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Monthly Archives

September 2012

HOW MUCH IS YOUR PERSONAL PROPERTY REALLY WORTH?

By Personal Perspective

Many people don’t think they have a lot of value in their personal property. Sure, there’s the big-screen TV, laptop or tablet computer, and maybe the home theater system, but the rest is just clothes, furniture, tools, dishes, and stuff. Most of it will probably end up in the garbage or at a garage sale.

However, what we as insurance agents learn is that after a loss (when policyholders compile a list of their damaged and destroyed property and what it would take to replace it) they often find the cost stunning. We don’t want you to discover that you were underinsured, especially when it’s too late.

The reasons for this miscalculation might come down to the fact that most of us acquire our personal items gradually, a little bit here and a little bit there. In contrast, the items we know to be valuable are usually those whose purchase hits us at one time — the big-ticket television or computer, for example. Add up all those “little” expenditures and the chances are that your possessions are worth a lot more than you think.

What to do? Sit down and run a “mock loss” drill with your family. First, write down what you estimate your personal property to be worth. Now imagine that everything you own has been destroyed — and you just happen to have a complete inventory and picture or video of every single item (this should be easy to do because you can walk through the house and see everything).

Once you have your “lost property” list, start adding up the values. If you’re not sure, check store ads, catalogues, and Web sites. Be sure to count all those spoons and shirts, every blouse and toy, and each knick-knack and tool. Some of them might be old. However, if you’re counting on your insurance to replace them, calculate the value at what each item would cost today, if you had to drive a truck to the mall and replace everything at once.

Once you have your total, compare it with your original estimate. Shocked? One Virginia couple estimated their property values to be approximately $100,000. After a total fire loss, they tallied their possessions. To quote the wife, “I stopped counting at $300,000.” Their insurance coverage provided only $109,500.

Call us with your total, and let’s make sure your current insurance covers the real value of your possession. Do it now, before you suffer a serious real loss!

SURVEY: YOUR INSURANCE AGENCY IS HERE FOR YOU!

By Personal Perspective

A consumer survey by a national insurance organization warmed our hearts — and warned us to keep our focus where it belongs: Meeting your insurance and protection needs.

In the study, 95% of respondents said they wanted insurance agents to offer expert counsel. Some 92% also said it was important that their agent handle all of their insurance needs. Three out of four believed that it was important for their agent to contact them regularly for a coverage review. More than nine in ten (92%) want all of this FROM an agent in their community, with a local office to visit for sales and service.

Wow! That’s quite a list. Our response? We have good news and great news. The good news is that we hear you, and we’re pleased to see how many consumers realize the importance of their insurance protection — and the agent who provides it — to their peace of mind and security.

What’s the great news? We totally agree with all of your preferences and we’re dedicated to delivering what you want, the way you want it. Why not let us prove it? If you’re a client, tell us how we’re doing. If there’s a shortfall in our goal to provide excellent service, let one of us know immediately and we’ll close that gap promptly.

If you’re not a client of our agency, ask your friends about us. Better yet, give us a call or come by to visit. We’ll be glad to help.

YOUR BUSINESS IS UNIQUE — IS YOUR COVERAGE?

By Business Protection Bulletin

Insurance can be a risk-taker’s best friend. It lets you use your entrepreneur’s judgment to decide which business risks are worth taking and which aren’t — and when things go wrong, a professionally designed insurance program becomes your safety net. Although you can cover virtually any risk, it’s best to invest your premium dollars in those areas most likely to cause your business the most pain.

For example, if the business provides your family’s sole or main source of income, invest some premium dollars on a Life policy that will provide this income if events take you out of the picture.

If your business depends on computer technology, you’ll want to explore the insurance implications in case of:

  • Viruses
  • Business income losses due to extended downtime
  • Electronic forgeries and theft
  • Liability from alleged breaches of customer privacy. Although a standard policy might provide some basic coverage, you’ll probably need supplemental protection.

Although your building might have coverage in the amount required by the mortgagee or even what you paid, what would it really cost to rebuild it from the ground up? Bear in mind that:

  • Special design issues might raise these costs.
  • Building ordinances (such as those requiring sprinkler systems or wind-resistant materials) would significantly increase the expense of rebuilding.
  • “Grandfathering” the building under your community’s current building restrictions might even prevent you from rebuilding at your present location.

Would the amount of Liability coverage required by your landlord or included automatically with your Business insurance “package” be enough to protect you, considering that you can hardly open a newspaper without reading about a multi-million dollar lawsuit against a business? For these and other reasons, there’s no substitute for sitting down with us to review the key risks that your business faces and possible solutions to these exposures.

PROTECTING YOUR BUSINESS: THE BOP SOLUTION

By Business Protection Bulletin

A rogue employee embezzles $50,000 from your company’s bank account. A visitor to your office slips and falls on a wet floor, suffering a broken elbow. A competitor sues you for allegedly libeling their product.

Believe it or not, a single insurance policy could pick up the tab for any of these instances.

