Monday, February 20, 2017

Flood Insurance - What You Need To Know

If you have been through a major flood, you know the kind of damage and property loss it can cause. If you haven’t experienced it, it is difficult to image what it is like.

The National Flood Insurance Program (NFIP) was created in 1968 as a means for property owners to protect themselves financially in the event of flood damage. Flood insurance is offered to homeowners, renters and businesses in communities that participate in the program. According to the NFIP flood is the number one natural disaster in the U.S. From 2011 to 2015, the average flood claim was over $46,000. From 2006 to 2015, flood damage insurance claims exceeded $1.9 billion per year. Major changes to the program will come into effect from 1st April this year as continuing with the program with the current subsidized rates is no longer viable, and it is important that homeowners know about them so they can plan for the future.

NFIP Changes

Flood insurance premiums will increase. On an average, this will be about 6.3%. This increase does not include the Homeowner Flood Insurance Affordability Act (HFIAA) surcharge or the Federal Policy Fee (FPF). If the HFIAA surcharge and FPF are taken into account, the total impact on the policy holder will be around 5.4%. There will be no changes to the:

  • Deductible Factors
  • Federal Policy Fee
  • Reserve Fund Assessment
  • HFIAA Surcharge
  • Probation Surcharge
  • Increased Cost of Compliance (ICC) Premiums
  • Tentative & Provisional Rates
  • Mortgage Portfolio Protection Program (MPPP)

The annual premium rate increase is normally limited to 15% but in some cases it may go up to 18%. Additionally, the premiums for following Pre-Flood Insurance Rate Map (Pre-FIRM) subsidized policies will be increased by 25% per year until the rate is at full risk levels:

  • Non-primary residential properties
  • Business properties
  • Severe Repetitive Loss (SRL) properties, which includes cumulatively damage
  • properties
  • Substantially improved properties

In the case of Pre-FIRM Subsidized Policies the following increases will be effective:

  • Primary residences – premiums will increase on average by 5%
  • Non-primary residences – premiums will increase on average by 24%
  • Policies subject to 25% annual increases – premiums will increase on average by 23%
  • All other Pre-FIRM subsidized risks not covered in the first three bullets (primarily

Condominium and multi-family policies) – premiums will increase on average by 8%

How Are You Affected?

The changes that will come into effect are complex and technical. Most home and business owners will have difficulty in understanding the effect these will have on them. Now is the time to contact your insurance broker to know how the changes will affect you and how much you will pay for flood insurance. If you do not have flood coverage, an insurance professional will be able to help you find the policy you need at the cost that is right for you.

Wednesday, February 15, 2017

Earthquake Insurance is Cheaper than You Think

In 2015 the United States Geological Survey released its Uniform Earthquake Rupture Forecast which says that there is a 93% chance that California will be hit by a 6.7 magnitude earthquake in the next 30 years. That is almost double the size of the Northridge quake. Quakes are a clear and present danger for everyone living in the state. Northridge caused about $40 billion is property damage and about half of that was for homes. Because of the huge payouts, not only did premiums rise, many insurance companies reduced the number of polices they wrote. In response to this, the state Legislature created a basic no-frills policy that insurers could offer, but the coverage left a lot to be desired. Earthquake insurance coverage stagnated.

Earthquake Insurance Coverage Is Low

Despite the danger we all face, only about 10% of California homes have earthquake insurance. There are 2 main reasons for this. The first is that the rates for this coverage were high and many homeowners thought that they couldn’t afford it, in spite of knowing the risks they ran. The other reason is that many presumed that if a quake hit them, federal and state aid would help them recover. That is a major misconception. The aid is meant only to help families survive in the aftermath of a quake, not to repair the damage and rebuild their homes. As for the cost of the coverage, it is less expensive than you think.

New Coverage Options

The California Earthquake Authority (CEA) is a publicly managed organization that provides earthquake insurance through a number of leading insurance companies. Today, the CEA provides around 75% of all earthquake policies sold in California. The Authority’s CEO says that a new research has allowed the risk to be recalibrated and that rates have come down by almost 50%. The large amount of options available enables homeowners to tailor their earthquake insurance options to match their needs and their budgets. For example, the deductible can now be set at anywhere from 5% to 25%, instead of the old range of 10% to 15%.  Coverage for property inside the home can now range from zero to $200,000 instead of the old limit of $5,000. And when a home is uninhabitable after a quake, the loss of use coverage can be between 0 to $100,000.

