Every year, many home and business owners discover there are certain disasters their policies do not cover. It is important to consider these issues before they happen and cause damage that will have to be paid for out of pocket. Earthquakes, floods and acts of terrorism are three types of disasters that a policy will not cover.
Flood Damage Protection
Every home and business owner needs to know if his or her property is located in a flood zone. If it is, it is crucial to purchase a flood policy. Business owners should also find out how often floods have happened in that particular area in the past. In some cases, the government is slow to map out flood areas, so it is important to ask more than one source. To purchase a flood policy, discuss options with an agent. Flood insurance is provided by the National Flood Insurance Program. If a building is in a flood zone and its floor plans do not conform to plain building codes, the government requires it to be torn down after damages are more than 50 percent of its market value. People may purchase ordinance or law coverage, which is helpful for covering the costs of tearing down a building. Business owners should also make sure their properties are compliant with any coinsurance clauses in their policies.
Homeowners and business owners do not have earthquake protection in their policies unless they purchase specific coverage for this type of loss. People who live in areas that are prone to earthquakes should purchase this coverage. Even if most earthquakes are small, history has shown that any areas prone to quakes will eventually have ones that are large enough to cause significant damage. There are different types of deductibles for earthquake policies. The deductible is calculated on a percentage of the coverage instead of a specific dollar amount. For example, a building owner who insures a property at five percent for $200,000 would have to pay for the first $10,000 of damages. It is important for business owners to remember that interruption protection only applies for losses that occur due to covered disasters or incidents. If a business does not have earthquake protection and has to shut down for a while, there will be no compensation for lost income.
Acts Of Terrorism Protection
In 2002, the Terrorism Risk Insurance Act was passed. It ruled that only businesses purchasing special coverage would be compensated for losses resulting from acts of terrorism. Many policies already include this, however you need to check your policy to be sure. The only exception for this type of insurance is workers’ compensation, which only provides coverage for deaths and injuries resulting from acts of terrorism.
Nearly every business or home needs one or more of these types of coverage. Homeowners and business owners who are not protected could end up paying thousands out of pocket for damages. The premiums for these types of policies or endorsements are affordable, so it is important to discuss options and review coverage with your agent as soon as possible.
Premiums Will Increase.
Broadly speaking, look for premiums to increase in 2016. According to the Spring Healthcare Trend Survey from Wells Fargo Insurance, 65 health insurers surveyed indicated that overall claim costs increased by 7 to 10 percent, before any changes in plan designs. Those increases and more are eventually going to show up in insurance premiums going into 2016. Indemnity-type plans seem to be showing somewhat higher claims increases than HMOs, but all types of plans are showing increases from between 7 and 10 percent.
Also contributing to claims increases: Hikes in generic drug prices, as well as the increased use of expensive specialty biotechnology drugs, including Abilify and Crestor.
The study aside, though, we’ve already seen some major carriers with big market shares in individual states file for some major premium increases:
- CareFirst Blue Cross of Maryland requested a 34 percent premium increase for its PPO plan, and another 26.7 percent hike in its HMO.
- Wellmark Blue Cross of Iowa filed for a 43 percent premium increase, while Coventry asked for an 18 percent hike for its Iowa members.
- Moda asked to raise premiums on its Oregon beneficiaries by 25.6 percent, and Lifewise applied for a 38.5 percent increase.
- Highmark has already asked for increase of 13.5 percent to 39.65 percent in Pennsylvania, and Geisinger HMO has asked to hike their premiums by 40.6 percent to 58.4 percent.
- Humana’s Georgia plan is asking for premium increases of 14.8 to 19.44 percent.
In some cases companies are totally redesigning their plans, so there is no real direct comparison between this years’ and next years’ pricing structures.
Companies Will Scale Back “Cadillac” Plans.
Analysts also expect to see a series of changes to so-called “Cadillac plans,” in an effort to avoid a 40 percent surcharge on some of these plans beginning in 2018. According to the Wells Fargo survey, some 38 percent of large employer plans will be impacted, either by the tax, or by changes to these plans in the effort to avoid the tax.
The Wells Fargo survey also found that insurers expect to see continued expansion of the role of employee wellness initiatives of various stripes, and continuing pressure to narrow networks of providers.
We will also likely see some changes to network designs and an increase in the number of so-called “tiered” networks. These networks retain a narrow-network base, but also provide some more limited coverage for certain providers who are “outside the plan.” These systems seek to encourage plan participants to use in-network providers, but also allowing for some flexibility to use other providers.
