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The Policyholder Advocate
Newsletter
inside
Time for a Checkup
Flood Insurance
Sewer Backup
Business Insurance
pg 2
pg 3
pg 3
pg 4
November 2012
Maintenance of Property is Policyholder’s Responsibility
No one wants to hear that a loss is not covered. Fortunately it doesn’t happen very often. But for those
instances where coverage isn’t available the reasons are usually pretty obvious.
The typical homeowner policy, which dollar for dollar is one of the best buys in the insurance business,
has been broadened so much over the last twenty years that, at first glance, it would seem to cover just
about any misfortune a policyholder could have. When carefully examined, there are several basic
precepts that come to light.
For a loss to be covered, it must be accidental. The loss must be unexpected and unintentional. Losses
that are certain to happen over a period of time do not represent a risk of loss because they are certain to
occur. The peril of wear and tear, marring, deterioration, or mechanical breakdown will surely occur
over time. This is a certain event. We know that furnaces wear out, and roofs deteriorate over time.
The second class of losses that cannot be covered are those that are so controllable they will only occur
if gross disregard for the property’s care occurs first. An example might be leaving a metal object out in
the rain.
The typical homeowner policy would exclude losses resulting directly from wear and tear, deterioration,
mechanical breakdown, rust, shrinking, crackers and more. In considering each of these excluded items, it
is obvious that they fail to meet the test of a covered loss: sudden, accidental, and unexpected.
Natural Gas Safety
Natural gas is colorless,
odorless and tasteless. Some utility
suppliers add a distinctive “smell”
like spoiled eggs so a gas leak can be
easily detected. If you smell gas,
Vectren Energy advises that you do
the following:
Leave the home/building immediately.
Do not open windows or doors to allow fresh
air into your house.
Do not use the telephone.
Do not turn lights on or off.
Do not light matches or other ignition source.
Do not turn any electrical appliances on or off.
Next time you receive your bill make a note of the
emergency numbers and keep them handy.
There is an exception to this exclusion. If,
because of any of these excluded perils,
water escapes from a plumbing, heating,
automatic fire protection sprinkler or air
conditioning system or domestic appliance,
the resulting damage to the covered
dwelling or other structure is covered. Also
covered is the cost to tear out and replace
any part of the covered building necessary
to repair the system or appliance.
An example of this would be a rusted pipe
that causes water to leak and damage a
wall. There is no coverage to fix the
deteriorated pipe, but since the leaking pipe
caused damage to the structure, there is
coverage to tear out the wall to get to the
rusted pipe for repair, and then repair the
damaged wall.
Lawsuit Lotto
Spring is Almost Here
Potential flood hazard
While spring brings us renewal after the long winter, and
heightens our senses as we prepare for outdoor activities,
we can’t be oblivious to the special hazards that spring’s
weather conditions can bring.
Just like the frozen pipes and ice-filled house gutters that
winter delivers, spring holds some special hazards as well,
not the least of which is potential flooding.
Is this how you envision
your day in court? We are all
just one complaint away from
finding ourselves in front of a
group of usually ill-qualified or
ill-informed, but well-meaning
people who might decide our
fate. Is this how you want to
risk your financial future?
How do we combat the
threat to our welfare in the
event that someone, either by
virtue of their injury, or in
search of deep pockets, brings
suit against our business? We
can be the best managed
company in the world, yet that
is no guarantee we will not be
sued.
Our recommendation is for
you to take advantage of our
offer to provide a personal
umbrella or excess liability
policy. This type of coverage
will provide you with at least an
extra million dollars of liability
protection. In the case of some
umbrella policies they might
also provide coverage for
occurrences that are not
covered by your primary policy.
An umbrella liability policy is
quite affordable. If you are
interested in providing another
level of secuirty to your future,
just give our office a call and
we will prepare a quote and
review this coverage with you.
Visit the National Weather Service website
http://water.weather.gov/ahps/ and see how the green speckled map showing all
the potential flood hazards nearly fills the map of the United States, and you will
get some idea of the enormous risk we face here in the US. You don’t have to live
in a flood zone to experience flooding. Many conditions can result in a flood:
hurricanes, broken levees, outdated or clogged drainage systems and rapid
accumulation of rainfall. New development miles upstream can create flooding in
your area.
There is typically a thirty-day waiting period from the time of application till the
policy goes into effect.
