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Personal advice

  • A pivotal point in a parent's life is when a child leaves home. You need to make sure your loved one is properly insured.

    Most auto and home insurance policies define persons protected under the policy to include the following:

    • The person named on the policy

    • The named person's spouse (who lives in the same residence)

    • The other relatives of the named person who live at the same residence

    Coverage problems can appear when living arrangements change.

    Related, But Not Residents

    An adult son or daughter may think that, when a loss happens, coverage is available from mom or dad's homeowners or auto policy. It usually isn't.

    Policies are typically clear. A relative is covered, but only if the relative is a full-time resident of the named insured's household.

    Being Independently Insured

    Understandably, insurance is not always a priority for adult children who are now on their own. New grown-ups typically have few possessions, especially possessions of high value, and this adds to the likelihood that insurance is overlooked or seen as unnecessary.

    However, EVERYONE has a legal responsibility to handle the damage they accidentally cause to other people and/or other people's property. When a child reaches adulthood, they've also reached the point where they need to get their own insurance.

    If an adult child asks you for insurance advice, give them the name of an insurance professional you trust to help them get the exact protection they need.

  • You may be frustrated with car insurance premiums and factors that make premiums go up in price:

    • Increased number of claims your insurance company receives

    • Newer model cars' higher value, particularly SUVs

    • Higher amounts being awarded in auto lawsuits

    • More business processing and administrative expenses

    • Auto loans lasting longer, meaning bigger auto repair costs for older cars

    There are ways to address rising costs. First, gather your insurance records and any other car-related information. Next, determine if circumstances have changed since you last dealt with your coverage. Then call your agent and ask these questions:

    • If I have your home and auto insurance with the same company, am I getting a discount?

    • Does my coverage take full advantage of the discounts offered by my company?

    • I have more than one car; am I getting a credit?

    • Does it make sense to change my deductibles?

    • Do my cars really need physical damage coverage insurance? (An important consideration for older vehicles)

    • Do lifestyle choices such as drinking or smoking affect my premium?

    • My son or daughter is on the honor roll; does this affect my premium?

    • Did you know that my car has special security features?

    • Did you know that my son and/or daughter took driver's education?

    • Does the company have accurate information on how often and how far I drive?

    • Am I with a standard carrier or do I qualify for any preferred program?

    • Is my vehicle charged an additional premium because of its type or performance?

    • Do I qualify for a loss-free history or policy longevity discount?

    Giving your agent accurate information helps you get the best available premium. Provide your agent with complete details about your driving history. It's important to talk about who drives your cars and how they're used. Finally, use your agent as a resource for handling errors about your account or which may be shown in your driver records.

  • Do You Have a Lot of Policies?

    You have a policy for your home and the cars driven by your family. You have just the right policy for the apartment you rent out to others as well as special coverage for your boating excursions. Your homeowner's policy even has a special, added coverage to handle the business that your spouse runs out of your home. Yes, it looks like you can breathe a sigh of relief and be confident that you have all the coverage you need.

    Or should you have an umbrella?

    An umbrella is the term for a liability policy that covers your primary policies (and sometimes provides protection that is not available under your primary coverage).

    Is There Such a Thing as Too Much Coverage?

    Not in the case of carrying umbrella coverage. Umbrellas are designed to supplement a person's primary coverage. A person's primary coverage is typically part of his or her personal automobile and homeowner's coverage. Primary refers to the fact that, in the event of injury of damage (known as a loss), the liability portion of your auto or homeowner coverage is the first to respond. Umbrella policies respond to an eligible loss only after the primary insurance has paid its limit.

    It's quite possible that your primary insurance limits provide more coverage than you'll ever need. However, circumstances could involve a type of loss that is not completely covered by a primary policy. If you don't have enough primary coverage, any shortage may have to come out of your personal assets.

    Umbrellas generally provide additional coverage for the following policies:

    • Personal Automobile

    • Homeowners

    • Farm owners

    • Recreational Vehicles

    • Watercraft

    • Personal Liability

  • Umbrella or Excess Coverage?

    In part 2, we continue our discussion of how umbrella policies work.

    A traditional umbrella offers broader protection, covering primary policies as well as a variety of uncovered expenses. You may also need an umbrella to handle odd situations such as hobbies or activities that may have the likelihood of more liability losses.

    Generally, umbrellas provide coverage for any amount of a loss that exceeds the primary policy's deductible. However, when handling a loss that is not covered by primary insurance, a special kind of deductible called a self-insured retention (SIR) may apply. An SIR is the dollar amount you have to pay before the umbrella coverage is triggered.

    Of course, umbrellas don't always work as named. Your policy may just provide additional amounts of coverage to supplement existing protection. This is how an excess policy performs. Excess policies respond the same way as a primary policy. In such cases, an umbrella may "follow the underlying coverage".

    This means that the umbrella covers ONLY the situations covered by its underlying coverage and vice-versa. Some umbrellas provide broader coverage, but only a careful evaluation of the actual policy wording will reveal the extent of the additional protection.

    You may or may not be feel the need to carry an umbrella. The best way to find out if extra coverage is necessary is to discuss your coverage needs with a professional insurance agent, especially if you have a larger than average amount of personal assets or are involved with activities that could expose you to larger liability losses.

