by keeping the home heated during the absence.

Freezing

A homeowner policy typically offers protection to a home that is damaged by acts of vandals. with an important exception. Let’s visit the Guddysons again.

Example 2: Fern Guddyson and her family leave their home in Minnesota in January. Again, they’ll be in Miami for the next 10 weeks while Fern gets her doctorate in surfing from Palm Leaf University. A week before the Guddysons return (in late March), a group of kids break out most of the windows in the home. They then take a variety of tools found in Mr. Guddyson’s toolbox and smash doors, floors and walls. Fern makes a claim to her insurer when the family returns home from Miami. The insurance company’s claims department estimates the damage and gives Fern a check to cover her loss.

Typically, vandalism losses are covered even during periods of extended unoccupancy. However, if the Guddysons had emptied their home of all furnishings and turned off the power for the time they were gone, the vandalism loss would not have been covered.

Why Are Such Exclusions Necessary?

Homeowner policies contain such exclusions in order to avoid special loss situations. A vacated home becomes an attractive nuisance, often attracting acts of vandalism. If a home is to be vacated, it may be necessary to purchase dwelling fire coverage to protect the home. In regards to loss caused by freezing, insurers want to encourage homeowners to do a little planning in order to reduce or eliminate the chance that a system or appliance causes a loss. If an insured refuses to act responsibly toward their property, they risk the chance of an uninsured loss.

If you’re facing a situation in which your home will be unoccupied or vacant for an extended period, talk to your agent and make sure you do whatever is necessary to preserve your full insurance protection.


COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

What kind of home? You may not be looking at the correct article.

This is the right place if…

You own a home (free standing, not rented, not a mobile home i.e.: the home is permanently attached to and part of the foundation).

Or,

You own a town-home (not a condominium or co-op or time share). Perhaps this town home is attached to another residence, perhaps not. I own the land that this town home sits on, but I am part of a town-home community)


This is not the right place if…

See "I own or rent a trailer, manufactured housing, or double-wide…"

See Condominium or Co-op? Your Insurance Needs are Different


You will need to go elsewhere after reading this article if…

I Own a Time-Share in Addition to Having Another Residence…


NOW! You own a home…

Many companies have either their own Homeowners policy form or have endorsements to standard policy forms that help distinguish them from the competition. Some companies like new, high-valued homes, some companies do well with older or historic preservation homes. Others are comfortable with country homes or old farm homes and some don’t like the city. It pays to shop around, both for the best coverage and for a company who likes homes in your area.

Find a company that wants to insure your home. If the company and agency already has a customer base in your area, consider them first. They understand how to insure homes like yours. This agency or company may not always have the cheapest policy, but they may have the best combination of coverage, price, service and claims expertise for your particular needs.


Two Types of Coverage: Named Causes of Loss or Risks of Physical Loss

  • Named causes of loss coverage is just that. The policy only covers for certain kinds of causes of loss to your property. You must prove to the company that one of the covered causes damaged your property.
  • Risks of physical loss covers all causes of loss except those that are excluded. The company must prove that one of the excluded causes of loss damaged your building.

Many companies offer risks of physical loss coverage for your buildings and named causes of loss coverage for your "stuff". Other companies will offer risks of physical loss coverage for virtually all of your covered property. Risks of physical loss costs more, but here are some claims that would not be covered under named causes of loss policies:

  • The washing machine in the spin cycle danced across the room and broke the water heater, cascading water throughout the home.
  • A guest injured herself and bled all over the couch and carpet.
  • While the insured cleaned the imported crystal chandelier, the chandelier fell, shattering into pieces.
  • While working on the attic floor joists, the insured slipped and put his foot through the ceiling.
  • A two year old boy went on a rampage with a hammer, smashing the bathroom toilet, sink, walls etc…
  • The insured dropped a storm window. It cascaded through the home, down the stairs, damaging walls along the way.
  • The insured was cleaning the bowling ball in the bathroom sink – the bowling ball slipped and shattered the sink.
  • The insured’s lawnmower kicked a rock through the exterior air conditioner.
  • The insured slipped and threw a full paint can into the room; the spray hit virtually everything in the room.
  • Freezing and thawing of ice on the roof caused a break in the wall and water damage to the interior of the home

The policy name for risks of physical loss coverage for buildings is often referred to as Homeowners form 3. To add risks of physical loss to personal property under form 3, you must have the Homeowners 15 endorsement. Some companies sell a Homeowners form 5 which does the same thing as the combined Homeowners 3 plus the Homeowners 15 endorsement. Other companies have their own risks of physical loss forms they call Special, Gold, Executive etc. Not everyone will qualify for risks of physical loss, but most companies sell the coverage.

NOTE: Your state may have restrictions or natural disaster cause of loss problems. Coastal states face wind problems. California, and certain Midwestern areas have severe earthquake problems. Some Western states have brush fire problems. Other areas face hail damage. Each state and company has its own rates and philosophy on how it will insure these common causes of loss. Check around.


Policies that are considered named causes of loss forms are the Homeowners 1 (not sold much any more), the Homeowners 2 and the special use Homeowners 8 forms


Homeowners 8

  • Insures for the same causes of loss as the Homeowners 2 form.
  • Designed for older homes. Older homes generally were built with more expensive and/or exotic materials. You could not build most turn of the century homes today for any price.
  • Contains no coinsurance penalty. You and the company agree on a maximum coverage limit if the building burns to the ground. NOTE: in most states the company only has to pay for the actual cost to repair or replace, so if the building costs less to rebuild than the limit of insurance, only the cost to rebuild is paid.
  • Not all companies will write the Homeowners 8. Some states do not permit the sale of this policy.

Basic Homeowners coverages common to all homeowners form that insure both the home and personal property…

