Advisor Insurance Agency Blog

So what’s Japan have to do with it?

kirk — Fri, 20 Apr 2012 19:04:49 +0000

The insurance industry is one of the oldest international markets ever established. Back in 1688 in a coffee shop in England men would bid on a portion of a trading trip they were willing to finance. The risk was spread over several people, should the trip go bad. The Coffee Shop was Lloyd’s coffee shop and the trade routes were to the America’s, and the Far East. The coffee shop grew up into Lloyd’s of London.

So that is how insurance became a global industry and this is why Japans horrific earthquake is important to you. Insurance companies worldwide buy insurance from Re-Insurers such as Munich Re, Gen Re and Lloyd’ Re. These re-insurers are truly global and when the largest insured event of all time occurs in Japan the risk is spread out globally to assist in the rebuilding.

2011 was very significant to the insurance industry because of the many nearly worst case claims scenarios that were experienced. Insurance rates are influenced by several factors, but claims history and claims forecast are 2 of the more significant. The claims factors can influence on a local level, national level, and global level. So let’s take a quick look at 2011 and see what has influenced the insurance industry in our near future.

Locally, in Missouri, we have had 5 significant catastrophe losses. A Catastrophe is a loss that causes more than 10 Million in Damage. The Joplin Tornado has been the worst of the 5. The Joplin tornado is forecast to cost about 2 billion alone.

On a national level the Alabama tornado outbreak of over 200 tornadoes is now one of the top 10 costliest catastrophes in U.S. History. That puts it with major hurricanes such as Hugo, Andrew, and Katrina.

Finally, global catastrophes that included both the Japan earthquake and the Christ Church, New Zealand earthquake have combined to make the first part of 2011 surpass re-insurers annual catastrophe budget in just 6 months. The estimate for insured losses worldwide for 2011 is $105 Billion!

I know this is a lot of information but I feel it is important for purchasers of insurance to prepare for significant rate increases of 10 to 20% over the next one to two years. Many companies have already started taking these rate increases and they have also started making other significant changes. Some insurance companies are moving to “split deductibles”. A “Split Deductible” is where you may have a deductible of $500 to $1,000 but then may have a separate Wind/Hail deductible of $1500, $2500, or 1% or 2% or even 5% of coverage A, (amount of dwelling coverage). The percentage deductibles are often misunderstood as a percentage of a loss, but make no mistake; they are a percentage of the total dwelling value. A $200,000 home could have a Wind/Hail Deductible of $4,000.

SO WHAT SHOULD YOU DO? 1. Read over your declarations page every year. If you do not understand it call your agent and make them explain it. If you do not want to do that call my office and we will assist you. These split deductibles are not necessarily bad, but they could be unaffordable if you are not prepared for it.

2. Call and get other quote and compare. If you deal with an independent agent other quotes may be a simple as calling and asking for a re-quote. If you deal with captive insurers the process will take a little longer but could still save you thousands.

3. Realize your contract is for one year, not a lifetime. Many people do not shop their insurance because they have been with XYZ insurance company for 20 years. That mentality will not help you at claim time because they are still going to follow the contract especially while money is tight. Regardless of what an insurance company or an agent representative says, the insurance contract is what dictates payment after a loss.

I hope this information helps, and on an ending note: Please try to understand your policy for any insurance product before a loss occurs, because afterward it is too late to make changes.

Insurance Coverage and Cycling.

