Summertime Blues

"There ain't no cure for the summertime blues."  Blues?  It's the first day of summer and that means fun.  Why all this talk about summertime blues?  It is a very simple equation. Fun +  x = liability (where x = just about anything!)  Unfortunately, your "fun" residence abounds with chances for injuries and resulting liabilities to others. Let's demonstrate the truth of this hypothesis:   fun + x = liability.

Your backyard pool is loads of fun.  Add your neighbor kids to the mix and you have the potential of someone getting hurt.  Result?  Liability due to failure to take reasonable precautions to prevent children from swimming unsupervised..

You are hosting a fun summer soiree with a great selection of adult beverages.  On his way home from the party, one of your guests is involved in a serious automobile accident. Outcome?  You get sued under the doctrine of social host liquor liability.

Your kids' trampoline is the hit of the neighborhood.   Your backyard is the place for fun until a neighbor's child gets injured when he bounces off the trampoline platform onto the ground.  Consequence?  Suit papers alleging inadequate supervision on your part.

The backyard grill at your fun-filled Fourth of July party, goes haywire, badly burning a 12 year old.  The end result could be legal action against you for your failure to maintain the grill in good working order.

The list of potential summertime blues is an endless as the fun!  So what's a fun-loving homeowner to do?  Is there a cure for the summertime blues?

Prevention is the best cure.  Just as you put on sunscreen to protect your skin from the elements, make sure that all of your "fun" attractions are installed correctly, maintained in good working order and adequately supervised at all times.  Talk to your insurance professional about increasing your home insurance policy's liability limits or purchasing an umbrella policy.  Increasing your liability limit to $500,000 is normally less than $30/year. Additionally, an umbrella liability policy can cost as little as $150 a year for $1,000,000 worth of coverage.

Take a few moments out of your summer fun to protect your most valuable assets - your home, your income and your family.  Fun + (x + insurance) = reduced liability and peace of mind.

Insurance Folks are Nuts!

The other day, I stumbled upon a blog entitled "18 Disney Movies That Were Never Made." It is probably no surprise to you that a film chroniciling the adventures of a superhero named "Insurance Man" was not on the list.  You can't blame an insurance nerd like me for checking. Anyway, the blog made me think about the media's portrayal of the insurance industry in movies and tv shows.  Does art imitate life?  Has insurance been portrayed honestly?  What is fact and what is fiction?  You be the judge.

One episode of the beloved Andy Griffith television show highlights the value of homeowners insurance.  Aunt Bee loses her "valuable" antique broach given to her by her Aunt Martha.  Andy tells Bee they can put in a claim with the insurance company. A geek like me beams with pride as Andy explains the applicable homeowners coverage to Aunt Bee.  Fact - Insurance rocks!

There was actually a television series that centered on the insurance industry.  Can you name it?  The main character was an insurance investigator named Mike Longstreet.  Did I mention he was blind?  The short-lived show was appropriately named Longstreet and aired for one short season in 1971-72.  The blind protagonist was equipped with his seeing eye dog, a gun and was an expert at martial arts.  Quite a hero but I am leaning towards fiction.

The 2012 hit television show, Revolution, is a sci-fi drama that takes place when the world has been robbed of electricity.  Believe it or not, the show has a connection to insurance. One of the key characters and villains is Major Tom Neville.  Prior to the blackout, Tom was an insurance adjustor.  All adjustors are villains?  Fiction.

The big screen has had a few collisions with insurance as well.  Do you remember the Jack Nicholson movie, About Schmidt?   The main character, Warren Schmidt, is retiring from his career as an insurance actuary.  He reflects on his past and whether he ever made a difference in the world.  Sidenote, not all actuaries are without emotion!

In 2004, Ben Stiller played the role of Reuben Feffer, an actuary whose job analyzing risk for insurance  seems to have turned him into a dour, lifeless loser whose wife cheats on him during their honeymoon.  Remember Along Came Polly?  Fact - not all actuaries are as boring as Feffer!

I was pleasantly surprised to discover insurance in a Disney movie!  Did you take your kids to see the 2004 computer-animated movie, The Incredibles?  This action-comedy centers around a family of superheros.  The father, Bob Parr, is an insurance company adjuster by day and superhero possessing great strength and durability by night. Finally an insurance champion that everyone can relate to and that's a fact.

Without a doubt, Double Indemnity is the most famous insurance storyline.  Initially a novel, this critically acclaimed story has been made into a movie and a play.  The movie version stars Fred McMurray as Walter Neff, an insurance salesman turned murderer. Neff kills his lover's husband to collect on an accident insurance policy.  The payout?  A $50,000 double indemnity benefit; i.e. twice the benefit if death is caused by accidental means.

As an insurance geek, Double Indemnity is my all-time favorite since it is jam-packed with insurance terms and references.  One of my favorite lines from the book is from McMurrary's character, Walter Neff.  "You think I'm nuts?  All right, maybe I am.  But you spend fifteen years in the business I'm in, maybe you'll go nuts yourself".  Fact - not all insurance folks are nuts!

A Fool And His Money Will Soon Be Parted

As tornado cleanup continues for thousands of residents of Oklahoma, the nation finds hope as stories of rescued individuals, recovered pets and salvaged possessions come to light.  A brief account about the surprising recovery of cash, (you remember cash?  greenbacks?  paper money?) caught my attention.   

Moore, Oklahoma resident Tom Bridges had $2,000 cash from the sale of his boat. The cash was in an envelope with a rubber band, on a windowsill of all places, before the tornado hit. The day after the tornado, he found that envelope with the money intact in his destroyed home.  No small miracle that paper money in a paper envelope was found after 210 mph winds whipped through town!

