An annual review of your insurance coverage may be the time to make changes in coverage, endorsements, or carriers.
Any time you make changes in the way your business runs, you can also change your exposure to risks. As your organizational needs evolve over time, it’s a good business practice to consider whether there are other carriers that can offer reduced premiums or expanded coverage better suited to your requirements as you grow, move, or expand your offerings.
Fortunately, the insurance marketplace is responsive to changing risks that buyers face. In some cases, it may make more sense to remain with your current carrier but update the terms of your program agreements to reflect your current operations. In other cases, a new carrier may be able to provide coverage more tailored to the new risks your company is encountering. Transitioning to a new insurer could have unintended consequences, however. The experience of your insurance advisor can be invaluable.
Should you choose to make a change, a strong relationship between you, your insurance broker, and the carriers will make the transition as smooth as possible.
Here are four ways your insurance broker can keep you informed about your choice of carrier to help you avoid any surprises.
1. Stay Ahead of New Market Conditions/New Insurers/New Coverages
Your broker can keep you apprised of factors impacting the overall market to prepare you for possible premium increases or decreases with your existing carrier well in advance of renewal. The broker should also be aware of insurers that are offering new lines of coverage and should approach the carriers for quotes on your behalf.
In addition, brokers can help you stay ahead of emerging coverages and potential exposures that may affect your business, which is critical to avoiding losses that may not be covered under your current policies. Understanding the differences among your policies, knowing what they do and do not cover, and advising you on what endorsements you should obtain for your standard policies can help ensure that your company isn’t exposed to unnecessary or avoidable risks.
Recently we worked with a new client to provide coverage for social engineering fraud (SEF), which occurs when a hacker imitating a senior executive, sends a phishing email to an employee telling the employee to wire company funds to a bank account on an emergency basis. The business owner mistakenly believed that either the cyber policy or the crime policy covered the loss. But neither of the policies had been endorsed to provide SEF coverage, and the business was left with a gap in coverage that the risk manager hadn’t realized until we brought it to the manager’s attention.
2. Update the Fine Print of Your Program Agreements
Most carrier agreements stipulate that in the event you transition to a different insurer, the collateral amount can be reset at the carrier’s discretion. If your policy is on a large deductible or other type of loss-sensitive program, you might experience substantial cost implications. Your broker can thoroughly review your program agreements with your insurers and, if possible, amend this wording by setting specific parameters around how the collateral will be calculated. For example, the calculation might include predetermined loss-development factors or consideration of the insured’s outside actuary calculations.
3. Review Outstanding Claims
When you change carriers, there will inevitably be outstanding claims to process, but standard agreements typically nullify any special claims-handling procedures that were put in place while you had your coverage with the insurer. As a result, you will still be dealing with claims, but you might lose the ability to have any or all of the following:
- Free claims reviews
- Use of a pre-selected defense counsel
- Notification of reserve changes
- Ability to have input on settlement amounts
- Continuity of adjusters because the insurer will most likely move any open claims to a different unit
Your broker should review the agreement around what happens if you move from the insurer and, when appropriate, modify the agreement to create as much certainty as possible around the way outstanding claims will be handled.
4. Adjust for Changes in Insured Operations
Many insurance policies limit coverage to events that occur in a certain geographic area. The insured area is often referred to as the “coverage territory.” If your company expands its operations outside the United States, your broker will need to review the coverage territory in all policies to ensure there are no exposures in your new areas of operation that aren’t covered in the existing policy. Similarly, if your company begins offering new products or expands on the scope of existing services, an in-depth review of your existing coverages is necessary to make certain no new coverage is needed.
Here are two examples of changes in insured operations that we’ve helped our clients with recently:
- An insured established a new 401(k) plan and began providing health coverage to employees. They now needed fiduciary liability coverage because these plans are subject to ERISA and present possible personal liability to plan administrator.
- An Insured decided to hire a sales force who will be driving on company business. After reviewing their options, they elected to increase the limits carried on their automobile liability coverage and added to their umbrella coverage limits.
