Wednesday, December 31, 2014

Travel and Holiday Safety Insurance: Why is it required?

The globalized economy has shrunk the world with its connectivity both virtually and physically. Where once upon a time it was a luxury to fly from country to country, today for most people, who are frequent travelers, flying or travelling is an everyday matter. People travel for business reasons, to vacation with their families, for purposes of treatments or to visit their kith and kin.

However, Traveling per se is not always a wonderful experience. There are innumerable perils that a business or leisure traveler goes through depending on the destination, duration, and other factors. Consequently, it is always wise to have a travel insurance policy for the duration of travel / stay at a foreign destination.

So what exactly does a Travel Insurance cover? While one can procure customized travel insurance policies to cover a wide variety of risks, most travel insurance providers cover an optimum number of common risks such as: 
  • Medical emergencies like accidents, sickness and surgical procedures
  • Sudden or emergency evacuation from troubled areas
  • Cancellations and interruptions to a trip’s schedule
  • Accidental death, accidental injury or accidental disability benefit
  • Expenses for an overseas funeral or transportation of corpse to the home location
  • Lost, stolen or damaged baggage
  • Lost, stolen or damaged official/personal travel documents
  • Emergency replacement of essential items in cases of delayed baggage
  • Missed flight(s) due to sudden scheduling/rescheduling by airlines
  • Travel delays due to weather conditions
  • Hijacking, Kidnapping, acts of crime or terrorism
General Exclusions
Most travel insurance providers do not cover:
  • Pre-existing medical conditions such as asthma, diabetes, heart, liver or lung diseases
  • Visiting destinations that are affected by war or terrorism
  • Visiting destinations that are prone to natural disasters like floods, hurricanes etc, at the time of travel
  • Ailments, injuries, illness and hassles with local law enforcement agencies for substance abuse
So what does a traveler do in the above situations? That is where the facility of optional coverage comes into the picture.
Optional coverage
One could go in for one or more additional items at an extra premium. These are:
  • Pre-existing ailments such as asthma, diabetes, heart, liver or lung diseases
  • Sports and adventure activities that are risky such as skiing, scuba diving, parasailing, rock-climbing, mountaineering, motorbike racing or driving, etc
  • Travel to high risk countries that are affected by war, civil war, natural disasters like volcanoes, and terrorism hotspots
  • Additional AD&D (accidental death and dismemberment) coverage
  • Insolvency of third-party agencies like airlines, hotels, tour operators etc
  • Acute onset of pre-existing conditions: In addition to covering pre-existing ailments, one could also cover the unexpected onset of these conditions, despite taking medication and despite being given clearance by a doctor before the travel
Managing Risk
While the travel insurance policy acts as a safety net, it is advisable for all travelers to manage some of the risks associated with travel, so as to minimize claims and damages. Some of the aspects that can be taken care of are:
  • Road Safety: Taking care while driving or using a vehicle, in the place to be visited
  • Crime: Avoiding any situation that can invite crime or criminal attention on oneself
  • Illness and Injury: Taking care of one’s health and preventing any situations that can cause injury
  • Discrimination and Disability Access: Being aware of the local culture and possible causes of discrimination on various grounds

As a full-service insurance brokerage firm, Allied Brokers understands the risks that travelers face while embarking on a journey. Which is why, we provide travel and holiday safety insurance plans with several levels of gradation to factor various requirements of our customers. 

Sunday, December 28, 2014

Business Income Insurance: Why is it required?

Businesses suffer losses or interruption due to losses whether man-made or natural. Previously, business owners got themselves insured against the loss or destruction of tangible assets like machinery, equipment, buildings, vehicles, raw material and finished products. A change has since occurred. In the past couple of decades, Insurance companies have begun offering a more important coverage for loss - loss of income affecting revenue or profit during short or long periods of interruption to the business. This new category of insurance is called Business Income Insurance or Business Interruption Insurance (BII).

So what does BII cover? How does it help small, medium and large businesses recover the loss of income due to business interruption?

Factors to consider
  • The duration of Interruption: Depending on the nature of the business, you could consider either the time taken for the business to resume production or operations (as in small scale manufacturing), or the actual time taken for the business to reach the same state that it was in before the interruption happened. This includes loss of reputation and brand value.
  • Sales Projections: Here again, depending on the nature of the business, Sales Revenue can be calculated by projecting the sales revenues achieved in the previous years over the time of interruption. However, if you have introduced new measures and innovations in the recent past, and if it has had a positive impact on sales revenue, then these too must be considered.
  • Deducting the value of Goods: Loss of profit calculations is generally very simple to arrive at. Normally, the value of goods is deducted from the sales revenue to establish net profit. However, if the business owners have changed the profit percentage in the recent past due to changing business conditions, then the correct figure must be factored in the insurance cover.
  • Discontinuing Expenses: Ordinarily, when a business is interrupted, some expenses get discontinued for the duration of interruption. Such expenses will be deducted from the cover. However, if any other additional expenses that may have occurred due to other reasons, then these must be considered and added to the cover.
  • Depreciation: The usual process that is followed is to use the business’ income tax returns or IRS filed to calculate depreciation on fixed or mobile assets,and include it in the cover. However, you should also be cognizant of whether the real depreciation of the asset would take longer to recover any lost asset or assets, than what is shown in the IRS, and therefore, arrive at a more realistic figure.
  • Overtime done by Executives: The claim should also factor the time spent by executives in restoring the business to its original condition. This includes both time spent in strategizing for operating the business in a disruptive situation, as well as execution. This can be costly in the case of senior management executives and must be added to the claim amount.
Other options and endorsements

In addition to the minimum or base cover, there are a few other options to cover losses in other conditions that may be relevant to the business. Some of them are:
  • Expediting and Extra Expenses
  • Dependent property
  • Utility services
  • Civil authority
  • Contingent Business Income insurance
  • Service interruption
  • Leader property
  • Interruption by civil or military authority coverage

Allied Brokers is a full-service insurance brokerage firm and has been providing insurance cover throughout California in various categories, since 1954. We work closely with business owners to understand the real extent and nature of losses during a business interruption and adequately cover the same. We will guide you through various covenants, state laws, options and endorsements, while creating a comprehensive cover for you. This will help you tide over the interruption and cover all damages, thereby helping you restore normal business conditions at the earliest. 