If you would like a quote for flood insurance please give us a call.
Annuities….Are They For You?
Annuities have been around for a very long time. Many people have no idea just
how annuities work. Very simply, an annuity is a contract between you (the
annuitant), and an insurance company to provide you with a future income stream.
You give an insurance company an amount of money and, in return the insurance
company promises you regular checks for as long as the contract stipulates.
The annuitant has a wide variety of choices of how to structure the annuity. Payout
can be for a certain period of years, begin immediately, or sometime in the future, or
can be paid for your lifetime. Age, sex, duration of payments and the amount of
payments are determining factors in the initial or ongoing premium.
But, are annuities for you? There are several reasons why someone should seriously
consider annuities in your financial or retirement planning:
n
Income You
Cannot Outlive – Annuities can provide you income, which by
contract, you cannot outlive.
n
Guaranteed
Returns - Annuity contracts guarantee a minimum rate of
interest. The amount you get from your annuity will never be less than what you
put into the annuity, a guarantee you can't get in the stock market.
n
Tax Deferred
Interest – Interest earned on a deferred annuity is not taxable
unti ltaken out of the annuity.
n
Proceeds
at Death Pass Outside of Probate – While annuities are estate assets the
proceeds pass directly to the beneficiary named in the contract avoiding the
probate process.
While annuities aren't for everybody they do provide a safe-haven for money with
guarantees that you cannot find anywhere else. The long and successful history of
annuities is one of the greatest arguments in favor of this investment.
What Did Santa Leave Under Your Tree?
Insuring items of special value
How Strong is
The Promise
Christmas has come and gone and some of you received gifts of jewelry,
cameras, or collectibles. It’s easy to overlook the need for the special coverage
needed for some of these items.
The homeowner insurance policy is written to provide coverage for the
average policyholder. While the policy provides some limited coverage for
special types of property, it in no way serves the needs of the unique insurance
consumer. Most of us do not own collections or have large amounts of
expensive jewelry in our homes. For those who do own items of special interest
or value, there is a solution. The personal property floater, either as a standalone policy or an endorsement to the homeowner policy, can provide special
coverage for unique items like artwork, stamps, coins, jewelry, silver and gold.
A significant advantage to insuring unique and unusual items in this manner is that the personal
property floater usually provides coverage for a much broader list of perils than those provided by
your contents coverage in your homeowner policy. In fact, unless there is a specific exclusion
contained in the policy, the peril causing the loss will usually be covered.
The personal property floater also offers broad coverage against losses that are not covered in the
homeowner policy. This adds special emphasis to insuring items that, while there is no specific limit
in the policy, may be subject to loss from perils that the personal property section of your homeowner
policy does not provide. For example, a policy holder may have a collection of highly breakable fine
arts, but the personal property section of your homeowner policy provides no coverage for simply
dropping and breaking an item in your collection. In order to cover these breakable fine arts properly
you must have these items specifically covered by the personal property floater.
While many of your special property items are easily identifiable in description and value, some
items like antiques might require a professional appraisal. This is the only way to properly arrive at a
value and many time an accurate description. If you don’t have these items specially insured under a
fine arts floater then at the time of loss you could be reimbursed an inadequate amount. The
replacement cost endorsement used with homeowner policies agrees to replace a property item with
like kind. When a value is impossible to establish you will basically receive the useful value of a new
item, without consideration for any intrinsic value.
The modern homeowner insurance policy is written in easy to understand language that can be
reviewed by most policyholders, if you have the patience. If you are still unsure of your coverage
after your personal review of your policy, contact our office so we can help guide you through your
personal insurance package.
A Home-Based Business
For many reasons people are looking at just how viable it might be to
operate a business from their home. The types of businesses are varied
from a simple office exposure to an active retail site like a beauty or
barber shop. If your business is a separate entity, such as a limited
liability corporation or partnership, the insurance will need to be written
on a commercial policy. If however, your business, like so many homebased businesses, is a simple proprietorship, and not a legally defined separate entity, you may
qualify for incidental business coverage offered as an endorsement to the homeowner policy.
The homeowner policy specifically excludes coverage for claims arising out of a business
pursuit. A common endeavor found today is childcare. This is a perfect example of why
insurers must limit certain exposures in their policies. Caring for children in the home offers
many serious liabilities that most policyholders do not have, and would not want to pay for in
their standard homeowner insurance. However, insurance companies have recognized that there
are exposures that don't quite rise to a full commercial exposure, and subject to certain
conditions are willing to offer coverage. Give us a call with any questions you may have about
starting a home-based business.