An oft quoted proverb says "A fool and his money will soon be parted."  By no means am I saying that Mr. Bridges is a fool but what if he and his money had parted... permanently? What if he hadn't found that wad of cash?  Furthermore, what if one of his neighbors had hidden away thousands of dollars worth of gold coins and the tornado deposited the coins in lands unknown?

Of course, the insurance addict in me got to thinking....  Do the folks know how insurance responds to claims involving money?  Inquiring minds want to know.

A standard home, renters or condo insurance policy places a $200 combined limit on the following valuables:

Money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards.

'Nuff said.  If you routinely or just by happenstance have a combined total of more than $200 worth of these items in your home, please be aware that if someone burglarizes you or your home burns down or a tornado blows through, the most you will recover from your insurance company is a whopping $200!  Please don't be confused. There is not $200 for money and $200 for gold and $200 for smart cards.  The TOTAL is $200.

As always, please talk to your agent about your particular policy and your specific needs.  As a perk on select coverage forms, some insurance companies will automatically increase this $200 limit to a $500 or $1,000 amount. Others will allow you to increase this limit to a $1,500 maximum or higher, for an additional premium charge.

No need to be foolhardy.  Now that you understand the insurance consequences of damage to your cash and coins, you can decide when to part with your money.

Peace of Mind

In 1971, Memorial Day was declared a national holiday by an action of Congress.  Often called Decoration Day, the majority of Americans think of Memorial Day as the beginning of summer.  However, the intended purpose of Memorial Day is to honor the nation's war dead.  For those of us that do not have a war veteran in our family, we often associate Memorial Day as a day to remember any loved one that has passed.

Perhaps part of your Memorial Day is a visit to the cemetery. Be aware that across the country, there are increased instances of theft of grave markers. I can only image how violated I would feel if a visit to the cemetery revealed that the headstone of a loved one had been stolen, damaged or vandalized.  A recent theft of a $36,000 brass statue and grave marker occurred in Trumbull County, Ohio.  Police reports from around the country reveal that many markers are stolen and sold for scrap metal.

An obscure yet invaluable coverage of most home insurance policies is coverage for grave markers.  A typical policy might read:  "We will pay up to $5,000 for grave markers, including mausoleums, on or away from the "residence premises" for loss caused by a Peril Insured Against under Coverage C."  The "Peril Insured Against" would include tornado, vandalism, lightning and theft.

Today, many headstones are personalized with photos, detailed artwork, emblems and even QR codes, honoring the complexity of the individual's life.  Typical headstones can range from $750 to $2,000. The more customization the higher the cost.

The process of designing a permanent memorial is an extremely emotional experience.  It is the final word on someone's life journey.  Each and every visit to a grave marker stirs feelings of joy, sadness and perhaps, comfort.  It is reassuring to know that if something unforeseen harms your loved one's marker, you can look to your homeowners insurance policy for assistance.

Insurance is peace of mind.

Have a safe and blessed Memorial Day.

Sinkholes - Coming To A Home Near You

Imagine waking up to find the basement of your residence swallowed by a sinkhole.  That's just what happened to a couple renting a home in Cincinnati early this morning.   Luckily, no one was injured in the geological event.

You may remember the deadly sinkhole in Florida that claimed the life of 37 year-old Jeff Bush while he was sleeping in his bed. Since that event, neighboring homes in Seffner, Florida,  have been condemned and are being demolished.

Sinkholes are depressions in the surface of the land caused by the sudden settlement or collapse of the land.   According to a U.S. Geological Survey, sinkholes are found all over the world.   In the U.S., sinkholes are especially common in Florida, Missouri, Tennessee and Kentucky.

So, is the damage caused by a sinkhole covered on your homeowners policy?   In most states, NO.  In the states of Florida and Tennessee,  insurers are required by law to offer sinkhole coverage for an additional premium.  In other states, if the carrier offers the coverage, a homeowner can elect to purchase it for an additional premium.

Be aware that this optional sinkhole collapse endorsement covers only the  "actual physical damage arising out of, or caused by, sudden settlement or collapse of the earth ."  Emphasis on "actual physical damage".  So if your neighbor's home is damaged by a sinkhole and your home is condemned because of a potential sinkhole underneath, is there actual damage to your home?  The coverage you paid for may not apply.

Good news for Florida residents.  Because sinkholes are so common, the mandated coverage does pay for expenses when the home is "being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that structure."

As for businesses, most commercial insurance forms do provide sinkhole coverage.  As always, be sure to discuss this coverage and other potential coverage limitations with your agent on your specific policy.

Sticks and Bricks

The horrific tornado that devastated parts of Oklahoma this week has been deemed an EF5. The National Weather Service classifies an EF5 as the strongest category of tornadoes, generating winds of up to 210 miles per hour.  Thankfully, the number of lives lost remains low but initial property damage estimates are at $3 billion.

The stories are heart-wrenching   The destruction is nuclear.  The remains are nothing more than sticks and bricks.

After a 25 minute reign of terror, the monster tornado left.  First responders began the search and rescue mission.  Now the cleanup and rebuilding begins.  Enter Red Cross, FEMA and insurance.

The good news is that, unlike Superstorm Sandy, this tornado has no complications of flood insurance.  A tornado is a tornado is a tornado.  Windstorm.  Covered by the vast majority of insurance policies.

The bad news is, just like Superstorm Sandy, many of the victims are renters. Renters without insurance.

According to a recent study, nearly 70% of renters don't have renters insurance!  WHY? Surely it is not the cost.  The National Association of Insurance Commissioners reports the average renters policy costs under $200 a year.  Less than $200 per year.  Let's break that down.

$200 a year

$16.67 a month

That minimal premium policy would likely provide:

$15,000 contents

$4.500 loss of use

$500,000 liability

Consider this:

The average single American's monthly cell phone bill is $71.

The average American's cable bill is $86 per month.