  • Coverage for your building.
    • You work with the agent to establish the replacement cost of your home.
    • You must insure to 80 or 90% of replacement value to avoid any kind of "under-insurance" penalty if you have a loss. These penalties can include reduced payment, or change from payment on a replacement cost basis to actual cash value. Actual cash value means depreciation. Roofs depreciate over 20 years. A 10 year old roof is 50% depreciated. Do you want only 50% of your repair bill paid? No. Work with your agent to make sure you insure to value.
    • Ask your agent if a guaranteed replacement value clause in the policy is available. The Guaranteed replacement value clause says that coinsurance will not be a factor if a properly prepared replacement cost valuation is submitted at the same time the policy application is submitted, provided this valuation is updated each year after.
  • Coverage for your outbuildings – garages, sheds, barns, cabanas – are usually covered as a percent (10-30%) of your building limit of insurance. Normally these limits are adequate for the average 2 car garage, but not for carriage houses, three car garages or barns. You can increase the limits of insurance.
  • Coverage for personal property ("stuff") is usually 50-75% of your building limit. Again, this may be adequate for the average homeowner, but are you average? How much stuff do you own? Is your stuff new – is it of superior quality?
  • Additional living expense coverage is usually a percent of your building limit of insurance (20-40% or even a "no limit" form commonly called actual loss sustained).
    • Additional living expenses covers the additional cost of temporary housing, food and other increased costs of living when you are forced from your home by a fire or other covered cause of loss.
    • If you have a tenant, the homeowners form can cover your loss of rents if rent payments (by contract) do not continue after a covered loss.
    • For most customers, the limit of coverage provided by the standard policy will be adequate, but if your home will take a long time to repair or the loss occurs in the dead of winter, you may not have enough to pay the extra living expenses.
    • If you are in a disaster prone area (tornadoes, hurricanes, earthquakes, wildfires), we have seen recent occurrences where it has taken 2-3 times the normal time to repair property because materials and workers were overwhelmed with work or unavailable.
    • Actual loss sustained coverage is best, for there is no limit to worry about.
  • Endorsements: Sump pump, ordinance or law, business in the home. There are literally hundreds of endorsements companies make available to provide additional coverage not found in the standard homeowners policy. This is where you need a good agent who specializes in personal lines insurance. Let the agent ask you a lot of questions. The agent needs answers to build the right policy for you. Homeowners policies are not cookie-cutter forms. Every family’s needs differ and a good agent can help you design the correct plan for you.
  • Theft limitations. This brief article is not the forum to discuss every limitation and exclusion under the Homeowners form. However, you need to know that certain "target" items have limited coverage for theft. The limit shown is the average theft limit in the market. Your company may provide less or more. Increase coverage by endorsement to the policy or through a personal article floater policy. (See Click here for information on insuring jewelry, furs and other high valued items
    • Jewelry and gems ($1,000)
    • Furs ($1,000)
    • Gold, silverware, pewterware ($2,500)
    • Guns ($2,000)
    • Building supplies – no coverage for theft
  • Other Property limitations. The following property is subject to certain maximum limits of coverage. The limit shown is the average limit of insurance available in the market. Your company may provide less or more. Increase coverage for most by endorsement to the policy.
    • Electronics used in an auto ($1,000)
    • Money ($200) Including coin collections – face value only.
    • Stamps ($1,000)
    • Business personal property ($2,500 on, $250 off premises)
    • Other than boat trailers ($1,000)
    • Boat trailers ($1,000)
    • Boats – anything bigger or more valuable than a canoe – purchase a separate boat or yacht policy.
    • Credit card forgery ($500)
    • Fire department service charge ($500)
  • Fine arts, antiques, Persian rugs, hummels and other collections should be appraised and listed separately in a personal articles floater or endorsement.
  • Your personal property "stuff" can be covered for replacement cost. That five year old refrigerator that is only worth $100 but would cost $600 to replace could be covered for $600 for this endorsement. Ask for replacement cost contents coverage.
  • Liability coverages are usually identical from form to form, however some companies will have special endorsements to improve coverage. We recommend that you always ask your agent to quote you an umbrella liability policy (improves coverage and increases liability insurance limits to $1,000,000 or more).
    • Liability covers you for your negligence in injuring other people or property on your premises or through the actions of many of your hobbies.
    • The policy also provides defense coverage, including hiring and paying for a lawyer (if necessary) and paying most court costs.
    • Covered claims include: slips and falls; baseball beans the neighbors child; you hit the foursome in front with your errant hook shot; your lawnmower spits out a rock into traffic and blasts through a car window, injuring the driver and the car.
    • Homeowners insurance does not, however, provide you any car insurance for any car you drive. High limits of insurance are recommended, and again, you should ask your agent about an umbrella policy to increase your coverage to $1,000,000 or more.
  • Why high limits of liability insurance? Anyone can sue for anything and for any amount.
    • If your policy covers you for $100,000 liability insurance and you are sued for $200,000, your insurance company will advise you that you need to hire a lawyer at your own expense.
    • If the insurance company pays out the $100,000, it’s obligation is done, but the lawsuit may not be over. Courts are backed up. The high cost, whether good or bad, of lawsuits, court fees and lawyers is not exaggerated.
    • The injured party may not have to pay a dime in attorney’s fees until the lawsuit is won. You don’t have that option. Your defense lawyer will want to be paid from the day of hire, often for each hour worked – even if you eventually lose the case.
  • Medical payments coverage is for minor injuries to people other than residents of the household. You don’t have to be sued or be negligent.
    • Example: Aunt Bertha from 200 miles away comes to visit for a few days. The day she arrives she slips on the stairs and breaks a hip.
    • The insurance company will pay up to the medical payments limit ($1,000 – $10,000 normally) for the medical expenses incurred. After the medical payments limit is used up, you must be negligent and/or sued by the injured person.

Cutting costs

Deductibles save money. Combine your auto and home insurance with the same company. Many companies offer discounts on both auto and home when you insure them together (not available in all states). Some companies offer combination auto/home policies which usually provide superior coverage at a lower price than if you were to cobble all the coverages together using many policies (not available in all states).


 

COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


IN-HOME BUSINESS

Do you have an arrangement with your employer to work from your home for either part or all of your work week? Is it an on-going rather than a temporary agreement? If your answer is YES, then you are among the nation’s telecommuters.

The increased flexibility you enjoy by not having to fight commuter traffic or squeeze into a cubicle is accompanied by a special set of concerns regarding insurance coverage for your property and for your legal responsibility to other persons. Following are some important coverage needs that any telecommuter must examine.

Home Property

You may have gaps in coverage caused by either business property that belongs to your employer that is kept in your home or your own property that is used either fully or partially to perform your job duties. In either case, you’ll find that your home or tenant’s policy severely restricts or excludes coverage for property having business-related use. What complicates this situation is that such property usually consists of high-valued items that are vulnerable to damage and are also attractive to thieves. This property includes items such as fax machines, copiers, computers, computer peripherals (monitors, printers, scanner, modems) and phones, answering machines, etc.

Home Liability

While your home or tenant’s policy protects you against most instances in which you cause others injury or damage others’ property; the situation is changed when the loss has a business connection. Personal insurance policies that include liability protection typically exclude business-related losses. Further, different policies can be quite broad in interpreting how a loss is connected to “business.” Liability Policies A and B would routinely respond to handling an insured who spilled hot coffee on a guest in his home. What if, instead of being a social guest, the visitor was your employer’s client? Policy A may still offer coverage because it considers the coffee spill to be a common home hazard. But Policy B may flat-out exclude the loss because the injured person was in the home for a business reason.

Vehicle Liability

Instead of using your personal vehicle for going to and from work, more of your vehicle use may be related to your job. Many instances of job related use may be excluded from your personal auto coverage.

Home Accidents

Simple events may be complicated when they occur in the course of performing your job at home. Coverage for injuries suffered while going up the stairs or experiencing a prolonged illness may cause coverage questions for your employer. Individual company or state-mandated coverage for employees may not apply to work-related accidents that occur at home.

Document What You Do

In order to determine what insurance coverage needs you have to address, you must clearly identify your exposure to business losses. Document the following:

  • What routine job duties do you perform in your home?
  • Are any tasks hazardous?
  • Who visits your home because of your job (clients, vendors, repair personnel, suppliers, others)? Be Specific.
  • How often do such persons visit?
  • Is a certain part of your home dedicated as a work area/office?
  • What equipment is used in your job? (Is the equipment used only for your job? Who owns each piece of equipment)?

Once you have a good idea of the loss exposures from performing your job at home, you need to discuss your situation with an insurance professional. An insurance pro can help you find additional coverage options as well as help to identify what coverage gaps must be addressed by your employer. While it can be liberating to telecommute, you must make sure that you haven’t given up important protection along with your cubicle.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


INTERNET LIABILITY

A Brave New Web World

Each day, thousands of persons around the world are discovering the Web. While many are content with passively exploring, there are plenty of people who decide to become active participants by creating their own Websites. The reasons for having a Website vary, ranging from frivolity to earnestness, or they may be strictly pleasure or serious business. Personal Websites commonly describe the host, his or her family and interests such as a particular hobby, sports, profession, humor, etc. Whatever the reason for creating your own Website, it can represent an additional source of loss that may require additional insurance. The loss potential is directly related to the purpose and content found on the Website.

New Opportunity For Old Types Of Loss

Although the Web is still relatively new, Web-related loss exposure is not. Remember that legal liability to another person or party is the result of your actions that cause injury or damage to property. Your Website liability is an extension of your accountability for what you say or write and it extends to members of your household; so it’s important to be aware of your family’s little computer wizard. The types of losses that may be created by a Website include:

  • Libel – knowingly publishing false information that harms a person’s reputation
  • Invasion of Privacy – disclosing information that interferes with another party’s peace of mind
  • Infringement – violating or interfering with another’s property rights or the right to pursue business

Oops, You May Not Be Covered

This is quite important. Most homeowner policies protect against liability for physical injury to another person or to actual damage to another party’s property. Liability created by Website content typically involves personal (or non-physical) injury which is not covered by a typical homeowner policy. While individuals may be able to add protection (such as add-ons to a homeowner policy or umbrella coverage), certain losses may still be uncovered because they involve intended acts or business activity.

Can You Protect Yourself?

The good news is you can take steps to eliminate or, at least, minimize the possibility of facing a Website-related loss. The first step is to identify areas of concern. The key to understanding and addressing any possible Website liability is to focus upon:

  • the nature of the Website
  • the Website’s contents
  • who may be harmed by the site
  • how a party may be harmed

It’s important that you think hard about these issues and approach the job objectively. Your building a site just for “fun” could end with you explaining the punchline in court. Two people can interpret a site in radically different ways. Use a method of examining your Website that helps you view it through “fresh” eyes that won’t gloss over important facts. Asking the help of others could be a big plus.

