The homeowner's insurance policy is personal insurance coverage for owner-occupied homes and second homes. The policy includes coverage on the building, contents, living expenses, and personal liability coverage.
Homeowner's Insurance Advice -
Learn what perils (fire, lightning, windstorm etc.) your policy includes. Are there different perils for loss to your building compared to the coverage provided for your personal property?
Does the policy pay for the replacement of your home after a loss?
Is the limit of coverage adequate? One estimate holds that 35% of homes are underinsured. Could you rebuild your home for the amount of insurance you have?
Don't rely on your home insurance to protect a home based business. Commercial liability is excluded by most homeowner policies. Coverage on business property (computers, file cabinets, reference books, office equipment) is limited as well.
Are your contents valued at replacement cost or depreciated value?
Consider large deductibles to control your premium - $5,000 or $10,000 may make sense.
Many insurers are reluctant to provide coverage for dog owners due to the concern of liability from dog bites.
Most policies exclude damage by flood and earthquake.
Most policies limit coverage for damage caused by mold and fungus.
Most policies limit coverage on jewelry, silver, guns and fine arts. Check with your insurance agent.
Does your policy include liability coverage for libel and slander?
If you travel overseas, check with your agent to determine coverage for property away from your home. Insurance on personal laptop computers may be limited.
Is your policy's bodily injury and property damage liability coverage adequate? Consider an umbrella liability policy for additional limits of protection.
Most homeowner's policies include personal liability for volunteer activities. However, the policy does not include coverage for events such as employment practices liability and mismanagement. Non-profit volunteers should check with the charity to see what coverage is purchased by the organization - director's and officer's coverage for example.
Alarm systems may qualify for policy premium credits.
Insurers may provide premium discounts for clients who buy auto and home coverage.
Some insurers provide credits on home insurance for nonsmokers.
REFILE-Allianz to start selling life insurance in Japan
TOKYO, March 26 (Reuters) - Allianz (ALVG.DE: Quote, Profile, Research), Europe's biggest insurer, said it will sell variable annuities through a Japanese unit of Citigroup (C.N: Quote, Profile, Research) and may offer other products as it enters the world's second-largest life insurance market.Hartford Financial Services Group Inc (HIG.N: Quote, Profile, Research) and others have established over several years a solid presence in variable annuities -- a hybrid of life insurance and investment trusts.
Variable annuities typically offer some guarantee to the principal and have struck a chord with Japan's growing number of retirees eager to shift some of their savings out of low-yielding deposits but worried about the risk of a pure stock or bond fund.
The market has already grown some 28-fold over the past five years to 16.5 trillion yen ($165 billion), but is still thought to have plenty of room to grow given it is just a tenth the size of the U.S. market.
"The potential is there," said Fitch Ratings Associate Director Megumi Usui, adding, however, that the entry of more Japanese insurers in addition to foreign firms such as Hartford was making the market tougher to crack.
"The market is getting quite competitive," she said.
Hartford Life held 24 percent of Japan's variable annuities market in terms of assets as of September, followed by Mitsui Sumitomo MetLife at 14 percent, ING Life at 13 percent and Tokio Marine & Nichido Financial Life at 12 percent, according to industry newspaper Hoken Mainichi Shinbun.
Allianz had said earlier this month that it would start selling variable annuities in Japan from April but had not given details such as its plans to sell the product through Nikko Cordial Securities, a broker recently acquired by Citigroup.
Allianz said it would consider additional sales partnerships while also looking at introducing other products, encouraged by deregulation last year that further eased restrictions on what insurance products could be sold through banks.
Bruce Bower, Allianz's Asia Pacific Chief Executive Officer, told Reuters in an interview that the company had not decided on its next product offering for Japan but that bundling healthcare insurance with annuities could be an option.
"Healthcare is a big industry in Japan and a growing industry in Japan. We'll explore what opportunities may arise to see whether it is viable for us to launch products in that regard," Bower said. (Editing by Louise Ireland)
Personal Finance: Can life insurance help you get that business loan?
Georgianna G. Latino
news@theadvertiser.com
Most businesses run on credit, or at least ready access to it. Without credit at reasonable rates, many businesses would find it nearly impossible to carry out expansion plans or get through times of tight cash flow. That's one reason businesses watch interest rates so closely. A lower rate usually means better access to more credit at lower rates.
Life insurance may be a player in the credit game. When banks evaluate a loan application from a business client, they frequently take into consideration whether a key employee in that business has life insurance. In the event that the employee's loss causes a business disruption, the life insurance could serve as a means of secondary collateral. In a sole proprietorship or other closely held business, a life insurance policy can possibly be a deciding factor to the bank as to whether or not to grant the loan. The chances for obtaining a loan approval may be enhanced if the business itself is named as the policy beneficiary.
A life insurance policy can help in the following ways:
# It may make a lender more willing to grant credit or a loan.
# It may open access to higher amounts of credit.
# In some instances, it may result in a more competitive loan rate.
Which insurance is right for you?
Term is often used, especially when:
# Protection needs are short-term or limited, such as to cover a single loan for a specific period of time.
# The situation calls for a high dollar amount of coverage.
# Dollars are tight. Term insurance provides coverage for a lower immediate premium dollar than does permanent insurance.
# Most businessowners prefer no-frills protection. You can buy it when you need it and drop it when you're done.
However, term life insurance has its drawbacks:
# It's pure cost. Unlike permanent life insurance, term provides no living benefits in the form of cash value accumulation.
