Friday, December 22, 2017

The Tragedy of the Under-Insured

Hundreds of Californians who lost their homes in the recent wildfires are depending on their insurance policies to help them rebuild their lives. In many cases, the payout will be smooth and the amount will be enough to cover the reconstruction costs. However, for others, there could be a rude awakening. 

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The Under-Insurance Problem

Studies show that a shocking 60% of homes in America are under-insured. The average shortfall is in the range of 20%. It is naturally tempting to reduce insurance premiums so that the money saved can be spent elsewhere. And 20% does not seem like a huge difference – the gap can always be covered if the need arises. However, thinking this way is a mistake. For example, if a home worth $500,000 is destroyed, a 20% shortfall in the insurance coverage will be $100,000. That is not a small amount that can be easily made up. The gap between your insurance coverage and what you need to rebuild could be where your plans for your family’s future get tripped up. Paying an insurance premium year after year may, over time, appear to be a waste. It is only when you need the money that you realize cutting back on the coverage was a mistake.

Knowing How Much You Need

You pour your life’s savings (and perhaps more) into your home. You know exactly how much it cost and so,you think, getting the right insurance coverage should be easy. But that’s not correct. What the home cost some years ago is not what it will cost today. A home that cost $600,000 in 2010 may cost over $750,000 today. A policy that pays out $600,000 is not going to be enough to rebuild. On top of that, there are all the other expenses that come with paying for temporary accommodation till your home is ready to occupy.

Another problem that occurs is that many homeowners fail to update their insurance policies after making improvements or additions to their homes. A home could have $50,000 worth of work done on it over a few years. That shortfall is bad enough, but it is often worse. The $50,000 worth of improvements could add $100,000 to the value of the home. Without adequate coverage, rebuilding it to the same standard that it was, will be nigh impossible.

Check Your Insurance

The California Department of Insurance advises all homeowners to check and see if their insurance coverage is enough for them to rebuild. In addition, an inventory of the contents of the home should be regularly updated. This sounds simple enough, but insurance is a complicated subject and it is easy to make mistakes. These mistakes may not come to light until a home has been lost and the insurance payout is not enough for rebuilding. Getting the advice of an insurance agent will help you to ensure that you have the right coverage. This is not a one-time exercise but an action that should be undertaken every few years so as to ensure that when required, there will be enough money to rebuild the home and protect your family’s future. 

Preventing Thefts During Holiday Season

The holiday season is something that everyone looks forward to. Unfortunately, that “everyone” includes criminals too. We love the holidays because it’s a time for family, friends, fun and festivities. Burglars love it because,for them, it is the time for easy pickings. Thefts and break-ins skyrocket during the holidays because criminals know that this is when homes are left empty for extended periods, and people, preoccupied with holiday activities, tend to become careless about precautions they normally would take. Here’s what you can do to make life more difficult for burglars and keep yourself from becoming another crime statistic.

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Keep Your Lights On

How do burglars know if a house is empty? The simplest way is to look out for those that have no lights on at night for a few days in a row. That usually means that the family is away. If you have automatic timers installed set them to turn the lights in various rooms on and off at set times of the evening and night. If you don’t have timers, ask a neighbor to drop in every alternate day or so and turn on the lights for the night. The neighbor can also collect any mail that may be lying on the doorstep – that is another giveaway that no one is at home. Do not forget to stop newspaper delivery for the days you will be away – a pile of papers in front of the house is a burglar magnet!

Protect All Entry Points

Thieves will enter a house from wherever they can, not just the front door. Before going out of town spend a few minutes double checking that all possible entry points to the house are securely closed. That includes doors, windows, garages, French windows, and so on. If you have an alarm system installed, turn it on and check that it is working. Ask your neighbors to keep an eye on your home and report any suspicious activity, such as strangers lurking around, to the police. You can also inform the police about your absence from home and request them to do extra drive byes during that time.

Protect Your Purchases

Holidays are a time for shopping. As you go from store to store, the many bags in your car would be a tempting target for thieves. Keep all your purchase out of sight in the trunk and go home between stores as much as possible to leave your shopping in the house. Remember to ensure that your car is always locked and try to park only in well-lit places that are not deserted.