See Part Two for important considerations about your Website.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Considerations For Your Web Site

If you or someone in your household operates or is building a Website, you need to be aware that the site could open you to legal situations. Here are some questions you should consider:

Who created the site?

Key consideration: depending upon the circumstances, a private party that created the site for you may share (or even own) the responsibility for damages caused by the site.

What is the purpose of your site?

Key consideration: Is there ANY business activity or purpose? If so, you may have an immediate need to secure appropriate protection.

What content is found at your site?

Key consideration: Not only do you have to think about YOUR message, but you must think of other parties that appear at your site such as friends, companion businesses or even miscellaneous links.

Who do you intend to attract to the site?

Key consideration: There’s a big difference in the type of people you’re targeting, such as inviting:

  • relatives to see baby pictures or family newsletters
  • customers to request product/service information or to place orders
  • hobbyists to distribute or solicit stories or advice
  • strangers to a forum for discussing sports, political or other topics

Is there anyone you would not want to see the site? Why?

Key consideration: Answering this question honestly is critical. It can identify prime areas for possible legal action against you. It may also suggest what precautions you may take, including the easiest action such as eliminating the reference to a person, group or organization.

Does Your Site Create An Insurance Need?

After examining the key concerns about your Website, you should be prepared to take precautions which may include:

  • adding security features to your Website
  • changing the content
  • adding waivers or disclaimers about links or certain pages that appear on your site
  • adding user agreements to your site
  • creating guidelines on maintaining current and future content at the site
  • changing your homeowner coverage
  • buying additional or special personal or business liability insurance
  • adding or eliminating a guest book (if you have a guest book, pay close attention to what visitors say)
  • eliminating the Website

Once you’ve carefully examined your Website situation, a discussion with an insurance professional could be an excellent step to identify coverage needs which may include having to buy commercial coverage. The instant and widespread access represented by the Internet creates new perils for individuals. Don’t hesitate to seek the help of an insurance professional or even competent legal advice.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Let The Buyer Beware

The Internet is proving itself to be an explosive and revolutionary player in the Age Of Information. Many different types of business are taking advantage of this medium, with its connection to savvy, technologically astute consumers, as a way to promote insurance products. As we all peer over our glasses at the 21st century, it bears repeating – “Let the buyer beware.”

What Is The Danger?

Actually, perhaps no more than any business transacted via any other medium such as in person, via phone, catalog, wholesale club, etc. BUT, the need for being a careful consumer is critical to whatever medium is being used. The other problem is that seeing information published gives the information a higher level of credibility than it may be due; this Includes the information you’re currently reading. Our advice is to be certain of the information you get before acting on that information. Although it’s true that ten sources of information can give you ten different answers, it’s preferable to seek and sort out different grains of truth than to have blind faith in a single source.

Why Is There Danger?

There are numerous reasons. The internet holds many wonders, but it also provides many opportunities for acquiring information that may be useless and even harmful. Any prudent individual should remember the following:

  • it is often impossible to verify who has posted the information and whether the source has any expertise in the subject matter
  • material that appears on the net may be presented as facts when they’re actually opinions
  • the information may be accurate for one purpose or set of circumstances, but it doesn’t tell you how the information applies to other situations; at the very least, it should contain some kind of disclaimer
  • no credible party may have taken responsibility for keeping the information accurate and current
  • the person or organization that posted the information may possibly have a criminal intent

Often internet publishers forget that the medium is global and they may be using information that is for a specific group or geographic location.

So Is This Information Any Good?

That depends upon what you do next. When seeking information to meet your insurance needs it’s important to discuss your concerns with a knowledgeable source. A professional insurance agent is a good source for getting the answers you need to fit your unique coverage situation.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


PERSONAL LIABILITY

There’s Just No Time

Oh the demands on you…a job, family, your hobbies, volunteer work, your children’s school and recreational obligations, the lawn and garden, house cleaning, repairs and on and on. Like many of your peers, you might find that you just don’t have the time to get all of it done. Also, like many of your friends and neighbors, you may be "outsourcing" some of your responsibilities.

Everything Old Is New Again

In days of old, a mark of the wealthy was to have most of your work done by servants. While this is still true of the very wealthy; a newer development is that this is now becoming a mark of the middle-class. Increasingly, more people are hiring folks to either assist or takeover duties such as:

  • child-rearing
  • gardening
  • decorating
  • housecleaning
  • laundry
  • grocery shopping
  • personal errands
  • child-transport
  • minor home repairs
  • lawn maintenance
  • meal preparation
  • exercise

While such help used to fall under the auspices of butlers, maids and nannies, today, individual specialists are providing similar services on either a part-time or full-time basis.

Personal Services and Personal Liability

When personal services are provided by a commercial business, such as a limousine or laundry service or a lawn care company, there’s generally no need to worry about being held liable for injury to another person or their property.

Example: The Burlies never had time to take care of their lawn. As their grass grew thinner and the weeds spread, Mr. Burlie decided to sign-up for the "Green Thumb" package from Lucky’s Lawn Services. One afternoon, a Lucky Lawn specialist arrived at the Burlie’s home, unraveled a hose and began to spray a weedkiller. A few minutes later, Stevie, who lived several homes away from the Burlies, came rushing by on his skates. Stevie didn’t see the hose until it tangled his wheels and sent him headlong onto the cement curb. In this instance, Lucky’s Lawn Services would be responsible for the injuries.

However, as individuals are hired by Joe and Jane America to perform personal services, the responsibility for injuring other people or damaging the property of others may begin to fall upon Joe and Jane. In these cases, will Joe and Jane have any help in paying for damages or injuries?.

Homeowners Insurance To The Rescue

A person who employs the services of another may be held legally liable should the "employee" cause an accident. Can the average person who is guilty of nothing more than trying to make their lives a little less hectic depend upon their homeowners insurance for protection? Well, coverage depends upon the details surrounding an event. Generally a homeowners policy will exclude coverage for losses that are related to the covered person’s (insured’s) business or when other coverage, such as workers compensation or disability insurance, should apply to the loss.

Example: Molly Kelp really likes her neighbors’ son, Peter, who is home from college. Molly knows that Peter is struggling for money to keep attending school, so she occasionally hires him to do jobs around her home. One day, she asks him to trim the branches of a tree that is in the front of her home. The branches are low enough to disturb traffic in the street. Peter jumps down from the ladder he’s using for the job at the same time that a car is passing by. The ladder tips over onto the car’s hood and the surprised driver swerves off the street and into the front of another neighbor’s home. In this case, Molly’s homeowner policy may apply to the damages caused by Peter. Why? Because the work was strictly related to Molly’s use of her residence. If Peter caused an accident while carrying a ladder to paint Molly’s law office which is next door to her home; coverage would be excluded.

Do Your "Homework" On Personal Services

If you’re not sure about what happens when a person you hire causes a loss, you need to do your homework. Discuss the details with an insurance professional and bring a copy of your insurance policy. Between the two of you, you should be able to make sure that your needs are covered.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

Headlines Hit Home

Many Americans have been horrified and confused over the shootings which have occurred in schools nationwide the past several years, and the Columbine High School tragedy has been of particular concern. After having these events splashed over the airwaves and newspapers; the consequences of these actions have to be dealt with by the survivors. While citizens, authorities, social and psychological experts, gun opponents/proponents are all wondering why such things happen, the focus is beginning to shift to pointing fingers.

Who’s Responsible?

The shootings have created both human and financial consequences and armies of lawyers are being formed to hold someone financially accountable. Let’s not oversimplify these events; there are elements that make them different from each other. The individuals involved and the particular circumstances that triggered each event are not similar enough to treat them in the same manner. However, the acts do have an important element in common. Since all of these acts have been performed by children, it may appear understandable that their parents are the first to be held responsible.

The first source that other parties look to for financial relief are insurance policies. In such instances, would the parents’ homeowner policies respond to lawsuits over the actions of minors who injure or kill their schoolmates? The answer is…..it depends.