Today, a home with slab foundation and frame construction can get a basic CEA coverage for just $804 per year.

Get the Coverage that is Right for You

If you do not have earthquake insurance, now is the time to get the coverage you need. And if you do have a policy, this is when you can relook to see if it offers you the protection you need and if not, get additional coverage without emptying your bank account. Earthquake insurance is a complex subject and balancing coverage, deductibles and premiums requires expert knowledge. Contact an insurance broker to know where you stand and what additional coverage is available to you.

Monday, January 23, 2017

The Different Types of Homeowner’s Insurance

There is no one-size-fits-all homeowner’s insurance. Each insurance company has its own coverage types and limitations. When purchasing a homeowners insurance policy, spend time looking at all the options available and also discuss the matter with your insurance broker. He will be able to help you find the right coverage at the right cost. Taking out coverage you don’t need is a waste of money, but not having the protection you require could be disastrous. The following outlines are intended to help you understand the basic homeowner’s insurance types that are available.

Policy Types

  • HO-1: Limited coverage Policy – This is a very basic policy that provides coverage against only a few specific types of disaster. It is no longer available in many states.
  • HO-2: Basic Policy – This is an expanded version of HO-1 that offers protection against a slightly larger range of disasters. There is a version of this available that has been created specifically for mobile homes.
  • HO-3: General Coverage Policy – This is the most common and popular type of policy. It offers protection against all types of risks, excepting those that have been specifically excluded in the policy document.
  • HO-8: Old Home Policy – This policy, designed for older homes provides for compensation for damage on an actual cash basis. This equates to replacement cost less depreciation. In some cases, if the home is very old, full replacement cost coverage may not be available.
  • HO-4: Renter’s Policy – As the names says, this policy is for those who stay in rented homes. It offers protection for all the renter’s possession and any fixtures or fittings, such as new kitchen cabinets, that the renter may have installed at his own cost.
  • HO-6: Condo / Co-Op Policy– This policy provides condo and co-op owners coverage for their belongings in the condo or co-op and also for any parts of the structure that they may own.


The following options are normally available for all types of homeowner’s insurance.

  • Actual Cash Value: This covers the replacement of a home and/or possession with  deduction for depreciation
  • Replacement Cost: This covers the actual cost of replacing a home and/or possession. There is no deduction for depreciation.
  • Guaranteed / Extended Replacement Cost: This is the most comprehensive type of coverage with the greatest protection. Under this option, the policy will cover the full cost of replacing a home to what it was before the loss, irrespective of the actual cost. This means the homeowner is covered even if the replacement cost is greater than the policy limit. This option will normally not cover the cost of upgrading the home to comply with current building codes. However, it is often possible to get an endorsement that will also cover these costs. In some cases, an insurance company may offer an extended replacement coverage instead of a guaranteed one. This will cover replacement cost to a fixed percentage over the policy limit.

If you are planning on purchasing a homeowner’s insurance or want to check if your existing coverage is right for you, consult an insurance professional. He will be able to guide you through the different policy types and options to find the coverage that is right for you.

Wednesday, January 18, 2017

Scam Artists Collect Where Disaster Strikes

A disaster can destroy homes and damage lives and futures. That is bad enough, but what could be even worse are the swarms of scam artists, who arrive on the scene of the disaster, eager to rip off those they can get their hooks into. It is the hurt and vulnerable who are the best victims. Fly-by-night contractors and door-to-door scammers descend like flies when they find innocent people whose misfortunes they can benefit from.

No matter how well prepared you are, a disaster can leave you confused and you could probably be confronted by problems, you never thought of. That is when you are most vulnerable. Staying organized and following procedures will help to keep you safe.