Anticipating and planning for change is part of business. Don’t be lulled into a sense of complacency and simply renew with the same insurer year after year. You have options. Your broker is a trusted business partner who can help you actively avoid any of the potential insurance minefields that come with change, as well as choose the right path forward for your continued business success.
About the Author
Joe Tatum is the CEO of Relation Insurance Services, a premier insurance brokerage that offers risk-management and benefits-consulting services through its family of brands across the United States.
This article originally appeared on the PropertyCasualty360 website here and in a printed edition of National Underwriter.
Neighbors are using their personal boats to rescue Friendswood residents in Houston during Hurricane Harvey.
Written by Kelly Tonsing
Each year, we watch in horror as unsuspecting folks—living normal lives similar to our own—are rescued from their rooftops via watercraft after their small town has been ravaged by natural disaster. Most recently, by Hurricanes Jose, Harvey, Irma, and Maria. In news interviews, residents express something along the lines of, “My family and I have lost everything,” or “There’s no way to understand this unless you’re here, living it.”
Do you wonder what happens to these people once the debris settles? Or how they rebuild and attempt to resume normal lives?
According to an article by the Wall Street Journal, only 50 percent of homeowners in Puerto Rico, who are currently facing mass power outages and destruction in the wake of Hurricanes Irma and Maria, have insurance policies protecting them from wind damage.
In Houston, Federal Emergency Management Agency (FEMA) data reveals only about 17 percent (1 in 6) of the homeowners most affected by Harvey have flood insurance policies. This 17 percent likely has—depending on their level of coverage—access to up to $250,000 to rebuild their homes and $100,000 to replace personal belongings.
The other 83 percent, or 5 out of 6 homeowners most affected, however, aren’t as fortunate—they’ve lost their belongings, their homes, and likely decades of hard work and savings, with nothing to show for it and likely no opportunity for short-term recovery. According to one Washington Post article, this group “will be dependent on private charity and government aid, especially grants from Federal Emergency Management Agency.”
Most people don’t realize that FEMA doesn’t pay individuals for any of their personal recovery; rather, they provide low-interest loans to homeowners who lack flood insurance if—and only if—the conditions satisfy FEMA’s specific definition of “flood” and a state of emergency is declared. Every penny of the federal loan must be paid back in full, with interest.
My name is Kelly Tonsing, and I’m a licensed insurance agent at Ascension Insurance, Inc. in North Carolina. As such, I frequently discuss flood insurance (and the lack thereof) with clients who have homeowners’ insurance. When I ask clients why they’ve opted out of such a crucial policy, I typically receive one (or more) of the following responses: “I just can’t afford it,” “My house isn’t in a flood zone,” or, my personal favorite, “I don’t need it—I live on a hill.”
I’m here to talk through each one with you.
I Can’t Afford It.
First, let’s talk about the cost of adding flood insurance to your existing homeowners’ policy. According to ValuePenguin, flood insurance policies purchased in 2017 through the National Flood Insurance Program (NFIP)—a program established in 1968 by the National Flood Insurance Act (NFIA) allowing property and/or homeowners to purchase flood insurance directly from the federal government—averaged $56 per month. In Texas, home of Hurricane Harvey, 2017 flood-insurance premiums through NFIP were only $40 per month (that’s $482 per year—28 percent below the national average).
Other states on the lower end of the premium spectrum include Florida, which is currently experiencing the devastating consequences of Hurricane Irma, Maryland, Arizona, and Alabama. To clarify, rates have less to do with which state you live in and more to do with how far away from water you live and how much coverage you want. Private insurance rates may be even more competitive compared to those of NFIP’s.
According to FEMA, there are also other great opportunities for discounts and steps you can take to mitigate risk and lower your monthly flood-insurance premiums.
So, for the same cost as a monthly fast-food run for four, you could instead implement flood-insurance coverage, which—in the event of a damaging flood—would provide you the monetary support to rebuild your home and purchase new belongings (e.g., furniture, clothing, a television, etc.) for you and your family.
I Don’t Live in a Flood Zone.