What Do Homeowner Policies Intend To Cover?

Homeowner polices are called package polices because they offer coverage in two major sections. Section I protects the property that belongs to the policyholder such as his home, garage, storage sheds, household furnishings and even the increased living expenses created by the loss of use of such property. Section II provides coverage against the policyholder’s legal responsibility for injuring other persons or damaging their property. While the shootings certainly involve substantial injuries and property damage, homeowner policies may not provide coverage.

Homeowner insurance policies intend to respond to events that are accidents. While the language differs among policies, generally, the premiums you are charged for this liability protection is based upon having to defend and make payments to injured parties because of losses that are neither intended nor foreseen by the policyholder. Of course, the particular loss details have a great deal to say about whether the event can be considered an accident or not. How the loss was caused, the age of the person causing it and other circumstances affect coverage.

Are Shootings Covered?

The question of the hour is: will a homeowner policy pay for the financial consequences of a person shooting someone else? Surprisingly, nothing is clear cut. For instance, it could pay if the shooting involved a person who was defending himself or protecting another person. It may pay if a person was practicing on a gun range and a shot ricochets and injures another. It may even provide coverage if one person aims directly at another and fires a weapon, but the person holding the weapon is, say, a toddler.

Many homeowner policies define whom are considered to be mature individuals and, generally speaking, the age is 13 years or older. Acts involving both guns and persons who are this age or older are excluded from coverage under a homeowner policy. Why? Because such persons should be old enough to understand the extreme danger represented by guns. The choice in deploying a gun or similar weapons against other persons can rarely be considered accidental and, in most instances, are the full responsibility of the weapon-wielder.

But again, there can still be instances where a homeowner policy may be required to defend or pay for such losses, including instances:

  • where a parent may be held to be indirectly responsible for the actions of a child
  • where the shooter is found to be mentally impaired or is otherwise considered unable to have understood the nature of his or her actions
  • where a court may interpret a policy as being applicable to a shooting.

The fact is, the question of insurance coverage for such horrible events is as confusing and complicated as why such events ever occur. Only the passage of time and legal findings have the chance to make this subject any clearer.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Ready, Set, Summer!

Summer witnesses a huge surge in personal activities. School ends and parents start searching for leisure and recreational activities for themselves and their children. The activities range from elaborate vacations or summer-long camps to simply buying play and sports equipment (or getting it out of storage) and renewing park and pool passes.

Summer Fun’s Dark Side

At the risk of being a killjoy, it’s important to remember that good, clean fun can also have consequences when things go wrong. Using sports equipment such as tennis racquets, baseballs, baseball bats, Frisbees, lawn darts, or horseshoes have the potential to harm others. There is even greater harm posed by operating skateboards, bikes, mopeds, go-karts, and radio-controlled cars, helicopters and planes. An even larger area of concern may involve inviting friends over to use your driveway, play equipment or swimming pool. Basically, the potential liability comes from either you having fun at the expense of other persons or their property, or failing to take precautions that persons you’ve invited to your residence (or other places) are safe to enjoy themselves.

How To Preserve Your Fun

The easiest way to prepare for your summer liability is to ask yourself some questions:

  • What can I do to keep other persons safe from my activities?
  • Am I prepared to be responsible for people I hurt or property I damage?
  • How do I make my home and yard safe for fun-seeking visitors?
  • Am I keeping my guests to various events safe?

While accidents happen, many can be prevented by making sure that you and your children enjoy your activities in a responsible manner. Operating bikes safely and in low traffic areas reduces the chance that others will be hurt. The safe use of games and equipment also make the likelihood of having someone injured more remote. In other words, it’s important that your family uses sports and game equipment safely and appropriately. It also means that an adult be around to supervise many activities when necessary, such as when the fun may be more hazardous (street hockey) or when young neighborhood children are around. Supervision is critical for potentially dangerous activities such as the use of motorized recreational equipment, trampolines, and swimming pools, even small wading pools. It’s also important to make certain that guests you invite for camping or hiking trips are watched after carefully. In many instances, you are responsible for the safety of your guests when you bring them along to enjoy outdoor activities, particularly boating or other activities involving water-related equipment.

Home Inspection

Another way to reduce the chance of others being hurt is to do an inspection of your home and yard. Do you have an adequate fence (with secure or self-locking gate) to protect young children from a pool when you’re not around? Is your playground equipment well-maintained and strong enough to support the weight of the children using it? Is your yard and driveway free of tripping hazards? Are dangerous items such as tools, chemicals and lawn equipment kept out of reach of children? If you can answer "no" to any of these questions, you’re inviting trouble.

Insurance Plays A Role

When accidents happen, they may be followed by medical expenses and, more seriously, lawsuits. You must be protected against such financial consequences. Don’t assume you have coverage, especially when an activity involves motorized or powered equipment. You may have to add coverage to your homeowner policy or even buy special coverage for mini-bikes, mopeds, boats, all-terrain vehicles, etc.

So make safety a part of getting ready for summer fun. It’s also smart to include a visit or call to your insurance professional to make sure you have the right coverage to support a fun summer.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

What’s A Waiver?

Webster’s Encyclopedic Unabridged Dictionary defines "waiver" as 1. an intentional relinquishment of some right, interest, or the like; 2. an express or written statement of such relinquishment. Actually it is appropriate that waive rhymes with wave, because whether you’re waiving or waving, you’re saying goodbye. In the case of a waiver, you may be "saying" farewell to a right to holdanother party accountable for their acts.

Today waivers are being used with increasing frequency. The use of a waiver is for the primary benefit of the party requesting it. A common rationale for using a waiver is that the possible legal consequences of sponsoring an activity or event would be too great to pursue without either special protection (such as insurance) or a waiver. Here are some examples:

  • playing school sports
  • playing community league sports
  • church related sports groups
  • intramural sports
  • sports clinics
  • taking sky-diving classes
  • giving permission for your child to go on an out-of-state trip
  • joining an aerobics class.

What Happened to Permission Slips?

Permission slips are still around, but they’re generally just used when the consequences are quite low. Example: "Please sign this form to indicate your permission for your son/daughter to walk from their classroom to the library." The use of permission slips has decreased along with the willingness to assume responsibility for a given activity. Of course, the reduced willingness is, at least partially, due to waivers. Waivers do make sense when the threat of being sued exists alongside a valid reason for not assuming the risk of a lawsuit. As permission slips were found to be inadequate in the face of an increased likelihood of lawsuits, such slips began to follow a type of evolutionary path:

1. Permission slips allowing participation in an activity or event

2. Permission slips including authority to act in emergencies (but the party may still be accountable for their action)

3. Permission slips waiving any right to sue for actions occurring during an emergency

4. Waiving any action arising from both the routine and emergency aspects of an activity

6. Waiving any action arising from both the routine and emergency aspects of an activity AND

agreeing to assume the liability for the actions of another party.

Better Waived Than Sorry?

Under certain circumstances, waivers are very similar to advertising . . .they’re sometimes only effective when you believe in them. For instance, the person signing the waiver may add a comment that he or she has only signed the waiver as a formality, or under duress or protest. Often there are flaws connected with the waiver, such as the wording being incorrect or even illegal. An example of the latter is having a parent sign a waiver concerning injuries to his or her child, when that state’s law doesn’t permit a parent to waive a minor’s rights. Another example is when state law may hold one party strictly liable for certain acts, regardless of any attempt to waive their responsibility. Further, there are other elements that affect the enforceability of waivers such as:

  • who is sponsoring the activity (profit or non-profit organization)
  • the age of the persons being required to waive their rights (minors, adults, seniors)
  • the nature of the activity (short trip to museum or horseback riding)
  • the ability of the person waiving their rights to understand their actions
  • the details of any injury (is the injury connected directly to the activity?; is some degree of carelessness involved?)
  • whether the parties affected by the waiver benefit equally from its use (for instance, a dangerous team-building exercise where an employee is required to participate or face termination)
  • the qualifications of the staff holding the event

Proceed With Caution

Waivers are sometimes unavoidable, unless you choose to skip the event or activity. And, sometimes, waivers are inconsequential, being used under circumstances where they are unnecessary. The problem is in that wide, murky, middle-ground. It’s in such instances that you should take the time to read and understand a waiver before agreeing to its conditions. Perhaps you can’t avoid assuming some risk or giving up your rights, but at the minimum, read before you sign so that you understand what could happen. So look before you waive.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Oh Beautiful, For Sprawling Pets

America loves its pets, especially dogs, whose population in U.S. households is estimated at 60 million. While dogs make great companions, playmates, and protectors, they also continue to be a problem for certain dog owners and their insurers. Current statistics indicate that approximately two million people are bitten by dogs each year. Of this total, nearly 800,000 dog bite victims seek medical treatment for their wounds. Each of these incidents are potential lawsuits

Have Teeth, Will Bite

With the continued growth of dog ownership, incidents of bites have also climbed. Besides increased ownership, another factor that contributes to the epidemic of bites is that owners often fail to supervise and train their pets. A third big contributor to the problem is that many persons, especially children, do not know how to behave around dogs. Bites occur when:

  • a person stares at a dog, which the animal perceives as a threat or challenge
  • people attempt to handle dogs who are trying to eat or are nursing puppies
  • trespassers invade a dog’s territory
  • "rough-housing" with a dog escalates beyond playing.

