Category: Insurance

Homeowners Insurance & Lawsuits

Posted on by inswebkit

It is common for neighbors to disagree. For example, one person may think that their outdoor dog barking at people passing by is an asset for keeping them safer from intruders. However, a neighbor who enjoys peace and quiet would think the dog is a nuisance. Another neighbor may enjoy listening to his or her music at a loud volume, but others who live in the neighborhood will likely find it annoying. Some situations may not be about noise. People who live in neighborhoods with a uniform appearance may hassle a new homeowner who decides to paint his or her house a clashing color. Whether the source of the problem is noise or something else, disagreements between neighbors can escalate into lawsuits. Before this happens, it is important to know what types of provisions a homeowners policy provides for legal issues.

Many people think that a homeowners insurance policy covers most types of lawsuits filed against them. For this reason, people are usually not as careful as they should be about preventing them. For example, consider a new homeowner who moves into a subdivision, replaces the existing fence with higher boards and paints them contrasting colors. If the subdivision has rules about the permissible colors and acceptable maximum height of fences, they will try to get the new homeowner to comply. Homeowners who refuse may find themselves facing a lawsuit for violating the subdivision’s code. The courts will likely favor the subdivision’s rules, and a homeowners policy will not provide coverage for the legal battle. Therefore, it is important to understand exactly what legal issues are covered under the policy.

Loud noises, eyesores and changes are all issues that do not physically harm another person. While they may be annoying, they are not issues that would be covered by a homeowners policy if they escalate into a lawsuit. Always remember that a homeowners policy offers protection for two types of liabilities, which are property damage and bodily injury. If the family dog bites someone on the property, a guest falls off a broken step or one of the kids breaks a visitor’s car window, a homeowners policy covers such issues.

Since coverage is limited to two types of physical damage, it is important to work as hard as possible to settle disputes with neighbors. For example, if neighbors complain about a barking dog, it may be best to enroll the dog in training or purchase a no-bark citronella collar. Trim overgrown shrubs or trees that neighbors may complain about. Many people get angry and frustrated when a neighbor makes accusations or complains. Anger is usually what causes people to be stubborn and refuse to compromise. Always listen to what neighbors have to say, and try to understand the situation from their perspective. Use common sense to arrive at a solution that is favorable to both parties. However, the best way to avoid anger and confrontation is to fix possible nuisances before neighbors complain. For additional information about avoiding problems and lawsuits with neighbors, discuss the issues with an agent.

Why Wealthy Families Need More Insurance

Posted on by inswebkit

Although many people assume America’s wealthiest families have nothing to worry about, they do have to worry about being targets of significant liability lawsuits. The high unemployment rates and unsteady economy have contributed greatly to these realistic fears. Unfortunately, many wealthy families do not have ample protection against such lawsuits. They also underestimate the cost of potential damages and how affordable protection is in comparison with those damages.

A recent study performed by ACE Private Risk Services found that half of the people interviewed thought the worst lawsuit they could possibly face would be less than $5 million. However, the grim reality is that lawsuit awards for serious injuries are often much higher than that amount. The individuals interviewed in the study belonged to households with more than $5 million in assets. ACE’s study sought to uncover the threat perceptions of these wealthy families. With the nation’s discourse over wealth disparity, the findings show that rich families feel they are increasingly targeted for lawsuits. Approximately 80 percent of wealthy individuals feel their money puts them at a higher risk. More than 65 percent of the individuals interviewed felt that the nation’s view of the wealthy has become more negative since 2008. In addition to this, almost 40 percent feel they are more likely to face lawsuits during the next several years.