Personally, I think the number of uninsured renters is because renters erroneously think that their landlord is responsible for their property.  They think that the landlord insures their property.  Nothing could be further from the truth.

Unlike a smart phone or cable, insurance is not a "fun" product to spend money on.  The actual policy document, be it paper or electronic, won't give you a warm and fuzzy feeling.

What insurance can do is give you peace of mind.  Peace of mind, Renter, that when a tornado or fire leaves you with nothing but sticks and bricks, you will be able to replace your belongings, find temporary housing and begin the process of recovery.

The Hammer Clause - Not What You Think

"Doctor, Lawyer, Indian Chief" - Besides being the name of a popular song from 1945, what do these occupations all have in common?  Each requires that the individual with the title possess a special skill holding them to a higher standard of conduct.  They are considered professionals.  Plumbers, programmers, carpenters...the category of professional has evolved.

If allegations arise that one of these individuals failed to render services of a professional nature, their business liability policy, sometimes referred to as a Commercial General Liability (CGL) policy, will not respond.  Professional liability is excluded under CGL policies.

The astute professional carries a professional liability policy in addition to his CGL.  Professional liability insurance, also referred to as malpractice insurance, will protect the professional when allegations of errors or omissions in professional services arise.  But you knew that.

What you may not know is that many professional liability policies contain an unusual clause, known as the "hammer clause".  The hammer clause requires the insurer to seek the insured's approval prior to settling a claim for a specific amount.  Some professionals believe that settling claims out of court is an admission of error that may harm their professional reputation.  So the hammer clause appears to be a great way for the professional to have the final say before settling a suit that they deem frivolous or unsubstantiated.

However, what many professionals fail to realize is that if they do not approve the recommended settlement, the hammer will fall.  You see, the hammer clause goes on to say that the insurer will not be liable for any additional monies required to settle the claim or for the defense costs that accrue from the point that the insurer makes the settlement recommendation.

An example will demonstrate the point.  Dr. Smith has a $5 million limit on his professional liability policy.  His insurance adjuster/lawyer recommends that a settlement be reached in a malpractice claim for $500,000.  Dr. Smith refuses and wants the case to proceed to trial.  Any defense costs from that point on, as well as any settlement over $500,000, will not be paid by the insurance company.  Talk about putting the hammer down!

The 1945 song goes on:  "Tell the doc to stick to his practice; Tell the lawyers to settle his case.".  My interpretation, always work with an insurance professional who can explain these important policy provisions to you.  That way, you won't get hammered. 

The Best Two Minutes

It's Derby Week in the Commonwealth of Kentucky.  Mint juleps are being downed by the thousands, flamboyant hats are adorning ladies' heads, steamboat races and parades highlight every day and, oh yes, there is a horse race with some wagering.  The entire nation joins us in the celebration of "The Best Two Minutes In Sports".

So why all the fuss over this horse race?  Is it the fact that the Derby holds the record for the longest consecutive running sporting event in the US?  Could it be as simple as the opportunity to place a $2 bet and win thousands?  (The highest Exacta payout in Kentucky Derby History occurred in 2005 when a $2 bet paid $9,814.80. By the way, Exacta means you pick the first two horses in exact order.)  Or is the appeal of gambling?

Often, folks tend to equate gambling with insurance.  "I'm willing to gamble that an earthquake isn't going to occur so I am not purchasing earthquake insurance."  "If I purchase this collision insurance and I don't have a wreck, I have lost my money."  Yikes! Insurance is a wagering event like the Derby?

In honor of  the 139th running of the Derby, let's take "two minutes" to dispel the myth that insurance is a gamble.

Gambling creates a risk that did not previously exist - the risk of losing money.  If you don't gamble, you don't lose the money you were going to risk.
Insurance mitigates risk - the risk of a fire, earthquake, theft or other calamity already exists; insurance transfers the risk to an insurer.

Gambling lures you into the thinking that you may "come out ahead" - a $10 trifecta bet may pay you $575.  In fact, you may lose the $10, breakeven or hit it big.
Insurance, on the other hand, promises to put you back in the position you were BEFORE the loss.  If you had a flat screen tv before the fire, a homeowners insurance policy should provide you with a replacement, like kind and quality, flat screen tv.

Gambling has been known to cause much stress and anxiety leading to addiction problems.  The gambler is constantly trying to figure out ways to "beat the system" and "get ahead" - sometimes to the determent of his lifestyle, family and income.
Insurance, on the other hand, provides 24/7, stress-free peace of mind.  After paying your premium, you can rest easy knowing that IF a catastrophe occurs, your lifestyle and income will not be destroyed.  Now that's the kind of dependence problem I like to have!

Now, place your bets for the "Best Two Minutes In Sports" and enjoy the 139th Run For The Roses!

A Few Good Men Go Mad

Fans of AMC's series, "Mad Men" undoubtedly remember the grizzly suicide of  character Lane Price.  Lane, a seemingly honest and "good" employee, had embezzled $8,000 from the company account to cover a personal tax bill. When caught by Partner Don Draper, Lane was given the "opportunity" to resign without any legal ramifications.  Faced with the humiliation of being caught, Lane hung himself in the office.

Insurance junkies like me ponder the insurance ramifications of the embezzlement   Did Don contact his insurance agent to initiate a claim for employee theft? Did the firm have employee dishonesty coverage?  Did the agent recommend a fidelity bond?  But I digress.

Ask any business owner if his insurance program covers loss by theft and the answer will be a resounding "Yes."  Ask that same business owner if his insurance program covers loss by employee theft and the answer will be "It better."  Many just assume employee dishonesty is covered.

The sad fact is that employee theft is excluded under almost every business insurance policy. This invaluable coverage, often covered via a vehicle known as a fidelity bond, must be specifically added to the insurance program with an appropriate additional premium.