    See Part 1 for other basic information about umbrella coverage.

Commercial advice

  • If you own and/or run a smaller business, your insurance needs can be handled by a businessowner policy or BOP. BOPs are similar to a homeowners policy, offering both property and liability protection.

    Businesses such as retailers, wholesalers, small contractors, artisan contractors, dry cleaners, restaurants, offices, and convenience stores (including those with gas pumps) are eligible for BOP coverage. All such operations may be insured by a BOP as long as they are not larger than 25,000 square feet in total floor area or have gross annual sales greater than $3,000,000 (per location).

    What Do BOPs Protect?

    • Buildings

    • Additions (completed or being built)

    • Indoor and outdoor fixtures

    • Machinery and equipment

    • Landlord furnishings

    • Maintenance property (such as mowers, snowblowers, ladders, etc.)

    • Outdoor furniture

    • Floor coverings

    • Appliances used for refrigerating, ventilating, cooking, dishwashing, and laundering

    • Materials, equipment, supplies, and temporary structures located nearby

    The policy's protection to business personal property applies whether the property is located inside or immediately outside. Business personal property (such as office equipment, copiers, desks, etc.) includes property you own, lease, or control (i.e., borrow or control) as long as the property is used by the business.

    Businessowners liability coverage provides comprehensive protection for claims or suits made by other parties. Its liability section covers losses involving injury to other persons or damage to property that belongs to others. It also provides limited protection against personal injury (slander or libel), advertising injury, and losses involving an operation's products or services.

    There is no coverage for losses involving most vehicles, money, and securities; illegal property (contraband), land, water, growing crops or lawns; or watercraft.

    A BOP may be supplemented to provide additional protection. Property coverage options include adding insurance for accounts receivable, valuable papers and records, earthquake, spoilage, etc. Liability coverage can be expanded to handle additional business interests, limited vehicle liability, losses related to personnel situations, liquor liability, and injuries to leased employees.

    A BOP may be the answer to your company's coverage needs. Get more information on the BOP from the nearest insurance agent.

  • What are your policy insurance limits? You might think the insurance limit outlined on your insurance policy is your coverage.

    There are two main types of protection limits that insurers use.

    With occurrence limits, the complete coverage would be available for each loss during the policy period.

    With aggregate limits, each loss that occurs reduces the overall limit until coverage is completely used.

    In addition, there are also sub-limits, which some insurances use to control how much they pay out for losses. Sub-limits are used for specific losses. They may apply to both occurrence and aggregate limits.

    Be certain of exactly what your policies provide. Contact your insurance agent to discuss this important issue.

  • Hiring and firing practices have become legal minefields and have spurred the development of Employment Practices Liability Insurance (EPLI). It is important that a business has clear policies that are applied consistently to each employee.

    Do you know what type of decisions could trigger a claim?

    Is it legal to terminate a driver with a bad driving record? An employee who is rude to your customers? An employee who swears at customers?

    Don't think that the answer is simply "yes." A business's action may depend upon circumstances such as whether an employee's duties involve driving a company vehicle or directly involves customers and if the company can prove that such behavior fails to meet the applicable job standards.

    One key issue is having a lawyer with expertise in this area of the law. Another key issue is documenting the essential job functions and establishing measurable standards for each position. Use of regular performance reviews and applying the standards equally to each employee is a smart employment practice. The best defense against employment practice claims is to know the law in your state and then having policies and procedures that meet or exceed its legal standards.

    The U.S. Department of Labor offers a small business handbook from their website. The U.S. Equal Employment Opportunity Commission also offers numerous publications addressing different employment laws from their website. Contacting an insurance agent regarding Employment Practices Liability Insurance is another avenue to explore.

    Policies and premiums for this type of coverage vary among insurers. Many companies offering the coverage also offer assistance in writing policy and procedure manuals and other ways to reduce the potential for claims involving sexual harassment, wrongful termination, or discrimination. No business is immune from these claims.

  • For the smaller business, the Commercial Umbrella Liability policy is a newer insurance coverage option. Not long ago, the coverage was considered to be only needed by large business entities. Today, a different set of circumstances exists.

    Liability claims and court decisions involving millions of dollars are no longer uncommon. Any business can be found legally responsible for this type of judgment. A Commercial Umbrella Liability Policy can provide an extra layer of insurance protection to handle major losses.

    A business owner may consider an accident that does not involve a fatality to be one that can readily be handled by regular coverage. The reality is that such an accident may result in substantial medical care, lost income, and other expenses. Can your business afford a payment that exceeds a million dollars?

    When the insurance coverage provided by a business auto policy is not enough to meet the amount of a loss, the business is responsible for the difference.

    An Umbrella Liability policy could be the difference between bankruptcy and an on-going business venture. The Umbrella policy would take over where the business auto policy stopped, providing defense coverage and additional limits to pay large judgments.

    There are no standard Umbrella Liability policy forms; each company has their own variation. Each form offers different options that can help tailor coverage to specific business needs.

    One thing to remember is that an Umbrella Liability policy will not cover everything; there are exclusions in this form as in any other contract of insurance. However it still represents an excellent method to help shield a business from catastrophic claims.

    Contact an insurance agent to discuss securing this valuable form of liability coverage. It could help preserve your business.

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