# If you need coverage for more than a short period of time, keep in mind that the premium cost is likely to increase over time. Eventually, as you get older, the cost may become prohibitive.
# If you experience health problems and become uninsurable, you may not be able to buy coverage when you next apply for it.
Many business owners opt for permanent life insurance.
Cash value accumulation can be an important feature of permanent life insurance for businessowners, especially since many businesses rely on credit on an ongoing basis. In fact, it's not uncommon for business owners to routinely assign insurance benefits to their lending bank.
In a nutshell, here are several of the highlights of purchasing a cash value, permanent life insurance policy:
# Once you buy it, you can keep it for life, as long as you pay your premiums. The death benefit protection is with you for life as long as you pay your premiums. With term coverage, on the other hand, there is always the risk that the term insurance will expire and you may become uninsurable as you get older. Then you might not be able to purchase insurance, which can compromise your access to credit.
# The price doesn't go up. It remains level.
# The cash value that accumulates can be borrowed against at a competitive interest rate. (However, it's important to remember that loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.)
The reality of business is that businesses rely on credit, and life insurance can sometimes help you get that credit. For more information on how life insurance can help your business and family you should seek the advice of your insurance agent, tax professional and/or attorney.
Georgiana "Shelly" Latino, LUTCF, is a partner with New York Life securities. Her column appears twice a month in The Daily Advertiser.
news@theadvertiser.com
Most businesses run on credit, or at least ready access to it. Without credit at reasonable rates, many businesses would find it nearly impossible to carry out expansion plans or get through times of tight cash flow. That's one reason businesses watch interest rates so closely. A lower rate usually means better access to more credit at lower rates.
Life insurance may be a player in the credit game. When banks evaluate a loan application from a business client, they frequently take into consideration whether a key employee in that business has life insurance. In the event that the employee's loss causes a business disruption, the life insurance could serve as a means of secondary collateral. In a sole proprietorship or other closely held business, a life insurance policy can possibly be a deciding factor to the bank as to whether or not to grant the loan. The chances for obtaining a loan approval may be enhanced if the business itself is named as the policy beneficiary.
A life insurance policy can help in the following ways:
# It may make a lender more willing to grant credit or a loan.
# It may open access to higher amounts of credit.
# In some instances, it may result in a more competitive loan rate.
Which insurance is right for you?
Term is often used, especially when:
# Protection needs are short-term or limited, such as to cover a single loan for a specific period of time.
# The situation calls for a high dollar amount of coverage.
# Dollars are tight. Term insurance provides coverage for a lower immediate premium dollar than does permanent insurance.
# Most businessowners prefer no-frills protection. You can buy it when you need it and drop it when you're done.
However, term life insurance has its drawbacks:
# It's pure cost. Unlike permanent life insurance, term provides no living benefits in the form of cash value accumulation.
# If you need coverage for more than a short period of time, keep in mind that the premium cost is likely to increase over time. Eventually, as you get older, the cost may become prohibitive.
# If you experience health problems and become uninsurable, you may not be able to buy coverage when you next apply for it.
Many business owners opt for permanent life insurance.
Cash value accumulation can be an important feature of permanent life insurance for businessowners, especially since many businesses rely on credit on an ongoing basis. In fact, it's not uncommon for business owners to routinely assign insurance benefits to their lending bank.
In a nutshell, here are several of the highlights of purchasing a cash value, permanent life insurance policy:
# Once you buy it, you can keep it for life, as long as you pay your premiums. The death benefit protection is with you for life as long as you pay your premiums. With term coverage, on the other hand, there is always the risk that the term insurance will expire and you may become uninsurable as you get older. Then you might not be able to purchase insurance, which can compromise your access to credit.
# The price doesn't go up. It remains level.
# The cash value that accumulates can be borrowed against at a competitive interest rate. (However, it's important to remember that loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.)
The reality of business is that businesses rely on credit, and life insurance can sometimes help you get that credit. For more information on how life insurance can help your business and family you should seek the advice of your insurance agent, tax professional and/or attorney.
Georgiana "Shelly" Latino, LUTCF, is a partner with New York Life securities. Her column appears twice a month in The Daily Advertiser.
Comparing Rates and Companies
This section gives you steps you can use to help you get to the bottom line. Comparing the prices of term insurance versus cash-value policies is virtually impossible.When you’re ready to start shopping for life insurance, do the following:
- Decide which kind of insurance: The first thing you must do is decide which kind of policy you want (if you could afford it): term, whole life, universal life, or variable life. You must also decide which riders, if any, you want. Review the information in the previous chapters, which explain the details of each kind of policy and rider and goes over the pluses and minuses of each.
- Look for insurance companies: Seek out at least five or six companies and/or agents who sell the kind of policy you want. Eliminate any companies that you have doubts about. If you speak with any independent agents, remember to find out which company would be underwriting your insurance.
- Ask for quotes from each of those remaining companies or agents: Be certain that each quote represents the same amount of death benefit with all the same riders/ options you want. If possible, ask the agent or company to break down the charges so you can more easily compare the policies — which is particularly important when you evaluate cash-value policies. If you’re unsure as to which kind of policy to buy, get quotes for all the kinds of policies. Only then can you accurately decide which one is best for you.
Independent Director's Liability Insurance
If you serve on a board of directors, this might be important to you.
Several insurance companies are now selling coverage directly to independent board members to provide coverage when the corporate D&O doesn't respond due to government intervention, bankruptcy or insolvency. Hartford Financial Services Group, Inc. offers a policy called Priority Protection-IDL. Chubb Specialty Insurance calls their product Personal Director's Liability Insurance.
