Entries Tagged 'General Insurance' ↓

The destructive weather we have endured over the past two years has not only devastated property and lives, but also caused havoc in the insurance industry. Unfortunately, the National Flood Insurance Program (NFIP), with debt amounting to $17 billion prior to Hurricane Sandy, was particularly hard hit, and debt totaled more than $24 billion in mid-2013.

The NFIP currently is available to commercial property owners through large insurance companies. On October 1, 2013, NFIP rates increased; for commercial properties the increase was 25 percent per year until premiums reach the full actuarial cost.

Premium costs

As of October 1, 2013, a premium of $2,800 per year provides coverage of $500,000 for buildings and $500,000 for contents for companies qualifying for a preferred risk policy (in low or moderate-risk areas). For companies in high-risk areas, the standard rated policy is the only option available under the NFIP. Annual premiums start at $1,666 for $100,000 and $50,000 for building and contents respectively.

Separate coverage also can be obtained for buildings and contents. Premiums for standard-rated policies are based on such things as the age of the building, number of floors and occupancy, as well as the degree of flood risk. Replacement Cost Coverage is not available for commercial buildings or contents, and business interruption insurance is also not available through the NFIP

Extreme weather may continue

Statistical forecasts indicate that many cities are at risk if this extreme weather pattern continues, and experts are debating how to respond. Some cities are examining or revising flood plain maps to ensure they reflect current realities, and discussions are underway on measures to make urban spaces, in particular, more weather resistant.

With warnings such as these, businesses are naturally concerned about flood insurance. They should be: According to NFIP stats, 25 percent of businesses experiencing an event such as a flood closed up shop. From 2008 to 2012, the average flood claim was more than $75,000.

However, with the debt accumulated by the NFIP and dire warnings of sky-high premiums in the future, many are unsure about what to do and where to turn.

There is a first step: The Federal Emergency Management Agency (FEMA) has developed an online platform for those who believe they have been wrongly mapped as being in a Special Flood Hazard Area (SFHA). This designation means that SFHA businesses have a very high risk of future flooding; for them, an inadvertent mis-mapping can cost thousands of dollars in terms of higher premiums.

Letter of Map Change

The online Letter of Map Change constitutes a request to be re-designated. If granted, it will save on premiums and even offer some the option of not having to purchase flood insurance. If you believe you’ve been mis-mapped, it may be worth pursuing.

As noted, there is considerable debate in the insurance industry about the fate of NFIP. Changes can happen quickly. If you’re planning to purchase flood insurance, discuss it with your insurance professional, who will be aware of the most recent developments.

Directors and officers (D&O) liability coverage is essential for every organization, large or small. Because the fallout – for companies that skimp on liability insurance generally, and particularly on D&O coverage – could be catastrophic.

D&O insurance protects the directors and officers of an organization from liability arising out of their actions taken on behalf of that organization. These actions can include: poor investment oversight, negligence, misstatements, omitting important information, and management decisions and other actions that results in financial loss to shareholders.

Startups need D&O coverage

Newly formed organizations are not exempt. In fact, they’re more likely to need D&O coverage. Startups, by their very nature, are inclined to make seat-of-the-pants decisions and will tolerate more risk, meaning the company’s principals may not have taken the time to assess all the pros and cons of a management decision. Also, after those heady first days, companies may discover that one member of the new management team is a liability waiting to happen, creating issues for the whole organization.

Finally, a D&O liability policy can protect the company itself as well as the individuals who run it. While larger organizations can probably manage a single liability issue, a smaller, newer organization may well be decimated by the same type of issue.

D&O liability is only one part of a package of liability policies most companies will require. For example, the commercial general liability policy and/or a commercial auto policy will protect against allegations of bodily injury or property damage. D&O covers only allegations of wrongful acts, typically resulting in allegations of financial loss.

The basics of D&O coverage

While most publically traded companies, as well as private or non-profit organizations, have coverage that protects the company itself from liability in the event of a claim, others cover only the directors and officers of the corporation. It’s important to discuss with your insurance professional what coverage is important for your company in your industry.

Generally, D&O coverage comprises Side A coverage, which provides a defense and pays losses arising from negligent acts of an officer or director of a company, and Side B coverage, which will reimburse corporations for losses the organization pays to indemnify their directors and officers for claims against them.

Side C coverage was added in the 1990s to offer protection to the corporation against allegations of security irregularities. Additionally, employment practices liability coverage is increasingly common on D&O policies. This coverage provides defense and indemnity against allegations of wrongful termination, sexual harassment, and other violations of state and federal employment laws.

Don’t let your D&O coverage expire

D&O policies are written on a claims-made basis, meaning coverage is triggered when a claim is made. Claims-made coverage means acts committed prior to and during the policy period may be covered. Claims that are filed after the policy’s expiration may not be covered. If you plan to cancel or move from one insurance carrier to another, care must be taken to assure continuity of coverage and avoid gaps.

The Equal Employment Opportunity Commission (EEOC) is the federal agency that monitors employment discrimination. Over the last several years, EEOC claims have been on the upswing. In 2012, the EEOC received more than 99,412 private-sector discrimination charges, up from 2009, when charges totaled 93,000 and represented the second-highest level in two decades.