Many businesses do not understand just how important cyber insurance is or why they need it. Businesses that keep large amounts of personal data, corporate data, trade secrets and other protected information are the most common targets for cyber thieves.
What Does Cyber Insurance Cover?
There are several inclusions in a cyber insurance policy. Any business that stores trade secrets and protected personal information of clients should consider a policy that includes the most important features.
One of the most important features a policy should have is investigation of privacy and cyber incidents. This feature includes forensic investigation costs, outside counsel costs, fees related to sending letters to clients about security breaches and the costs of crisis management or public relations. Coverage applies even if there are no lawsuits filed.
Another important feature is defense against lawsuits, demand letters and various claims. Defense against possible liability issues is also essential. Business interruption coverage is another valuable feature. If the business must temporarily halt operations due to the security breach, this feature covers the cost of lost income during that time. It also includes denial of service attacks to virtual business sites.
A good policy covers third-party liability that comes from security breaches. This also includes instances of policyholders inadvertently distributing malicious code to customers. Look for a policy that includes coverage from other exposures such as cyber extortion, asset loss and income loss. If the policy also includes the costs of any regulatory investigations deemed necessary, this is a useful benefit. Internal and external hacks are usually covered, and negligent acts are typically covered under most policies.
Cyber Insurance Checklist
In addition to verifying that the policy has all of the important features covered, it is helpful to make a checklist of issues to ask the agent about. To make sure the policy is as comprehensive as possible, ask the following questions:
– Are errors, omissions and acts of outsourced providers or vendors covered?
– Are the acts of rogue employees covered?
– Is data that falls into the wrong hands covered?
– Does the policy have wording that could void the coverage in certain instances?
– Does the policy have a sufficient limit for individual risks?
– Do any other existing policies offer supplemental cyber coverage?
– Does the policy provide coverage for data placed in the hands of trusted vendors?
– Does the policy offer retroactive coverage for issues that are not noticeable immediately?
Mistakes To Avoid
There are several mistakes business owners often make when shopping for cyber insurance. One of the most common mistakes is not understanding the length of the application process. It often takes longer than people expect, and experts say it is usually necessary to involve several parties. Plan to include the IT chief, the risk management coordinator, the accounting manager and the company’s legal counsel. It is also helpful to talk to several owners of similar businesses to hear their solutions for dealing with security breaches.
Another common mistake business owners make is not taking advantage of what is offered by the insurance agency. Too many owners are quick to dismiss any additional suggestions as up-selling attempts. However, many products that agents recommend are useful and worth the small investment. Experts emphasize that it is important to be aware of any gray areas of the policy. Some issues may or may not be covered, and there are specific rules for certain incidents. Always ask an agent for clarification on these issues. Never assume that all policies are the same. Cyber insurance policies are not cookie-cutter products. Know what events are covered and to what extent, and always discuss any concerns with your agent before and after obtaining a policy.
How to Stay Safe on the Road this Winter
Excluded Coverages should be Addressed before a Catastrophic Event Occurs We might think of Missouri before Kansas when considering the risk of an earthquake. However, Kansas has recorded 94 earthquakes to date in 2014 (Insurance Journal). This is significant to property owners because basic (ie. unendorsed) property policies exclude earthquake coverage.Because insurance policies often exclude catastrophic events such as earthquakes and floods, endorsements and stand-alone policies have been created to cover these perils. However, many consumers wait until after a disaster to buy insurance, as it is not unusual for insurance companies to see a spike in applications after such events.
There are problems with waiting until a disaster strikes. First, if your property is affected, you won’t be covered. Second, companies often impose moratoriums in affected areas, due to the possibility of an aftershock or continued risk. Third, even if the coverage is available, the probability of having two or more consecutive catastrophic disasters in close proximity is small. The key is to get the coverage before a disaster strikes. Can the government help in getting coverage? The government is not an insurance company but can provide assistance, if financially able, in the form of loans that must be repaid. The bottom line is, property owners will probably fall short if they count on the government for catastrophic event insurance.We recommend that you prepare against potential disasters.
Please contact our office if you would like to learn more about earthquake, flood or other excluded coverages on your policy.
Safe driving is a must when deer are plentiful. During fall and spring, deer are much more common to see on the roads. This is due to fall breeding and plentiful food during spring months. These animals are most active around sunrise and sunset, which are both times when it is especially difficult to see well on the road.