Today's media abounds with stories of embezzlement by "good" people at all types of businesses.  Here are a few real life headlines about "good men" gone "mad":

• Former University Athletic Director allegedly diverted as much as $150,000 from his department's budget for personal use
• Former State Agriculture Commissioner accused of misusing state funds
• Two employees of a College Preparatory Academy are accused of stealing and/or misusing $148,000
• Employee of an accounting firm is accused of stealing more than $100,000 from the payroll account of one of their clients
• The treasurer of a Youth Soccer Association was charged with theft of embezzling $64,800 from the organization

Like AMC's fictitious firm of Sterling, Cooper, Draper, Price, employee embezzlement can exist right under the owner's nose.  No business is immune from the possibility of employee theft.  The most trusted, long-term employee may be caught up in gambling debt, drug addiction, or large medical expenses.  That may be enough to turn a "good man", mad.

What can you do to keep your "good men" honest?

1. Implement anti-theft procedures and internal controls to prevent misappropriation of funds.  Controls are put into place to keep honest folks honest.
2. Create a culture of honesty in your organization.  Encourage all employees to be vigilant and report any "suspicious" behaviors.
3. Run credit and background check on new hires and at regular periods for all employees.

What if Don Draper had decided to forgive Lane Price?  Instead of firing Lane, what if Don had made a concession and let Lane remain with the firm?  He was a "good" employee, right? 

CAUTION to any business owner that has contemplated this type of decision before.  Since Don was aware that Lane had committed a dishonest act, any future dishonest act by Lane would not have been covered. 

A common exclusion in an employee dishonesty policy removes coverage for any acts committed after the insured first becomes aware of any dishonesty on the part of said employee.  In other words, if Lane later embezzled $25,000, the firm's employee dishonesty policy would not cover that claim.  

Prepare for the unlikely event that one of your "good men" may turn into a "mad man". Talk to your Trusted Choice agent about adding employee dishonesty coverage to your insurance program today..

Snakes On An Insurance Policy

Did you hear the one about the Texas woman that tried to remove a snake by setting it on fire? There is no "hissss-terical" punch line to this - it's not a joke!  The woman's home was destroyed by fire and her neighbor's home was also badly damaged.

The Texas woman encountered the snake while working in her yard.  She poured gas on the snake to try to kill it and her son dropped a lit match on the serpent.  Enraged, the snake slithered towards some brush and "poof" - the rest is hissss-tory.

Assuming this woman carried home insurance, is this a covered claim?  Fortunately, there is not a "stupidity" clause in the standard home insurance policy.  (Not to say there aren't times when adjusters would love to invoke such a clause!)  So the actions of the woman and her son should not preclude her from receiving a claim payment.  Let's look a bit deeper.

All policies carry an exclusion for "intentional loss".  This is defined as a claim arising out of any act to  "commit or conspire to commit with the intent to cause a loss."  Did this woman intend to burn her house down?  By applying the policy's definition of "intentional loss", it would appear this loss was not intentional.

Another standard exclusion in home insurance policies is for damage caused by "vermin".  The last time I checked, snakes most definitely qualified as vermin.  Does this mean the damage is not covered?

Insurance policies follow the rule of "proximate cause" when more than one set of circumstances contribute to a claim.  In laymen's term, this is the "but for" clause -"but for" the fire, the snake would not have damaged the home.  In this case, the snake may have contributed to the loss but the fire is the proximate cause of this claim.  Based on these facts, the woman's home insurance will cover her claim.

Most of us have an aversion to snakes and would like to rid our neighborhoods of them. Fire is not the answer.  There is an old Chinese proverb that would have served this Texas woman, her neighbor and her home insurer well - "Beat the grass to frighten the snakes".

Clueless About CLUE

Professor Plum, in the lounge with the dagger.  Remember playing that detective game as a kid?  It's been around since 1949.

There's a newer version of CLUE that plays a vital role in determining the rate of your home or property insurance.  "CLUE" - "Comprehensive Loss Underwriting Exchange" has been around since the early 1980's and has really "taken off" in the last ten years.

Much like credit-scores, insurance companies run CLUE reports to properly assess the level of risk they will be insuring.  However, unlike credit scores, most consumers are not even aware of their CLUE report.

Did you know that anytime a potential property claim is submitted to an insurance company, that information is reported to an independent firm that compiles this info for the entire insurance world to access?  When you request a quote from any insurance company on your property, no matter what you tell them regarding claims, the CLUE report will reveal all....and more.

Remember when you called your agent to discuss how your absent-minded spouse let the sink overflow, again, damaging the ceiling below?  It was decided that you should not submit this second claim since the insurance company just paid $5000 for the first overflow.  Unbeknownst to you, your agent had a duty to tell the insurance company about the claim who in turn had a duty to report it to CLUE.  Now, all underwriters know about your propensity to have water damage claims.

Let's play this game a step further.  CLUE is a report on the property, not on you.  When purchasing a new home, you may be shocked to find that the insurance company wants to charge more premium than you expected.  The CLUE report reveals that there is a history of property claims on the home...before you even own it!

Finally, when you submit a claim and the actual payout is less than your policy deductible, it will still be on your CLUE and, believe it or not, has been known to be "held" against you.

This type of information or "misinformation" can have an adverse affect on your insurance premium.  In addition, CLUE reports have been known to trigger non-renewals of insurance from a current company and refusals to quote from prospective companies.

(By the way, similar CLUE reports exist for auto insurance claims as well.)

In the board game, Clue, players make "suggestions" as to who committed the crime. With that in mind, let me suggest some tips for handling your CLUE:

• Annually request your free copy of your CLUE report.
• Verify the information on your annual report.
• Think very carefully about reporting claims.  Your agent has a duty to report any potential claims.
• Before purchasing a new home, ask the Realtor to provide a CLUE report on the home.
• Visit Privacy Rights Clearinghouse for more information about "CLUE and You:  How Insurers Size You Up"
• Talk to your agent for specific information about your insurance situation.

