Thursday, September 29, 2016

Would you want to Share Your Home with a Burglar?

According to the police, there is a new trend in Bay Area crime – theft by home sharing “guests.” A case in point is that of a man who recently rented a Mountain View home on a home sharing site. He canceled just before he was due to occupy the premises. The premises was burglarized shortly afterwards. A few days later the homeowner called the police to say that someone had opened a credit account in his name and was due to pick up an expensive mobile phone. The police caught the man at the store and arrested him. A large number of items stolen from the home were found in his car.

Consequently, if you intend renting your home to vacation renters, please be cautious. Use the tips given below to keep your property safe.

How To Minimize The Risk:
  • A mention in a posting that a room or closet will remain locked is an indication that items of value may be in the home. If this is to be done, do not mention it in the post but discuss it with the renters one-on-one before renting the premises.
  • Do not leave valuables or important documents in the home, while it is being rented out. If taking them with you is not possible, lock them in a safe that is secured to the floor.
  • If possible try to meet the renters in person. This allows you to evaluate the kind of people they are. Meet them in a coffee shop or other place where their faces will be captured on surveillance video. If the renters cannot meet you in person and do not have a convincing reason for not doing so, that could be a sign that they have something to hide and are not the kind of people you want in your home.
  • If they do meet you in person but their statements are vague or inconsistent, they may not be people you can trust. Also, ask for identification and take a photo of the document.
  • If your premises is too large for the number of people who the renters say will be staying there, it could be an indication of an ulterior motive.
  • Thieves shy away from surveillance cameras. If you have cameras in your home and the renters object to it, they may have something to hide.
  • Be careful of last minute urgent rentals. This is a ploy of robbers who hope that in the rush the homeowners will overlook the precautions they should take.
  • Be suspicious of last minute cancellation, as in the story at the beginning of this blog.
  • Trust your instincts. If you feel that a renter is not to be trusted, do not give your home to him.
If you are planning on renting out your house or apartment on a home sharing site, following the advice given by the police is not enough. You need to be adequately insured to protect you from any loss that may occur. Contact your insurance agent to discuss the coverage options available to you. There is a lot that can be done, often at a reasonable cost, to provide you with the protection you need.

Thursday, September 15, 2016

Home Sharing – The Insurance Gaps

The 2 leading home sharing apps today cover over 3 million rental listings in almost 200 countries. This is a far larger number of rooms than even the largest of hotel chains has. The growth is projected to increase over the coming years. While the homeowners benefit from the income, many of them do not think about the insurance, tax and regulatory issues involved in engaging in this kind of commercial activity. Insurance is the trickiest of these.

Homeowners Insurance Is Not Enough

In general, home insurance offers a fairly broad coverage. However, when a part of the home is being rented out to generate income, it becomes a commercial activity and this may not be covered by the policy. When a business operates from a home, the insurance company can refuse to accept a claim and may also suspend liability and property coverage either at the time of renewal or even during the policy period itself.

If that happens, there will be no protection if a guest steals from the home. Even worse, there will be no coverage if the guest causes major damage to the property or if the guest is injured while staying in the home. The homeowner will be unprotected.

There Is Coverage Available

A Landlord Policy is one option. But that is really meant for those who rent out the complete premises full time and do not themselves live there. The scope of the coverage and the cost makes this an unattractive option for those who share their homes.

Insurers are aware of the need for new types of coverage to serve the growing home sharing market. That is why many of the major insurance companies are developing policies and / or endorsements that are aimed specifically for those involved in the home sharing business. The coverage includes issues such as:
  • Expenses related to furniture damage or theft by a guest
  • Other structures on the premises like a converted garage apartment
  • Theft of personal property
  • Damage to landscaping caused by a guest
  • Liability coverage for small watercraft like canoes, kayaks, jet skis etc.
  • Alcohol liability
  • Loss of business income – broken pipes or property damage that may make the premises un-rentable
  • And more
In some cases a home sharing insurance policy can replace a normal homeowner’s policy. The issues is such a serious one that one of the major home sharing apps requires that homeowners must have adequate insurance coverage before signing up.