kirk — Thu, 15 Mar 2012 21:24:11 +0000

Your cycle, be it 2, 3, or 4 wheeled is a unique item in the insurance world as it picks up insurance coverage from different policies, often automatically. Policies many of you already pay for are extending coverage to your favorite hobby and not costing you a dime more. However it is very important for you to understand these coverage’s and for you to make a conscious decision on if this coverage is adequate.
I will start this article by looking at how your Home insurance or Renters insurance policy work with the cycling hobby. Your cycle is covered for items such as theft, fire, wind and several other perils as personal property. It would be subject to a deductible which may be $1000 possible even more. Items that would not be covered would be falling off your carrier on the highway, damaging the bike in an accident, or possible pulling into a garage with the cycle on the roof of your car.
Your policy could be broadened under your home or renters policy by specifically scheduling each cycle you have. By scheduling the cycle 3 things happen. 1. The value is set before an incident is incurred, 2. Deductible is lower, usually 0 to $500. 3. It is closer to all risk coverage where accident damage, falling off bike rack and other items would be covered as long as they occur someplace other than a race. This coverage would cost between $7 and $9 per $100 in value. A bike with a value of $4,000 would cost between $280 and$ 360 dollars to insure per year.
The last coverage you get from your Home and Renters policy for your non-motorized cycle is liability coverage. Accidents happen, such as hitting a pedestrian or hitting a vehicle that is determined to be your fault. Coverage for these incidents would come from your personal liability coverage that is included with most Home and renters policies in the amount of 100,000 to 500,000.
Auto insurance also comes into play on your cycle. In Missouri it is estimated that 1 in 6 drivers have no insurance or 17.2% of Missouri drivers. This 17.2% of drivers cause an estimated 30% of accidents. An additional 50% have only Missouri Minimums of $25,000 per person and $50,000 per accident. When a helicopter ride to the hospital cost about $8600 no coverage or $25,000 of coverage does not go far. This is where your auto insurance can really help you and your family. Under Missouri law you have to carry uninsured motorist coverage of 25,000 per and 50,000 total. This could assist you with a hit and run accident. However I strongly recommend you carry higher limits of at least 100,000/300,000 for both uninsured (no insurance or hit and run) and underinsured motorist (when the offending party does not have enough coverage). This area of your coverage also needs to match your profession. If you are a surgeon that uses fine motor skills to perform your basic job function a simple broken hand becomes very complex, more coverage may be needed.
Here is the neat thing about insurance; the first dollar of coverage is the most expensive. To go from 100,000/300,000 coverage on your auto policy for bodily injury, uninsured motorist, underinsured motorist to 250,000/500,000 coverage usually cost less than $10 per month!
There is still one more option that can increase your liability if you injure someone, and your auto coverage’s by an additional $1,000,000 and that is to purchase an umbrella policy. You need to be careful here and specifically ask your carrier if 1. You are buying an umbrella or excess limits (you need umbrella) and 2, verify in writing the policy has umbrella coverage for uninsured and underinsured auto coverage. This policy will cost about $425 per year but when cars shoot by you at 70 mph while texting this may be very cheap coverage.
I hope you find the information in this article valuable and I wish all of you a very safe cycling season.

What is a FLOOD?

kirk — Fri, 12 Aug 2011 14:56:58 +0000

In the insurance industry the choice of words you use are sometimes very important. For instance, when I say flood is not covered under your home policy some people take that to mean damage from a washer, or toilet malfunctioning, or a pipe break is not covered. These items are not “flood”, they are water damage. If a sump pump backs up from too much water, that is water back-up. Unwanted water in your home can be flood, water damage, or water back-up.
A flood is water on the ground that backs up into a house from an exterior source such as a creek, lake, river, or drainage ditch. This is not covered by a home policy nor can it be added by endorsement. This coverage is a separate “flood” policy backed by FEMA.
Water damage, usually from freezing or puncture to a pipe, damage to a roof from wind or hail, or appliance overflow from a mechanical breakdown, is covered under the Home Owners Policy. However, even though the damage is covered, the cause, such as the broken pipe or malfunctioning appliance, is often not covered. The item that you need to be concerned with is what caused the water damage.
Finally, water back-up, usually caused by sump pump or sludge pump failure, is not covered automatically in the policy. It has to be added by an endorsement to the policy. The reason this is not covered is due to where the water comes from. Sump pump water is from under the foundation of the home or “ground water” and is specifically excluded under the policy.