Keep in mind that CLUE is only one of the tools that insurance companies use to adequately determine rates.   

Had no clue, did you, Colonel Mustard?

No Need to Fear, Underdog is Here!

Did you know that are approximately 70 million pet dogs in the US?  How many four-legged family members does your family have?  Remember when the "responsibility" discussion ensued about getting a dog?  What did you, as the responsible adult, make your child do to prove that he or she was "ready" for pet ownership?

• Walk the neighbor's dog for a month
• Write an essay explaining how responsible he or she is
• Obtain One Million "Likes" on Facebook (seriously - and these enterprising kids did it!)

Sooner than later, your newest family member, in the form of a lovable pooch, arrived. Within a few weeks, the parental unit was walking the dog while Junior was working his thumbs on a mobile device.  So much for teaching Junior responsibility, but what about your responsibility as a pet owner?

It may be a surprise to you that dog bites accounted for more than 1/3 of all homeowner claims in 2011, with the average claim totaling close to $30,000!

Yes, if Fido "accidentally" nips the neighbor's toddler and injury results, you could very well be sued for medical bills, pain and suffering and the like.  If Rover gets loose and bites someone else's dog, you could find yourself paying for vet bills.  "There's no need to fear.  Underdog is here!"  That is assuming you have a home / renters / condo policy.  The "underdog" of coverages on your policy that I am referring to is "Coverage E - Personal Liability".

Personal liability will defend you, even if the suit is groundless, false or fraudulent.  This inexpensive coverage can be increased up to a $500,000 limit for an additional premium of usually less than $30 per year.

This coverage is not limited to dog bites.  If you or family members are sued for many types of bodily injury or property damage claims, underdog "Coverage E", can rescue you. Talk to your Trusted Choice agent for more details.

There is one more thing to keep in mind regarding your dog.  Injuries caused by your dog will automatically be covered by your home insurance in most situations.  Some insurance companies, however, do have a "restricted" list of dogs that they do not want to cover on the home policy.  These breeds are perceived to have aggressive tendencies. Other insurance companies define what dogs are "restricted" from coverage based on behavior; i.e. biting history.  Be sure to discuss your pet honestly with your insurance company.

Be a responsible dog owner.  Train your dog.  Take necessary precautions with your dog around neighbors and visitors.  Finally, armed with your insurance policy, you can have no fear, underdog is here.

Are You SURE You Have Enough Insurance?

Just about every day, you can pick up the local paper (or online paper, or Twitter) to read about a family who lost their home to fire and discovered that they didn't have enough insurance to rebuild. Case in point, this morning's story, "Insurance will only cover about $160,000 and preliminary estimates indicate it will cost at least $200,000 to rebuild the structure."  Where will this family round up the missing $40,000+ for their home?

With these types of stories continually staring you in the face, why do you balk when your home insurance renewal increases the coverage on your home by a meager 2%?  You know who you are.  You are not alone.  Insurance agents across the country field these calls on a daily basis.  The dialogue is something like this:

Homeowner:  "I just got my renewal.  Where do they get these amounts?  I WISH I could sell my house for $250,000!  In this market, I would be lucky to get $200,000 for it."
Agent:  "I appreciate your concern, Mr. Homeowner.  Insurance is based on the replacement cost of the home; not market value."
Homeowner:  "That's ridiculous.  I can't afford this premium.  Please reduce my coverage back to what it was last year or I am moving my coverage to Compete-Cheap-Insure-Agency, down the street".

To the average American, your home is your most valuable investment.  And yet, some statistics shows that two out of three homes are underinsured.  Were you aware that the typical home insurance policy requires  that the homeowner insure the building to at least 80% of what it would take to replace the dwelling?  Replace, not sell.  Once that provision is met, the typical homeowner policy will pay up to policy limits.

Many home insurance companies offer "Additional Replacement Cost" coverage that will automatically increase your maximum amount of dwelling coverage by 25%, 50% and in some cases, a "guarantee" to replace the home, whatever it costs.  The additional premium for this invaluable coverage is usually around $25.

Another thing to consider is the cost of rebuilding your home up to code.  City, county and state ordinances will undoubtedly add costs to your rebuild.  Are you aware that some cities are considering a code addition to require the mandatory installation of fire sprinklers in new home construction?  How much will that set you back?  Yes, these ordinance or law costs are typically covered by your insurance but are limited to 10% of your building coverage amount!  You can, and should, purchase increased ordinance or law cost coverage.

Are you SURE you have enough insurance?

I know home insurance premiums are on the rise but there are ways to get the disaster coverage you need at a price that will fit in your budget:

• Consider increasing your deductible to a $1,000 or higher
• Ask your agent to shop your coverage with all of his companies to make sure you are getting the best coverage for your premium dollar
• Talk to your agent about your "insurance score" - what can you do to earn the preferred rate?
• Bundle your home, auto and umbrella policies with the same carrier for maximum discounts

If you still feel the replacement cost figure that your insurance company has is off-the-mark, spend some time assessing your home's replacement cost by visiting AccuCoverage.com.  For $7.95, you can accurately input your home's features into the same building-cost data base that insurers use.   Another option is to invite your Trusted Choice Agent to your home for a good old-fashioned home insurance review.  After all, who better than you and your local agent to calculate your home's replacement cost?