Here are the issues to consider:
-What are the policy limits?
-Is there a retention/deductible?
-In what circumstances will the policy pay? Must the corporate directors' and officers' policy respond first?
-Who selects the defense team - you or the insurer?
-Is coverage included for actions brought against a non-director spouse?
-Assuming the policy is a claims made, what are the extended reporting provisions available?
Several insurance companies are now selling coverage directly to independent board members to provide coverage when the corporate D&O doesn't respond due to government intervention, bankruptcy or insolvency. Hartford Financial Services Group, Inc. offers a policy called Priority Protection-IDL. Chubb Specialty Insurance calls their product Personal Director's Liability Insurance.
Here are the issues to consider:
-What are the policy limits?
-Is there a retention/deductible?
-In what circumstances will the policy pay? Must the corporate directors' and officers' policy respond first?
-Who selects the defense team - you or the insurer?
-Is coverage included for actions brought against a non-director spouse?
-Assuming the policy is a claims made, what are the extended reporting provisions available?
How to Buy Disability Insurance
I often get questions on disability insurance.
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China Life Insurance 2007 profit nearly doubles
HONG KONG (Reuters) - China Life Insurance Co (2628.HK: Quote, Profile, Research), China's largest life underwriter, posted a 42 percent gain in second-half profit on strong investment returns, topping analysts' expectations, but said it faces a more turbulent market environment in 2008.Investment returns at China Life (601628.SS: Quote, Profile, Research) (LFC.N: Quote, Profile, Research), which leads rival Ping An Insurance (Group) Co (2318.HK: Quote, Profile, Research) (601318.SS: Quote, Profile, Research), benefited from a near doubling in China's benchmark domestic share index last year, but stock markets have tumbled since peaking in October.
"In 2008, the company will face further challenges in view of the keen competition in the insurance industry and the uncertainty of the capital markets," Chairman Yang Chao said in a statement.
Shanghai's stock market, on which China Life depends for a sizeable portion of its investment income, has dived more than 30 percent since the start of the year on expectations of slowing income growth and rising interest rates to combat inflation.
The company earned 15.6 billion yuan ($2.21 billion) in the second half, compared to 10.99 yuan in the year earlier period. A poll of 21 analysts had forecast a profit of 14.1 billion yuan in the second half of 2007, according to Reuters Estimates.
China's life insurance market, dominated by China Life and Ping An, has grown dramatically as Beijing dismantles a cradle-to-grave welfare system, although the rate of premium growth is slowing.
On the strength of China's local A-share market, China Life racked up 44.02 billion yuan in net investment income for 2007, up 76.5 percent from 2006 and its net investment yield rose 1.49 percentage points to 5.76 percent.
The Shanghai benchmark index .SSEC rose 97 percent last year, boosting profits at China Life, which invests in publicly traded companies. The index hit a record high in mid-October before retreating amid the global selloff.
Understanding Underwriting
Underwriting — the process by which the insurance company determines whether or not it will insure you — is the very heart of insurance. And if you’re deemed insurable, underwriting is the process by which they determine how much to charge you for the protection. When determining whether or not you’re insurable and what your premium will be, the insurance company places you into one of three categories of risk, although you do have some flexibility to negotiate a better placement. The three levels are:- Preferred risk
- Standard risk
- Substandard risk
Ideally, you want to fall into the top category. The insurance company looks at four things to determine your category of risk:
- Your current health status: Through a medical history and the required medical exam, the insurance company places you into one of the categories. A personal history of illness puts you into a high-risk category. If your health has been good, you qualify at a higher level, which translates into lower premiums.
- The insurance company also asks about your family’s medical history, including the ages at which your parents, grandparents, and/or siblings died. If your parents died at relatively young ages or if one or both of them had serious diseases such as cancer, heart disease, or diabetes, you may fall into a higher risk category.
- Your projected health status: Your current health status, your personal medical history, and your family’s medical history (see the preceding bullet) all indicate how much risk you have of dying earlier than the statistics project based on your current age. Because the insurance company is betting that you’ll live longer than expected, a good projection means that you’ll either pay your premiums for a longer period or you’ll cancel your insurance at some point. Either way, the company has use of that money and never has to pay off.
- Your job: Some jobs are simply riskier than others. The degree to which your occupation places you into a highrisk category (not too many do, by the way), translates into the amount of your premium. Changing jobs or careers isn’t an option for most people, and doing so just to save money on a life insurance premium is absurd. Nevertheless, you should know that your job does have an effect.
- Special circumstances: If the insurance company identifies any unusual or special circumstances, it will investigate. If, for example, you suddenly — with no apparent reason — buy a $5 million policy when you’re in your 20s, the insurance company may ask a few more questions than usual. Likewise, if you make a statement in your application that conflicts with other statements. If the company isn’t satisfied with your answers, the underwriter will ask you to elaborate. And in some cases, the insurance company may even hire investigators who will ask questions of family members, neighbors, and friends. The degree to which you can resolve any unusual circumstances without having to force an investigation makes you more insurable at a lower premium rate.
Understanding Mortality Charges
When you pare things down to the bare essentials, life insurance is about how much you have to pay to insure your loved ones. The insurance company determines your rate as follows:- The insurance company and the industry at-large keep statistics on the mortality rates throughout the country, based on its own research or by relying on research done by others, such as the National Association of Insurance Commissioners. Through this research, the insurance company knows how many men and women in various age ranges (for example, 25- to 29-year-olds, 30- to 34-year-olds, 35- to 39-year-olds, and so on) die each year.