In large part, lack of
communication or
complexity in the
subject matter can be
blamed for the
perception gap that
exists between
policyholders and
companies. The
insurance mechanism
from the final consumer
to the worldwide
reinsurance market,
which helps spread
losses internationally,
has so many levels of
complexity it is almost
impossible to effectively
explain to the average
consumer.
When you spend
money on insurance
premiums, you receive
only a promise to help
you in the future. The
real value is not realized
unless you have a loss,
which neither the
insurance company nor
you want to experience.
But it is at this time that
fulfillment occurs. Our
goal is, and always will
be, to fulfill and exceed
your expectations.
Granted, the claim
process can get
complicated and
frustrating depending on
the size and complexity
of the claim. One
important job, as your
representative, is to
help calm the waters as
we help you navigate
through the claim
process.
Business Insurance
Avoiding “Willful” OSHA Citations
A willful violation is defined by OSHA as “one committed with an intentional
disregard of, or plain indifference to, the requirements of the Occupational Safety and
Health Act and regulations.” Depending on a variety of factors, inspectors will
conduct either a comprehensive or partial inspection. The consequences of such an
inspection can be dramatic, especially if a willful violation is found and cited.
WHAT TRIGGERS AN
OSHA INSPECTION:
A reported situation presenting
imminent danger to the health or safety
of employees.
As the result of a fatality or other
catastrophic event.
Top Ten Citation Reasons
1. Fall Protection - 7,139
6. Electrical Wiring - 3,584
2. Scaffolding - 7,069
7. Forklifts - 3,432
3. Lack of Hazard
Communication/Warning
- 6,538
8. Ladders, unintended use,
usafe use - 3,244
As a response to employee complaints.
4. Respiratory Protection
- 3,944
As part of a regularly scheduled
inspection.
5. Lockout/Tagout - 3,639
9. Electrical Improperly
Installed Components - 2,863
10. Machine Guards Improper
Use or Removal - 2,556
Employers have a responsibility to supply their workers with compensation in the event of an accident. Even the best
companies, who do everything they can to provide a safe environment, will still have an occasional accident.
The economic argument for workplace safety can be seen in reduced workers compensation rates and lower employer
uninsured costs. The indirect costs resulting from injuries, that can be linked back to a potential OSHA violation, can be four
to ten times the amount of the direct medical costs. Indirect costs include missed delivery dates, disruptions in workflow,
damage to your company’s reputation due to not being able to meet customer demands.
IS YOUR BUSINESS PROPERLY INSURED?
The Insurance Review
Commercial insurance comes in many forms, and buying the wrong policy could leave
gaps in coverage. As a business owner you should make it a standard practice to have an
annual review of your insurance package. Depending on the complexity of your operation,
this process can range from a phone call to a face-to-face meeting including a facility
inspection. Many times in the review process we turn up changes in your operation that
have occurred over the past year requiring special attention.
Without your cooperation with your insurance review we might never know about
possible operational changes that may require special coverage. An annual review can
address whether you have enough insurance to rebuild your buildings, and replace your
business personal contents including furniture, machinery, raw stock and finished inventory. Business contents could also
include property of others in your custody. This non-owned property needs special coverage. You know your operation
better than anyone else. We need your help to properly categorize your assets and analyze your operational exposures, for
both property and liability.
Another important consideration is the loss of business income that can occur as the result of a claim event. During the
rebuilding process that follows a claim a business could lose out to competitors, so a quick resumption of operations is very
important. Business Interruption Insurance can fill the gap. Make sure that your limits are adequate to provide for a period
of time that you believe it will take to return to normal operations. Trying to go cheap here is just bad business.
Liability coverage is typically broken down into several basic categories including bodily injury, property damage,
personal injury, and advertising injury. Your business could also face exposure from professional liability, or claims
involving officers and directors that are not covered in the standard commercial liability policy.
The information in this newsletter is meant as a guideline only. There is nothing in this newsletter that alters the coverage or interpretation of any specific policy or endorsement.
Because some statements are generalizations, and because different companies’ policies contain slight differences, please refer to your specific policy. Call our office before
making any judgments or decisions concerning your particular situation and the coverage that may, or may not, apply.