Since some wealthy families underestimate all types of liabilities, they are more likely to carry insufficient insurance policies. This is true with homeowners coverage, auto insurance and several other types of coverage. More than 40 percent of the survey participants reported carrying under $5 million in umbrella liability coverage. In addition to this, more than 20 percent said they did not have an umbrella policy at all. For those who are not familiar with this type of insurance, it is a crucial component of personal coverage. In the event an incident consumes the maximum amount allowed by an individual policy, the umbrella policy provides extra coverage. How much additional coverage it provides depends on what type of policy is purchased. Wealthier individuals should have umbrella policies that are significant enough to protect their assets. Keep in mind that auto or homeowners policies rarely exceed $500,000 alone. There are several companies specializing in umbrella policies for wealthy families whose net worth is beyond $1 million. These companies offer policies covering between $1 million and $100 million. Premiums for such policies are higher than average, but choosing a larger deductible brings lower premium amounts.

Selecting a plan with a higher deductible and paying for small losses is a responsible choice. Wealthy families must understand where their lawsuit risks are coming from. The survey shows that more than 50 percent of these families have employees. Gardeners, housekeepers and nannies are all staff members who could become disgruntled enough to file a lawsuit. In many cases, the allegations may not even be true. Sexual harassment, wrongful employment practices, wrongful termination and discrimination are common allegations in such lawsuits. Wealthy individuals who serve as trustees of charitable organizations must also consider the organization’s directors and officers coverage, which may not be significant enough for individual protection. Auto accidents, dog bites, character defamation and slander are also common lawsuit sources. The risks are evolving constantly, and it is crucial to be properly prepared. To determine if individual coverage needs changes or additions, discuss these options with an agent today.

Employment Practices Liability Insurance may Save Businesses from Costly Lawsuits

Posted on by inswebkit

EPLI is an abbreviation for employment practices liability insurance. This type of coverage protects businesses against claims made by workers that the company is violating their rights as employees. In recent years, the number of lawsuits filed against employers by employees has been rising considerably. Although the majority of lawsuits are filed against larger companies, no business should assume immunity from such incidents. Since more insurers are recognizing the need for this coverage, many are adding it to their business insurance policies. An endorsement on a BOP alters the conditions and terms. However, some companies offer EPLI as an individual policy instead. This form of coverage offers protection for several types of claims, which include the following:

– Discrimination
– Employment Contract Breaches
– Sexual Harassment
– Wrongful Discipline
– Promotion Failure
– Employment Failure
– Wrongful Termination
– Wrongful Emotional Distress
– Employee Benefit Mismanagement
– Career Opportunity Deprivations
– Negligent Evaluation

The cost of employment practices liability insurance is not the same for all businesses. Premiums depend on the number of employees, the type of business and the history of the business. For example, a company that has faced such lawsuits in the past would have a higher premium than a company with a clean record. Multiple lawsuits put companies in a much higher risk category.

Employment practices liability insurance will reimburse companies for their court fees, judgement amounts and legal defense costs. Legal costs are covered regardless of whether the company wins or loses. If civil criminal fines or punitive damages are included in the incident, the policy will not cover either one. EPLI policies do not cover liabilities that are covered in other types of policies. In order to prevent lawsuits, all companies should work with their managers and employees to minimize problems in the workplace. Addressing issues before they arise and taking measures to make the company an optimal place to work are two helpful steps to take.

Companies should form good screening and hiring habits when it comes to adding new employees. This will help them avoid possible discrimination lawsuits. To make sure employees are aware of the company’s policies against negative practices, place posters in high-traffic areas of the workplace. These posters should clearly outline the company’s policies. It is also helpful to send policies to employees via email or written correspondence periodically. In addition to this, the policies should be included in employee handbooks and training manuals. If employees experience problems, they should know what to do next. For example, if an employee is the object of sexual harassment, he or she should know how to report the information and who is in charge of reviewing such reports. Any relevant incidents should be clearly documented by the company. For more information about this type of coverage, discuss concerns with an agent.

Protect Your Possessions with an Electronic Home Inventory

Posted on by steve hom

Having a homeowner’s insurance policy is not enough to thoroughly protect all the possessions in your home.  Only by documenting your goods and updating the list on a regular basis, can you ensure you have enough insurance, settle claims faster and substantiate losses for income tax purposes.  The process of creating a home inventory may sound overwhelming, but technology has made it quite simple.