If you are involved in home sharing or plan to do so, it is critical that you have insurance that will give you the protection you need. Contact your insurance broker to discuss the nature of your home sharing activities and the coverage options available to you. He will be able to guide you to the right type of coverage that is cost effective while also providing you with the protection you and your home need.

Tuesday, August 23, 2016

Injury at Work – The Risk and Cost

Insuring your business and the people who work for you is just common sense. Besides, the obligation you have towards your employees, claims for compensation for sickness or injuries in the workplace, can be huge. But your employees may not be the only ones who work in your business premises. What about contractors and their subcontractors?

It Could Happen To You

Compensation to employees of contractors and their sub-contractors who are injured while working at site is a complicated and often contentious issue. The contractor may claim that all the required coverages are in place, but if an accident occurs and they are not, the liability could fall on you, and the primary employer. That is what happened recently at the new Tesla electric vehicle plant. A worker of a subcontractor working on the expansion of the factory was injured while on the job. It soon emerged that the subcontractor was in violation of employment laws and in breach of regulations regarding wages, overtime and workers comp.

Tesla had no knowledge of this, but when the facts came to light, they were dragged to court along with the subcontractor. The end result? The injured employee was awarded a $550,000 settlement.

Tesla is a huge organization with a vast amount of financial muscle. They will be able to absorb the monetary shock of the settlement. But what if something similar happened to you? The courts do not award settlement based on the ability of the employer to pay. It is on the basis of the amount of injury and the liability for it. In the Tesla case, the worker had fractured legs and ribs and a concussion. These are major injuries but, sadly, not uncommon in such cases. Would you be able to absorb a half million dollar payout? Or would that ruin you?

Get the Protection You Need

The vast number of insurance products available can be confusing to anyone who is not an insurance professional. Many business owners think they have the coverage they need when they do not. Part of the reason is the confusion that exists about coverage types. For example a person may read about employment practices liability insurance (EPLI) coverage and presume that since he has liability coverage, he is already protected. Not so. Liability coverage and EPLI are different and both are critical to protecting your business.

Remember that insurance is not a gamble, a luxury or just an expense. It is the shield that will protect you when you are faced with liabilities that could ruin you and your business.

When business imperatives demand that contractors need to be employed, the amount of paper work involved can be voluminous. Issues like workers compensation can easily fall through the cracks.Therefore, you as the principle employer must ensure that the contractors provide proof of their insurance coverage and that they add you as an additional insured party on the policy so that you are not in the firing line if things go wrong. In addition talk to your insurance agent to understand your possible liability and the claims that could be raised against you and get the insurance coverage you need to protect yourself and your business. If you do not have workers comp, liability coverages and EPLI you are leaving yourself dangerously exposed.

Tuesday, August 16, 2016

Include Home Protection in Your Remodeling Plans

There is more to home remodeling than giving the house a makeover and adding new features together with creature comforts. These are the main considerations, of course, but overlooking the protection of your renovated home could be a big mistake, one that may lead to massive financial loss. You have your home insurance policy, but that will not cover all your expenses if your home is damaged or destroyed. And then there are the hassles of repairing or rebuilding it, which are too many to list. That is why building in protection as part of the remodel is so important. Here are some factors to keep in mind when doing the planning.

Fire Protection

  • Wherever possible, install a full residential sprinkler system with a water flow alarm. Ensure that the system is checked annually to keep it in working condition.
  • Replace existing smoke or heat detectors with multi-criteria systems that detect combustible gases, carbon monoxide, smoke and heat. This will significantly increase the level of protection.
  • Install centrally monitored fire detection units in areas where the fire risk is the greatest – attics, garages, kitchens, laundry rooms and other similar places.
  • Where water based latex paint, stains, and polyurethane / acrylic coatings have been used, use fire retardant additives to reduce the fire risk.
  • A whole house surge protection system will protect electronic equipment from damage if there is power fluctuation or surging.