The Business Owners Policy (BOP) can provide “package” protection against these risks — and a wide variety of others — for a premium that’s significantly lower than the cost of the individual Property and Liability policies that you would need to cover all of these perils.

As a rule, BOP packages are available to Main Street businesses (those with revenues of $5 million or less and 100 or fewer employees).

Property coverage under a typical BOP includes:

  • Property Damage to your premises, contents, inventory, office equipment, and computers, as well as the property of others that’s temporarily in your care — such as clothing being cleaned. Most BOPs will pay for the cost of replacing lost or damaged property, rather than its actual cash value.
  • Business Interruption covers loss of income to your business caused by lost or damaged property.

BOP Liability coverage includes, but is not limited to:

  • Bodily Injury covers losses due to physical or mental injury, disease, and death that occurs on your premises or is caused by your products.
  • Medical Payments picks up the cost of health care treatment for customers, vendors, or suppliers injured on your property.
  • Personal and Advertising Liability protects your business against lawsuits alleging slander, libel, or invasion of privacy.
  • Crime covers loss of money or securities from burglary, theft, and embezzlement.

Bear in mind that because the amounts of insurance (limits) under your BOP are fixed, you might need to increase your limits. You might also need to add coverages, such as Fleet Auto. We’d be happy to help provide you with a BOP that’s tailored to the needs — and pocketbook — of your business. Please feel free to get in touch with us.

KNOW YOUR BUSINESS INCOME EXCLUSIONS

By Business Protection Bulletin

Many companies buy Business Income insurance to help reduce the devastating effect of a loss on their ongoing operations. Although this coverage is extremely valuable and can help keep your business afloat after a loss, bear in mind that it has a number of exclusions.

For example, coverage usually excludes lost income associated with a contract. If the covered loss affects your ability to meet a contract with a third party, the resulting lost income won’t be covered beyond the “period of restoration.” This period usually begins 72 hours after the loss and ends as soon as your property is restored and/or operational.

Let’s say that you sign a contract with customer ABC to supply materials for a year. A month later, your business suffers a major loss to property, including the materials that ABC agreed to buy from you. Because you’ll now be unable to offer these materials for an indefinite term, ABC has no choice but to find the materials elsewhere. Your property is repaired and operational five months later, ending the “period of restoration.” However, because of the exclusion, your policy won’t cover the remaining six months of lost income from losing the contract.

Review your Business Income policy today to learn its period of restoration. There might be an endorsement available to extend the amount of time that your policy will provide coverage. We can help you determine the period that’s right for you. Just give us a call.

DON’T LET ‘THIRD PARTY OVER’ RUIN YOUR PARTY

By Construction Insurance Bulletin

One of the true values of Workers Compensation law is the “exclusive remedy” provision to the employer. Basically, in return for providing coverage for injuries arising from the job, this provision protects you from being sued by the employee for the injury, regardless of who has been negligent. Thus, the benefits provided automatically by Workers Compensation become the “exclusive remedy” for the injury.

However, there’s one way to bypass this barrier to employer liability. It’s called “third party over.” Let’s say that an employee is injured when the scaffolding on which he’s standing collapses. Workers Compensation pays the claim, so he can’t sue the employer. However he chooses to sue the scaffolding company, alleging improper equipment and installation. He wins a judgment, which leads the scaffolding company to sue the employer/contractor, claiming improper usage of the scaffolding. In effect, the employer/contractor is being sued for damages arising from injury to its own employee — just what Workers Compensation is designed to prevent.

Is such a suit legal? Yes. Because the scaffolding company isn’t the injured person’s employer, there’s no prohibition against his suing them — and Workers Compensation law clearly can’t prohibit the scaffolding company from claiming against the contractor, either contractually or by alleging negligence.

If you face such a situation, would your Workers Compensation coverage protect you (because the claim originated from an injury to an employee)? Or would you have to turn to your General Liability coverage, as you would when sued by an outside party? The answer: Either policy might cover this situation, depending on the basis of the suit. For truly comprehensive protection, you need to carry several types of insurance. No one policy does it all. A claim that might fall just outside the purview of one policy can be either a disaster, or simply a hand-off to another type of coverage.

Keeping your entire umbrella of insurance protection current and coordinated might seem complicated — but that’s where our agency comes in. When it comes to risk management and insurance, helping you focus on what you do best is what we do best.

CONTRACTORS KNOW (BUILDING) VALUE

By Construction Insurance Bulletin

One of the ongoing dilemmas in Building insurance claims involves determining a valid cost for the replacement or restoration of damaged property. When this insurance is first written, there are a number of approaches for arriving at a reasonable amount of coverage — yet nearly all of the commonly used methods have their weaknesses.

For example, some businesses want coverage equal to what they have paid for the building. However, this ignores the value assigned to the location, which might have increased (or decreased, depending on the location) significantly. Others prefer using real estate appraisals; but this leads back to the sales price, not the construction price. Square footage and building material cost estimators are also common. However, even if they are fairly accurate in methodology, they depend on the accuracy of the data put into the formulas (garbage in — garbage out). Add the effect of changing zoning or building ordinances, and it’s no wonder that insurance industry experts estimated that the average commercial building might be underinsured by as much as 40%.