A traditional home inventory is a basic list of all belongings along with receipts to substantiate their value.  Camcorders and digital cameras have added much dimension to home inventories.  Video taped inventories are especially useful as you can narrate along with the video.  

To create a video home inventory, walk through every room of your home and pan around the room with the camera.  Don’t forget to open drawers and closets to record and describe what items are there.  Whenever you can, note where you bought each item and its make and model.  Make sure to categorically include toys, music CDs and even clothing and linens, as the cost of replacing these items can be substantial.  Take particular note of expensive items including jewelry, furs and collectibles that may require additional insurance. 

In addition to documenting your possessions electronically, make sure that you keep copies of supportive records including sales receipts, purchase contracts and appraisals.  Also, record the serial numbers for major appliances and electronic equipment.  Serial numbers usually can be found on the back or bottom of these items. 

Follow the same steps when creating a digital photograph home inventory except make written notations about the items.  Whatever form your home inventory takes, take steps to ensure you store it properly.  Either print out the files or burn a CD.  Keep a copy in a safety deposit box or have a friend store it.   Keeping only one copy in your house will serve no purpose if your home is severely damaged by a fire or other widespread disaster.  The same is true if your sole electronic home inventory is wiped out through a computer hard drive crash. 

In addition to annually updating your home inventory, it is important to update to include newly acquired items.  The Insurance Information Institute has created Home Inventory Software that is free to the homeowners and renters.  The “Know Your Stuff – Home Inventory Software” is available atwww.knowyourstuff.org.  The software includes a customizable room-by-room list of possessions and can also store electronic images.

Don’t Let Water Damage Drain Your Wallet

Posted on by steve hom

Water leakage is the most common form of damage to the home.  With an average cost around $5,000 for water damage repairs, it’s definitely a problem worth a watchful eye.  Most of these damage claims are a result of a broken washing machine or hot-water heater.   While these appliances were once tucked away primarily in the basement, now they are conveniently located on main or upper floors.  When they malfunction the water leakage damages walls and ceilings causing extensive, time-consuming and costly repairs.

There are preventative measures you can take to reduce the chance of water damage in your home from a faulty appliance.  They involve the following:

 

  • An average water heater lasts about 10 years.   If you notice wet spots on the floor or rust forming on the tank it is a good idea to think about replacing it.
  • A worn out rubber or plastic hose is an accident waiting to happen.  Examine the hoses on your appliances and under sinks for leaks from water lines or drain pipes. Consider replacing them with stainless steel hoses which have a much longer lifespan.
  • If your air conditioning unit is located in the attic check it periodically and have it maintained by a professional.   Make sure that your service agreement includes inspecting and cleaning the unit annually.  A leak starting in the attic will do considerable damage.
  • Only run dishwashers and washing machines while you are home.  If the appliance should malfunction you can turn the water off in order to avoid a huge flood.  It is, of course, vital that you know where the main water shut off valve is located in your home.
  • For less than the cost of dinner you can purchase a water alarm.  They work much the same way as smoke alarms do and are simple to install.  They can be placed on the floor or wall mounted.  The alarm’s sensor will trigger if exposed to any level of moisture.

 

Some water damage is covered by homeowner’s insurance and some is not.  In some instances a policy will only cover damage if regular maintenance has been performed.  It is therefore essential that these areas are checked before you suffer losses that you can’t afford to cover.

Will Your Insurance Cover the Cost of Rebuilding Your Home?

Posted on by steve hom

After a disaster happens it is too late to determine if you have enough insurance to cover the cost of replacing your home and your lost valuables. And as we have seen from recent events, disaster has a way of striking without warning.

Savvy homeowners make it a practice to review their homeowner’s insurance on an annual basis to see if their policy still provides adequate coverage to rebuild their homes at current construction costs. This is especially important if you have recently paid off your mortgage and you only purchased enough insurance protection to satisfy your mortgage lender’s requirements.

When you evaluate your coverage, be sure not to confuse the real estate value of your home with what it would cost to rebuild it.  Another point to consider is whether or not your policy covers improvements such as a new kitchen or bathroom and major purchases, as well as rebuilding costs.