Deer are difficult to see when it is dark, and they often dart out in front of vehicles at the last second. The vehicle body damage caused by hitting a deer can be very costly. One research finding showed that the average cost of deer collision damage was nearly $4,000.
Experts recommend all drivers verify accident damage coverage on their insurance policies. Damages due to hitting deer are typically covered on a comprehensive policy and not a collision policy, so it is important to know this before setting out on the road. If an accident does occur because of a deer, covered drivers should contact their agents immediately. Starting a claim in a timely manner is very important. When a deer collision happens, keep the following considerations in mind:
- If a deer that has been hit is blocking the road and creating a hazard, call local law enforcement immediately to report it.
- Always keep a safe distance from a deer after hitting it. If the animal is not dead, it may attack and has very sharp hooves.
In some cases, a deer collision may be unavoidable.The following tips should be remembered and practiced when driving:
- Always wear a safety belt, and stay alert and aware of sensible speeds based on current driving conditions.
- Never depend completely on deer whistles, reflectors, fences or detection devices.
- Always use high-beam headlights at night when there is no oncoming traffic, because these lights will hit the reflective part of a deer’s eyes.
- Watch closely for silhouettes of deer or their reflective eyes on the roadsides.
- When a deer is spotted on the roadside or in the middle of the road, brake firmly but do not swerve into another lane. It is less risky to hit a deer at a slower speed than to run into another vehicle or lose control of the automobile and roll it.
- Keep in mind that when one deer is sighted, it is very likely there are more nearby.
- Do not try to navigate around a deer in the middle of the road. If possible, pull to the side of the road, put the emergency flashing lights on and wait for it to cross.
While defensive driving is a good habit to practice at all times, it is especially important when deer are thick in the spring and fall. To learn more about adequate coverage or to review a policy, discuss concerns with your agent.
Vacant buildings are common products of a slow economy. Researchers say that recent statistics only show about a one percent decrease in vacant buildings in recent years. If buildings do not have any personal property or occupants in them, they are more likely to face several types of problems. Every year, there are over 30,000 fires in vacant buildings, and many of these result in severe injuries or deaths. They also cost well over $640 million in property damage. Most vacant buildings do not have good security or maintenance. This can lead to the following types of problems:
– Copper piping and other valuable fixtures inside the building may attract thieves. – Buildings become vandalism targets when there is no security on the premises. These buildings often end up with graffiti on their walls and broken windows. – Many young people are attracted to vacant buildings to use as places for parties or drug use. They are also common places for homeless people or drug dealers. – Groundwater and soil may become contaminated by toxic substances leaking from a vacant building. – Fires are common due to smoking trespassers, arsonists, decayed wiring and drug production. To complicate the matter, the automatic sprinkler system may be turned off. This makes it easier for fires to spread. With a lack of security, early detection is nearly impossible. No building owner wants to be fined for hazardous substances leaking or for a fire that could have been prevented. Building owners can take several steps to protect their vacant properties and make them less likely to be destroyed. The following are some useful tips: – The exterior of the building should be cleared of cardboard, paper, brush and scrap wood. – Stop by the property at least once each week. Another option for owners who live out of state is to hire a property management company to care for the building. – Keep parking areas and sidewalks in good condition, and they should be cleared of ice or snow during the winter. – If there are any toxic substances that may cause contamination and might harm people or emergency responders, they should be removed. – Put up obstacles to ensure pedestrians and vehicles stay out of the parking area. – Pay security guards to monitor the building overnight, and keep exterior lights turned on during the night. – Make sure the electricity for exit signs and emergency lighting is always on. – To avoid bursting pipes, make sure the heat stays on or the plumbing system is drained. There should be a minimum temperature set to keep automatic sprinkler systems safe. – Turn off the utilities except when needed to power alarm systems and lighting. – Fire detection devices should be linked to a central monitoring service and maintained well. If a building is almost 70 percent vacant for longer than 60 days, it may lose some vital insurance coverage. Standard commercial policies lower loss payments by 15 percent for the majority of losses. This does not include water damage, theft, vandalism or breaking glass. The building owner may opt to buy a vacancy permit for an additional premium. This permit replenishes some or all of the coverage for a specified time period. Vacancy changes coverage is also available, and this form of insurance will lower the minimum occupancy the building must have before it can be considered vacant in comparison with the standard percentage. To learn more about this coverage option and how to add it, discuss concerns with your agent.
