Insider's Insurance

So I received a call from a prospective client who was trying to buy a home near the coast of Connecticut. Unfortunately, the home was in an area where flooding is a concern and the financial institution offering the mortgage was requiring flood insurance. Duh, duh, duh… Little did the financial institution know that the National Flood Insurance Program was on hiatus because congress failed to approve another extension of the flood insurance program. Oh no! If the prospective client can’t get flood insurance, he can not close on the home he is looking to purchase, the seller can not sell his home and all the services that would be used in this sale will not be used. Basically, the economy takes another hit in an area that is struggling to bounce back just because the prospective client can not buy flood insurance.

Enter High Net Worth Insurance Carriers

Now I know that the National Flood Insurance Program is not the only way to obtain flood insurance. There are two other options that are offered by Chubb and ACE Private Risk Services. Both of these flood programs are provided independent of the National Flood Insurance Program. In this particular case, I was able to obtain flood insurance through both of these companies as well as superior coverage for the home being purchased. Before long the client will be able to close on his home and live happily ever after.

Most insurance companies increase certain coverage limits like the dwelling limit or jewelry valuations on an annual basis to keep pace with inflation and increases in costs. This is a standard industry practice and can be expected no matter which company you are with. There is one increase that you want to keep your eyes out for though. Sometimes a company may send a letter out that proposes an increase in the miles you may drive to work each day. An increase in this information will result in an increase in premium as well. Sometimes, this is done without one’s knowledge because most insurance related mail may be ignored. Basically, the insurance companies feel that they may not be rating your vehicles correctly and will send a letter out saying they are increasing your miles driven unless you contact them to say their estimate is incorrect. This is typically done when switching insurance companies. Just something to be aware of.

Take away: Make sure your automobile policy reflects the actual miles driven to work each day.

Chubb provides coverage for all exposures related to car rentals, anywhere in the world*, including those exposures that are typically not covered by standard automobile insurance policies. Most policies will cover you for liability, and policies that have collision and/or comprehensive coverage will cover you for physical damage to the rental vehicle subject to the deductible. Most standard policies, however, will not cover you for administrative costs, loss of rents while the car is being repaired, and diminished value of the car after the loss. All of these exposures are covered by Chubb under the liability section of their automobile policy. Because the loss will be covered under the liability section of the policy, there will be no deductible as well. If you do not have a Chubb automobile policy, the prudent course of action, when renting a car, is to purchase the collision damage waiver from the rental car company to protect yourself from any uncovered exposures.

* In some countries you may be required to purchase the rental car company’s insurance. In these cases, your Chubb policy will become excess coverage on top of that insurance if necessary.

1. Moving into a nursing home
2. Job relocation
3. Foreclosures
4. Rental properties
5. When a child occupies a parent’s home
6. When a parent occupies a child’s home
7. Divorce
8. Death of the insured
9. Transferring a home into a trust
10. Transferring a home into an LLC or Corporation
11. Seller remains after the closing
12. Seller moves out before closing
13. Buyer moves in or takes possession before closing
14. Buyer renovating the home before they move in
15. Homes under construction
16. Vacant and/or unoccupied homes

All of these scenarios represent situations where a person might not be occupying their residence. If that is the case, coverage for their home through a standard homeowners policy might be in jeopardy. Depending on the insurance company the home is insured through, the insurance company may have grounds for denying a claim based on the words, “where you reside.” These words are found in the language of most homeowners insurance policies.

The words, “where you reside,” refer to the person(s) who is named in the policy and the home they are occupying that is listed in the policy. When the named insured is living at the home listed in the policy there would be no question of coverage after a loss. However, if the named insured moves out of the home listed in the policy, for an extended period of time and does not inform their insurance company, there could be a battle when the named insured seeks coverage.

Blogging is a wonderful way to share your ideas and thoughts with other people. The medium has taken off like wild fire with millions of enthusiastic people writing to their heart’s content on the internet. Despite such enormous energy being expended on this activity, very little thought or concern has been given to the potential harm one could bring upon themselves with their written words. The exposure people may be opening themselves up to, unknowingly, is called, “libel.” Libel is defined as a false publication, as in writing, print, signs, or pictures, that damages a person’s (or entity’s) reputation.