An Issue Of Control

If you look at the situations that surround dog bite incidents, it’s easy to see how they can deteriorate into lawsuits. It is also reasonable that such claims often become the grounds for serious action on the part of insurance companies.

Insurance is still designed to handle accidents, and companies are at a severe disadvantage when policies are asked to respond to losses that have a significant element of control. Dog bite claims involve the insured having control over areas such as:

  • choosing to own a dog
  • choosing the particular breed of dog
  • raising the dog in a certain manner
  • housing the dog in a certain manner
  • exposing the animal to various social situations
  • degree of knowledge of the dog’s temperament and inclination to bite or attack.

All of the above elements can contribute to lawsuits and to action from an insurer.

The "Policy" On Dogs

If you have homeowners insurance and you own a pet, the liability portion of your policy provides protection for liability that arises from pet ownership. In fact, typical coverage is broad enough that; not only are you and your household protected, but even persons who have custody of your pet are also considered insured. There is an exception for certain businesses that, because of their profession and/or expertise, should have their own (business) coverage.Such businesses may include kennels, obedience schools, groomers and professional sitter or walking services.

Minimizing The Problem

Dog owners should have the privilege of owning a pet, but the privilege should be balanced with the safety of other people. Owners have a responsibility to raise and handle their dogs in a manner that reduces the chance for a loss. Steps to take include becoming knowledgeable about their breed of dog and about general principles of ownership and care. They should make certain that family members, social visitors, neighbors and strangers are protected from the owner’s pets. Owners should also take advantage of resources to help them, such as tips from animal shelters, dog ownership clubs, the AKC and a plethora of Internet sources.

Like One Of The Family

Pet owners generally have a very strong emotional bond with their pets. Many owners are often at odds with what they perceive as unfair or arbitrary treatment from insurers who choose to respond so quickly to dog bite claims. Some owners feel that a member of their family is being mistreated. It’s unlikely that many insurers would disagree with these feelings….just as unlikely that they would continue to insure a household where a son or daughter either attacked or bit others.

It may not be the fairest set of circumstances, but more insurers are choosing not to give dogs the benefit of the doubt. It’s becoming more common for companies to refuse to write coverage for persons who own certain breeds of dogs. Therefore, owners must fight this trend by not taking their pet ownership lightly….because insurers aren’t.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc

What Is An Attractive Nuisance?

This is a term originated by a judge to describe property that attracts youngsters and, because of their dangerous nature, creates a special obligation to property owners. Examples are:

  • swimming pools
  • trampolines
  • empty buildings
  • appliances kept outside
  • excavations
  • construction materials

All of these can lure children onto property and they all have the potential to cause serious injury.

Why Do Attractive Nuisances Create A Special Obligation?

A special obligation exists because of such property’s child endangering nature. Children do not have the reasoning ability of adults. When an opportunity to have fun pops up, it’s a rare child who thinks about the chance of being injured. A property owner with an attractive nuisance on his property cannot escape liability because of a trespassing child. When an attractive nuisance is involved, adults have to make a special effort to protect children from their blind sense of adventure or face the consequences.

How Do You Handle Attractive Nuisances?

The answer is…do whatever it takes to prevent a child’s access to the nuisance. Therefore, in order of their effectiveness:

1. Eliminate the nuisance:

Examples:

  • have old appliances hauled to a junk yard
  • tow old, non-running vehicles away
  • get rid of construction materials immediately after a building project is complete

2. Secure the nuisance

Examples:

  • take off doors or covers from large appliances awaiting garbage pickup
  • keep sharp tools, especially power tools and equipment, locked away
  • store construction materials in a garage or shed

3. Reduce the chance for injury from a nuisance

Examples:

  • install a pool cover and have a locked fence to prevent access to pool
  • do not allow younger children to use equipment such as trampolines
  • make sure there’s adult supervision of children using play equipment

If you’re not certain about whether you have an attractive nuisance situation, discuss the situation with an insurance professional.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


SPECIAL CIRCUMSTANCES

Who Are Insureds?

A pivotal point in every mature parents’ life is the time that their children leave to start their own households. Among the items that may be overlooked during this time is whether your grown children have bought their own insurance.

Most personal insurance policies define insureds to include the following:

  • The person named (shown) on the policy
  • The named person’s spouse (who lives in the same residence)
  • The other relatives of the named insured who live at the same residence

The problem with coverage begins when the living arrangements change.

Related, But Not Residents

Blood is often perceived to be thicker than insurance contracts, but policy wording prevails. An adult son or daughter may think that, when a loss happens, coverage is available from mom or dad’s homeowners or auto policy, but it isn’t. Policies are typically clear. A relative is covered, but only if the relative is a full-time resident of the named insured’s household. Even if the nonresident child lives next door, her parents’ policy is not going to spread its coverage to take care of her belongings.

If this fact appears harsh, know that insurance contracts are meant to handle sources of loss that can be easily identified. Person A’s cars or home is protected by Person A’s auto or homeowner policy. Imagine if that weren’t the case.

Example: The Rabbitfield’s home and cars have been insured by Plausible Fire & Casualty for 20 years. In the last five years, the Rabbitfield’s children have grown and started their own households. Per the Plausible home and auto policies, the insurance premiums and two policies that covered the original family’s two cars and one home, now cover the original home and cars PLUS the following:

  • Son Jimmy Rabbitfield’s apartment and car
  • Daughter Chana Rabbitfield’s home and two cars
  • Other son Perry’s home, seasonal home and two cars
  • Other daughter Bonnie’s apartment and car.

Besides covering all of the property, the Rabbitfield parents’ policies ALSO cover everyone’s personal legal liability.

While it might be a bargain for insurance consumers if a single auto or homeowner policy could be stretched this far, it’s not likely that the insurance industry could survive the flexibility.

Being Independently Insured

Understandably, insurance is not always a priority for adult children who are now on their own. In the beginning, there’s often a phase where the kids commute between "home base" and their new apartment or home and their property is at both locations. The new grown-ups typically have few possessions, especially possessions of high value, and this adds to the likelihood that insurance is overlooked or seen as unnecessary. However, even when possessions are few, EVERYONE has a legal responsibility to handle the damage they accidentally cause to other people and/or other people’s property. When a child reaches adulthood, they’ve also reached the point where they need to get their own insurance.

If an adult child asks you for insurance advice, give them the name of an insurance professional you trust to help them get the exact protection they need.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Insurance, Conservative By Nature

If you ever dreamed of being a time-traveler, one way to simulate the experience of going back in history is to read an insurance policy. Policies are written so conservatively that they still reflect situations that existed prominently decades ago. One example is the way that policies define the persons it insures. Most policies are designed to cover:

  • single individuals
  • traditional married couples
  • traditional family – husband, wife, children.

Policies also make allowances under all three of the above situations to cover relatives who live in the same household. However, when two or more unrelated individuals live in the same home, apartment, or condo and/or share the use of the same vehicle(s), the coverage situation becomes confused. Depending upon the policy wording or according to a company’s underwriting rules, coverage for an unrelated person may either be limited or may not exist.