- The insurance company uses these numbers and some others to determine your life expectancy.
- The insurance company then calculates how much money it has to earn on your premiums so that when it pays your survivors, it pays less than what it has made. Does that mean that if you have a $50,000 death benefit you will have paid more than $50,000? No. Definitely not. In fact, chances are with a term policy you’ll have paid no more than half to two-thirds of that figure, depending on your age when you die. Keep in mind that the insurance company makes money on the premiums you pay. Many other policyholders continue to pay premiums, and the company uses these premiums to pay out death benefits. Many people pay premiums for years but stop their insurance before they die, and the company gets to keep all that money.
- The insurance company builds in the commission it pays the agent who sold you the policy.
- The insurance company adds in the other costs of doing business, such as overhead, administrative costs, salaries, employee benefits, and a profit. Even mail-order or online policies involve some costs of doing business.
- The insurance company totals all these numbers, which is the mortality charge. Your agent, if you use one, should be able to tell you the exact amount you’re being charged as a mortality charge. This amount increases with age because it’s based on your life expectancy.
Product Recall Expenses
Your latest product is sent to hundreds of customers. After a few days the complaints start to come in. There is a problem and you need to recall your shipments. You call your insurance agent who asks, "Was anyone hurt?" The answer is no, but their could be injuries if the items are left in the marketplace.
General liability insurance includes product liability (for most insurance buyers). The policy will pay for the liability resulting from bodily injury and property damage from contaminated or unsafe products. The standard policy will not cover the expense of recalling suspected or actually tainted products - even if leaving the product on the shelves would cause covered claims.
Some insurance companies do offer recall coverage - either as an addition to the general liability policy or as a stand-alone policy. It is, however, a rarely purchased coverage.
The exposure of a product recall is just an example of the analysis every business needs to do of their risks. I've put together a listing of some of the most common risks - those covered by standard insurance and those that are not - Scott's Risk List.
General liability insurance includes product liability (for most insurance buyers). The policy will pay for the liability resulting from bodily injury and property damage from contaminated or unsafe products. The standard policy will not cover the expense of recalling suspected or actually tainted products - even if leaving the product on the shelves would cause covered claims.
Some insurance companies do offer recall coverage - either as an addition to the general liability policy or as a stand-alone policy. It is, however, a rarely purchased coverage.
The exposure of a product recall is just an example of the analysis every business needs to do of their risks. I've put together a listing of some of the most common risks - those covered by standard insurance and those that are not - Scott's Risk List.
The Disgruntled Employee
What can a mad employee do to you? How about erasing all your data?
That's just what happened to the company in the article here. (I was pointed to this article by Wes Trochlil's Blog.)
Who in your shop has access to your current and past data? How can you protect your operation from a disgruntled employee? What checks and balances can be put into place to protect your company?
That's just what happened to the company in the article here. (I was pointed to this article by Wes Trochlil's Blog.)
Who in your shop has access to your current and past data? How can you protect your operation from a disgruntled employee? What checks and balances can be put into place to protect your company?
Smoker who quit 'save on life insurance'
Smokers who want to save on their life insurance premiums would be well advised to kick the habit, one expert has claimed.
Sarah Horner, spokesperson for Norwich Union, explained that anyone who cuts out the cigarettes could see a dramatic fall in their premiums.
She said: "For certain people, a non-smoker can pay around half the premium as their smoker counterpart."
Horner added: "It's perhaps unlikely life insurance savings will be the only reason to quit, but they can certainly be an added incentive."
She also said that people have to give up smoking for at least 12 months to be considered as non-smokers for insurance purposes.
This could lead to a rise in the number of people requesting quotes for their policies as non-smokers in July, one year after the introduction of the smoking ban, Horner concluded.
According to recent research conducted by Benenden Healthcare, around 14 per cent of smokers nationwide (1.64 million) have given up smoking since July 2007.
Sarah Horner, spokesperson for Norwich Union, explained that anyone who cuts out the cigarettes could see a dramatic fall in their premiums.
She said: "For certain people, a non-smoker can pay around half the premium as their smoker counterpart."
Horner added: "It's perhaps unlikely life insurance savings will be the only reason to quit, but they can certainly be an added incentive."
She also said that people have to give up smoking for at least 12 months to be considered as non-smokers for insurance purposes.
This could lead to a rise in the number of people requesting quotes for their policies as non-smokers in July, one year after the introduction of the smoking ban, Horner concluded.
According to recent research conducted by Benenden Healthcare, around 14 per cent of smokers nationwide (1.64 million) have given up smoking since July 2007.