Insurance For A Flooded Mancave

Spring-like weather in January has hit the Midwest.  As much as we have been enjoying the temperatures, our yards are saturated with the snow melt.  Now, much of the area is under a "flood watch" as new rainfall is expected which may cause rapid runoff.  What's a homeowner to do in anticipation of a wet basement?  Especially when your basement is really a very expensive "mancave" complete with all of the amenities.  Let's look at your options:

You've seen all the commercials and heard the news that "flood" is not covered by your homeowners policy, so, let's buy a flood policy.  Problem #1, a new flood policy normally has a 30 day waiting period before coverage can take place.  Since the rain is predicted tonight, the flood policy for this current situation is not the answer.

Problem #2, even if you already have a flood policy in effect, the flood policy has very limited coverage for the lowest elevated floor of your home; i.e. the basement. More bad news, most personal property in the basement is not covered by the flood policy.  You knew that, right?

Many of you are thinking that surely, water running into a basement isn't really a flood. You are thinking that your homeowners policy will take care of the damage.  Let's look at one section of the standard water exclusion on a homeowners policy:

-  " excludes water which seeps or leaks through a building, sidewalks, driveway, foundation".

What?  You have been paying those increasing insurance premiums for years and you don't have coverage for water in your very expensive mancave?  Surely, Insurance Addict, you are mistaken.  Ummm...not really.  Let's discuss the homeowners policy and water damage.

The easiest way to try to keep it straight is to remember that your home policy will cover sudden and accidental losses.  Examples: pipes burst in your walls, the washing machine hose gets disconnected and spouts water for hours, the toilet runs and runs and runs for hours creating a waterfall from your second story steps to the living room.  These are examples of sudden and accidental water damage.

Where CAN you get the coverage you need for your basement and its belongings?  For tonight's rain, prevention is the best answer.  As I learned the hard way, all of my precious "goodies" that are stored in my basement are now kept in  large waterproof plastic containers.  When my lawn can't handle the rain water and it runs in my basement, I know that my keepsake photos, papers, etc. are protected.

Another option is to invest in a water sensor or basement flood alarm.  That way when the water starts to invade your mancave, you can move or elevate the larger items, like electronics.

Make sure your home is in good repair by caulking foundation cracks and inspecting gutters and downspouts.  These are just a few items on the Trusted Choice "Time To Winterize" list.

If sewer backup is a problem in your lower level, add "Sewer and Drain Backup" coverage to your home policy.  You can buy back this protection for usually less than $75/year.

Keep in mind that the flood policy defines a flood as "unusual and rapid accumulation or runoff of surface waters from any source".   (exactly what many of us will experience after this January rain)  My suggestion is to contact your Trusted Choice agent and ask for a price on a flood policy for your residence.  You may be surprised at the affordability. Remember, once your flood policy is in effect, there is still no coverage for your personal property in the mancave.  You will, however, have coverage for the drywall, furnace, hot water heaters, electrical and plumbing systems and other "building" items.

Water damage claims are some of the most confusing, frustrating and costly types of claims.  Talk to your Trusted Choice agent about your options BEFORE your "mancave" is damaged.

Smart Coverage for Smart Gadgets

Exciting news from this year's Consumer Electronics Show in Las Vegas - your new appliances may be "smarter" than you!   In addition, they will communicate with each other and you, via your smart phone.  Your refrigerator will be able to suggest recipes based on what you have in the fridge, your washer will recommend a cycle to get a stain out and your robotic vacuum will sweep the living room on your way home from work.  Rosey the robot maid, step aside! Even George Jetson's home wasn't this automated.

All of this smart technology is great when it works and frustrating as all getout when it doesn't.  Even worse, when smart technology breaks down or is damaged to the point of replacement, our wallets begin to "smart"!

The Insurance Information Institute reports that in 2011, the average claim for power surges to high dollar electronics was $5,112. However, most home policies will not cover damage to appliances caused by a power surge, not to mention the lack of coverage when the equipment has a mechanical or electrical breakdown.  

What's a "smart" consumer supposed to do? One solution is to make sure your emergency fund can handle the cost to replace one of these items when it is damaged. Unfortunately, when all of your electronics are networked together, the damage to one may lead to damage to the others. That may wipe out your emergency fund! 

Others may consider purchasing manufacturer warranties with their new electronics.  A recent article entitled "Extended Warranties" from ConsumerReports.org, advises that these service plans are "cash cows" for the retailer and "bad investments" for the consumer.  If you are going to purchase a warranty, be sure to investigate it fully.

A third option is an enhancement that you can add to your homeowners policy called "equipment breakdown".   Many innovative insurance companies are offering it for less than $50 per year.  This coverage can secure protection for your appliances and home systems from power surge, breakdowns and other losses that are not specifically stated in the policy contract.

This unique coverage extension is convenient and seamless — there are no separate warranty programs or fees to manage. And, best of all, you’ll have peace of mind knowing you’re covered for mechanical and electrical breakdown of your favorite gadgets, including:

• Flat screen, plasma and 3D televisions
• Computer and peripheral equipment
• Washers, refrigerators, ovens
• Freezer units
• High-efficiency home heating and central AC systems
• Home security systems

As you contemplate adding more gadgets to your futuristic utopia called home, contact your Trusted Choice Agent to discuss your options for adequately covering these items on your home, condo or renters policy.   It's the smart thing to do. 

A Snowman and His Umbrella

Oh! There's no place like home for the holidays....Truer words were never spoken.  At this special time of year, we open our homes to friends and family to celebrate the joy of the season.  Parties, cookie exchanges, neighborhood caroling- the possibilities are endless.   Enter the Insurance Grinch!