Protection from Water Damage

  • To prevent major water damage install a whole house automatic shutoff system which will detect and turn off water if the flow is excessive or if water is collecting in the wrong places.
  • Water leaks commonly occur below HVAC units, skylights, terrace doors, washers, sinks and wherever, other such appliances, are installed. Installing moisture detection devices at these points will provide an immediate alert of a leak, when it is detected.
  • Replace rubber hoses at water supply points for washing machines, dishwashers, sinks, toilets and so on with steel braided hoses which are less prone to damage, leaks and failure. All hoses should be replaced every 5 years or as advised by the manufacturer.
  • Install floor drains in the laundry room and other places where there are water connections to carry away water in case of pipe or tank failure.
  • Protect yourself from equipment damage by installing point-of-use water shutoff systems at the water supply points for HVAC units and similar devices.
  • Install the washing machine at the lowest level to minimize damage if a major leak occurs.
  • Install a sump pump of the right size, to remove water that may enter the basement after heavy rains.
  • An automatic backup generator will ensure that all protection devices and equipment will function, in the event of a power outage.

Factoring in these changes as a part of remodeling your home may increase the cost, but the peace of mind that follows, makes it worthwhile. Talk to your remodeling contractor about the many options available. In addition, it is possible that having theseproactive measures in place, could result in a reduction on your insurance premiums. To know more about how safety features can reduce your insurance costs, contact your insurance broker.

Thursday, July 28, 2016

Home Insurance: What is Covered and What is Not (Part -1)

Many people who have insured their homes tend to become complacent and think that they are covered, no matter what happens to the house. That is the biggest misconception. There are thousands of different types of home insurance and policy options. You should not take the nature and extent of your coverage for granted. Study your policy carefully and do not hesitate to ask your insurance agent for clarifications if you are not sure of anything. You can then modify the policy or take additional coverage to give you the protection you need.

Here are some of the coverages found on most policies and what you should know about them.

The Dwelling

The word Dwelling refers to the house itself and any structures, like a garage, that may be attached to it. The Amount of Insurance (Or Dwelling Limit) as stated on the policy document will show the maximum amount that the insurance company will pay if your home is destroyed by causes or actions covered by the policy. Check to see id f the amount is enough to get you a new home. If not, you need to increase your coverage.

Other Structures

Other structures, as referred to in the policy, will mean a structure not attached to the house. This covers, sheds / barns, pool houses, standalone garages etc. The cover limit for these is separate from that of the Dwelling and is usually much lower – often around 20% of the Dwelling coverage. Check to see if the coverage you have is adequate. You can buy additional coverage if required.

Personal Property

The term personal property on the insurance policy refers to all your belongings in the house – furniture, clothes, appliances, electronic items and so on. Here too there will be a specific coverage limit which is typically about 75% of the Dwelling limit. You can increase the coverage by paying more. There is an important issue to note here. There are two types of protection – “actual cash vale” and “replacement cost.” If the protection is for actual cash value, depreciation will be calculated and what you get for a 5 year old refrigerator that has been destroyed will be less than the cost of buying a new one.  If you are covered for replacement cost, the coverage will be for the cost of buying a new refrigerator at current prices.

Loss of Use

Where will you stay, till your home is repaired or till you find a new one? You are going to have to pay rent while continuing to pay your mortgage. The Loss of Use coverage will pay your rental expenses. There are two types of protection available.There is a payment limit that is the amount that the insurance company will pay, irrespective of how long you need to pay rent. Otherwise, if it is time based, all expenses will be paid, regardless of the amount. But the coverage is only for a specified time after which it will stop and you will not be paid anything.

In the next blog we will look at what is typically not covered by a home insurance policy.

Thursday, July 14, 2016

New Eligibility Criteria for End of Life Care

Talking about one’s last days is not a pleasant exercise. We all know that we will die one day, but it is human nature to try and avoid discussing it. However, thinking about it, talking about it and planning for the end, unpleasant though it is, can take away some of the pain, both for you and those you leave behind.