The costs of cash-value insurance
Term insurance is simple. Cash-value, as you may have guessed, isn’t so simple. Cash-value is also much more expensive because you’re paying not only for the protection, administrative fees, and commissions, but also to build up the investment so that the interest it generates will pay the costs of the protection, fees, and commissions. In addition, you’re paying more for the flexibility a cash-value policy gives you. The one thing that’s simple about cash-value policies is that the premium remains the same for the entire time. So what changes? Well, everything else, including, in many cases, the amount that goes to your survivors. When you purchase a cash-value policy, you pay a set premium based on the amount of protection you’re buying, the amount needed to pay the insurance company’s other costs, and the guaranteed amount that will accrue in your account. How all those numbers are configured is an extremely complex formula based on amortization tables, actuarial mortality charts, and contracts with life insurance salespeople.Unless you have a burning desire to wade through the numbers, the only things you really have to be concerned with are
- How much protection you’re buying (so that the death benefit is sufficient for your needs)
- The amount of your total premium (to be sure that you can afford the monthly payment)
- The guaranteed return (so you know how much will go into your investment)
The costs of term insurance
Every year (or every month or quarter or semiannually), you pay a set premium for term insurance, which covers you for that period. The next period, you pay again, either the same amount or a higher amount. Whether the amount is higher depends on whether you buy a one-year term, a five-year term, or another multiple-year policy. If you have a one-year term policy, you pay the one year and the company raises the premium each year. You don’t know how much you’ll pay next year.With a one-year term policy, you don’t know how much you’ll pay three or four years from now. Most companies can give you a pretty good estimate (provided that you select a company that has a proven track record of estimating accurately). But the key is whether the company provides dividends. If your premium is $346 per year and the dividend is $183, you pay just $163. If you buy a five-year term policy, the company declares the $183 dividend for all five years and you pay the same $163 each year. If you choose to renew for another five years, you pay the next premium minus the dividend rate for five more years.
With multiple-year policies like a five-year term, the company figures the premium based on the middle year. So if you’re 38 years old and buy a five-year term policy, the insurance company charges the same premium for all five years; it bases the premium on your age as though you were 41 for all five years (plus a slight, built-in inflation factor). If you add any options, the premium may go up slightly. On the other hand, if you choose a decreasing term policy, such as mortgage insurance, in which the death benefit decreases, your premium remains the same.
Computer Access Risk
How many people can log into your company's computer system?
Who can log into your computer system?
How many former employees still have valid passwords? How about former consultants and systems contractors?
Would this be a good time to check the list of valid logins? Yep!!!
Who can log into your computer system?
How many former employees still have valid passwords? How about former consultants and systems contractors?
Would this be a good time to check the list of valid logins? Yep!!!
Insurance and Intellectual Property Rights
News articles about intellectual property issues are an every day occurrence. The Internet and e-commerce have multiplied the dangers and exposures for small businesses as much as anyone. Here's an overview of the insurance issues that surrounds intellectual property. I'll discuss four types of intellectual property: patents, copyrights, trademarks, and trade secrets.
Coverage to Defend Your Intellectual Property - You Sue Them
The owner of a patent or copyright can incur significant expenses defending their intellectual property rights. For example, suppose a photographer posts a picture on her website. A web designer decides to use the photo without permission or compensation. When the photographer discovers the infringement there may be a series of emails from the artist to the website owner. From there, the dispute may escalate into a court battle. Time, court expenses, and legal bills become a part of the equation.
Worse are the expenses that may result in trying to enforce a patent, copyright, or trademark when a "little guy" is up against a Fortune 500 company with hundreds of attorneys.
Special insurance coverage is available to pay for your costs in going after an infringer. Coverage can be purchased to protect patents, copyrights, trademarks and trade secrets. Several specialty insurance organizations offer the policies. A web search for "intellectual property insurance" should bring up several such companies.
What property rights are protected? Be sure the policy you consider covers the rights you want to protect – patent, copyright, trade secrets, or trademark.
How much coverage are you buying? Policies are priced based on the limit of coverage you buy. A limit of $100,000 may sound like a great deal until you start thinking about the cost of attorneys and the related costs of a suit. Who are you going after? What resources will a Fortune 500 company have to throw at you? Most entrepreneurs buy this coverage to level the playing field. That means you'll need resources. Consider high limits of coverage.
What is the insurer's experience in the business? This isn't an area of insurance where hundreds of insurers compete. It's a specialty market with few players. You may pay a bit more for quality and experience. It will be worth it if you have a claim.
Read the fine print. Understand the coverage you are buying. What are the exclusions and limitations? Use an expert to help with your search and decision.
General Liability Insurance Policies - They Sue You
Defense of an allegation of infringement of intellectual property rights can be expensive and time consuming. The general liability insurance policy purchased by most businesses offers some coverage for the owners.
The primary coverage provided in a general liability policy is for bodily injury and property damage that comes out of your business. Common claims are product liability and slip-and-fall accidents.
The second section of the policy deals with personal injury and advertising injury coverage. Here the policy provides coverage for libel, slander, malicious prosecution and wrongful eviction. Also included is some coverage for your liability in intellectual property rights.
Here are some of the elements that are covered, and some of these policies' limitations:
Violation of Privacy: Most policies include coverage for "oral or written publication, in any manner, of material that violates a person's right of privacy."
Copyright, Trade Dress and Slogan Infringement: Most policies include coverage for copyright violations that take place within advertising. The word advertising is defined to include any notice to the public about your goods, products, or services including the Internet. However, web-sites are only covered for that part of the site that is about your goods or services for the purpose of attracting customers.
Violation Of Patents: There is no coverage under standard general liability policies for your liability arising out of an allegation of patent infringement.
Trademark Infringement: There is no specific coverage for trademark infringement.
Trade Secrets: There is no specific coverage for disclosure of trade secrets.
Standard General Liability Exclusions: The coverage outlined above is admittedly limited. However, there are further limitations. If you intentionally violated someone's privacy, or copyright, coverage is excluded. Further, if you are in the publishing, advertising, broadcasting, or telecasting business there is no coverage. Web designers, web hosting companies, and Internet content providers are also not covered.
The Best Solution: Professional Liability and E-Commerce Insurance - Protection for When They Sue You
If you are a Web-designer, publisher, advertising agency, broadcaster, Internet content provider, or simply have a website that is content-based, consider special insurance coverage designed specifically for the work you do.