Every time we open our door to "friends, family and others", we open the door to a potential lawsuit. Consider these possibilities:

• On his way home from your Holiday Open House, one of your guests is involved in an auto accident with another party.  After your guest fails the sobriety test, it is revealed that you were the host that served him alcohol.  Several weeks later, the injured party serves you with a lawsuit alleging "social host liability".
• The neighbors are caroling door-to-door.  After they serenade you with "Silver and Gold", one of the carolers slips and falls on your steps, resulting in a knee replacement surgery and lost time from work. Weeks later, your neighbor serenades you with a "negligence lawsuit".
• Being the home with the best sled riding hill in the cul-de-sac, the nearby kids love to bring their assortment of sleds and toboggans to your backyard.  Uh-oh!  You guessed it.  One of the kids loses control of his homemade sled and incurs a serious injury.  Ding dong.  Special delivery of a "failure to provide a safe sledding area" lawsuit.
• Finally, it's the night before Christmas and a burglar breaks into your home. You catch the burglar in the act and shoot him with your legally registered firearm.  Now, the burglar sues YOU for shooting him "negligently".  (Folks, I'm not making this stuff up!  Here is the real life story of such a case.)

The good news is that many of these types of lawsuits will be covered by your home or renter's policy. (You do have such a policy, right?)  However, why not supplement your coverage with a personal umbrella liability policy?  For as little as $150 a year, you can purchase a $1,000,000 umbrella policy. That's an added layer of protection for your assets in the event of a catastrophic lawsuit.

Crooner Perry Como sings another line in the song,  "If you wanna be happy in a million ways", - a hint from Perry about securing a personal $1,000,000 umbrella policy? Perhaps.  Sam the Snowman in Rudolph has carried a green umbrella for years.  Another suggestion?  Maybe.  Contact your Trusted Choice agent and discuss an umbrella liability policy today.

A Tale of Two Policies - Home vs. Flood

The wrath of Hurricane Sandy will forever live in our minds.  One of the saddest tales that recently came to light, was that of the town of Breezy Point, NY.  Breezy Point, sometimes referred to as the "Irish Riviera", incurred not only devastating wind and water damage from Hurricane Sandy, but also lost more than 100 homes to fire. Preliminary reports indicate a transformer may have sparked the fire while Sandy's torrential winds spread the fire through five blocks of homes.  Thankfully, not one life was lost to those fires.

A news reporter interviewed one of Breezy Point's displaced residents, who indicated that his home was destroyed by the fire while his son's home was ravaged by flooding.  Both families were eager to be able to visit their "homes" and begin any salvage and cleanup operations.

Enter the Insurance Geek, aka, me.  What a different path each of these two families will encounter as they start the claim process through the home insurance policy (fire claim) versus the flood insurance policy (flood claim).

Additional Living Expense - This coverage will pay for expenses for the family to live in a hotel, eat meals at a restaurant, rent an apartment, even pay for family pets to stay at a "pet hotel".  A typical homeowners policy provides this coverage, above and beyond the amount of insurance on the home and contents.  A flood policy specifically excludes this coverage.

Finished Basement/Family Room and Its Contents - A typical homeowners policy will pay to replace the paneling, bookcases, carpeting, "mancave" and furnishings, including the flat screen, comfy recliner, etc.  A flood policy provides limited coverage in the basement area.  Flood insurance will pay for damaged structural elements and essential equipment; i.e. central air units, furnaces, washers and dryers.

Deductible - A deductible is the amount of dollars the claim must exceed before the insurance company will participate in the claim.  A typical homeowners policy has a flat deductible that applies to all instances of one claim.  Some homeowner policies carry a separate wind deductible that is a % of the dwelling amount.  Flood insurance has a flat deductible that applies to each instance of a claim.  In other words, the deductible will apply to the dwelling claim and separately to the contents claim.

Valuation - Replacement versus Depreciated Value  -   Both policies require that the homeowner insure the building to at least 80% of what it would take to replace the dwelling.  Once that provision is met, the typical homeowner policy will pay up to policy limits.  Many home insurance companies offer "Additional Replacement Cost" coverage that will increase their maximum amount of coverage by 25%, 50% and in some cases, a "guarantee" to replace the home, whatever it costs.  The flood policy, however, only allows the insured to purchase up to $250,000 coverage.  So, if the home requires more than $250,000 coverage to replace it, the flood policy will not answer.

Contents - A typical homeowners policy will cover contents on a replacement cost basis.  The flood policy has no provision for replacement cost on contents.  The flood policy always provides depreciated coverage on contents.

Many Americans affected by Hurricane Sandy, will begin their travels in this tale of two policies.  For all of us, though, it is a good time to discuss insurance needs and expectations with a Trusted Choice Agent.   Spend some time assessing the replacement cost estimate of your home by visiting AccuCoverage.com.   Enlist the assistance of your mobile devices to document your contents using an inventory app like "Know Your Stuff".   As evidenced by Sandy, we never know when and what type of catastrophe may hit our home.

To quote Charles Dickens from his famous novel A Tale of Two Cities,

“Then tell Wind and Fire where to stop," returned madame; "but don't tell me.”

Explosive Insurance Careers

As a teenager, my son watched the action packed movie "Backdraft" with Kurt Russell, William Baldwin and Robert DiNero.  For those not familiar, the movie is about two firefighter brothers that are tracking an arsonist.  In one scene, the pathologist says to William Baldwin's character as he reluctantly picks up a dead body:  "He's not going to sell you insurance, pick him up."

That movie certainly had an effect on my son.  From that point on, he planned his future in the realm of fire safety.  He chose a college that offered a major in Fire Safety, Eastern Kentucky University.  He was a young man on a mission.

As a lifelong insurance agent and insurance geek, I realized the proximity of fire safety to my profession, insurance.  I knew that Eastern Kentucky University was the only University in the Commonwealth of Kentucky that offered a degree in insurance.  So, I planted the seed of him pursuing a double major, Fire Safety and Insurance; or a major in Fire Safety with a minor in Insurance.