It Doesn’t Have To Get Personal, Does It?

Not at all. Situations involving persons living together who aren’t related by law or by blood may have a romantic origin, be based on a platonic relationship or may be due to economic reasons. Why one or more unrelated persons are together is their business; the important consideration is, how are their insurance needs met?

Homeowners Insurance

If you share an apartment or rent a home and each of you retains separate ownership of your property, each of you should carry your own tenant’s policy.

If you own the home jointly, but maintain separate ownership of your personal property, you might consider the following strategy:

1. Name one individual as the "named insured" on the policy. The named insured is covered for his interest in the dwelling and personal property (such as clothes, appliances, furniture, etc.). Further, the named insured is also protected against losses involving his legal liability to others including payments for medical services.

2. Add the other owners as additional insureds – residence premises. The other owners then will have coverage for their interest in the dwelling, premises liability and medical payments to others.

3. Finally, each additional insured should buy their own tenant’s policy to cover their personal property.

Auto Insurance

If each roommate has his or her own vehicle, the insurance question couldn’t be simpler. Each vehicle should be insured by the individual owner. However, if two unrelated people share ownership of a vehicle; special action is necessary. In this situation the auto policy that covers the car should have a joint coverage endorsement added to it. A joint coverage endorsement (which may have various names) should result in giving the co-owners the same coverage as if they were related. (This endorsement is not available in all states.) The same strategy may be used when only one person owns the household’s vehicle. The other person (who does not have their own car) may be added via a joint coverage endorsement. However, other options may exist such as (depending upon the insurer): the non-owner resident may be added to the owner’s policy as a part-time driver or the other person might purchase a "non-owned" auto policy to get automobile coverage.

Life Insurance

The owner of a life insurance policy can name as beneficiary anyone whom he/she can persuade the insurance company to add to the policy. Generally, companies will not accept the designation of a beneficiary unless the beneficiary is a relative or has some financial relationship to the insured on the policy. Sharing property ownership is a legitimate reason. Insurance companies can also be persuaded – with logical argument – to add individuals as beneficiaries who are "living together," engaged or affirmed. Arguments include intent to marry, co-mingling of financial resources, the need for joint income to maintain current lifestyle, or the length of the cohabitation.

Health insurance

Unless you are related, in most states you will need to maintain individual health insurance policies. Many group health plans are more liberal, but check with your plan administrator and don’t assume your significant other is covered unless you see something in writing that says so. If either or both of you have children who need to be covered, you may need two separate family plans.

How can you be sure about whether your interests are properly covered? Easy…speak to an insurance professional; discuss your situation in detail and then determine the best way to structure your policies.

Revised (07/99)


COPYRIGHT: Insurance Publishing Plus, Inc. 1996, 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Do you have an arrangement with your employer to work from your home for either part or all of your work week? Is it an on-going rather than a temporary agreement? If your answer is yes, then you are among the nation’s telecommuters.

The increased flexibility you enjoy by not having to fight commuter traffic or squeeze into a cubicle is accompanied by a special set of concerns regarding insurance coverage for your property and for your legal responsibility to other persons. Following are some important coverage needs that any telecommuter must examine.

Home Property

You may have gaps in coverage caused by either business property that belongs to your employer that is kept in your home or your own property that is used either fully or partially to perform your job duties. In either case, you’ll find that your home or tenant’s policy severely restricts or excludes coverage for property having business-related use. What complicates this situation is that such property usually consists of high-valued items that are vulnerable to damage and are also attractive to thieves. This property includes items such as fax machines, copiers, computers, computer peripherals (monitors, printers, scanner, modems) and phones, answering machines, etc.

Home Liability

While your home or tenant’s policy protects you against most instances in which you cause others injury or damage others’ property; the situation is changed when the loss has a business connection. Personal insurance policies that include liability protection typically exclude business-related losses. Further, different policies can be quite broad in interpreting how a loss is connected to "business." Liability Policies A and B would routinely respond to handling an insured who spilled hot coffee on a guest in his home. What if, instead of being a social guest, the visitor was your employer’s client? Policy A may still offer coverage because it considers the coffee spill to be a common home hazard. But Policy B may flat-out exclude the loss because the injured person was in the home for a business reason.

Vehicle Liability

Instead of using your personal vehicle for going to and from work, more of your vehicle use may be related to your job. Many instances of job related use may be excluded from your personal auto coverage.

Home Accidents

Simple events may be complicated when they occur in the course of performing your job at home. Coverage for injuries suffered while going up the stairs or experiencing a prolonged illness may cause coverage questions for your employer. Individual company or state-mandated coverage for employees may not apply to work-related accidents that occur at home.

Document What You Do

In order to determine what insurance coverage needs you have to address, you must clearly identify your exposure to business losses. Document the following:

  • What routine job duties do you perform in your home?
  • Are any tasks hazardous?
  • Who visits your home because of your job (clients, vendors, repair personnel, suppliers, Others?) Be Specific.
  • How often do such persons visit?
  • Is a certain part of your home dedicated as a work area/office?
  • What equipment is used in your job? (Is the equipment used only for your job? Who owns each piece of equipment?)

Once you have a good idea of the loss exposures from performing your job at home, you need to discuss your situation with an insurance professional. An insurance pro can help you find additional coverage options as well as help to identify what coverage gaps must be addressed by your employer. While it can be liberating to telecommute, you must make sure that you haven’t given up important protection along with your cubicle.


COPYRIGHT: Insurance Publishing Plus, Inc. 2000

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Check with your exchange student program coordinator to see what kinds of coverage are automatically provided for the child. Is there health insurance, travel insurance, special liability protection if the child should injure someone or someone’s property? What and who exactly is covered and who is responsible for what?

Exchange student "stuff"

An exchange student in your care who is under the age of 21 is automatically an insured under the homeowners policy as if the child were a relative child. Under your homeowners policy, the exchange student’s "stuff" is covered while it is on your residence premises, or while away from the premises. Coverage away from the premises is normally limited to 10% of contents coverage, subject to a minimum limit of $1,000. Normally exchange students travel light, but review your coverage to make sure your limits are adequate if the student shows up with expensive racks of clothing and jewelry. Liability coverage that applies to your family also applies for damage and bodily injury done by an under 21 years of age exchange student.

If the exchange student is over the age of 21, then he or she is considered a guest. You can volunteer to include guest’s "stuff" while on your residence premises or while you and the guest are at some other residence premises. However, sometimes it is difficult to determine whether the older exchange student is a guest or a tenant – someone who is paying you a reasonable rent for staying in your home. These are questions for a qualified personal lines agent who can help you design the proper insurance package to cover your particular situation.

Exchange students driving

First, make sure that the exchange student is permitted to drive under the rules of the exchange student program. If the student may drive, make sure that he/she has a drivers license that is valid in your state. Contact your local motor vehicle department for advice.

Anyone, with your permission, who drives your insured vehicles is normally covered for liability insurance for damage that the permitted driver does to other property and people, subject to the limits of insurance under the Personal Automobile Policy Form that is available in most states. Coverage to damage done to your vehicle, above any deductible, is also available when you have the appropriate collision and comprehensive coverages. Please check with a qualified automobile insurance agent after reading this and before your exchange student arrives. Virtually every state has its own special state-mandated endorsement that will expand or limit the coverage we describe here. Companies may use different forms that give broader or even more limited coverage than the Personal Automobile Policy Form.

If you expressly forbid the exchange student to drive your vehicle and the student does anyway, you may not have coverage under the policy, but you may still be found liable under a court of law – perhaps for improper supervision of a minor. Permission to use the vehicle in some policy forms must come from you, not your own child, or even Uncle Fred.

Medical payments coverage will apply to the exchange student who is injured in an accident while occupying or driving your car with your permission.

Discourage any exchange student who is a minor from purchasing a car, truck, motorcycle, RV, boat, moped, scooter or any other vehicle. An exchange student is a foreign national, on a temporary visa, a minor, and only in your temporary care. If the vehicle is purchased anyway, discuss the event with legal counsel retained by the exchange student program, or if such counsel is not available, discuss with your own attorney. Do your best to impound the vehicle until you can straighten out the legalities.