Professional liability and e-commerce insurance policies offer a variety of coverage options. The policies may also plug other insurance holes you may have. Some examples: Web designers can be held liable for errors in programming/coding that results in web site downtime and loss of revenue. Publishers and broadcasters can be sued for libel and slander. E-commerce sites can incur significant losses caused by hackers and denial of service attacks. Web site owners may lose revenue when servers crash or power is interrupted.
Professional liability insurance and e-commerce insurance are two different things. Professional Liability Insurance protects against a wrongful act for which the policyholder is liable. Also known as malpractice insurance, this coverage can protect software and web designers from legal actions brought by clients who feel the software of site was not correctly designed. Policies can protect publishers and broadcasters from allegation of libel and slander, in addition to violation of intellectual property rights. Wrongful publishing and violation of privacy rights can also be included.
On the other hand, e-commerce insurance is a combination of many different coverage sections – from loss of business income when a web site goes down, to copyright infringement, to the services of a public relations team to repair your reputation after a hacker or cyber thief attack. Almost all of these policies include coverage for copyright and trademark infringement.
There are four issues to keep in mind when shopping for professional liability and e-commerce policies.
All Professional Liability and E-Commerce Policies Are Unique - There are no standard policies. Each insurer writes their own policy and provides their own, unique coverage. Get quotes from multiple insurers.
Deal With A Knowledgeable Advisor - Get quality help as you look for the right insurance coverage. A strong agent or broker is vital. Consultants, too, can help. These policies are complicated and require special expertise.
Understand What's Covered - Read the policy to learn the coverage included in the insurance. Don't rely on sales brochures or website descriptions. Get the actual policy and read it.
Understand What's Not Covered - Read the policy to learn the exclusions and limitations. Recall that the general liability policy discussed earlier covered copyright infringement, unless you are in advertising, broadcasting, or publishing. Insurers are famous for giving coverage then taking it away. Read the exclusions and definitions. Look for warning words like, "except" when reading the policy.
Coverage to Defend Your Intellectual Property - You Sue Them
The owner of a patent or copyright can incur significant expenses defending their intellectual property rights. For example, suppose a photographer posts a picture on her website. A web designer decides to use the photo without permission or compensation. When the photographer discovers the infringement there may be a series of emails from the artist to the website owner. From there, the dispute may escalate into a court battle. Time, court expenses, and legal bills become a part of the equation.
Worse are the expenses that may result in trying to enforce a patent, copyright, or trademark when a "little guy" is up against a Fortune 500 company with hundreds of attorneys.
Special insurance coverage is available to pay for your costs in going after an infringer. Coverage can be purchased to protect patents, copyrights, trademarks and trade secrets. Several specialty insurance organizations offer the policies. A web search for "intellectual property insurance" should bring up several such companies.
What property rights are protected? Be sure the policy you consider covers the rights you want to protect – patent, copyright, trade secrets, or trademark.
How much coverage are you buying? Policies are priced based on the limit of coverage you buy. A limit of $100,000 may sound like a great deal until you start thinking about the cost of attorneys and the related costs of a suit. Who are you going after? What resources will a Fortune 500 company have to throw at you? Most entrepreneurs buy this coverage to level the playing field. That means you'll need resources. Consider high limits of coverage.
What is the insurer's experience in the business? This isn't an area of insurance where hundreds of insurers compete. It's a specialty market with few players. You may pay a bit more for quality and experience. It will be worth it if you have a claim.
Read the fine print. Understand the coverage you are buying. What are the exclusions and limitations? Use an expert to help with your search and decision.
General Liability Insurance Policies - They Sue You
Defense of an allegation of infringement of intellectual property rights can be expensive and time consuming. The general liability insurance policy purchased by most businesses offers some coverage for the owners.
The primary coverage provided in a general liability policy is for bodily injury and property damage that comes out of your business. Common claims are product liability and slip-and-fall accidents.
The second section of the policy deals with personal injury and advertising injury coverage. Here the policy provides coverage for libel, slander, malicious prosecution and wrongful eviction. Also included is some coverage for your liability in intellectual property rights.
Here are some of the elements that are covered, and some of these policies' limitations:
Violation of Privacy: Most policies include coverage for "oral or written publication, in any manner, of material that violates a person's right of privacy."
Copyright, Trade Dress and Slogan Infringement: Most policies include coverage for copyright violations that take place within advertising. The word advertising is defined to include any notice to the public about your goods, products, or services including the Internet. However, web-sites are only covered for that part of the site that is about your goods or services for the purpose of attracting customers.
Violation Of Patents: There is no coverage under standard general liability policies for your liability arising out of an allegation of patent infringement.
Trademark Infringement: There is no specific coverage for trademark infringement.
Trade Secrets: There is no specific coverage for disclosure of trade secrets.
Standard General Liability Exclusions: The coverage outlined above is admittedly limited. However, there are further limitations. If you intentionally violated someone's privacy, or copyright, coverage is excluded. Further, if you are in the publishing, advertising, broadcasting, or telecasting business there is no coverage. Web designers, web hosting companies, and Internet content providers are also not covered.
The Best Solution: Professional Liability and E-Commerce Insurance - Protection for When They Sue You
If you are a Web-designer, publisher, advertising agency, broadcaster, Internet content provider, or simply have a website that is content-based, consider special insurance coverage designed specifically for the work you do.