Monday, November 24, 2014

Employment Practices Liability Insurance: Drawing a Line

The United States of America, has always stood for equal opportunities in employment, and creating a safe workplace for the community of employees. Similar to several other areas of labor and employment related issues, the United States of America, has been a shining example of how legislation can be used to enforce good practices and prevent acrimonious incidents at the workplace. Some of the landmark legislations in this domain include:
  • 1964: Title VII of the Civil Rights Act
  • 1967: ADEA (Age Discrimination in Employment Act)
  • 1990: ADA (Americans with Disabilities Act)
  • 1991: Civil Rights Act
  • 1993: Family and Medical Leave Act (FMLA) 
These laws are interpreted and enforced by the EEOC (Equal Employment Opportunity Commission) of the Federal Government.

However, use and abuse of laws exist in every sphere of life and the law governing the safety and equal opportunities for employees is no exception. These laws have, unfortunately, opened up a whole slew of employment related lawsuits. It has been reported that between 1999 and 2003, there were as many as 403,000 law suits filed under various laws and subsections, by employees, with the EEOC. Needless to say, some of these claims were groundless, but nevertheless extremely expensive to defend or settle.

That is why, in the last couple of decades, one of the insurance products that is increasingly being favored, is the Employment Practices Liability Insurance (EPLI). EPLI is a type of liability insurance that covers wrongful acts arising at the workplace and provides protection from claims against them. These generally cover:
  • Sexual harassment at the workplace
  • Discrimination on various grounds such as gender, age, physical disability, compensation & benefits, genetic traits, nationality of origin, pregnancy, race, color, religion and retaliation for whistle-blowing, among others
  • Wrongful termination from employment
  • Breach of employment contract
  • Negligent or improper evaluation
  • Refusal to employ and/or failure to promote
  • Wrongful norms for workplace discipline
  • Wrongful infliction of emotional distress
  • Inappropriate workplace conduct
  • Defamation
  • Invasion of privacy
EPLI aims to protect Managements of the businesses from groundless claims brought about by disgruntled employees. The coverage also includes:
  1. Perceived issues: Although there may not be an intention to create a wrongful act, gaps in age, generation and communication gaps can create a perception of wrong-doing.
  2. Legal conflicts between employees and contractors, vendors, customers, partners and clients.
  3. Deliberate damage or injuries inflicted by the company’s employees without the Management’s consent or knowledge.
The policies cover Directors, Officers, Management personnel, and employees as insured. However, most EPLI policies generally exclude coverage for:
  • Punitive Damages
  • Fair Labor Standards Act Violations
  • Certain Americans With Disabilities Act Claims
  • Employee Retirement Income Security Act (ERISA) Violations
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) Violations
  • Occupational Safety and Health Act (OSHA) Violations
  • Intentional Institutional Claims (such as retaliating against a whistle-blower)
  • State Employment Law Violations
The cost of EPLI coverage is a complex matter and depends on the nature of business, size of the company (number of employees), past history of lawsuits and claims made against the company. The policy will reimburse the insured company against the defense costs which is the cost of defending the lawsuit in court, as well as, the settlement amount. It also covers legal costs, irrespective of the outcome. 

Allied Brokers is a full-service insurance brokerage firm and has been providing insurance cover throughout California, under various categories since 1954. We understand EPLI thoroughly, having handled many such claims. We will guide you through the intricate terms, conditions, details and caveats that govern EPLI. We provide policies that are optimally-priced and offer the kind of coverage that is required, keeping your best business interests in mind. 

Thursday, November 20, 2014

Understanding Professional Liability Insurance Coverage

What is it?
Professional Liability Insurance (PLI), also called Professional Indemnity Insurance (PII) or Errors & Omissions (E&O) is a type of liability insurance, created for professionals who are in the consulting and/or services business. This prevents these types of professionals from having to bear the full cost of defense, in case a client files a negligence lawsuit against them, and/or the cost of the damages awarded to the client in case of a civil lawsuit.

Who requires it?
While this is not an exhaustive list, PLI/PII covers doctors, lawyers, insurance agents, property dealers, agents & brokers, investment advisors, financial service providers, architects, structural engineers, construction specialists, electricians, plumbers, software developers, website developers, application developers, software architects, project managers, business administrators, quality control / quality assurance consultants, Testing analysts, business analysts, transporters, etc. NGOs and non-profits.

Why is it so important?
Earlier, there was only the General Liability Insurance which covered physical harm caused to a person or property, as well as wrongful advertising. Then, as services companies became larger, there were other, newer forms of insurance which covered the employers, the public, the product, etc. But most of the consultants or service providers mentioned above rarely cause physical or advertising injuries. The claims are more in the nature of misrepresentation, negligence, bad faith, unfair business practices and incorrect advice. Hence, a newer form of Liability Insurance had to be created. Not having this cover can expose these consultants/service providers to expensive lawsuits, loss of reputation, and closure in some cases.

What does it cover?
PLI generally covers claims made during the policy period for any form of negligence, error or omission that may have occurred on part of the consultant/service provider. It rarely covers claims for these lapses that have occurred in the period preceding the start of the liability period, unless specifically mentioned in which case, it’s called a retroactive policy.