Most basic homeowner’s policies will provide replacement cost for damage to the physical structure of your home. Replacement cost covers the repair or replacement of damaged property with materials that are similar in kind and quality to what your home was built with.

For added protection beyond the estimated cost of rebuilding your home, you need a guaranteed or extended cost policy. This type of coverage is especially important if there is a widespread disaster that raises the cost of building materials and labor. A guaranteed replacement cost policy would pay to rebuild your home regardless of the actual cost. Insurance companies offer extended replacement cost policies, which provide an additional 20% or more of coverage above the limits found in the basic homeowner’s policy.

You should also consider purchasing additional coverage that will increase the protection of the standard homeowner’s policy:

  • Inflation Guard – automatically adjusts the rebuilding costs of your home to reflect changes in construction costs because of inflation
  • Building Code Upgrades – provides ordinance or law coverage that pays a specific amount toward increased building costs resulting from having to meet new or tougher building codes
  • Water Back-Up – insures your property for damage caused by the back up of sewers or drains

Standard homeowner’s policies do not include coverage for earthquakes or flooding, including flooding resulting from a hurricane. Flood insurance is available through the federal government’s National Flood Insurance Program, www.floodsmart.gov. However, you may be able to purchase the coverage from the same insurer from whom you purchased your homeowner’s insurance. Earthquake insurance is also available through private insurance companies. You should speak to your agent about purchasing flood and/or earthquake coverage if you live in a geographic area that can be hard-hit by these types of natural disasters.

The second part of your coverage evaluation should include a determination of whether or not you have adequate protection for your possessions. You can do this by conducting a home inventory, which itemizes everything you own and the estimated cost to replace these items if they are stolen or destroyed. If you find that your possessions are not sufficiently covered, you can increase protection in either of two ways:

  • Cash Value Policy – pays the cost to replace your belongings minus depreciation.
  • Replacement Cost Policy – pays the actual cost of replacing the item.

If you have a replacement cost policy for the contents of your home, your carrier will pay to replace lost or damaged items with new ones that are comparable. If you have a cash value policy, your carrier will pay only a percentage of the cost of any new items because they have been used and have depreciated in value. Generally, the price of replacement cost coverage is about 10% higher than cash value coverage, but the difference in cost will more than pay for itself in the event of a major disaster.

Make Sure You Are Fully Covered Before Winter Storms Arrive

Posted on by steve hom

The beautiful and peaceful looking blanket of fresh snow that a winter storm leaves behind can be deceiving.  Winter storms can be extremely dangerous, causing extensive property damage and hazardous conditions.   Do you know what to do to minimize winter storm damage to your home?  If you do sustain damage, do you know what your homeowner’s policy will cover? 

Winter storms can cause a wide range of property destruction including wind damage, burst pipes and damage to buildings as a result of heavy ice or snow.  Typically, homeowner’s policies cover these categories of loss.  However, flood damage is generally not covered under a standard policy and additional coverage may also be needed for sewer and drain back-ups.

Winter storms not only wreak havoc during the course of the storm but further damage is possible as the snow starts to melt.  You should check your policy to see if this type of damage is covered.  Often damage due to melting snow is preventable and your insurance company may want to see that you took appropriate precautions before they will cover a claim. 

To prevent damage from melting snow:

  • Check for accumulation of snow on the downwind side of your roof and consult with a roofing contractor for safe removal. 
  • Keep gutters clean of leaves to prevent frozen snow or rain from creating an “ice dam” which can damage your home’s ceiling as the melting ice can spread under roof shingles. 
  • Watch for sewer and drain backups as snow melts.  Make sure to alert your local government officials if public street drains become clogged. 
  • Before a storm, remove dead branches hanging over your house.  After the storm, remove large amounts of snow from branches if they pose a threat.
  • Prevent freezing pipes by keeping your home warmer than 65 degrees.  You can also let faucets drip slightly to prevent freezing.  Know where your home’s main water shut-off valve is so that you can quickly turn off water to your house should pipes burst. 