Preparing For the End

Millions of California residents are eligible for health care benefits that will affect the nature and quality of care they will receive in their last day. The problem is that many of them do not know about it. Both Medicare and Medi-Cal (the state version of Medicare aimed at those with low incomes) are now offering coverage for discussions between patients, or their family members, and medical professionals on end of life care. This does not mean finding and moving to a nursing home or assisted living facility – those options can be exercised at the patient’s discretion. What Medicare and Medi-Cal are now offering, is planning for what happens if you are unable to communicate your wishes for treatment. For example, if you have a stroke that leaves you unable to communicate, and unconscious, do you want to be placed on a ventilator or would you prefer to pass on naturally? Who will make these decisions for you? The quality of your life, or of your death, could depend on this.

You Can Talk To Your Doctor

Medi-Cal, which covers 13 million Californians covers advance care planning between doctors and patients / family members. Doctors can bill for these discussion twice every year without prior authorization. There is no patient age limitation for this. Medicare, with 5 million members in California, offers covers for these planning discussions for those over 65 years of age and also for younger people with specific disabilities. There is no limit on the number of discussions with the doctor.

The aim of this coverage is to enable people to prepare an “Advance Care Directive” that will dictate the course of their medical treatment if they are unable to communicate these themselves. You can state what treatment is acceptable, under what conditions and when a DNR (Do Not Resuscitate) will come into force.

Many doctors are uncomfortable initiating these discussion, both on a personal level and because they feel that a patient may misunderstand the intent and become upset. If your doctor is hesitant to discuss these issues, it is up to you to carry the conversation forward, understand the options for you and your family and then formally document the decisions that have been made. You have the freedom to change your decisions at a later date if so desired.

Talk To Your Insurance Agent

Along with Medicare and Medi-Cal, some private insurance plans also cover end of life planning discussions. If you are not covered or unsure of your coverage, talk to an insurance professional to know what your status is and if needed, get an insurance plan that provides you this coverage. You owe it to yourself and those you love.

Tuesday, June 28, 2016

Ride-share companies riding on the American society?

Uber, Lyft and SideCar are companies that provide an app which is downloaded by both drivers and passengers seeking a taxi, to make it easy for them to engage. Traditionally, these companies should be regarded as software companies. However with megabucks riding on the transportation business, these companies have morphed into full-fledged Transportation Network Companies (TNCs), but would prefer to be called as ‘ride-share services provider’.

However, the problem does not lie merely in the nomenclature for these companies. A larger problem is the dubious means employed by these companies to dodge regulatory policies that govern all TNCs. One such regulation pertains to the insurance cover provided to drivers of their cabs.

Lyft is a conventional TNC but Uber works on a sub-contracting model. That is, their drivers are mix of owner-driven personal vehicles (called UberX) and fleet-owned commercial cabs (called Uber).  The fleet-owned commercial cabs are covered by commercial insurance but the owner-driven independent contractors are covered in a different way. Such drivers are offered non-primary coverage with $1 million coverage for driver liability and $1 million to cover uninsured or underinsured drivers. However, this cover only applies when a passenger is being driven.

During times when the cabbie is looking for a passenger or responding to a hail, a much lower insurance cover is provided to the driver:
  • $50,000 injury,
  • $100,000 injury total, and
  • $25,000 in property damage
This means that when cabbies are not driving a passenger around, they are at the mercy of their own personal insurance which puts them at risk.

Thankfully, the Federal and State Governments have woken up to what looks like a scam, and are passing bills to regulate these companies. Two such bills being passed by California state senate are:
  • AB 2293: This would eliminate the double-layered insurance cover for cabbies and require all kinds of TNCsto mandatorily have taxi-like primary insurance. This will protect the drivers against lawsuits for loss of life, and/or injury whenever they are on road, irrespective of whether a passenger is being driven or not.
  • AB 612: A more important bill, this mandates these companies to conduct alcohol and drug tests on drivers at regular intervals of time. Also, no drivers can be contracted, unless a thorough background check is conducted on them.
While the ride-share companies may fall in line on the above requirements, there are other questions to be asked. Do they provide workers compensation;do they pay payroll taxes; are they avoiding the normal costs of doing business; are they taking the American society (not just the passenger) for a ride? Questions one must ask oneself before hailing these taxis.