Does it cover Civil Liability Insurance?
A typical PLI does not cover criminal prosecution or civil liability cases, including, but not limited to suits such as defamatory, contract violations, warranty breaches, IP (intellectual property) violation, cost of doing business, etc. Exceptions to this insurance coverage, for technology providers, made are for internet security, data breach, data loss/theft, etc. These sets of suits are generally covered separately or are covered by exclusive contracts for each of them.

Can it be customized?
Since each service business is unique with its own inherent risks and intricacy of service provided, PLI contracts are generally customized to the nature of the business. So a PLI for people in the medical business is different (called as malpractice insurance) from an errors and omissions contract for lawyers, financial service consultants, investment advisors and insurance agents. Any good insurance company will provide profession-specific PLIs.

Can I have a PLI only for a specific contract?
PLIs generally apply to the individual and are not specific to a particular contract. However if a particular contract expects you to have a PLI, Insurance companies can provide such coverage. Many government and corporate contracts expect consultants to have a fairly high-value PLI before they can bid for a contract. In such cases, Insurance companies will process the PLI on a need basis.

How do I get started?
Allied Brokers, a long entrenched and experienced provider of insurance coverage in the Bay area, is also a trusted name for personal insurance, business insurance and health insurance. All you need to do is to pick up the phone and call us today on the listed numbers and a senior advisor will talk to you in depth.

Friday, October 17, 2014

The Importance of Renters Insurance

If you live in a rented house or apartment, homeowners insurance is not something you need to worry about. But that doesn't mean that you don’t have belongings and assets that you need to protect. Your landlord will have insured the building in which you live, but that does not cover your personal possessions. What if they should be stolen or damaged or destroyed by fire or natural disasters? Most people tend to underestimate the value of their belongings. It’s easy to think that replacing your possessions will cost you a few thousand dollars. When disaster strikes, you may suddenly find that the actual cost runs into tens of thousands of dollars.

Do Not Underestimate the Value of Your Possessions

Whether or not you decide you need renters insurance, it’s a good idea to inventory and value all your belongings. Take a couple of weekends and catalog everything you own. You may think you can do it in a couple of hours, but once you start investigating closets, cabinets, attics, basements and garages you will normally find that you own much more than you ever realized. Sure, a lot of it may be junk. If so, you are now in a position to get rid of it. What remains is what is important and now you can start to put a replacement cost on all that you own. The final figure may come as a huge surprise. Most people do not realize how much they accumulate over the years and how valuable it all is. If you lost it all, could you replace everything? And if you can do it, take a moment to consider the extent of damage that it could cause to your savings and financial stability. One leading insurance company estimates that the average person has over $35,000 worth of possessions that are normally not covered by any policies that a landlord may have.

It’s Not Expensive

A typical renter’s insurance policy should not cost you more than a dollar a day. That’s is an insignificant amount when compared to the peace of mind that comes from knowing that your belongings are protected in case of loss. If you don’t have renters insurance, why not call your insurance agent and talk to him or her about taking out a policy? The advantage of buying the insurance from a company you are already dealing with is that most insurers offer discounts to people who already have other policies with them.
What’s covered and what’s not
Renters insurance covers, but is not limited to:
  • Theft
  • Fire
  • Lightening
  • Hail
  • Windstorms (hurricanes etc.)
  • Damage to the plumbing system due to freezing
The coverage for some types of property / belongings may be subject to dollar limits:
  • Gold and Silverware – limitation normally applies to theft only
  • Jewelry and furs
  • Money, bank notes and coins
  • Securities and negotiable instruments
  • Watercraft, furnishing and equipment
  • Trailers
  • Firearms – limitation normally applies to theft only
Renters insurance will not cover:
  • Issues related to business pursuits
  • The provision or non-provision of business services
  • Bodily injury or damage to property that is intended or expected by the insured
  • Ownership, use of and maintenance of motor vehicles, aircraft and some types of water craft

Renters Insurance is almost similar to auto insurance and therefore the coverage depends largely on the type of plan that you choose. You can either insure all your belongings or you could be selective in what you wish to insure. You can even decide how much deductible you want on your liability coverage. Renters Insurance also covers any damage that you may have accidentally caused. Before making your decision it would be advisable to shop around for the best coverage you can get.

Thursday, October 16, 2014

Do You Need Identity Theft Insurance?

The recent theft of personal celebrity pictures from the cloud once again demonstrates how insecure content and data stored online can be. Even if you are a “traditionalist” and keep your data only on your hard drive, you’re still not safe. Hackers, malware and phishing are increasingly more sophisticated, so much so, that it has become a constant battle to fend off these attacks. Cyber strikes are always without warning and any security software or patches to combat the infiltration is developed subsequently.

According to the Federal Trade Commission, (FTC), the major complaint from consumes, for the past 14 years, has been ‘identity theft’. If you have been a victim of your identity being stolen, you will certainly be aware of how disastrous this can be, especially if you have suffered:
  • Financial losses
  • The pain of having to live with poor credit
  • The enormous amount of time and effort needed to reestablish your identity and credit
  • The sense of personal violation

If you are yet to become a victim of ‘identity theft’, it could mean that the security measures you have in place are protecting you right now, but it does not take away the threat of your personal data being stolen. In a world where security services can only play catch up with the cyber criminals, can you ever be totally, completely safe? Or should you seriously consider the advantages of an identity theft insurance cover.