This is one of the most common explanations I hear for not protecting one’s property from the possibility of flooding. According to FEMA, more than 20 percent of flood claims in the U.S. originate from owners of properties outside a designated “high risk” flood zone. According to an article by Maggie Koerth-Baker, senior science writer for FiveThirtyEight, that number in Houston is currently closer to 30 or 40 percent. She goes on to argue that the entire concept of the 100-year floodplain is misunderstood, and designated flood zones are “best understood as estimates—and not necessarily very reliable ones.”
Not sure if you live in a flood zone? Each year, FEMA publishes maps detailing flood hazards and showing flood risk levels “based on historical climate information and the best available science.” To check out the map for your area, click here. To view your area’s flood history, check out FEMA’s interactive visualization tool here.
I’m Safe—I Live on a Hill.
For those who live on a hill or atop a mountain, it is still wise to consider the possibility of flooding from rainfall. Consider my family’s personal anecdote: We own a mountain house located on the Blue Ridge parkway, a beautiful scenic highway in North Carolina and Virginia. Although located at an elevation of approximately 1,850 feet, the home incurred severe water damage from rainfall washing down the mountain.
Mudslides, caused by excessive rainfall, occur regularly in mountainous communities and have been known to completely wipe out homes’ walls and foundations. Without flood insurance, the full financial burden for necessary repairs after such an event falls solely on the shoulders of the homeowner. What would you do if your home in the mountains was severely damaged by rainwater flooding or a mudslide? Have you considered the potential financial devastation and how you might recover?
It’s time to take a serious look at flood insurance to protect you, your loved ones, and your property from one of the costliest natural disasters in the United States. Here are some startling statistics from Risk Analysis, An Official Publication of the Society for Risk Analysis:
- “From 1996 to 2007, insured residential flood losses alone totaled over $26 billion (approx. $2 billion per year)”
- “Average annual property damage cause by floods has increased 54 times over the last four decades, from $51 million in the 1960s to $2.77 billion per year in the 2000s (2000-2008).”
- The authors use statistical evidence to argue that the flood problem in the United States will only continue to worsen, and property damage will intensify.
If you need more reasons to consider flood insurance, watch this story about two property owners who underwent the same natural disaster in 2009 and had very different experiences.
About the Author
Kelly Tonsing manages Ascension’s Personal Lines Practice in our eastern region. She is charged with the strategic direction of the department and for providing an excellent client experience to more than 10,000 policyholders. Upon joining the insurance industry, Kelly found her true passion and skill for leading others in a business built on the value of relationships. She enjoys writing blogs to share her knowledge of and experience in the insurance industry in an approachable and caring way. Connect with her on LinkedIn!
Written by Kelly Tonsing
Kelly Tonsing manages Ascension’s Personal Lines Practice in our eastern region. Although she spends each and every day examining insurance policies, managing claims processing, and ensuring the best available protection for our clients, she hadn’t yet examined the fine print of her own car insurance. Until the unthinkable happened. Read below to learn more about Kelly’s dangerous auto accident, and how she wished she would have read this crucial advice before starting her ignition that morning. Hindsight is often 20/20, but perhaps, with Kelly’s testimonial, foresight may be as well.
Months ago, I had my first real automobile accident. Having been in insurance for years, I had always approached the auto claims experience from an academic perspective. But there is no better teacher than real life. After my accident, I gained some insight that I hope you never have to learn the hard way.
My auto accident occurred at an intersection, when a vehicle collided with my passenger door at 45 mph—and I was deemed “at fault.” Consequently, my liability insurance had to pay out approximately $46,000. Every one of my six airbags deployed, protecting my face and head from injury, but shattering my left hand and wrist. My vehicle was totaled and carted off to the proverbial auto cemetery, never to grace the roads of Charlotte again. God rest her soul—she gave her life for me!
This experience and subsequent claims process provided me valuable insight that, had I known it before, would have saved me time, money, and headache. Here are some things you might want to take a look at on your own policy before you have a claim:
- GAP INSURANCE
Always, ALWAYS buy gap insurance on a newly purchased vehicle that you finance—even when you purchased used and believe you got the deal of the century. The total paid out by my insurance on the depreciated vehicle was not nearly enough to pay off my auto loan. Had I not had gap insurance at the time of the accident, I would have faced a new-vehicle purchase without a trade in, which would mean paying off my prior auto loan and adding a new replacement-car payment. Ascension does not offer gap insurance, so I would recommend speaking with your financial institution about your options.