Professional liability and e-commerce insurance policies offer a variety of coverage options. The policies may also plug other insurance holes you may have. Some examples: Web designers can be held liable for errors in programming/coding that results in web site downtime and loss of revenue. Publishers and broadcasters can be sued for libel and slander. E-commerce sites can incur significant losses caused by hackers and denial of service attacks. Web site owners may lose revenue when servers crash or power is interrupted.
Professional liability insurance and e-commerce insurance are two different things. Professional Liability Insurance protects against a wrongful act for which the policyholder is liable. Also known as malpractice insurance, this coverage can protect software and web designers from legal actions brought by clients who feel the software of site was not correctly designed. Policies can protect publishers and broadcasters from allegation of libel and slander, in addition to violation of intellectual property rights. Wrongful publishing and violation of privacy rights can also be included.
On the other hand, e-commerce insurance is a combination of many different coverage sections – from loss of business income when a web site goes down, to copyright infringement, to the services of a public relations team to repair your reputation after a hacker or cyber thief attack. Almost all of these policies include coverage for copyright and trademark infringement.
There are four issues to keep in mind when shopping for professional liability and e-commerce policies.
All Professional Liability and E-Commerce Policies Are Unique - There are no standard policies. Each insurer writes their own policy and provides their own, unique coverage. Get quotes from multiple insurers.
Deal With A Knowledgeable Advisor - Get quality help as you look for the right insurance coverage. A strong agent or broker is vital. Consultants, too, can help. These policies are complicated and require special expertise.
Understand What's Covered - Read the policy to learn the coverage included in the insurance. Don't rely on sales brochures or website descriptions. Get the actual policy and read it.
Understand What's Not Covered - Read the policy to learn the exclusions and limitations. Recall that the general liability policy discussed earlier covered copyright infringement, unless you are in advertising, broadcasting, or publishing. Insurers are famous for giving coverage then taking it away. Read the exclusions and definitions. Look for warning words like, "except" when reading the policy.
Insurance That Smells
Dutch wine maker insures his nose for $7.8 million through Lloyd's.
He contends that the loss of his nose would severely limit his ability to earn a living.
He contends that the loss of his nose would severely limit his ability to earn a living.
How Premiums Are Calculated
Before you can determine whether a premium is reasonable, you have to know how insurance companies determine the cost. So many of the costs are hidden inside the cash value, projected earnings, and dividends that figuring out how much you’re actually paying isn’t as easy as it sounds, even with term insurance. You know how much goes out of your checking account each month for the policy. And you know at the end of each year how much the surrender value is, if you have a cash-value policy. Theoretically, you can just subtract the amount in your account from the amount you paid out. But what about next year? What about cancellation charges? The next sections take you through the basics.
What if I fail the exam?
If the company refuses to insure you because of your medical condition, first check that the medical report is accurate. Request that the company send a copy either to you (which they may not do) or to your doctor (which they will do). Go over the report with your doctor. You may be facing legitimate health concerns that you need to address. If you find a mistake on your medical report, notify the insurance company in writing immediately. Being turned down for life insurance can affect other insurance applications that you may be filing.
If the medical report is correct and the company charges you a higher premium, appeal to the agent who sold you the policy, although chances are you’ll have very little luck changing the amount. You can go to a different company, but they’re likely to discover the same problems and raise their premium as well. At that point, you either pay the higher premium or lower the face value to lower the premium. You can also try to find an insurance policy that doesn’t require a medical exam or that requires only a limited exam. (An independent agent may be able to refer you to another company.) In any case, discuss the situation with your agent to see whether the two of you can come up with a solution.
If the medical report is correct and the company charges you a higher premium, appeal to the agent who sold you the policy, although chances are you’ll have very little luck changing the amount. You can go to a different company, but they’re likely to discover the same problems and raise their premium as well. At that point, you either pay the higher premium or lower the face value to lower the premium. You can also try to find an insurance policy that doesn’t require a medical exam or that requires only a limited exam. (An independent agent may be able to refer you to another company.) In any case, discuss the situation with your agent to see whether the two of you can come up with a solution.
What “high risk” means?
Insurance companies are concerned about a number of highrisk people:- Smokers
- People with high cholesterol
- Potential diabetics
- People with indications of coronary disease
- People with a personal history of cancer or other serious disease
- People who work in high-risk occupations
- The company won’t insure you.
- The company will charge you a higher premium.
- The company will ignore the high risk (which isn’t likely).
Pet Insurance
The other day there was an article in the Wall Street Journal about pet insurance. The writer enrolled pets in a variety of plans and tested the coverage and service. The conclusion was that the plans were of little real value.
I can't say that I'm surprised. I have long thought that pet insurance was an exercise in dollar swapping - similar to dental insurance. Premiums tend to be more than the benefits paid and the protection from catastrophic loss is minimal. Most policies limit the payout for a particular illness or accident.Health insurance for pets is a relatively new product in the world of personal insurance. Insurers tend to be specialists. Coverage is offered through the Internet and through pet stores. Most insurance agents don't yet offer pet insurance to their customers.
Pet Insurance Advice -
-Most pet insurance policies have a limit of coverage of about $3,000 for a sickness or injury. Premiums run about $400 to $500 per year for true insurance (see below regarding the difference between discount programs and insurance). So, you're going to pay $3,000 to $5,000 for coverage over the life of your pet. How many catastrophic injuries will one pet have?
-What's the coverage limit? Look at the schedule of insurance. What's the maximum coverage for a sickness or an injury? What types of illnesses are covered by the policy?
-What's the deductible? How much will you pay of a claim?