The Best Protection

Crooks are smart and they are always looking for ways to outwit all the precautions you take. There is no such thing as a sure-fire guarantee that you will not be robbed, no matter what you do. The best protection for you and your family is to ensure that your insurance coverage is enough to allow you to recover, if you should be robbed. Your homeowners insurance policy may not be enough. Talk to an insurance professional to see if there are gaps in your coverage that you need to fill. Once that is done, you can rest assured and fully enjoy your well-deserved holidays.

Thursday, November 23, 2017

Climate Change Will Cause More Disasters in California

The phrase “natural disaster” can be misleading. Disasters such are earthquakes, flood and fires are beyond human control. But that does not mean that humans have not played a role in how frequently these disasters occur and how much damage they cause. The case for and against the effects of climate change will continue to be argued for years, but as California Gov. Jerry Brown said recently "With a warming climate, dry weather and reducing moisture, these kinds of catastrophes have happened and will continue to happen.” In other words, in California, the ground realities of climate change are clear.

The Effects of Climate Change

The increase in the severity and frequency of wildfires in the state is alarming. Experts say that as long as global temperatures continue to rise, the problem will increase. While climate change is not what starts wildfires, the variations in temperature and rainfall that it causes contributes to how these fires develop and spread. In California, weather patterns over the last few years have created an ideal foundation for a devastating fire season which usually reaches full intensity in the month of October. There are 4 key factors involved:

   ·     The high temperature in summer months results in grass, bushes and trees being significantly drier by the time the fire season starts.

  ·     The dry winds from the interiors of the continent enable the fires to spread faster than they did before.

  ·     The higher temperatures also mean that the fire season will last for longer than it did in the  past.

  ·     There is more rain and snow during the winter. This may appear to be a factor that will help prevent fires, but it is not so. The higher precipitation in winter means that more vegetation will grow and grow faster. There will thus be more of it to dry out and burn when the fires start.

Improvement Will Take a Long Time

The Paris Climate Acord, which the U.S. is no longer part of, has set a limit of a 2 degree Celsius rise in global temperature by the year 2100. The amount of drying that such an increase will cause will require a huge amount of precipitation to counteract the drying out and the fire risk that will result. None of the existing scientific models predict such an increase. Till things change for the better, the risk of loss from fires will continue to rise.

The only protection for homeowners against the loss of this biggest investment in their lives and the one on which their family’s future depends is through insurance.Unfortunately, California has a large number of uninsured and under insured homes. The reasons for this are the cost of insurance and a common belief that disasters happen to the “other guy.” Saving a few dollars today may have a small impact on a family’s budget, but the loss of a home can destroy its hopes for the future. Finding the right insurance coverage at a cost that is viable, requires professional expertise. Talking to an insurance broker about home insurance needs will give homeowners the information they need to make insurance decisions that are in their family’s best interests.

Cost of Wildfires

Wildfires are not new to California, and most residents take the risk as a fact of life. What is worrying, however, is the increasing amount of damage and financial losses that these disasters cause. This year the California Department of Insurance has made a preliminary estimate that the insured wildfire losses are in the region of $1.05 billion. This number is based on claims received from the largest insurers in the state and is expected to rise. As of mid-October insurers have received 601 property loss claims, 4177 claims for partial residential losses and 3000 claims for auto losses.

Since the fires began on October 8th, over 250,000 acres have been burnt black, and almost 7,000 structures which includes homes, commercial establishments and wineries, have been destroyed. Over 15,000 people were displaced.

Cost to Families

These numbers are bad and with climate change expected to increase the risk of fire in the future, the dangers will only surge. It makes sense to take steps to protect your home from fire damage and loss, but there is never going to be a 100% certainty that you are safe. A home directly in the path of a wildfire will be destroyed. That is why along with protection it is important to also plan for recovery after major damage or complete loss of your home.

Losing a home is not just a physical and financial loss, it is an emotional one too and with all these factors put together, the devastation that a family will suffer is huge and will affect their lives, and often their futures, for years to come. Nothing can make up for the loss of a home, but having the right insurance coverage will speed the recovery and rebuilding of lives.