Employment claims aren’t likely to disappear. The previously amended American with Disabilities Act (ADA) expanded the number of people covered under the Act, and as our population ages at a faster rate, more employees than ever will be protected by the ADA. With other economic, political and social changes in the offing, your organization simply can’t afford to operate without Employment Practices Liability Insurance (EPLI).

For smaller companies, in particular, one of the advantages of buying coverage is the risk management assistance most EPLI carriers provide. Employment practices carriers can help reduce your risk by reviewing your current employment policies, if you have them, or helping you develop them if you do not.

If you believe you cannot afford EPL coverage, consider this: For companies with 15 to 100 employees, the courts can award damages of up to $50,000. Add in defense costs, and your business faces substantial risks. Even if a claim is settled outside court, you will have to re-hire or promote the claimant and could be on the hook to pay the employee’s legal costs.

With this much money at stake, can you really afford not to have this coverage?

If you’re one of many driving somewhere for the upcoming holidays, ensure you have adequate auto insurance coverage. Even if you have insurance, look into extended protection, particularly in these scenarios:

For rental vehicles

Even though personal auto insurance covers many losses, it’s limited, so always consider rental car coverage. Personal policies may cover property damage in rental car accidents, but not some subsequent costs, such as the rental company’s loss of income or rental car’s diminished value.

Read the fine print about insurance in rental contracts. Talk to your insurer to clarify personal coverage, and get quotes with higher liability limits and lower deductibles, which will help cover losses with ease.

Out-of-state travel

When travelling out of state, explore additional protection. Auto insurance laws vary by state. Those from no-fault states such as Florida or Michigan often only carry state minimum liability limits, or worse, don’t cover bodily injury. This usually means you don’t have adequate coverage. And very little or no protection – even in not-at-fault accidents.

It’s especially important when traveling to these states to carry additional insurance for collision as well as for property damage. Be particularly aware of the limits of your bodily injury coverage. If you’re uninsured or under-insured, you should acquire additional bodily injury coverage. If someone is injured in an accident you caused, you could be sued for medical expenses, court costs, legal fees, and pain and suffering; you’re responsible for those expenses if they exceed your coverage limit for bodily injury.

Peace of mind

You may pay more, but if insufficient coverage results in you having to pay for repairs or for the major expenses resulting from an accident with injuries that exceed your liability limits, you probably won’t be able to take a vacation again for a long time. In that case, the cost of protecting yourself with appropriate coverage is certainly worth it.

According to the National Fire Protection Association, 50 percent of house fires occur in December. The usual culprit? Tannenbaums. So before decorating this year’s tree, consider the following:

• From 2006 to 2010, Christmas trees started an average 240 house fires a year, resulting in four deaths and 21 injuries, not to mention $17.3 million in property damage annually.
• Forty-two percent of Christmas tree fires happen during the “12 Days of Christmas” – December 23 to January 3.
• Disposal is crucial. One homeowner wrapped the tree in clear plastic and put it on the patio. The shiny plastic caught the sunlight, and the tree went up in flames.
• Fake trees are responsible for only a third of all Christmas tree fires.

If a fire happens, contact your insurer immediately. Don’t delay or decide to cover damages yourself. Usually structural damage is worse than you think. Smoke damage alone in a room the size of a bathroom can cause thousands of dollars in damage.

Wiring damage can spread. If it does, your claim could be denied for failing to report previous damage. Condo and townhouse owners and renters would be liable for damage caused to neighbors’ homes.

Tree tips:

• Ensure lights, extension cords, and power strips are in good condition
• Unplug lights before leaving home or going to bed
• Keep trees away from fireplaces and heat sources.
• Water trees daily.

Going to college is exciting for both “traditional” students – typically age 24 or under – and “non-traditional” students, such as graduate or international students, or those over 24.

It has its challenges, however, including illnesses and injuries. And finding health insurance at any age can be difficult. Even more so, in 2014, when everyone will be required to carry coverage according to the Affordable Care Act (ACA).

Options for traditional students include:

Parents’ health insurance: The ACA permits children to remain on parents’ policies until age 26. This is the best option, but check with providers for limitations. For example, if a student is going to school out of state, coverage may be affected, and the result could be higher co-pays and deductibles and limited availability of in-network care providers.

College health insurance: Many colleges and universities offer student health insurance plans. Prices and coverage options vary by state and school. If a student is able to choose between a parent’s plan and a college plan, college plans are worth considering.

Individual health insurance: If neither of these options will work for your student, individual plans can be purchased from national providers. However, this is the most expensive option, and many may consider it a last resort.

Non-traditional students – including graduate and international students – usually have the same options unless they’re older than 26. Graduate schools often offer plans comparable to traditional student health plans, and individual plans are available.

For students traveling abroad, coverage may become limited outside of a certain region, so student travel health insurance may be the only option. School-sponsored trips may offer coverage, and some providers will tailor coverage to travel plans. Adding emergency medical evacuation coverage and 24-7 help lines are definitely recommended.