Airbags really do save lives. As I mentioned, my airbags shattered my hand and wrist, but they saved my life. Because broken is always better than dead, I will always choose autos with as many airbags as possible going forward.
- NEW-CAR REPLACEMENT
If you have a vehicle fewer than three years old, ask your agent about new-car-replacement coverage, which allows you to replace your vehicle regardless of the depreciation. Check the fine print with your carrier, as carriers differ on the age allowed for this coverage. It is a great bang for your buck if you happen to total your vehicle, which, as I discovered first-hand, is not hard to do when airbags deploy.
- RENTAL REIMBURSEMENT
I am used to driving an SUV, which is typically not a rental option under the standard $30/day allotment. For $10 per year (less than a dollar per month) additional premium, your daily rental allowance will be bumped to $50/day, which makes all the difference if you rely on a larger vehicle for daily transportation. To maximize comfortability and return on investment, check your policy to ensure you do not decline this coverage or choose a lower limit, as an extra dollar per month could mean an added monthly allowance of $600 ($900 with the $30/day allowance versus $1,500 with the $50/day allowance).
- MED PAY
Med Pay is the coverage on our auto policy that can be used for anyone in your vehicle who might be hurt in an accident to use toward their health-insurance deductible, including yourself. Luckily, my accident occurred in the final three months of the calendar year, and I was less than $1,000 away from meeting my health insurance out-of-pocket maximum on a high-deductible plan.
However, what if the accident had occurred in January? My ambulance ride to the nearest hospital ran $1,500, and my associated emergency-room costs neared $8,000. My wrist surgery was $20,000. Not to mention physical therapy twice weekly for several months at more than $100 per visit. I was quickly racking up medical expenses, but luckily for me, my Med Pay on my auto policy exceeded my health insurance deductible. This was the most significant lesson I learned from my accident; in an age where high-deductible health insurance plans seem to be the norm instead of the exception, make sure your Med Pay coverage will help you meet that deductible. If you, like me, have a high-deductible health plan, resist the urge to cut corners to save a few dollars on your Med Pay coverage. It is not a huge expense to raise that from $2,000 to $5,000, but, I assure you, paying a few extra dollars a month for higher Med Pay coverage is worth every extra dollar you spend if you are in an accident during which someone gets hurt.
- LIABILITY LIMITS
What if the other person in the accident had been the one to go to the hospital in an ambulance with broken bones instead of me? My liability would have had to pay for her property ($50,000) and her medical expenses (already more than $60,000 for me, and still rising). Limits of $100,000/$300,000/$50,000 would have been completely exhausted in about two weeks and I would have had to cover the rest personally through whatever means I had available, even future paychecks if necessary. What most people don’t understand is that the limits of your policy don’t determine what you are liable for, only what insurance will pay out toward your liability. The state of NC only requires us to have $30,000/$60,000 in liability coverage on our auto policy, and that is devastatingly inadequate.
Meeting those state minimum requirements leaves all of your assets exposed and you could find yourself in serious financial trouble. A court can go after your future wages, children’s college funds, your savings, even your investment portfolio, leaving all those years of putting away for retirement evaporated because you saved $10 per month to have lower liability limits.
At the end of the day, we are all required to have auto insurance to drive a vehicle, and I’ve never been in a serious accident before this one. At fifty-something years old, I thought the current limits of my policy were adequate, but we don’t get to schedule bad luck for convenience and budgets. After this experience, I immediately raised my med pay coverage to $5,000. I don’t plan to be in another accident, but if I am, I want to know that my minimum out-of-pocket for injuries in my vehicle will be covered by my combined auto and health insurance, and that my auto policy will pay the bulk of that health-insurance deductible.