Path to Recovery

The federal and state aid that is made available after natural disasters are meant only to help those affected, survive. It is not for recovery and rebuilding lives that requires insurance.That’s what, those who have suffered losses because of the wildfires will be depending on. However, in many cases, the coverage may not be enough to allow complete recovery. If there are savings available, it could help make up the shortfall. But savings are created for a specific purpose and to use those resources to rebuild a home will mean that other important objectives must be sacrificed. If there isn’t enough in the form of savings to make up the insurance coverage shortfall, then what? The family’s future will be damaged and in the worst case, ruined.

Check Your Coverage

Underestimating insurance needs is easy. The value of a home will change over time and so too will the possessions that the family accumulates. What was an adequate coverage a couple of years ago may no longer be so, now. That is why it is essential to regularly review your insurance coverage and ensure that what you have is enough to help your family recover if your home should be lost.

All that it takes is a call to an insurance broker who will be able to review your existing coverage, your actual insurance needs s and then help you to cover the gap, if it should exist.

Wednesday, October 25, 2017

What Does Small Business Insurance Cover?

As a small business owner, you know the importance of insurance coverage for your business. It helps protect you from financial losses and against specific risks covered by the policy which typically includes fire, wind damage, lightning, falling objects, theft etc.  A normal policy will offer 3 basic types of coverage.

Clothing Store Owner.

General Liability Coverage

General liability will cover the medical costs if anyone is injured at your business place due to negligence. Depending on the policy terms, it may also pay for legal costs if you should besued over an accident that occurred at your place of business. General liability coverage is subject to limits. If the medical expenses are in excess to your coverage limit, you may have to pay from your pocket to cover the balance.

Business Property Coverage

Property coverage will protect the business premises (if you own it) from risks that are listed in the policy. For example, if the premises are damaged or destroyed by fire, the policy will help to pay for the repairs or rebuilding. If the furniture or equipment is damaged, destroyed or stolen, the policy will cover the cost of replacement or repair. When buying a small business policy it is important to choose the right deductibles and limits. This means that you can select the amount you will pay yourself before the policy kicks in, and the maximum amount that the policy will pay. As a general rule, higher the deductible, lower the premium.  Because of cash flow limitations, many small businesses make the mistake of keeping deductibles and limits low to reduce the premium outflow. However, saving a few dollars a month could result in paying thousands of dollars from your pocket if damage or loss occurs that is not covered. An insurance agent will be able to help you find the optimal coverage for your business.

Business Interruption Coverage

This will help you to continue operations after a covered peril occurs. It is meant to help in replacing lost income and the higher expenses that arise after your business operationsare affected. For example, if your premises are not usable after a fire, the coverage will help in paying rent for a temporary workplace. This coverage is subject to limits both in terms of the overall dollar amount payable as well as the time period for when it is applicable. Your insurance agent will be able to give you a clear picture of what the limits are to help you to find additional coverage, if you should need it.

Additional Coverage

In addition to these 3 basic coverage, it is often possible to buy additional coverage which can include:

 ·         Data compromise coverage

 ·         Employment practices liability coverage

 ·         Business auto insurance

 ·         Outdoor property coverage

 ·         Equipment breakdown coverage

 ·         Product liability coverage

 ·         Professional liability coverage

Ensure You Are Protected

The loss of your business could have a severe impact on you, your family, and your employees. Small business insurance is a protection to your business and by extension, to the ones who depend on you. The variable coverage limits and options available mean that the best way to get the protection you need, at a cost you can afford, is to consult a professional insurance broker.

Disaster Insurance – What You May Not Know

Hurricane, earthquakes and other natural disasters have been around since the beginning of time. The spurt in the volume and intensity of these disasters appear to be increasing over the years. While part of this may be due to climate change, the expanding population of cities, exponential growth of infrastructure and increasing value of homes are among the major reasons for these massive financial losses. These disasters and the publicity surrounding them have caused homeowners to re-look at their insurance coverage. While the overall policy may appear to offer adequate protection, there are factors that could limit the resources available to repair or rebuild your home.