Identity Theft Insurance – Pros and Cons
  • According to the National Association of Insurance Commissioners, the average cost of identity theft insurance ranges from $25 to $60 per year
  • It may include account and credit monitoring, credit alerts and reimbursement of cost of repairing your credit history
  • The typical benefits under the policy are limited to $10,000 to $15,000. Additionally the deductibles can be as high as $500 or more
  • Some insurance companies provide extra services in guiding the injured party through the complex processes of notifying the credit reporting agencies in order to help recover their credit
  • Identity Theft Insurance has a limited scope
  • The policy will not cover any financial losses
  • The mental, emotional and psychological impact of being an identity theft victim can be immensely traumatic
To buy or not to buy
  • The cost of insuring yourself against identity theft is comparatively imperceptible but given the limitations of the policy plans, gives pause for thought
  • The need to protect against ID theft still remains. Many people opt for credit monitoring services. If you have the wherewithal or the time, you could monitor your credit, constantly. If, however, you do choose to employ the services of a professional credit monitoring service to monitor your credit, the charges thereon for the service is only $10 per month
  • There are companies like American Express that provide free ID theft protection to all their cardholders
  • Covering against Identity theft gives you peace of mind and the insurance agency will generally provide you with a dedicated advocate who will work on your behalf
  • Some insurance companies will immediately notify you to allow you to take immediate action
  • In case of any detection of breach of your identity, an immediate alert is sent out to you
  • In some plans the ID Theft Insurance covers loss of your wallet and credit cards, whilst you are travelling
  • Some insurance companies may reinforce their plans to include online protection such as:
  • Anti-key logging software which has the ability to delete or immobilize hidden key stroke loggers
  • A Phish-blocker that detects phishing sites and immediately opens a warning page to alert you


Thursday, September 18, 2014

Why Californians don’t invest in Earthquake Insurance Part – 2

Rationalizing the reasons to avoid spending on earthquake insurance is easy. Starting with the reason, “It always happens to the other guy” to more complex justifications, there are a huge number of excuses for not buying a policy. Among the most common are:
  • A home survived the last quake without any damage. That may be so, but it is not a good enough reason. Each quake is different and a region that has historically only suffered from mild tremors could have a major quake tomorrow. Just as there is no way to accurately predict where and when an earthquake will happen, there is no way to know how strong the next one will be. Historical precedent means nothing. In addition, new fault lines are being discovered regularly and even if there has never been a quake near a newly discovered fault, it is no guarantee that an earthquake could not happen next week.
  • A home is earthquake proof. New construction techniques can be used to make a structure more earthquake resistant. Retrofitting of older homes to enable them to withstand stronger temblors is possible. But there is no such thing as a completely earthquake proof home. There is no technology available today that can protect a home from a truly massive quake. And even if the techniques that can increase a home’s quake resistance, exist today, these very same techniques need to be properly applied. For example, bolting a home to its foundation, is a popular way in increasing quake resistance. Regardless of these new developments, studies show that while it may be of some help in protecting a one story wood framed building, structures of two or more stories, those with big gaps in the frames and those with big picture windows are more likely to suffer quake damage, if bolted to the foundation. And a strong foundation is of no use if the ground beneath the home crumbles completely, like the earthquake that hit Anchorage Alaska in 1964, when a whole neighborhood was washed out to sea.
  • FEMA will come to the rescue. Homeowners affected by an earthquake may be eligible for low interest FEMA loans to help them rebuild and get back on their feet. Remember however, that these are loans; the money, along with interest, will have to be repaid. Moreover, these loans will be added to a person’s net worth statement as a liability which will offset the equivalent quantum of assets. Another factor to take into account is the growing reluctance in Congress, faced with numerous natural disasters, to hand out money to those who did not bother to get insurance to protect themselves.
  • Let the bank take it. Those with very little equity in their homes, owing to huge mortgages or other reasons like large decline in home prices, may be tempted to hand over the keys of a ruined home to the bank and walk away. Even the little equity available will be lost and perhaps more importantly, their credit rating will suffer, consequently making it very difficult to finance another home for a very long time.
Don’t Set Aside the Odds

Granted many may argue that the odds of an earthquake striking their homes down, are more in their favor. Many may reason that the probability of winning a lottery ticket is much higher than the probability of an earthquake happening in their neighborhood. Stop! Think! Winning a lottery ticket would be awesome, but lack of earthquake insurance, when calamity strikes, would be disastrous. All of the above reasons also would not be of any help, when it is too late, especially when you live in an earthquake prone region. 

Tuesday, September 16, 2014

Why Californians don’t invest in Earthquake Insurance Part – 1

Californians tend to be blasé about earthquakes. They happen; and unless you have been directly affected by one, it’s something you accept as part of living in California. This is one of the reasons why only 17% of homeowners in California have earthquake insurance. The recent Bay Area temblor in August, has made no difference to homeowners. It’s easy to rationalize the apparent lack of or need for earthquake insurance. What are the odds of your home being damaged or destroyed? One way of looking at it is that the odds are very small, so why pay out so much for insurance, when you may never need it? However, the purpose of insuring is to cover against the improbable, which often has devastating financial consequences and therefore, the best approach to take would be, ‘what could happen, if you lose your home and you don’t have insurance’. For example: a healthy man in his 30s buys life insurance because he is safeguarding against an improbable eventuality, thereby averting any financial catastrophes.

The other issue that dissuades people from buying quake insurance is the historically accurate but currently invalid perception that it was not a customer friendly option.

1994 – Northridge and After

Prior to the year 1994, insurance companies that offered homeowners insurance were also required to offer earthquake coverage. Consequent on the Northridge quakes, the $12.5 billion in claims settlement turned out to be higher than all the premiums collected on earthquake insurance in the state. This led to insurers refusing to underwrite either homeowners or earthquake insurance policies – the losses for them were too high. The State Legislature acted to set up a state run insurance pool to provide the needed coverage – the California Earthquake Authority (CEA).

The policies available were basic and not user friendly. CEA policies had a 15% deductible. This meant that a homeowner with a $300,000 policy would have to pay $45,000 before the policy took effect. These policies were limited to only the actual building and did not cover swimming pools, landscaping or other possible areas of loss. Besides, the interiors were covered for only $5,000 worth of assets. Anything else that was destroyed, damaged, ripped out of the walls, etc. that exceeded this amount had to be paid for from the homeowner’s pocket. And until the home was restored, repaired / rebuilt, the family would have to find temporary accommodation elsewhere. While the pre-Northridge policies covered rent and living costs for up to a year during the time the home was being repaired or rebuilt, CEA policies were limited to a $1,500 payout – about enough to pay for a month at a motel.