Most exchange students are great kids, but like any other children, they have diverse personalities and can be influenced by the "wrong crowd." Remember, while he or she is in your care — you are responsible for the exchange student’s actions and well being.

Health insurance

Check with your exchange student program. Most programs have blanket coverage for exchange students. If not, discuss with the parents of the exchange student, before the student arrives, what coverage the child will have while in the USA. If coverage is not available, you can often arrange for short-term individual policies from an individual health insurance carrier. You normally cannot add exchange students to your group health or individual health insurance policy.


COPYRIGHT: Insurance Publishing Plus, Inc. 1996

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

What Is Loss Control?

Of course you are familiar with insurance, but are you aware that insurance is just one of a variety of methods for controlling your personal exposure to loss? Insurance is a method of loss control. Loss control is important because your personal environment is filled with opportunities where losses can occur. Most folks would like to minimize their chance of suffering a significant loss. The process of identifying and acting upon situations which may lead to losses is called "loss control."

Loss control may involve both simple and complex ways to reduce the likelihood of facing a loss. Besides insurance, you can choose to use protective devices, oral or written contracts to shift the responsibility for a loss, avoid ownership of items that may cause a loss (such as large pets), avoid dangerous hobbies and activities, or change your environment. Let’s look at some areas where you might exercise loss control.

Loss Control With Your Automobile

  • Use a bike or public transportation instead of owning your own car
  • Borrow or rent a car when needed
  • Take a defensive or advanced driving skills course
  • Practice defensive driving
  • Obey traffic laws
  • Adjust driving habits according to driving conditions
  • Park or store your car where there is greater security
  • Install security alarm and/or other anti-theft devices
  • Properly maintain the car in good condition, especially safety devices such as brakes
  • Purchase or use cars that have higher safety ratings
  • Don’t lend your car to inexperienced or inconsiderate drivers
  • Have an emergency kit available, including first aid

Loss Control In Your Home

  • Keep the inside and outside of the home in good repair
  • Carefully store flammable liquids
  • Install security alarm and/or other anti-theft devices
  • Consider an apartment or condo which avoids certain risks of home ownership
  • Warn visitors about any known hazards in your home
  • Avoid running a business from your home
  • Take precautions when your premises includes attractive nuisances such as playsets and swimming pools.
  • Keep dangerous objects out of the reach of children
  • Carefully scrutinize activities that may create a bigger exposure to loss such as dangerous hobbies or highly visible activities (volunteer work for organizations that may create extra chances for losses)
  • If you are involved in high risk hobbies or activities, get the training and/or take precautions to be sure that your participation is as safe and responsible as possible
  • Take care with heating and electrical devices and systems (such as portable heaters, loads on electrical circuits, etc.)
  • Keep first aid kit available
  • Have a fire escape plan, including any needed safety devices (such as escape ladders from 2nd floor exits)

Miscellaneous Loss Control

  • Store important papers in a secure, fire-resistance box or even in the corner of a freezer.
  • Keep all the negatives of photos, so they can be reproduced
  • Make videotapes of personal property as a record of your possessions
  • Make copies of personal videos
  • Arrange to exchange and keep important papers and mementos such as copies of videos and photos with friends so they’re easier to access and less expensive than storing in a safety deposit box

Of course the help of an expert is invaluable and your insurance agent is a very helpful source for reviewing any actions you’re considering to reduce your chances of facing a loss. So contact your agent for his or her expert assistance.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


VALUABLE ARTICLES

Coins Bear Interest (pun is intended)

The technical term for the study and appreciation of coins, currency, medals and similar property; is called numismatics; but let’s use coin collecting instead. Collecting coins is one of our country’s oldest hobbies and it is still quite popular. Coin collecting is particularly interesting because it can involve a hobbyist in geography, culture, history, precious metals, economics, monetary laws, politics and customs on either a national or international basis. It also touches upon the arts and sciences as it involves engraving, designing and even metallurgy.

What Coverage Exists Under My Homeowners Insurance?

This hobby has a big impact on insurance coverage, regardless whether the collector is a tenant or a homeowner. Homeowner policies typically provide extremely limited coverage for property which can be used as a medium of exchange. This is especially true of collectible coins and currency which has a special value that, typically, far exceeds its face value.
One homeowners program, which represents an industry-wide standard for homeowners insurance coverage, contains a severe restriction on the limits available for money. In fact, regardless of the insurance limit that appears on the policy, the maximum amount of coverage is limited to less than $300 for any loss which involves money, including currency and collectible coins.

Why Is Coverage So Limited?

It would be a losing proposition for insurers to offer liberal coverage for coin collections and similar property. Why? Because such property is:

  • attractive to thieves,
  • subject to fraud and counterfeiting,
  • small in size but very high in value, and
  • very vulnerable to destruction.

Standard policies recognize the above attributes and are designed to limit their exposure.

What’s a coin collector to do?

In the case of coin collecting, enthusiasts are encouraged to seek special protection for their valuable property. A collector has the option of adding a special endorsement to their basic homeowner protection or buying a separate policy. While arranging for coverage, a coin collector must meet three critical objectives. First, the collector must be able to prove their possession of the property. Second, the collector must find a reliable method to carefully document the current value of their property. Keeping careful and current records is essential to making sure that a loss is properly covered. A collector should maintain current inventories of their collection. A written inventory is good, but it could be backed up by photos or even video documentation. The collector should also keep independent verification of coin values such as guides and, when warranted, professional appraisals. Finally, the collector must be clear about their coverage:

  • what is the total amount of coverage provided?
  • is the coverage for each individual piece or a single (blanket) limit for the whole collection?
  • what is the basis of loss settlement (actual cash value, guaranteed amount, replacement cost)?
  • are their any special storage or notification requirements?

Keeping Your Insurer Informed

This may seem obvious, but it is very important to keep your insurer informed about any changes involving your coin collection. Keep your insurer posted about pieces you no longer own, new pieces you have acquired and any changes in values. If values have changed, make sure that you tell your insurer to adjust your coverage. You can even ask your agent or insurer to keep current copies of collection values and inventories in their files.

Collecting coins is a great recreation and it’s worth a collector’s time to make sure that their investment in it is properly protected.


 

COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

The typical homeowners policy offers plenty of coverage for personal property, usually offering a limit equal to half of the amount reserved for the residence (ex. Your home is covered for $150,000, so your contents and furnishings are covered for $75,000). While this is generous coverage, it doesn’t extend to all types of property for all causes of loss. Certain types of property, because of its high value and liquidity, is far more vulnerable to loss…either easily destroyed, easily stolen or both. For instance, an insurer protects your sofa right along with your fur coat for the same basic premium, but the two types of property don’t represent the same chance loss. Recognizing this fact, insurers put more restrictions on the coverage provided by a basic policy.

Theft Coverage Limitations

When property is lost due to theft, coverage under a standard homeowner policy is severely limited (generally between $1,000 – $2,500) for the following types of property:

  • jewelry, watches, furs, and gemstones
  • dinnerware, serving sets, trophies and similar property made of or plated with silver, gold, platinum or pewter
  • for firearms, accessories and related property

Other Coverage Limitations

Several categories of property are subject to very modest limits (generally between $200 – $2,500) of coverage, regardless of the cause of loss (theft, fire, accidental breakage, etc). Specifically:

  • money, bank notes, coins, medals, gold, silver and platinum (other than jewelry or dinnerware)
  • securities, accounts, deeds, tickets, stamps, manuscripts, passports and similar property
  • watercraft and related property including their trailers
  • trailers not used with watercraft
  • business property located in your residence
  • business property located away from your residence
  • certain types of electronic property (CD players, VCRs, TVs, radios, computers )and related accessories) which is lost or damaged while in a car or is located away from your home and used for business.

Please refer to part 2 on how to get more coverage for these classes of personal property.


COPYRIGHT: Insurance Publishing Plus, Inc., 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

In part 1, we told you that the typical homeowners policy contains substantial coverage limitations for certain types of property. The modest insurance protection affects property that is highly vulnerable to loss because it is targeted for theft and/or has a high level of value in relation to its size. Examples are gold, money/securities, precious metal-plated dinnerware, jewelry, furs, stamps, electronic property, business property, watercraft and firearms.