During my years of working in insurance, I have never had someone complain after a claim to say they had too much insurance coverage. Usually clients get upset that something is not covered even if that coverage was offered and declined. But for just the cost of a nice lunch each month, you too can have the peace of mind knowing that you’ll have everything covered if you should ever need it.
These are the thoughts I had after my experience, and I hope you will find them useful. Talk to your agent today to make sure you have the right coverage limits.
Most of us love summer. But long, hot days, coupled with heavy summer storms, hurricanes and periodic heat waves, all tax the power grid and can lead to inevitable blackouts. Now that summer’s officially on its way, what can you as a homeowner do to protect what matters to you most?
As with any disaster, building an emergency kit and having a family communications plan in place are two vital items to consider. And following your local utility energy company conservation measures helps utility companies avoid imposing rolling brownouts in the first place.
In addition, here’s a checklist that can help you protect your family before, during and after a blackout.
- Keep bottled water handy. You can also fill plastic containers with water and place in your freezer.
- Keep your car gassed up.
- Make sure you would know how to manually release your garage door if the garage door opener was not operating.
- Check with your pharmacist regarding any medications you are currently taking, especially if they need to be refrigerated.
- Use flashlights whenever possible; leave the candles for another time.
- Disconnect appliances, computers and other electrical equipment. A power surge or spike may damage these items.
- Run your generator outdoors, never inside the house as carbon monoxide will build in closed spaces.
- Keep your refrigerator and freezer doors closed whenever possible. Keep the cold air in.
- Keep a portable radio handy. Listen to local news whenever possible for updates.
- Keep cool whenever possible, paying special attention to the elderly and younger children. Towels soaked in water may provide some relief, applying to the back of the neck.
- Take the stairs, even if you think the power is back on.
- Follow the advice of emergency personnel, whenever possible.
- Unless forced to evacuate, try to keep traveling to a minimum. (Traffic lights may stop working during blackouts.)
- Use 911 for emergency situations only.
- After the blackout, throw away any food that has been exposed to temperatures over 40 degrees fahrenheit for a prolonged period of time. When in doubt, throw it out!
Learn more about family communications plans and disaster preparedness, in this article, from ready.gov.
Depending on where you live, hail can be either a sporadic, mildly irritating event or a potentially devastating, destructive threat.
According to the Wikipedia article, hail is a “form of solid precipitation”. It sounds harmless enough, yet hail storms cause damages to crops and property each year. Per NOAA, “small hail, up to about the size of a pea, can wipe out a field of ripening grain or tear a vegetable garden to shreds. Large hail, the size of a tennis ball or larger, can fall at speeds faster than 100 miles per hour and can batter rooftops, shatter windows and “total” automobiles.” Hail causes an average $1 billion a year in damages in the U.S., according to the National Storm Damage Center [https://stormdamagecenter.org/hail-storm.php]
In North America, hail is most common in the area where Colorado, Nebraska, and Wyoming meet, known as “Hail Alley”. Hail in this region occurs between the months of March and October during the afternoon and evening hours, with the bulk of the occurrences from May through September. Update: just this past Sunday, The Weather Channel reported severe damage from hails storms in the south. Watch the video.
Identify hail damage after a storm
If a storm hits your home, follow these guidelines:
- Look for dents, cracks or breaks on windows, screens, doors and even patio furniture.
- Examine outdoor appliances like air conditioning units, and look for dents or excessive water intake.
- Check trees and shrubs; if they’re stripped of foliage, there’s a possibility your roof might be damaged, says the Rocky Mountain Insurance Information Association.
- Inspect your vehicle(s) for cracked or broken glass, or dents caused by hail
- Be safe when checking roof damage; consider using binoculars, or call a professional
If you find damage, take action
Take pictures before you make any temporary repairs. And, cover any damaged areas to prevent additional negative effects from the storm– board up any broken windows or cover a hole in a roof with a tarp.
Regardless of the level of damage, you’ll also want to promptly report it to your insurance company, which may have recommendations on finding a contractor to repair damage. (Remember to save all the receipts; you’ll likely need them for your insurance claim.)
Download our full checklist so you can be prepared when the skies get dark and grey, for how to look for hail damage.