October 2016

Foreclosure insurance is, by definition, going to be covering an empty home. So, if nobody’s living in the home, if it’s just going to sit dormant for awhile, then how comprehensive does the insurance really need to be? Well, the assessment process here is much like with any other insurance policy, it all starts with…

Evaluating Your Risks

Nobody’s living in the home right now, but the people living in a home are only one part of the risk that comes with insuring a home. A vacant home is just as, or more at risk than an occupied home when it comes to certain risk factors:

• Vandalism

Is there an easier target for vandalism than a house with nobody in it?

• Natural disaster

You probably won’t see a fire resulting from faulty wiring while the power is turned off, but lightning strikes, flooding, earthquakes, storm damage… Mother Nature isn’t specifically targeting occupied homes.

• Theft

Although nobody is storing possessions in the home, a vacant house is a prime target for theft of materials, like copper wiring.

Foreclosure insurance is, more often than not, intended to protect an investment. REO insurance is there to ensure that, should something happen to a foreclosed home while you’re looking for a new buyer, then the money that you’ve put into the home doesn’t go up in smoke.

So you need to consider the risks with your particular property, in your particular area:

• What’s the weather like?

If you live in the Southwest, earthquakes might not be a major concern, but they certainly will be in California, and anywhere from Los Angeles to Las Vegas, you’re going to need to consider the risks of fire damage. Likewise you’ll need to consider flooding and storm damage in the South.

• How’s the neighborhood?

In a high-crime neighborhood, vandalism and theft are major concerns. Less so if you’re insuring a rural farmhouse.

• When was the last time you had the home appraised?

You need to make sure that you’re covering the home for what it’s worth, not what it was worth one, two, three years ago when you first started lending to the previous occupant.

Essentially you’re looking to cover your foreclosed-upon property through a lender placed property insurance policy to a point where you feel comfortable, and where your investment is protected. “Vacant” doesn’t mean “risk-free.” Plenty can go wrong with or without an occupant, and comprehensive REO insurance will keep you covered when it does.

A few years ago there was a story involving a truck broker and their driver hit with a $5.2 million verdict in a negligent hiring case. Following a serious accident, the courts found that the carrier did not do a comprehensive job of investigating the driver, who had been under the influence of illegal drugs and fallen asleep at the wheel.

It can be surprising what winds up damaging a company. A driver who uses drugs and falls asleep while driving might, in another instance, have been held solely responsible for the accident, or the freight insurance provider might have covered the costs involved. However, because the carrier did a poor job of vetting the driver, they wound up being hit with a $5.2 million charge of negligent hiring.

In short, a comprehensive, responsible approach to the entire process of managing your company is the best way to both prevent unfortunate accidents, and to stay out of the courtroom. Contingent motor cargo insurance is there to ensure that reasonable risks are covered. If you are not going to do your due diligence, then your contingent cargo insurance is a waste of money. Insurance can help you to cover your ends when doing business, but it’s not a magically binding contract or a bulletproof shield against any and all charges. Comprehensive insurance means that, if you cover your end, if you vet your drivers, if you maintain your vehicles and your equipment properly, then you are covered when something goes wrong.

Perhaps the most important factor in ensuring that your insurance policy will protect you is ensuring that you have hired the right people. There are a few simple ways to do this:

• Run background checks
• Verify credentials
• Conduct your own testing and additional training

You need to have the utmost faith in your staff, not just your drivers, but everybody to whom you’re signing a check. If something goes wrong and the incident leads to legal proceedings, you need to be able to prove that you have done everything that could reasonably be expected of you. If you’re investing in contingent cargo insurance, it means that there’s quite a bit riding on your shoulders. A comprehensive insurance policy and a comprehensive approach to hiring the right people. There’s no reason to take on whatever drivers will have you. There are more than enough qualified, competent professionals out there to keep your business running smoothly.

Contests like the Lumberjack Olympics in Hayward, Wisconsin are a great opportunity to show off your team’s skills, celebrate the American logging industry, and just have a real good time chopping wood. They’re also an insurance buyer’s worst nightmare if you don’t know what you’re doing. Logging contractors liability doesn’t cover it. If you’re hosting or attending a logging competition, then there will be a whole host of risks that you need to manage which simply won’t be addressed by your basic logging insurance policy, such as…

• Spectator Liability Insurance

When you’re cutting wood to sell to hardware stores and construction crews, you probably don’t have much of an audience watching you. When you host a lumberjack competition, you’re going to have hundreds of people standing around who don’t know the first thing about logging safety. Spectator liability insurance will help to ensure that you’re covered should anything happen to somebody who came just to enjoy the show.

• Competitor Insurance

If you’re hosting, then as long as your athletes sign a waiver of liability, you can hold them responsible for providing their own insurance. Generally this is going to be your best bet if you’re allowing all-comers to compete. You don’t know the individual level of training and ability and experience for each competitor, so your best bet is to let them provide their own coverage.

If you’re attending as a competitor, then you absolutely need to make sure that your health insurance provider knows that you’re entering a potentially dangerous competition. Whatever extra costs that may entail, it’s going to be cheaper than paying your own hospital bills after taking a fall from a tree.

• Equipment Insurance

Your timber logging insurance providers are covering your equipment for use in professional logging. Use a chainsaw to see who can hack a three-foot-thick tree down the quickest and they’re probably not going to pay out when the saw breaks down because you didn’t pace yourself. The equipment used in logging competitions is usually fairly simple: Chainsaws, axes and basic safety equipment. It’s not too pricey to cover your own equipment.

The best way to offset the costs involved with hosting or attending a lumberjack competition, both insuring your ends and providing the best equipment, is to look for sponsorship deals. Companies like Stihl, Remington and Timberland frequently sponsor lumberjack athletes, teams and contests if they feel that it will highlight their brand in a positive way.