With respect to your insurance coverage, you may have coverage for the damages you cause through your writing if you have what is called, a personal injury endorsement on your Homeowners policy. This endorsement provides coverage for a lawsuit brought on by unintentional libel, defamation of character, or slander. Other exposures that could present a danger to well meaning bloggers include copyright infringement or plagiarism. In order to cover these exposures, coverage would have to be obtained through a commercial insurance policy or a specialized policy such as those sold by The Media Bloggers Association. If you would like to learn more about this important topic please contact me at Ericson Insurance Advisors.

Congratulations! You found better coverage, service, or premiums and decided to move your insurance. This the point where mistakes can cause major headaches for you. These headaches will be caused by nasty letters from your mortgage company, unexpected cancellation notices from your current insurer, and even surprise increases in premiums from what you thought would be your new coverage.

Relax, the blunders can all be prevented with the right knowledge and planning. Without this knowledge and planning you can expect sleepless nights and several calls to your new insurance advisor wondering what is going on. If you or your advisor understands the 5 biggest mistakes that can occur during an insurance transition, calamity is easily avoided.

1. Mortgage company is not notified of change of insurance – Every bank requires insurance on a home that they financed. If a change is made to your insurance, your bank should be notified immediately.
2. Allowing your old insurance to cancel on its own – This mistake is interpreted to mean that you did not pay your bill and may have a negative effect on your insurance.
3. Not replacing your old automobile ID cards – This can cause major hassles if you are stopped by the police and your ID cards are out of date.
4. Not using the same effective dates – Using different effective dates from those on your old policy will create a gap in your coverage.
5. Not informing your new advisor about all losses or violations – This can result in a change in the premium once your policy is issued.

There are several other mistakes that can be made in the course of a transition, but an insurance advisor who is aware of them can make the transition very smooth for you.

Most homeowners insurance policies sold today can be described as “Open Perils” policies versus “Named Peril” policies. With “Open Perils” you will have more types of losses covered because of the way the policy is written. The “Open Perils” policy covers all causes of loss except for those that are specifically excluded. This is the exact opposite structure of the “Named Perils” policy, which states that it only covers those perils that are specifically listed in the policy.

Here is a list of named perils:

1. Fire
2. Lightning
3. Windstorm
4. Hail
5. Explosion
6. Riot
7. Civil commotion
8. Aircraft
9. Vehicles
10. Smoke
11. Vandalism
12. Malicious mischief
13. Falling objects
14. Weight of ice, snow, or sleet
15. Accidental discharge or overflow of water or steam
16. Sudden and accidental damage from artificially tearing apart, cracking, burning or bulging
17. Freezing
18. Sudden and accidental damage from artificially generated electrical current
19. Volcanic eruption
20. Theft

The popularity of the “Open Perils” policy is primarily due to the insurance industry’s desire to provide better coverage for its customers. Better coverage, however, should not be construed as complete coverage that covers everything that might happen.

When you look closely at the exclusions in the “Open Perils” policy you may notice some large gaps in coverage.  The good news is that some of these gaps can be addressed with additional coverage options.  Having an awareness of what is not covered will enable you to decide whether the optional coverages are worth the extra expense.

Please see the list below for several of the most common exclusions from a homeowners policy.

1. Ordinance
2. Law
3. Earth Movement
4. Power failure
5. Neglect
6. War
7. Nuclear Hazard
8. Intentional Loss
9. Water damage
10. Acts or Decisions
11. Faulty, inadequate or defective planning, zoning, etc…

NOTE: These lists may not be complete or representative of all Homeowners policies.

Taking the time to prepare an inventory of your personal property can alleviate any concerns you have about receiving the maximum reimbursement from your insurance company.  It will also save you from feeling overwhelmed with minutia when you are dealing with the stress of a large loss.

A home inventory will provide you and the insurance company with the details needed to demonstrate the value of your damaged possessions. The details can include video, pictures, bills, receipts, appraisal forms and any other documentation you have describing an item’s value.

There are several ways to prepare a home inventory and having as much detail as possible is recommended. A simple way to do this is to take pictures of everything you have and store them in a safe place. If you would like to be more detailed you can download a free software program that will help guide you through the process. One such program is available at www.knowyourstuff.org.

You may also want to hire a professional to handle the task for you instead of doing it yourself. This is recommended if you have high value property that requires a higher level of expertise and care. There are several reputable companies in Connecticut and New York who specialize in preparing home inventories that would be happy to assist you.