In addition, the cost of coverage was high in comparison to the pre 1994 quake policies. CEA based its rates on the then current levels of earthquake prediction. This brought places like San Bernardino, which was previously presumed to be fairly safe, into the higher risk zone, resulting in an increase in premiums.

The widespread protests at the cost and limited coverage of quake insurance caused the state to relook the issue and the result was more policy options, increased coverage of contents and lower deductibles. The number of policy holders started to show a steady increase. But even now, 5 out of 6 homeowners in the state still have no earthquake coverage, because:-
  • To the extremely wealthy, the loss of a home is only a minor inconvenience.
  • To the others whose equity in their homes is so low that paying for insurance makes no sense.
Yet, these are a very small minority. For the rest, not having coverage is a huge and potentially catastrophic gamble.

Call Insurance by Allied Brokers (650-328-1000) for all available earthquake options.

Monday, August 25, 2014

You May be insured, But Where is Your Pre-Loss List?

Every homeowner knows about the importance of homeowner’s insurance. But how many know about the importance of having an inventory of their possessions? According to available statistics, while over 90% of homeowners are concerned about having the right insurance coverage, just about 40% have ever documented the contents of their homes. And how current those lists are is anyone’s guess.

Ask an insurance broker and he will tell you that a policy holder making a claim along with a pre-loss list of items that have been destroyed or stolen is very rare.

No Inventory’ Means Problems and Delays

Not having an inventory makes it difficult, and often impossible, for a homeowner to be sure that nothing has been left out when a claim is filed. In addition, the absence of an inventory can cause the settling of claims to take longer than they normally would. How much longer could it take? According to a survey of insurance professionals, about 80% think that a claim accompanied by an inventory is settled, in most cases, 50 to 100% faster. Think of what that time difference could mean when disaster strikes. Your whole focus is on repairing the damage, making good the loss and returning to your normal life as quickly as possible. The delay is going to hurt.

A Mere List is Not Enough

A problem that insurance companies often face is that the inventory, if it is available, is lacking in two key elements.

The first is proof of ownership. Keeping documentary proof of ownership of valuable items in a safe place is very important.

The second is that the lists do not have value driven descriptors. Simply listing a desk or chair is not enough. Is it a small school desk that costs about $200 or is it a valuable antique that is valued at $200,000? Or is it something in between? And not everything old is automatically a valuable antique.

Evaluating the extent of the financial loss without this kind of information is a long and cumbersome process. Besides proof of purchase, the value drivers for furniture are the brand, the condition, the material used in making it and the condition at the time of the loss.

Reconstructing Damage and Loss

The insurance company will typically go through a home room by room with the policy holder to determine what has been lost. The process is often a wall by wall, floor to ceiling exercise with the policy holder being asked to list out everything in the room. It is difficult enough to do in normal circumstances. When battling the trauma of major loss, it can be almost impossible to do it accurately and ensure that nothing is left out.

And what about the worst rooms to reconstruct – the attic and basement? These are where items that are not in use are stored. A lot may be junk, but there could also be valuable things. Can you list out everything in your attic right now and be sure that nothing important has been left out?

Make an Inventory

Making an inventory takes time. You need to go room by room and closet by closet to cover everything. And then you have to find all the documentation that is available to establish the values. Do it in a rush, and important things could be overlooked. Ideally the best way to do it is the spare a few hours each weekend to create a detailed list of all your possessions. This list will not only help you with insurance claims. It will tell you about all the things you own so you can decide what you need to keep, what has to be repaired, what can go and what needs to be added to.

If you have questions about your homeowners’ insurance policy, or insurance in general, contact Allied Brokers at 650-328-1000 or visit us at We have over 50 years of experience in the industry, and our team of experts is always happy to assist you.

Sunday, August 24, 2014

Know Your Insurance before Remodeling

Homeowner’s insurance is not the most exciting of subjects. Home renovation is much more interesting. The home is a focal point in our lives and anything that makes it better is fascinating. But remodeling and insurance are very closely linked and to ignore the insurance issues involved with home remodeling is to court disaster. With every good thing that a remodeling can achieve, there is also the potential for things to go bad. Insurance is your protection when things go wrong. Normal homeowner’s insurance will not provide the coverage needed when major remodeling is underway. For example, if 50% of your home is destroyed because of a remodel going bad, the homeowner’s policy will only cover the part that is intact. You should have a builder’s risk policy to cover the cost of what needs to be rebuilt.

Are Your Contractors Insured?

The contractor you have engaged to do your remodeling is highly reputed with great references. But even the best can make mistakes. Before hiring a contractor take the time to ensure that they, and all the subcontractors they may use, are not just licensed but also bonded and insured. While asking to have a look at the certificates of insurance is essential, many insurance experts recommend going one step further and contacting the insurers to make sure that the certificates are genuine. These experts also say that contractors should ideally carry a minimum of $1 million coverage for each type of insurance they have.

Add Yourself to the Contractor’s Policy

The contractor will have a general liability insurance policy. It makes sense to have yourself added to the policy and it costs little or nothing. If this is done then you will be fully covered against liability for any damage that may happen during the course of the remodeling such as a water main being damaged or broken and causing a neighbor’s property to be flooded. Having your name added to the policy has another advantage – if the policy lapses while the work is underway, the insurer will notify you.

Will the Value of Your Home Increase?

