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