What You Should Do

  • Contact your insurance company as soon as possible. Since there may be many people in the same situation as you, getting through may be difficult. Keep trying.  When you do make contact, state your situation clearly. Have all your policy information at hand. Ask questions to get clarity on any points you do not understand. Maintain a log of all the people you talk to,along with dates, times, and a summary of what was discussed.
  • Make sure all your emails to and from the insurance company are properly sorted and filed safely.
  • Follow the instructions you receive from the insurance company. The procedures can often appear to be a waste of time and frustrating, but insurers have mandatory procedures they must follow and that requirement devolves on their policy holders. By doing exactly what is asked of you, you can avoid a lot of delays and hassles.
  • Document everything. Take pictures of the damage that has occurred. File receipts and records of all the payments you have made after the disaster struck.
  • Once the insurance company accepts your claim, do not relax. It is when you have your guard down that scam artists will strike. Do not be in a rush to get repairs done. Returning to normality fast is tempting, but you need to be sure who you are entrusting the repairs to. In the conditions after a disaster, going online to check out contractors and verify references may be difficult. Do what you can. One thing that is essential, is to contact the Contractors State License Board in your area. You can phone the board at 800-321-2752 or go to the website at to check a contractor’s license.
  • Try to avoid dealing with middlemen. Going to an attorney or hiring a public adjuster should be a last resort. Your insurance company will provide you with an adjuster at no charge to you. Work directly with your insurance company – that prevents miscommunications and needless aggravation. Ask you insurance brokers for assistance if you need it.
  • Do not start any repairs until the adjuster has given a go ahead.

Being Prepared Is Best

Planning for the worst is not being negative – it is a positive act that will help you to overcome the challenges that arise after a disaster. Remember that your insurance broker is there to provide you with the help you need on insurance related issues. Contact him to get a detailed checklist of what you should do if disaster strikes. And if it does happen, he is there to help you.

Monday, December 26, 2016

Insure Your Business Before Disaster Strikes

As a business owner, you know how important it is to carry insurance. But many businessmen look at insurance as a necessary evil – one that must be dealt with and gotten out of the way as quickly as possible, and at the lowest cost. With margins always under pressure and balancing income and expenditure a constant juggling act, it’s easy to consider only what is likely to happen and insure only against that in order to keep premiums down. What you need to insure against are the things that could happen.

The Unlikely Happened

A fire broke out in the shop next to a specialty food store in Denver. The food store escaped fire damage but the water and smoke damage from next door caused it to down shutters for a year. The owner had $10,000 in lost income coverage, but that was not much help in the $100,000 of lost business in the 12 months the store was closed.

A Florida business owner had an old dilapidated barn full of imported furniture. The cost of insuring the old building, that would have to be pulled down sooner or later, appeared to be prohibitive and so the owner decided against it. When a flood hit the area, the furniture was heavily damaged and had to be sold off at a heavy discount. The overall loss was around $7,000. The gamble did not pay off.

The owner of a family run business passed away and his wife took over. Sometime later she found an employee had been embezzling money. Since it was a family owned business, the idea of taking out business fraud insurance never occurred to the owner. Recovering from the loss was a long struggle.

Think Of the “What Ifs…”

Suppose you run a small business out of your home. You keep inventory in the house or in another building on the property. You have homeowners insurance on your property and think everything in it is protected. But if there is a fire and the inventory is destroyed, the policy will not cover the loss.

Its human nature to not dwell on the worst case scenarios. But that does not always make good business sense. You can’t insure against every possibility. Paying for coverage to protect your business from being destroyed during an alien invasion by fire breathing dragons may be going too far. But there is a difference between the unlikely and the impossible. The unlikely does not always happen to the other guy. It could happen to you and if you have not planned for the possibility, your business may suffer more than you thought possible or may even cease to exist.

Get the Coverage You Need

Professional help in deciding what kind of insurance coverage your business should have, and how much of it, is best done by experts. Contact an insurance broker to have your coverage examined. If there are shortfalls, the broker will help you to get the additional coverage you need. Your premiums will go up and you may have to do a little more juggling of the income and expenditure. But if the worst should happen, you will still have a business and income and outflow to balance instead of nothing at all.