If freezing pipes burst, the contents inside your home could also be damaged as a result of inclement winter weather.  To make sure you would be properly compensated for this type of claim make sure to:

  • Prepare a household inventory including photographs or videotape footage of your possessions.
  • Keep receipts for high value items.
  • Prepare a list of key insurance information including contact phone numbers and insurance policy numbers.
  • Keep a copy of these documents in a safe location outside of your home. 

Snow and ice can also leave you vulnerable to legal liability if someone slips and falls on your property or is hurt from falling ice.  While resulting lawsuits may be covered, you could be found negligent if you didn’t take reasonable steps within an appropriate amount of time to prevent such accidents.  Therefore, to ensure your family’s safety and that of visitors to your home, clear walkways and remove ice as soon as you can after a storm.

Remaining Under the Radar with Your Homeowner’s Coverage

Posted on by steve hom

If you contact your insurance company to verify coverage for a particular claim, it goes on your record.  Even if you call your agent directly, they might be obligated to inform the insurer of your inquiry.  Too many inquiries, even if you never file a claim, can jeopardize your policy.  Too many claims, regardless of their size, can result in non-renewal at the end of your policy’s term.

Here are several ways to stay under the radar with your insurance company:

  • Don’t file for small claims.  When property damage occurs, get estimates first before calling your insurer or agent.  Pay for small repairs yourself, if possible.
  • Consolidate coverage.  Have your homeowner’s and auto insurance with the same company.  The insurer might think twice about canceling if you’re likely to pull the other coverage and move elsewhere.
  • Increase your deductible.  If you heed the earlier advice and don’t intend to file for small claims, save the money you’re spending on a policy with a $250 deductible and raise it to $500 or even $1000.
  • Insure your home for its replacement cost, instead of the balance of the mortgage, and save money.  Approximately 25 percent of your mortgage represents the cost of the land.  If your home burns to the ground, you’ll still have the land.
  • Stay with the same insurer indefinitely.  You’ll build up a track record, and your insurer might refrain from canceling your policy if you do have a claim. 
  • If you purchase a house, check into a homeowner’s policy before your closing date.  Thanks to the Comprehensive Loss Underwriting Exchange (CLUE), there is a database of insurance claims that inform an insurer if a particular house has ever been subject to a claim.  If previous claims were paid on the house, you’ll have a hard time obtaining coverage, even if you’ve personally never filed a claim.  Furthermore, any insurance you’ll find will be more expensive than standard rates.

At the same time, if you’ve filed claims before and purchase a new home, you could be denied a policy, not because of the house, but because of your own claims history. 

Call your state’s insurance commission to ask about state regulations concerning non-renewal or cancellation.  A few states have laws that prevent an insurer from refusing to renew your policy for claims caused by acts of nature.

Bearing the Risks of Condo Ownership

Posted on by steve hom

Living in a condo can be risky business if you fail to discover where you are vulnerable so that you can remove or at least lessen your liability.  As always, any liability assessment starts with the condo association’s master policy.

There are four basic types of risks that associations must protect themselves against. The first is property loss, which means physical property as well as intellectual property such as legalities of the association’s operations. The second is liability resulting from a person or legal entity filing a claim against the association. The third is any unplanned loss of revenue or increase in expenses in an accounting period, and the fourth is losses resulting from the inability of an association employee or board member to continue in their current capacity.

In order to manage the risk associated with these losses, condo associations generally have master policies that include:

  • General Liability – for claims of bodily injury or property damage
  • Workers’ Compensation and Employer’s Liability – coverage of employees against injury while they are working
  • Directors & Officers – to cover claims of negligence or malfeasance by association leaders
  • Fidelity Bond – for claims of misappropriation of association funds

These policies can be written separately, but they usually are combined into one umbrella policy.

As a unit owner, you need a personal policy to cover personal property. Your policy is typically written on Form HO-6. The liability coverage on Form HO-6 is similar to other homeowner’s policies, but the property coverage is not.