When you’re a college student, finding health insurance isn’t difficult if you know where to look. As for paying tuition bills? Well, that’s another story.

As the end of the year approaches, many of us are thinking about health insurance; for example, most employers open up enrollment to health care benefits. Newer employees can sign up, and other employees can change benefits.

Now’s the perfect time to review options, reduce costs or add coverage. But many put off taking action because of the volume of paperwork and confusing terminology.

It’s particularly important to be proactive this year, as the Affordable Care Act (ACA) will be mostly implemented in 2014. Here are three steps that may help simplify your review process:

Learn the language: There are many terms exclusive to health insurance that have different meanings in other contexts. Online searches are great, but only visit reputable websites.

Update: This is the time to make necessary alterations if you’ve experienced a major life change, including marriage, divorce, having children, relocating or the death of a spouse.

Even if nothing has changed, review your coverage. Employers may have increased deductibles, removed options or be offering new plans. If you aren’t aware of any changes, ask.

Consider Health Savings Accounts (HSAs): Many employers offer HSAs. These are good options for young, healthy single employees, and also may be more attractive than Flexible Spending Accounts (FSAs) which have changed under the ACA. With an HSA, you contribute from your paycheck, pre-tax, to pay for health expenses such as co-pays and prescriptions. Unlike FSAs, money unspent in an HSA accumulates and earns interest. 

Here’s a warning as the holiday season approaches: Wrapped presents don’t just excite kids – they tantalize burglars. And this comes with a big price tag; the average amount of property stolen in a home burglary is $2,119.

Here are some tips on preventing burglaries that are specially designed to prevent Grinch visits and on making claims:

Be prepared:

• Don’t advertise your winter holiday on Facebook.
• Risk is high before, during and after the holidays. Most burglaries occur when daytime routines return to normal.
• Use classic “burglar prevention” techniques: light timers, holding subscriptions and mail, etc.
• Recipients may not see the gifts you sneak in, but burglars might. Bring gifts home disguised and after dark.
• Don’t pile empty boxes on trash day. It’s too obvious.
• After a burglary, the chances of being burglarized again increase. Burglars know you’ll replace stolen items.

Only 21 percent of stolen property is recovered. Insurance is the best way of compensating for a loss. When choosing coverage and making claims, remember:

• Avoid actual cash value (ACV) coverage, which considers depreciation. ACV covers cost at time of loss, meaning you won’t receive the full value of the item. Replacement cost coverage doesn’t consider depreciation, so that if someone steals your TV set, with replacement cost coverage, you would receive a TV set of like value.
• You usually need proof of ownership of stolen items. This could include receipts, videos, photos and model numbers.
• Usually premiums increase after claims, especially thefts. If policyholders become categorized as high risk, insurers can cancel or not renew policies after theft or fire claims.

It’s far better to prevent thefts as best you can than pay the emotional and financial costs of being a theft victim.

As Kermit the Frog once said, “It’s not easy being green.” Despite many obvious advantages to the greening of your commercial space, green upgrades may mean your current insurance coverage could be insufficient in the event of a loss.

Over the last few years, green building improvements have continued to help building owners cut costs. A number of corporations across the US have installed vegetative roof systems in their buildings and have benefited from the shading and cooling properties that reduce energy consumption.

Experts predict the green market will double over the next few years. As quoted by EarthShare, a 2011 study by MIT indicated that sustainability is now on the agendas of 70 percent of the country’s corporations. In response, insurance carriers now offer coverage options for these growing green initiatives.

Some coverages for green initiatives that have been or are being developed are:

• Coverage to replace normal HVAC systems with green systems upon loss.
• Coverage for the installation of alternative plumbing systems for reduced water consumption.
• Coverage for the use of materials that emit fewer indoor air contaminants.
• Coverage for the cost of recycling building materials after a loss.
• Coverage for increased business interruption after a loss due to longer construction periods required for green rebuilds.

Discuss your green coverage – before you suffer a loss – with my office; we can suggest options.

No one likes writing checks for insurance premiums. However, insurance provides business owners with many benefits, including peace of mind. Here’s a list of benefits that may make you feel a little better the next time you write that premium check.

• Few business owners can afford to rebuild a building or replace damaged merchandise.
• Insurance companies provide expert loss prevention assistance to help you solve loss exposure problems you may face.
• Insurance allows you access to credit so you can expand your business.
• If you can’t continue operations after a loss like a fire, insurance is available to provide you with continuing income.
• Insurance provides expert medical treatment to your employees if they are injured after an accident.
• Insurance can help smooth out difficulties you may experience if you or your business partner becomes disabled or dies.
• Insurance provides your family with an income if you die.
• Insurance allows you to comply with state regulatory agencies.
• Insurance can protect your products when they are shipped.
• Insurance helps to protect you from legal liability if you are faced with a lawsuit from an angry customer, competitor or group.

When you write your next premium check, consider the many benefits of insurance. You want to spend your time growing your business and spending time with your family; enjoy the peace of mind insurance offers.