Friday, December 16, 2016

Life Insurance Benefits You May Not Know Of

Families today are scattered like never before. Education, work, marriage and a range of other factors mean that relatives now live not just across the country, but across the globe. While they usually try to keep in touch as much as possible, details of how life is lived, including financial issues, are often lost. This includes insurance benefits. Many people wonder if there are insurance benefits that may be due to them which they are unaware of. Or they may think that they could be beneficiaries of a policy, but do not know how to find out. According to Consumer Reports, an estimated $1 billion in benefits from life insurance policies are lying unclaimed. One reason for this is that locating possible insurance policies in which a person is a beneficiary used to be very time consuming and difficult. The number of insurance companies, the place where the policy was issued and the confidentiality and other restrictions on releasing the information made the search frustrating and legitimate benefits were often not found.

There Is Now A Way to Find Out

A recent press release by the California Department of Insurance says that there is now an online tool available that can help people search for possible life insurance or annuity proceeds that may be due to them. The search covers the entire nation. The tool has been created by the National Association of Insurance Commissioners (NAIC) and has been specifically developed to help those who think they, or others in the family, are beneficiaries of a policy but do not have the details, such as the name of the insurer or the policy number, that will help them to get the information they need.

Requests for information are encrypted to ensure confidentiality.When the tool is used to request information on possible unclaimed benefits, the insurance companies will search through policy holder information and if possible matches are located, report these to the relevant state insurance departments. The companies will then get in touch with the beneficiaries to determine the validity of the claims and process them accordingly. There is no charge for using the tool.

The Benefits Are Yours – Claim Them

There is often hesitation in searching for life insurance benefits. People feel that searching for money in the estate of a deceased person is questionable and self-serving. What should be remembered is that the policy was created with specific aims in mind and if these are not fulfilled, in terms of giving the beneficiaries their rightful proceeds, the purpose of the policy and the wishes of the person who had it are not being respected. Unclaimed insurance benefits remain in limbo and do not do anyone any good.

If you want to know more about the tool and how to use it, visit the California Department of Insurance website. Alternatively, you can get in touch with your insurance broker and ask for guidance on how to proceed.

Wednesday, November 23, 2016

EPLI - What It Is and Why You Need It

EPLI stands for Employment Practices Liability Insurance. This is not the same as the general liability that most businesses do (or at least should) carry. EPLI is to provide specific protection to business owners from claims by employees that their legal rights have been violated or that they have been treated unfairly.

Your Employees Are Like Family

This is a common feeling among small businesses. Everyone knows everyone else and meets socially and helps each other out on family matters etc. So what is the need for EPLI? Isa supervisor who has been with you for 10 years suddenly going to sue you? Maybe! It does happen far more frequently than you think. It’s like a close-knit family that suddenly and irreversibly falls apart. The fact that the reason is foolish or illogical doesn’t matter when emotions run high. Yes, suing an employer is often an emotional reaction. Studies show that the most common reasons for employment practices lawsuits are:

  • Retaliation for a real or imagined issue – 44.5%
  • Race-related issues, both real and imagined – 34.7%
  • Disability – 30.2%

You cannot afford to ignore these numbers.

Frightening Facts about Employment Liability Lawsuits

If you still feel that EPLI is not important, the following may help to change your mind.

  • Your most innocent remark or action can be misinterpreted. Anyone can have a bad day and an act or words that were a joke yesterday could cause anger today. That anger could lead to a lawsuit.
  • The fact is that a business is 3 times more likely to be hit with an employment practice lawsuit than it is to experience a fire.
  • The courts are becoming more sympathetic to plaintiffs in such cases. The average cost of an employee lawsuit has risen by over 25%, over the last 5 years.
  • Businesses with 15 to 100 employees are the most common targets for federal discrimination claims.
  • Only about 30% of small businesses have EPLI.
  • Many business owners think that their general liability coverage protects them against employee’s lawsuits. That is not correct.

What EPLI Covers

EPLI coverage may vary depending on the insurance provider. In general, it includes:

  • Wrongful termination
  • Breach of employment agreement
  • Failure to create or enforce adequate employment policies
  • Invasion of privacy
  • Discrimination
  • Violation of FMLA
  • Workplace harassment
  • Retaliation

You probably have a number of different insurance coverages for your business. They are focused on protecting you from issues beyond your control or from actions against you by outsiders. But what about when a lawsuit comes from within? Without EPLI you could be left exposed to huge losses. Talk to your insurance broker to check if you have the coverages you need. If you do not have EPLI coverage, your broker will be able to suggest the right type of policy for your business.