As happens with parents and young adults, my suggestion fell on deaf ears.   Josh informed me that "just because you love insurance, doesn't mean I love insurance".   He adamantly stood his ground - he wanted nothing to do with insurance.

During his sophomore year, Josh had the opportunity to attend the NFPA Convention (National Fire Protection Association) being held in Dallas, TX.  His father and I scraped up enough funds for gas, a two-night stay at an economy hotel, and sent him on his way to Dallas, complete with student admission to the Convention.

Upon his return, Josh announced that he knew where he wanted to work upon his entry into the Fire Safety field.  Imagine the I-told-you-so-smile on my face when he said:  "FM Global Insurance."    I am proud to say that Josh landed that job as a Loss Control Engineer with FM Global upon his college graduation. His career path has ended up combining Fire Safety and Insurance.  That degree in insurance?  Never happened.

The insurance industry has so many career opportunities and yet, young adults think of insurance in very limited terms - salesman, boring, sales. Did I mention boring? Nothing could be further from the truth.

A Loss Control Engineer inspects buildings for fire safety, making engineering recommendations and working with building owners to prevent claims.

An insurance adjuster travels to scenes of destruction caused by fire, tornadoes and hurricanes to help the person or business determine what they have lost, place a value on the loss and get them back on their feet.

An insurance agent interviews families or businesses with an ear for hearing where their pain point is if something unforeseen were to happen.  The agent then provides solutions to assist should the unexpected occur.

An actuary analyzes data and numbers, using the rules of probability, to determine the chances of certain types of accidents occurring to a group of individuals or businesses.

A premium auditor meets with businesses to review their sales and payroll figures for a 12 month period.  The auditor then assists the underwriter to ensure that everything is rated correctly.

An insurance underwriter works with insurance agents, helping to determine the fair and adequate rate of insurance that a particular client should be charged.

As with all industries, there is also a need for data programmers, managers, service reps, clerks, etc.; the list goes on. The insurance industry employs more than one million people in the United States.  Many of those individuals are baby boomers.  Like me, they will be retiring in the next 10 - 15 years.  That means an explosion of opportunities abound for millennials in the insurance industry.

The insurance industry helps people and businesses protect themselves in the event of catastrophes.  There is nothing boring about that.  Insurance is a unique and rewarding field that doesn't get the attention it deserves from young adults.  Did I mention that the insurance industry provides great opportunity for financial success as well?

Just to set the record straight, once, just once, my son said, "Mom, you were right.  I should have taken those insurance courses in college.".  Now that makes a mother explode with pride.

Tornadoes and Windstorms and Hail, Oh My!

To steal a line from the Cowardly Lion in "The Wizard of Oz", "Unusual weather we're having, ain't it?"

Have you budgeted for increased home insurance premiums this year?  If you haven't, you darn well should.  Here are some staggering statistics from the National Oceanic and Atmospheric Administration regarding our favorite Commonwealth of Kentucky as of July 30, 2012.  (NOAA) 

·         Kentucky ranks 3rd in the nation for overall weather related events (combines, wind hail, and tornado activity)

·         Kentucky has experienced 63 Tornadoes – which also ranks 3rd to Texas and Kansas.

·        Kentucky is ranked 2nd in Wind events – behind Texas which is 268,820 square miles – compared to KY which comes in at a mire 40,409 square miles.

"Toto, I've got a feeling we're not in Kansas anymore."  

Insurance companies are raising premiums, increasing deductibles and, in general, being very picky about whose homes they even want to insure!  What can you do?

1. Talk to your Trusted Choice Agent.  With access to multiple insurance companies, the Trusted Choice Agent can compare policies and premiums for you.
2. Increase your current home insurance deductible to at least $1,000.  Ask for the savings to go even higher.
3. Do your part to minimize the chance of ANY damage happening at your home:
• Invest in smoke detectors, burglar alarms and dead bolt locks.
• If you have water backup problems in the basement, install a sump pump.
• Clean the lint filter in your dryer after each and every use
• Check and replace those standard rubber hoses on your washing machine with steel braided reinforced hoses.  

Kentuckians, your home is one of your most valuable possessions.  Use your brain to prevent claims, your courage to talk to your agent about your options and your heart to protect what you love.  "Oh, Auntie Em, there's no place like home."    

Three's Company, Too!

When the tv show "Three's Company" aired in 1977, no one but an insurance nerd like me worried about the insurance implications of unrelated people living together.  "I wonder if Jack, Janet and Chrissy each had their own renters policy to cover their belongings?"  

Today, about 1/3 of married people in the US have cohabitated.  A recent study reveals that people who cohabit with just one person and then marry that person go on to accumulate wealth at double the rate of people who marry without cohabiting.  No wonder cohabitation is on the rise!

Seriously, there are many types of living arrangements these days:

• Cohabitation couples (AKA significant other)
• Boomerang "kids" moving home with parents
• Aging parents moving in with adult children
• Grandkids being raised by grandparents

Does your insurance agent know about these living arrangements?  There are significant coverage implications that need to be addressed, before an uninsured claim arises.  

Let's talk about your home insurance which covers your property and provides liability insurance in case someone sues you.  Everyone that lives in your household is covered, right?  WRONG.

Most homeowner policies cover "you" (person named in the policy), your resident spouse, any resident relatives and any persons under the age of 21 that are in your care.

So, on a basic home policy, your live-in (no matter the gender) is not covered.  Likewise, if your spouse moves out, he/she is not covered.  

The other scenarios listed above will have coverage under the homeowners policy as long as the individual's legal address is the same as yours and they are a relative.  (Note - relative is NOT defined in the home policy.)

Bottom line, talk to your TrustedAdvisor about the individuals living at your home and what type of coverage they have and what they may need.  Affordable solutions are available.

Next time, we'll talk about your auto policy and how living arrangements and policy language determine who has what type of coverage.