Many remodeling projects can increase the value of a home. An example of this is a kitchen remodel or a room addition. If your home is destroyed after the remodel, it will cost more to replace. It is a good idea to check your homeowner’s insurance policy to ensure that the coverage you have is enough to cover the cost of rebuilding a home that is more expensive than it used to be. Many insurance policies do contain a replacement cost endorsement that will cover the cost of rebuilding your home. Do you have it?

Remodeling and Peace of Mind

Home remodeling can be a stressful experience with costs to be controlled, deadlines to be met and contractors to be dealt with. These are a part of all remodels and there is no way to escape them. But the fear of financial loss when things go bad is an unnecessary burden and one that you need not carry.
Talk to Insurance by Allied Brokers to find out about the additional coverage you need to protect yourself when your home is being remodeled. Call us at 650-328-1000 or visit our website at

Sunday, July 20, 2014

Frequent Natural Disaster Raise Homeowner’s Risks

According to the Natural Disaster Housing Risk Report about 8% of the 131 million housing units in the U.S. are at risk from natural disasters. Out of the over 3,000 counties analyzed, 12% or 373 were categorized as being at very high risk of suffering from natural disasters. Assessment was done on the basis of risk data for earthquakes, hurricanes and tornadoes and 5 risk categories were created. These are: very high risk, high risk, medium risk, low risk, and very low risk.
It is estimated that the annual cost of insured claims from natural disasters has increased from $5 billion in the 1970s to in excess of $40 billion in 2010. That is an 800% increase. While the sharp rise in home prices accounts for part of the rise, the volume of catastrophic events is a significant factor in the rise. This is something that many insurers are now turning their attention to and California is a case in point.
The California Situation
In the last month 2 earthquakes hit southern California. One measured 4.6 on the Richter scale. There’s nothing unusual about this. The U.S. Geological Survey says there are 10,000 quakes ever year but most are too mild to be felt. Those recording over 4.0 account for only 0.2% of them. Luckily, the recent seismic activity caused only minimal damage, but the next time could be worse – much worse. According to FEMA, no part of the U.S. is safe from quakes and some regions are more vulnerable than others. This is something that California residents know only too well. It is this increasing awareness, both in California and other parts of the country, that is leading to an increase in the sales of earthquake insurance policies.
What Kind of Coverage?
There are 2 options when it comes to earthquake insurance – an endorsement or a separate policy.  While endorsements are typically less expensive than a separate policy, there are usually many exclusions and higher deductibles. When taking out earthquake insurance what is important is the quality of the policy and the amount of coverage, not whether it is an endorsement of separate policy.
In California, the California Earthquake Authority (CEA) is the major player in the earthquake insurance market with member companies having 850,000 policies in force which amounts to 70% of the total number of quake insurance policies. Under state law, a separate earthquake policy is required to be offered when homeowner’s insurance is being sold. According to the CEA, while major earthquakes that cause significant damage may not be all that frequent, the benefits of earthquake insurance outweigh the expense. Typically, quake insurance provides for the replacement cost of a home subject to a 10% to 15% deductible.
Surprisingly, while the number of quake insurance policies being sold for homes is growing, business owners seem to feel that the risk is not significant. In California, fewer than 10% of commercial insurance policies include earthquake coverage. The risk is the same for both homes and businesses and with the growing awareness of the need for proper coverage, it is expected that the number of quake insurance policies sold to businesses will increase in the future.
How much damage could a major seismic event in a highly populated urban area cause? According to FEMA it could be up to $200 billion.
If you have questions about your earthquake insurance policy or any questions about insurance in general, call Insurance by Allied Brokers at 650-328-1000 or visit our website at

5 States Where You Could Get Burned By Employee Lawsuits

Every business owner thinks, or at least hopes, that everyone who works for him is happy and that they all feel like a family. Maybe they do and maybe they don’t. But no matter how happy they are working for you, nothing stays the same. The best of employer–employee relationships can go downhill because of mistakes, misunderstandings and just plain human emotions. Whatever the reason, when things go bad, an employee could hit you with a lawsuit.
You may think that you know your people and that it won’t happen to you. But the statistics say otherwise. On average, a business in the U.S. with 10 employees or more stands a 12.5% chance of being involved in an employee liability lawsuit at some time. This is the national average. The figure changes dramatically if we look at the situation state wise. In many states the risk of being involved in litigation is higher.
California Tops the List
The District of Columbia has an incidence rate of Employment Practices Liability (EPL) litigation that is 32% higher than the national average. In Illinois the figure is 26%, in Alabama 25% and in Mississippi it is 19%. What about California? It stands at the top of place where employee liability lawsuits are most likely with business owners facing a 42% higher chance of being involved in a lawsuit.
With numbers like these, employers in California need to be extra cautious. Having EPL insurance is not enough. The limits on the policy need to be high enough to offer real protection. In federal courts compensatory and punitive damages combined are limited to $300,000. Most states, however, have no such ceiling on the quantum of damages that may be awarded to an employee. If you are a business owner in California and do not have EPL insurance, the danger is obvious. And even if you do have coverage, are you sure that it is enough? It’s important that you talk to your insurance broker ASAP to check on your coverage and discuss the monetary implications of increasing it, should it be required.
Insurance Companies Offer Resources for Protection
Many insurance companies are willing to go the extra mile to support their clients and reduce the probability of a lawsuit. A loss in court can cost an insurer a huge amount. Many insurers offer training materials to their clients to help them establish Best Practices in sensitive areas for employer – employee relations such as race, sex, age, disabilities and so on. These inputs can be extremely helpful in prevent lawsuits because the insurance companies that provide this support has avoiding EPL litigation as a primary focus.
Unfortunately, many businesses miss out on both the need for EPL insurance as well as the support that insurers give in avoiding lawsuits. This is because, in smaller organizations, there will typically be one person looking after HR issues. While he or she may be aware of the issues involved in EPL liability, the decision to insurance purchasing is usually done by the head of the company. This operational and communications gap is the kind of thing that allows companies to become liable for massive payouts in EPL cases.
Another problem is that many businesses are under the mistaken impression that their general liability policy covers them against employee lawsuits. It does not.
Have you checked your EPL liability coverage lately? Are you protected against that one big lawsuit that could take your company down? Contact Insurance by Allied Brokers by calling 650-328-1000 or by visiting

Tuesday, June 24, 2014

Employers – Are You Protected From Slander and Libel Lawsuits?