As a construction professional, you’re well placed to know the cost of restoring or rebuilding after a loss. What others “guesstimate,” you must do accurately for a living. Ordinances and zoning laws that are Greek to most people form part of your everyday knowledge base.

We can review the valuations of your buildings and recommend any necessary changes to your coverage. From that point, let’s explore opportunities to improve the accuracy of building valuations for your clients and ours. Perhaps together we can make inroads into that 40% gap.

ADDITIONAL INSUREDS? CONSIDER OTHER OPTIONS

By Construction Insurance Bulletin

Owners and general contractors usually ask to be added to a subcontractor’s policy as “additional insureds” in order to protect themselves against vicarious liability claims arising from the activities of the sub.

Let’s say that a subcontractor’s employee accidentally drops a tool from a scaffold, injuring a pedestrian on the sidewalk below. Although any liability claim against the sub will go directly to the sub’s insurance, the GC and owner might also find themselves drawn into the suit. For example, the claimant might argue that they were liable for bringing the sub onto the jobsite. Adding them as additional insureds to the sub’s policy is an attempt to make the sub coverage the primary source of defending and paying the claim.

However, such arrangements carry numerous potential pitfalls, such as inadequate coverage (due to exclusions or limitations) and/or inadequate coverage limits (due to previous claims draining the available limits).

As an alternative, the subcontractor might buy a separate Liability policy tailored to protect the named insured for vicarious liability from the actions of the sub. Two such policies are the OCP (Owners and Contractors Protective Liability policy) and PMPL (Project Management Protective Liability). Each provides separate limits of coverage from the sub’s regular Liability policy. Although the two differ in several ways, each offers an attractive solution to the vicarious liability issue.

If you’d like to choose either of these options in your contractual arrangements as an owner/GC or as a sub, our Construction insurance professionals stand ready to help. Give us a call.

WORKERS COMP: SOME FIND FRAUD FINE

By Workplace Safety

Every state battles fraud and abuse of its Workers Compensation system. Even though you use Worker Comp to protect your employees and keep your premises safe, you might well end up paying higher premiums because other firms, employees, and medical providers have no compunction about cheating the system through fraud and abuse.

Workers Comp fraud involves such criminal acts as workers falsifying claims, employers misclassifying high-risk workers with less dangerous jobs to lower their premiums, and physicians exaggerating injuries and their treatment and overbilling insurance companies for expensive services never rendered. Fraud has led a number of states to pass legislation simplifying the prosecution of offenders. On the judicial front, some states provide insurance companies with immunity from lawsuits if they report Workers Comp violators. On the downside, insurers need to tread cautiously because a firm wrongfully accused of fraud has legal recourse after a false report or misleading statement.

Unlike fraud, Workers Comp abuse isn’t a felony, although it also increases premiums for everybody. Usually, this misuse of benefits involves a worker who uses unnecessary medical services, remains away from work after their injury has healed, or reports an off-hours injury as happening on the job.

According to a recent Insurance Research Council survey, more than one in four workers (28%) believe that padding Comp claims is justified to recover the policy premium, which they aren’t even responsible for paying! Insurance companies have trouble detecting this common abuse, especially when they’re up against a stress or soft-tissue injury, because there are few if any physical symptoms. This attitude among workers might be an extension of the belief that claims-padding on policyholders’ Personal insurance coverages (Auto or Homeowners) is simply a way of getting their money’s worth from their premium.

As a business owner or manager, you can help curb Workers Comp fraud and abuse and keep your premiums under control by:

  • Screening out potential abuses when you recruit employees and assign jobs.
  • Developing close, mutually respectful relationships with your workers to minimize any grudges against management that might encourage abuse.
  • Keeping close tabs on potential abuses of the system.

We’d be happy to work with you in reaching these goals. Just give us a call.

RISK MANAGEMENT PROGRAMS HELP REDUCE COMP COSTS

By Workplace Safety

Any business owner knows that sound risk management provides a foundation on which to base all other operation strategies — and a great way to reduce accidents and injuries and lower its Comp premiums.

Because this is such an important topic, here are the seven essential benefits of a risk management program, as detailed by The National Alliance for Insurance Education & Research:

  1. Reduced cost of accidents
  2. Providing adequate protection
  3. Economy of operations
  4. Integration of safety plans
  5. Reduced risk of criminal liability
  6. Ability to plan and budget more effectively
  7. A clearer focus on the big picture

If you hire someone to oversee risk management within your company, the Alliance recommends that they: Develop and communicate risk-management policies; prepare recommendations and reports; conduct risk-identification surveys; analyze and measure exposures; review leases and contracts; coordinate compliance with regulations; implement risk-control programs; investigate accidents; manage claims and litigation; arrange risk financing (including insurance); establish retention programs; determine and allocate cost of risk; and monitor results.

This is only one perspective on risk management. We’d like to review your company’s risk management program, as well as your Workers Comp coverage, at your earliest convenience.