Issues to Consider

         ·         Your standard disaster policy may not be enough. A typical homeowners’ policy will not normally cover damage from floods or rising water. Some policies pay for damage caused by wind or wind-driven rain but others do not. Some policies issued in areas that are prone to hurricanes include a specific “hurricane deductible” where the policyholder has to pay a large amount from his pocket before the coverage kicks in. For example, if a home valued at $200,000 is destroyed by a fire, the standard deductible is typically from $500 to $1,000. However, under the same policy, if the destruction it is caused by a hurricane, the deductible could be 5% or around $10,000. This is a huge difference. 

          ·         Because of this, you may have to dip into your savings. In the case of earthquake damage, you may need to pay as muchas 15% from your pocket. Without enough cash available, you could be forced to sell off assets to cover the cost of repairs. Ideally, you should have savings set aside for such a contingency or a Home Equity Line of Credit (HELOC) set up to cover you. The HELOC should be set up in advance because no lender will extend credit on a house that has already been damaged.

       ·         Since the standard homeowners insurance does not cover flood damage or loss, taking out flood insurance may be a good idea, depending on the flood risk in your zone. A qualified insurance agent will be able to help you evaluate the risk and find the right coverage. Note that there is awaiting period for this coverage to kick in – it is usually 30 days. This is to discourage people taking out a policy only when a flood threat is imminent. Another factor to keep in mind is that coverage offered by the federal government’s National Flood Insurance Program is limited to $250,000 for property and $100,000 for contents. Additional coverage can be bought from private insurers.

Check Your Coverage

The complexities of insurance coverage mean that it is easy to make mistakes when taking out a policy or misunderstanding the coverage that exists. Talk to a reputed insurance broker about your existing disaster coverage to know if there is a gap that needs to be covered. He will be able to help you stay completely protected.

Sunday, September 24, 2017

Filing a Claim after a Natural Disaster

Natural disasters like hurricanes and floods have been a major topic of conversation of late. The silver lining in the massive loss and damage that has occurred in Texas is that it has caused many homeowners to reevaluate the need for flood and earthquake damage coverage that is not typically covered by a homeowners’ insurance policy. Those who have the coverage will be protected if a disaster occurs. However, ensuring that you get the insurance pay out as quickly as possible is often not easy. It is estimated that the damage caused by hurricane Harvey in Texas could be around $10 billion. It means that insurance companies will have to process tens of thousands of claims. That volume will often lead to delays in the payouts. According to the National Association of Realtors, after a major natural disaster it could take anywhere from a week to a few months for an insurance adjuster to get in touch with a policy holder. It is worthwhile knowing what you can do to speed up the process if you should ever need to make a claim.

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Expediting an Insurance Claim

  • Contact your insurance company as soon as possible. Even a day’s delay could mean weeks or months longer before the payout is made. It is not that the companies intentionally delay payments – they are flooded with claims and so the sooner the claim is filed, the sooner it can be processed.
  • Ask the insurance company when you can expect the adjuster to contact you. This will enable you to be ready when he comes.
  • Take pictures and videos of the damage, including personal items. Include the date of purchase and keep receipts of high-value items in a place where they will not be lost.
  • Keep a record and receipts of everything you spend to make any immediate repairs that maybe possible and are essential. Also, record everything you spend on accommodation and food in case your home is unlivable.
  •  Keep a detailed record of all the actions you take in filing your claim. This includes the people from the insurance company you speak to or correspond with. Note down the dates, times and include details of what was discussed.
  •  Be careful of what you discard. The adjuster may want to see these items. In case you have to discard them because of municipal hazard regulations or for your own safety, take pictures of all that is discarded to show to the adjuster.
  •  If the insurance company offers you the options of signing up for text alerts, do so. This is the quickest way to know the status of your claim, when the estimate is ready and when the payment will be made.

If you have the insurance policies or if you are planning to get additional coverage, talk to your insurance broker about other area or insurance company specific actions you can take to expedite the process, if you should ever have to make a claim.