It’s a scenario that every business owner is familiar with. An employee who has worked with a business for years, and learned all the ropes, quits and starts a competing business of his own. The parting of ways can be pleasant, cold and business like, or acrimonious. In the first two instances, the employer finds replacements and carries on, taking legitimate steps to protect his business from the new competitors who know his way of working and trade secrets inside out. But when the parting turns into a fight, things can get ugly very soon.

Defamation and Other Claims

In a recent case a California wealth adviser was ordered to pay over $3.5 million to 2 ex-employees for defaming them. The ex-employees in their suit claimed that the former employer had had made defamatory comments and accusations against them after they left him and started their own financial advisory services.

The claim was that the old employer has made accusations of fraud, planted false evidence and pressurized one of his clients to manipulate Google’s search results so that negative comments and defamatory accusation were a major component of the results. The case came up before the Financial Industry Regulatory Authority. There were 3 arbitrators, all ‘public arbitrators’ with no connections to the securities industry. This may have been a good thing as they would not, in theory, have been subjected to pressure or attempts to influence them unfairly. On the other hand, they had no hands-on knowledge of the working of the industry and the ground realities. The ruling was in favor of the ex-employees who were awarded $2.5 million in punitive damages. In addition, compensatory damages of $800,000 were levied. The ex-employer also had to pay for the opposing sides’ attorney fees which came to almost $340,000.

The ruling is going to be appealed. One of the grounds is that the arbitrators had no knowledge of the industry and were thus not component to make any ruling in the matter.

Ignore the Merits of the Claim

In cases like this it is always difficult to evaluate the merits of the claim made by either side. Often there are no clear cut blacks and whites – just shades of gray. The competency (or the lack of it) of the arbitrators is also often open to debate. What is important is the financial blow that the employer suffered. It is the sort of thing that can happen to any business owner. The owners may have done nothing wrong but the ruling goes against him. Or he may have inadvertently said or done something that he should not have. Either way, the loss from this kind of situation can cripple or even destroy a business.

This is where having the right kind of business insurance coverage becomes critical. Claims and counter claims are a part of business and losing this kind of case will not necessarily harm the ex-employer who should be able to recover from the loss of two employees quickly. But the financial loss is another matter. The right kind of business insurance coverage will protect against the financial loss. In many cases a general liability business insurance policy will offer coverage in these types of circumstances. If you are a business owner or employer, you should check your coverage to see if you are adequately protected from being sued for slander, libel or defamation. Wherever the fault lies or even if there is no fault and the whole thing is just a misunderstanding, the cost of losing can massive. And even if you win, the legal fees you have incurred can be huge. With the right type of insurance, the financial cost of being sued is something you do not have to worry about.

Contact Insurance by Allied Brokers with your questions about business insurance, safeguarding your business against unexpected future risks and potential financial losses. Call us (650) 328-1000 or visit us at

If Your Fire Insurance is Canceled

When the Cocos fire was raging a San Diego resident whose home was in danger was surprised and happy you receive a phone call from his insurance company. The company representative told him that the company had a mitigation team in the vicinity and that it offered a free service wherein they try to protect the homes of their policy holders. The fire did not damage the resident’s home, but he was happy and thankful that the insurance company had been so proactive in protecting the interests of its policy holders.

What happened next was a shock to the man. A week later, he received another phone call from the insurance company. The representative told him that his home was classified as being in a wildfire area and because of this the company had decided not to renew his insurance policy. The homeowner, who in the past 10 years had never filed a claim on either his home or car insurance policies, felt let down. He felt that after accepting premiums totaling about $25,000 over the 10 year period, the company dropped him like a hot potato.

It’s Legal

According to the State Department of Insurance, what the insurance company did is not unusual. When an area is designated as a high fire danger region, insurance companies, especially those with a lot of exposure in these areas, move to limit the number of policies they issue. Like all businesses, insurance companies cannot survive without making profits. And one way of doing this is by reducing the risks and the possibilities of huge payouts. No one can argue with this logic.

But there’s more to it than logic. The homeowner was never told earlier that his home was in a high risk area. The company took his money for 10 years without hesitation. He was never told why things had suddenly changed. And worst of all was the timing of the news. It came just one week after the first phone call saying that the insurance company was going the extra mile to protect him. The decision not to renew the policy is legal and from the insurance company’s point of view, makes sense. But is it fair?

If it Happens to You

The relationship between an insurance company and its policy holder is a business one with the company wanting to make a profit from the policy and the policy holder expecting protection from loss. For the policy holder there is also the feeling of security that comes from being insured, a feeling that grows as renewals come and go without a hitch. To have it suddenly withdrawn can leave the homeowner feeling very vulnerable. If this happens to you, there are some things you can do about it.

You can take steps to reduce the fire risk and then appeal to the insurance company to reconsider this decision. The insurer may change its mind and renew the policy. If not, there are other insurance companies that you can contact. The best thing to do is to talk to an insurance broker that represents a number of insurance companies. This will allow you to get expert advice and compare coverage options to find the policy that best suits you.

And if you think that your policy has been wrongfully canceled, you can call the State Department of Insurance and the agency will investigate to see if the insurer has followed the correct procedure in the matter.