TV Commercial started 7/18/2011

kirk — Mon, 18 Jul 2011 19:52:08 +0000

TV Commercial

Independence

kirk — Wed, 29 Jun 2011 20:05:24 +0000

https://www.travelersagentvideo.com/VLP19B7F1.aspx

The “GAP” Gap

kirk — Tue, 07 Jun 2011 19:07:06 +0000

Here is where the GAP gap comes in. In today’s economy Gap Insurance is incredibly important. The prices of automobiles are regularly over 20,000 with many being much higher. However, as soon as you buy that new vehicle its value plummets; the $20,000 car you bought 10 minutes ago may only be worth $16,000 now. Your auto insurance covers your vehicle on an ACV or actual cash value basis. This means insurance pays the value of the vehicle at the time of the loss.

If you have an accident in your one month old car, you may owe $4,000 more than it is worth, this is called the Gap. This gap can be covered with Gap Insurance. Gap Insurance is sold at the car dealership or from your personal auto policy.

When you add Gap Insurance at the dealership it cost between $400 and $800 for the life of the loan. If you purchase it from me on your personal auto policy it cost between $10 and $20 every 6 months with no additional deductible. On the high side, purchasing GAP coverage from us will cost you $200 over five years, and you can cancel it when you no longer need it. So GAP on your personal auto policy cost half to one-fourth the price of the dealership charges. Also, watch that deductible- with dealership GAP you have to pay an extra $1000 deductible!

So the moral of this article is buying GAP Insurance is good, but watch out where you buy it.

Do You Understand How Your Insurance Policy Pays Out On Roof Claims?

admin — Tue, 29 Mar 2011 01:21:08 +0000

It is early spring here in the Ozarks, sunny days, warmer weather and storms on the horizon. Storms are the nemeses of insurance companies, as they have the ability to cost insurance companies a lot of money, quickly. They also inspire people with pickups, clipboards and cell phones to become instant contractors. These people roll into a hail damaged town, make promises to wave deductibles, do spotty work and are never seen again leaving you to hope the work was done correctly.

One thing that will help us as we move into this storm season is if we know how our insurance policy will work during a claim. Keep in mind an insurance policy is a black and white policy that sets the floor, or least amount, an insured or insurance company can do. When times are good insurance companies seem to pay more than is expected in the policy and when times are bad they tend to follow the letter of the policy. So let’s assume we had a wind storm that damaged the west side of my 9 year old roof. What does the policy owe for based on Insurance Service Offices HO OO 03 (all companies are slightly different but this is a generic base policy):

Under Section 1-Conditions

C: Loss Settlement

2. Buildings covered under Coverage A or B at replacement cost without deduction for depreciation, subject to the following:

a. If at the time of loss, the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of any deductible and without deduction for depreciation, but not more than the least of the following amounts:

(1) The limit of liability under this policy that applies to the building;

(2) The replacement cost of the part of the building damaged with material of like kind and quality and for like use; or

(3) The necessary amount actually spent to repair or replace the damaged building

d. We will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Once actual repair or replacement is complete, we will settle the loss as noted in 2.a and b above.

Wow, that was clear, so what does that mean? Well according to the policy above, the insurance company would owe for the repair or replacement of the damaged roof minus my deductible. So if the west slope of my roof is 6000 to repair and I have a $1000 deductible the insurance company only owes $5000 in total. However according to letter (d) above the insurance company only owes a portion of this until the work is finished. So if my 20 year roof is 10 years old the insurance company owes $3000 and the rest when I prove the repairs are made.

Now what if a roofer says I need a whole new roof because of the age of the roof but still the damage is on the west side? The Missouri Department of Insurance actually has that answer on the frequently asked Questions portion of their web page. Here is what they have to say:

“The company is not responsible for repair or replacement of the roof unless it is damaged by a covered peril. The policy does not provide coverage for repair/replacement that is due to ordinary wear and tear or from lack of maintenance. The company can authorize repair/replacement for just that portion of the roof that was damaged by the covered peril.” www.insurance.mo.gov/consumer/faq/hofaqs.htm

So the Department of Insurance is clearly saying the insurance company only has to pay for the damaged portion regardless of the roofers feelings.