Form HO-6 covers your personal property, as well as improvements, additions, and private ownership spaces such as balconies, private entranceways and private garages. However, the policy only covers physical damage to property if it is caused by a named peril that is specified in the policy. Named perils are standard and include events such as fire, lightning, storm, explosion, riot, aircraft, smoke, vandalism, theft, and broken glass.

Your personal property is not covered for damage resulting from perils listed in the exclusions section of your policy. These usually include damage that occurs from enforcement of building codes, earthquakes, floods, power failures, neglect, war, nuclear hazard or intentional acts of destruction.

As the condo unit owner you also have to be vigilant about property loss in the master policy coverage.  In general, a condo association’s master insurance policy will require you to share a part of the loss if the building is damaged by fire, lightning, vandalism or the weight of ice or snow. Remember, as the common owner of shared spaces, you assume the liability connected with damage to those shared spaces. Your personal insurance coverage will provide you some relief from this debt, but be advised that you may want to consider augmenting it. That’s because a policy written on Form HO-6 entitles you to collect up to $1,000 for loss assessments charged to you by the condo association. Be aware that Form HO-6 has a unique feature in this regard. When a loss is covered by both the condominium’s master insurance policy and your individual policy, your homeowner’s insurance will only pay for the balance of the loss that remains after the master insurance policy pays 100 percent of its limit.

Understanding the features of your personal coverage as well as the master policy will help you know your rights and responsibilities in the event it becomes necessary to collect on your coverage.

Protecting Your Condo Against Floods

Posted on by steve hom

Flood insurance is a horse of a different color when it comes to the types of coverage available because it must be obtained through the Federal Emergency Management Agency (FEMA). Under the National Flood Insurance Program (NFIP), there are flood insurance guidelines and policies for both the condo association and the individual unit owner.

The condominium association is responsible for maintaining all forms of property insurance necessary to protect the common property against hazards to which that property is exposed. If the condominium is located in a Special Flood Hazard Area as designated by the federal government, it is the responsibility of the condo association to provide adequate flood insurance protection for all common property.

The Residential Condominium Building Association Policy (RCBAP) Form is designed for buildings owned by condominium associations that have at least 75% residential occupancy and are located in communities covered under the flood insurance program. High-rise and low-rise residential condominium buildings can be insured under the RCBAP. The program enables the association to manage flood insurance needs according to their insurance requirements. Under the RCBAP, the entire building is covered, including the common areas, individually owned building elements within the units, and commonly owned personal property if the policy is written with contents coverage.

The RCBAP is a replacement cost policy. This means that no depreciation deduction is taken at a loss settlement. The maximum available limit is $250,000 per unit times the number of units. Buildings that are not insured for at least 80% of their replacement cost or the maximum amount of insurance available for that building under the NFIP would be subject to a co-insurance penalty at settlement.

Since the association’s coverage of building elements within their unit would be primary, and the unit owner’s personal coverage considered excess coverage, unit owners should obtain information about the by-laws and building coverages provided by the association.

In addition to building elements, unit owners should cover their personal property as well as structural improvements they have made. The policy that addresses the insurable needs of residential unit owners is the Dwelling Policy Form. This form can cover building elements within units, improvements made by unit owners, flood loss assessments and personal property owned by the unit owner or it can simply cover the unit owner’s personal property depending upon how the policy is written. It may not, however, be used to cover the cost of co-insurance or deductibles. An individual unit’s coverage cannot exceed the $250,000 building policy limit for single-family dwellings in program communities, or the $35,000 building coverage limit in emergency program communities.

There are options for covering improvements within units made by the unit owners. If the unit owner purchases contents coverage under the Dwelling Policy Form, coverage is also available for the interior walls, floor and ceiling, if not otherwise covered under the condo association’s flood insurance policy. The coverage limit is 10% of the amount of the contents coverage. If a unit owner uses the contents coverage to insure improvements, it reduces the personal property limit.

If you need assistance in finding flood insurance coverage for your condo, please give us a call.