Insurance by Allied Brokers has been functioning in the industry for over 50 years and we work with a wide selection of major carriers across California. If you have questions about your insurance policy, don’t hesitate to call us at (650) 328-1000 or visit us at

Friday, May 23, 2014

Flood Insurance Update

The July 2012 Biggert/Waters Flood Reform was modified by Congress in March 2014 with new rules and rates effective May 1, 2014.

This will reduce the size of flood insurance rate increases to an 18% per year maximum.

It will also remove the requirement for an elevation certificate for most homes.

The legislation only affects the government run F.E.M.A. national flood insurance program.

We have a new private flood insurance company that will offer qualifying homeowners flood insurance at up to 50% lower rates with no elevation certificate required.

Relief is on the Way

The new Act repeals the Biggert-Waters provision which introduced fresh rates to older homes after the new flood maps are issued, even if they had been built in compliance with the then current flood maps. Prior to the repeal, property owners newly mapped into high risk areas would have had to either elevate their homes or face a phased 5 year increase in their rates. The new law also allows most properties to continue with their subsidized premiums instead of having to face massive rate increases when the property is sold or an existing policy lapses. Annual rate increases are there, but these are limited to a large, but hopefully bearable, 18% per year.

Another benefit of the March 14th law is that FEMA is now required to refund to policy holder who overpaid their premiums under the pre-March 14 law. Additionally, FEMA is required to minimize the number of polices where the annual premium exceeds 1% of the total cover that the policy provides.
So when is all this going to happen? As one insurance professional said “At the leisure of Congress.” That is the big uncertainty on the relief that the new Act promises.

But what about Flood Protection?

The new Act does give lawmakers time to work out a more equitable way of financing flood insurance. And it gives homeowners time to prepare for the inevitable increases in rates. But that is not enough. Under both the old and the new laws, standard flood insurance policies will only pay for physical damage to the property cause by rising wear. Coverage for the contents of the home and personal belongings needs to be purchased separately. Many older policies have contained archaic and unfair rules like one that states that in the kitchen, only the lower cabinets are covered against damage, not the upper ones. Preventing or, at least, controlling flooding is where a permanent solution lies.

In the long term, there is a need for finding a solution to the problem of water direction in the event of future flooding. The San Francisquito Creek Joint Powers Authority (JPA) has been in negotiations with the Regional Water Quality Control Board regarding flood control and protection plans. A couple of months ago, the Board denied the JPA permission to begin the project. The JPA is now trying to have the decision overturned. Until a viable solution to the flooding issue is found, delaying the inevitable flood insurance rate increases is only fighting a holding action.

And for those who think that finding a solution is not all that urgent, given this year’s drought, all that can be said to them is to recall the El Nino storms of 1998, and remind them that this year is predicted to be another El Nino year.

If you have questions about your flood/homeowners insurance policy or about insurance in general, call Insurance by Allied Brokers. We have been serving the Bay Area for over 50 years, and have been closely watching the industry and government policy changes long enough to find the best solutions for you among any given scenario. Call us now at (650) 328-1000.

Tuesday, May 20, 2014

Do you trust your bookkeeper?

Does your small business or home owners association policy have Employee dishonesty coverage?  Most policies include a token amount of coverage. Make sure you have enough insurance for your business to survive an embezzlers theft. Almost every day you can read an article about some business's bookkeeper getting caught stealing money from their employer, ususally over a long period of time.

American Greed on CNBC has a weekly series on the Madoff’s and Stanford’s of this world of crime. According to the ACFE employee dishonesty causes up to $400 Billion in losses. But every day smaller thefts are taking place. For a few hundred dollars you can buy $250,000 of coverage to protect yourself.

As more executives get access to company assets and the technology that manages the company assets, employee dishonesty is the new pandemic. While earlier, dishonesty largely meant embezzlement or theft, now employees are finding newer and smarter ways to cheat their employers. 

Executives who work in the Administration, Finance and Asset Management departments of a company can commit forgery or manipulation of company documents, cheques and agreements. They can get access to the company’s cash reserves and initiate illegal fund transfers. Employees who work in Banks, Insurance and Financial Service companies are known to frequently indulge in computer or credit card fraud.

However, these are more common means of fraud and employee dishonesty which are covered by standard or standalone policies by most insurance companies.

It’s high time you asked yourself - does your business insurance have enough coverage for employee dishonesty?

Most policies cover a trivial amount automatically of $20,000 or less. It’s extremely inexpensive to add $200,000 or more. Stories like this are commonplace locally. The crooks are almost always caught after years of stealing and all the moneys gone. Think of Fry’s electronics whose millions of dollars were stolen by an executive recently. A local nursery was put out of business by an embezzler. Countless other examples of victims bilked by people they trusted.

If you are on the board of directors of a homeowners association or a commercial condo association you better make sure you have enough coverage to cover the total reserves in the association’s bank account. We have just reviewed 2 clients recently that have 0-$50,000 when they should have $250,000. As a board member, you can be held liable for this oversight.

Some companies include employee dishonesty insurance as a part of their other insurance contracts. The coverage can be added either by the base policy or by endorsement. The AICPA accountants program adds employee dishonesty coverage by endorsement.

However, this approach has its own disadvantages. The employee dishonesty component has its own limits, and this may not be adequate to cover new and unique kinds of frauds that are unearthed every day. For example, Business owner’s policies (BOP's) usually limit employee dishonesty component to $10,000, and this again covers only the first party committing the act of dishonesty.

Further, typical AICPA endorsements for employee dishonesty only factor acts committed by employees. Non employees such as agents, third party agencies such as Security companies who routinely transport or handle cash and securities are not factored. Also, these terms and conditions are outdated and do not factor computer fraud which is emerging as the number one choice for fraudsters and dishonest employees.

All this implies, you need to quickly evaluate your business insurance policies today.

Call Carlos or Mimi at Insurance by Allied brokers at (650) 328-1000 for a free insurance review.