One important bit of advice to remember is that if thunder is audible and lightning is visible, it is time to take cover. Failing to do so could be a deadly mistake. There are many people who enjoy thunderstorms, and some people are fascinated by watching the bright flashes of lightning flicker across the sky or count the number of seconds between a flash and the thunder. Lightning is one of the most dangerous forces in nature, so it is important to take the right steps to protect the home, property and especially life from lightning.
When lightning can be seen, do not use phones that are land lines. Also, do not turn on the water faucet to wash hands or take a shower during a storm. Lightning charges will follow through metal wires and pipes, and water is a good conductor of electricity. This means a person touching water that travels through a metal pipe could easily be electrocuted.
It is also important to protect electronics during a storm. When lightning strikes a power line near a home, it will often follow the phone lines or wiring into the house. This means not only a land phone would be destroyed but also televisions, computers and other electronics that are plugged into electrical outlets could be rendered useless. Some homeowners insurance policies may not cover damages due to lightning strikes. A simple and easy way to avoid finding out is to just unplug all electronics as soon as a storm is approaching. Even if antennas are grounded, disconnect them. Disconnect any satellite dishes or Internet connections. Surge protectors can help prevent electronics from being ruined from power spikes and lightning strikes in the distance, but lightning that strikes close by is powerful enough to ruin the surge protector as well. What is even scarier than it ruining electronics is that it can jump through surge protectors and across an entire room. When it does this, it is called side flashing, and side flashes are dangerous to anyone or anything in their path.
Lowering the risks of a fire is also an important step. Putting up lightning rods may help this, but it will not protect an entire building from electrical surges. Lightning rods simply make a path for the currents to enter the ground safely, but they do not actually lower the chances of a home being hit by lightning. Some buildings have lightning rods on top of them. These are useful for catching the strike, but lightning can still jump and ruin wiring or cables on top of the building. When lightning hits the ground, a tree or a building, it does not simply travel straight down. The current will spread in several directions, so anything or anyone nearby will not be safe. Being hit with lightning indirectly is almost as dangerous as being hit directly.
When a person is injured or killed from a lightning strike, it may not be the most popular news material. However, there are far more deaths and injuries from lightning every year than what is reported on the news. It is never safe to assume it will not happen, because lightning is unpredictable. Every homeowner should know in advance what is or is not covered in the event of lightning strikes. To learn more about home insurance and lightning strikes, discuss concerns with your agent.
“Of course you would say that. You’re an agent.” Growing consumer confidence in the Independent Agency system proves this point, as Independent Agency market share of personal auto insurance continues to show growth. Despite massive Television and internet advertising campaigns that lend familiarity to a number of national insurance companies and drives consumers to “get a quote online,” the independent agency system continues to gain market share.
Ben Salzmann, President and CEO of Acuity Insurance, recently stated that ‘Independent Agent market share for personal auto insurance was 25% three decades ago and is 33% today.’ On October 1, 2013, Auto-Owners Insurance Company issued a public “Declaration to Independent Insurance Agents and the Independent Agency System.” The Declaration proclaims 100% commitment to conducting business exclusively through the Independent Agency System. Auto-Owners recognizes their success is heavily due to the personal level of service their policyholders achieve through independent agents. The Independent Agency system grows not with hundred million dollar advertising campaigns, but with personalized service, competitive prices and performance. The Independent Agent is not employed by a single insurance company, bound by its rates and terms, but has the ability to compare rates and plans with a variety of insurance companies – not just one. This dynamic gives the Independent Agency customer the advantages of competitive pricing and genuine personalized care.
24/7 online quoting offers consumers unprecedented convenience. However, treating insurance like a commodity can be dangerous. Consider a medical world where one could research his or her symptoms, prescribe one’s own prescriptions and be both doctor and pharmacist. Disregard for the value of such occupational expertise poses serious risks. Purchasing insurance online may not put one’s health at risk, but the analogy is a fair one. Discounting the knowledge and expertise of the licensed agent can jeopardize one’s liability exposure and assets.
Independent Agents are immersed in the industry and more familiar with insurance trends, common coverage selections, risk exposures, recognizing competitive premiums, etc. A career agent works for his or her customers. This agent-client relationship creates an inherent need for the agent to provide customers excellent service, and will regularly lead to a more personalized assessment of the client’s needs (better than a call center hundreds of miles away).
At the time of a claim, your agent is your consultant and advocate. If you have purchased your insurance direct or online, then your only consultant may be an employee of your insurance company whose counsel may not be completely unbiased. Your agent’s advice at time of purchase can prove “priceless” in the event of a claim, while an uninformed online purchase or oversight could lead to a financial hardship under the same circumstances.