How Do You Handle The Limited Coverage Situation?

You have to do something extra to your insurance program. Insurance companies are happy to provide more coverage, if they are paid for their trouble. Specifically, limited coverage can be handled using the following methods:

Increased Coverage C Endorsement – this form is only appropriate for property saddled with limited coverage for theft losses. This form is attached to a basic policy and it increases the theft insurance limit (ie. for jewelry from $1,500 to $5,000).

Scheduled Personal Property Endorsement – this form is used for increasing coverage for property that has protection reduced for all sources of loss. The property is removed from the basic policy’s limits and is covered exclusively by the endorsement. This form takes more work since each item of property has to be listed and assigned a particular insurance limit.

Inland Marine Property Floater – this method works like the personal property endorsement, except that it is a separate policy. This alternative is more appropriate for persons owning substantial amounts of high-valued property. The coverage must often be purchased from specialized insurers and comes at a high cost. In order to qualify for such coverage, you may need to meet special circumstances such as having a residential alarm system or make use of vault storage.

Another Advantage Of Special Handling

In order to arrange coverage under a schedule or an inland marine policy, the property must be properly valued. This often involves appraising the property. It’s very helpful to have an expert source establish the current value of jewelry, furs or other valuable possessions. In fact, such property should be appraised every two or three years since their values often increase over time.

Do you still have questions about property that needs special handling? Talk to an insurance professional about your needs and make sure that you have proper protection.

Please refer to part 1 for more information on restrictions faced by certain types of personal property.


COPYRIGHT: Insurance Publishing Plus, Inc., 2001

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

First, A Reminder

If you haven’t had a chance to do so, we suggest that you read the article titled: "Jewelry, furs, guns, silver, goldware, fine arts and other expensive stuff" (we know, we really need to shorten the title). If you can’t get to it before reading this article, we’ll mention that basic homeowner policies typically provide very limited coverage for property such as jewelry. The reason for this is that jewelry is high-valued (especially in relation to its size), easily lost or destroyed and is very vulnerable to theft and fraud.

Be Confident About Your Coverage

Whether you already have expensive jewelry or are about to acquire some; it’s important that you have the type of coverage you want. First ask yourself if you want or need special coverage. If your jewelry holdings are modest (basically costume jewelry or just worth a few hundred dollars) perhaps the limited coverage provided by a basic policy is adequate. However, when high values are involved, special insurance coverage should be bought. A few options are available such as buying supplemental insurance that is attached to your homeowners or tenant’s policy or purchasing a special, separate jewelry policy.

The important step is to discuss the coverage options with an insurance professional. Discussing the coverage will allow you to understand how a loss will be paid. Does the coverage consider values that increase over time? Does it cover mysterious disappearance (when you know the property is gone, but can’t pinpoint when and how the property was lost) and other causes of loss, or just fire and theft? Discussing the coverage also helps you understand the steps you must take to make sure that you keep the maximum coverage in force and whether the coverage you receive is worth the additional price.

Documenting The Jewelry’s Value

Answering this question may, initially, be quite simple. If the jewelry has just been purchased, the store receipt or certificate may be the basis of establishing the insured value. However, as time goes by, or if coverage is being rewritten with a different insurer; a new, total insurable value might have to be determined. At this point, it may make sense to get the assistance of an appraiser. Getting an appraisal that affirms your jewelry’s current value is an excellent way to assure that your property is properly protected. Of course, it’s prudent to be sure that the appraisal is from a competent appraiser. It’s your responsibility to find out an appraiser’s competency (check their credentials and number of years of experience). It also makes sense to find out how and where the appraisal is to be performed. There are several professional jewelry and appraisal associations that can give you information on appraisers and appraising methods. And, of course, talk to a potential appraiser to see if they know their stuff and how willing they are to explain their work to you. All of these items are important, especially since you have to pay a fee for an appraiser’s services.

Handle With Care

Once you’re certain about the value of your jewelry and the adequacy of its insurance coverage; you need to properly handle your jewelry. After all, who wants to actually file a claim? If you own a significant amount of expensive jewelry you may want to look into other precautions such as:

  • Get new appraisals every two or three years, sending a copy to your insurer
  • Take photos of your jewelry from several angles; again, share copies with your agent or insurance company
  • Consider a quality in-home security system, including a hidden vault or storage area
  • Take care on where and when your jewelry is worn, trying to avoid becoming a theft target
  • Keep original receipts and all appraisals; especially if they demonstrate that the jewelry’s value is appreciating
  • Ask your jeweler whether they have access to "Gemprint," a jewelry identification system that documents a jewel’s distinctive markings much in the manner of fingerprinting.

Again, your first step is to talk to an insurance professional since he or she shares your concern that you have the protection you need at a price you can afford.


COPYRIGHT: Insurance Publishing Plus, Inc. 1999

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


UMBRELLA

Are You Getting Excessive?

Okay, you have a policy for your home and the cars driven by your family. You have just the right policy for the apartment you rent out to others as well as special coverage for your boating excursions. Your homeowner’s policy even has a special form to cover the activities connected to the business that your spouse runs out of your home. Yes, it looks like you can breathe a sigh of relief and be confident that you have all the coverage you need. Or should you have an umbrella? An umbrella is the term for a liability policy that covers your other, primary liability coverage on an excess basis (and often to provide coverages that aren’t available under the primary coverage).

Doesn’t "Excess" Mean Too Much?

Not in the case of carrying umbrella coverage. Umbrellas are designed to be carried over a person’s primary or underlying liability coverage. A person’s primary coverage is typically part of his or her personal automobile or homeowner’s coverage. Primary refers to the fact that in the event of a loss, the liability portion of your auto or homeowner coverage is the first to respond, that is they respond on a primary basis. Umbrellas or excess liability policies respond to an eligible loss only after the primary insurance has paid its limit. It’s quite possible that your primary insurance limits provide more coverage than you’ll ever need. However, loss circumstances could result in primary coverage that’s not covered by a policy. For instance, your newly licensed child is driving the family car and slides on an icy highway. He ends up causing a chain collision damaging several cars and injuring a dozen drivers and their passengers. If you don’t have enough primary coverage, any shortage may have to come out of your personal assets. Or maybe you often volunteer to help transport members of your son’s first grade class on field trips and you have an accident because you tried to beat a yellow light.

Umbrellas generally provide additional liability coverage for the following underlying policies:

  • Personal Automobile
  • Homeowners/Farmowners
  • Recreational Vehicles
  • Watercraft
  • Personal;(Comprehensive) Liability

The additional coverage may often extend to providing for related expenses such as the cost of providing a court defense.

Why Isn’t Coverage Excluded?

Of course, umbrellas don’t always work on an excess basis. Umbrellas may act just like an underlying policy for losses that are not generally covered by your auto or homeowners. In this case, an umbrella may respond the same way as a primary policy. For instance, you may have to go to court after being accused of defaming another person. The liability section of your homeowners policy may not cover this type of loss, called personal injury, but it may be a covered cause of loss under an umbrella. You may also need an umbrella to handle odd situations such as hobbies or activities that may increase a person’s chance of facing liability losses. For example, you have an in-home hobby of training guard dogs or you publish a newsletter on the Internet covering local or state politicians.

In certain instances, umbrellas may provide coverage for any amount of a loss that exceeds the policy’s deductible. However, in place of "deductible," umbrellas refer to a self-insured retention or SIR. IMPORTANT: don’t get confused into thinking that umbrellas pay for anything that is excluded under a primary policy. Umbrellas do provide broader coverage, but only a careful evaluation of the actual policy wording will reveal the extent of the additional coverage. In certain cases, an umbrella may "follow the underlying coverage". This means that the umbrella covers ONLY the situations covered by its underlying coverage. In this case, the umbrella also excludes a loss that’s excluded under a primary policy.

So, Do You Feel Any Rain Drops?

You may or may not be feeling the need to carry an umbrella. The best way to find out if extra coverage is necessary is to discuss your coverage needs with a professional insurance agent. Especially if you have a larger than average amount of personal assets or are involved with activities that could expose you to larger liability losses.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

  • Protect Your Home

  • Protect Your Family

  • Protect Your Business

The David Agency Marine Insurance Pet Business Insurance