-Is there a co-payment? Do you share the claim with the insurance company? Do they pay 70% and you pay 30%, for example?
-Does the co-payment increase with your pet's age? Some policies increase the co-payments or reduce the amount of coverage as your pet grows old - effectively reducing the insurance you have when you may need it the most.
-What's the claim process? Do you pay the vet then wait for the insurance company to reimburse you, or does the insurance company pay the vet directly?
-What discounts are available? Some insurers offer reduced rates for service animals (seeing eye dogs), pets that are tattooed for identification, etc. Do you qualify for any of the discounts?
-Is it an insurance plan or a discount plan? There are many plans that are not insurance but provide a discount when you are a "member" and use certain veterinarians. The fee for such programs (memberships) is lower than the insurance plans. The discount plans may also offer savings in other areas of pet care besides injury or illness.
-Does the plan require that your veterinarian be a part of a special insurance network or can you use any vet? Some pet insurance policies require that you use their network of veterinarians. Check the list of participants before you buy the policy.
-Is there a waiting period for coverage to start? Some policies have a time where there is no coverage once the application is submitted. This is the equivalent of a pre-existing conditions clause. Such waiting periods prevent you from buying coverage when your pet is already sick.
Boat and Yacht Insurance
Boat insurance provides coverage on personally owned watercraft - sailboats, powerboats and personal watercraft. The policy can also include coverage on your trailers, motors, personal property, electronics and safety equipment.
Issues to Consider:
-Is the amount of liability coverage adequate?
-Does your personal umbrella policy provide extra limits of liability?
-What are the navigational restrictions on the policy?
-Lay-up periods may save premiums for boats used only a part of the year.
-Review the amount of coverage on the hull, motor, and trailer regularly to be sure the coverage is adequate.
-Consider using higher deductibles to control premium.
-Does the policy include exclusions or limitations for certain operators?
-Does the policy include coverage for personal effects?
-Review the coverage for protection against injuries caused by a boater with no or low liability coverage.
-Some insurers include boat coverage as part of the homeowners' or personal insurance package.
-Are there discounts available for owners who attend boating safety classes?
-Small boats (rowboats, canoes and kayaks) may be covered by homeowners' insurance.
-Are there premium credits available for having your boat insurance with the same insurance company as your auto and/or home insurance?
How to take the medical exam?
Medical exams for life insurance can involve anything from a quick review of your medical history, your family’s medical history, noting your height and weight, and taking basic vital signs (blood pressure and pulse) and a swab of cells from the inside of your cheek, or it can be a more extensive exam requiring an EKG (electrocardiogram), blood tests, X-rays, and urinalysis. In addition, on your insurance application, you give the insurance company permission to check with your doctor to follow up on any findings or questionable items on the application.
The extent of your physical exam is based on the following:
The extent of your physical exam is based on the following:
- Your age
- Your medical history
- Your family’s medical history
- Whether you smoke
- The amount of insurance you’re seeking to buy
For the quick review, usually a health professional comes to your home or office. If you need to undergo more testing, the company may ask you to see a physician or go to a clinic. The insurance company bears the cost of the exam (although, of course, such administrative costs are built into the cost of the insurance policy you purchase).
Qualifying for the Coverage You Want
The concept of life insurance is simple: Although you hope you live a long life, you also pay a company to make sure that if you die sooner rather than later, your survivors have something to fall back on. The company, similarly, is hoping that you don’t die before it has a chance to make more on what you pay than the cost of paying your survivors. You know that you will die eventually — the only question is when. Your only gamble is which insurance company you choose.
But companies don’t like to gamble, so they stack the deck. The more likely you are to die sooner rather than later, the more the company needs to get from you in the early years of your policy. If, on the other hand, the company can count on you being around for a long time, it doesn’t need as much each month to make a profit from your premiums. So how does the company make this judgment? It uses the answers to two questions:
To qualify for a life insurance policy, you have to pass two conditions: You have to be young enough, and you have to be healthy enough.
The age condition is based strictly on statistics gathered for large numbers of people. If you’re older than 60 or 65, most companies won’t insure you. If you’re younger than that, the company will insure you, basing your premiums on your age. To judge your medical condition, the company will ask you to provide your complete medical history and, for most policies, will ask you to undergo a medical exam.
But companies don’t like to gamble, so they stack the deck. The more likely you are to die sooner rather than later, the more the company needs to get from you in the early years of your policy. If, on the other hand, the company can count on you being around for a long time, it doesn’t need as much each month to make a profit from your premiums. So how does the company make this judgment? It uses the answers to two questions:
- Based on complicated statistical analyses and longevity charts, how long are you likely to live?
- Based on your medical history and information, are you a high or low risk?
To qualify for a life insurance policy, you have to pass two conditions: You have to be young enough, and you have to be healthy enough.
The age condition is based strictly on statistics gathered for large numbers of people. If you’re older than 60 or 65, most companies won’t insure you. If you’re younger than that, the company will insure you, basing your premiums on your age. To judge your medical condition, the company will ask you to provide your complete medical history and, for most policies, will ask you to undergo a medical exam.
Buying Life Insurance through the Mail
Most professionals frown on buying life insurance from a direct-mail flyer sent out to you and thousands of your closest friends promising you personal service. Although buying a life insurance policy through the mail may have been a decent alternative a few years ago, today it pales when compared to the positives of buying online.
But if a flyer sparks your interest, consider it just as much as you would an insurance policy you discover through an online search. Do your homework. Compare terms, rates, company ratings, and talk with a trusted agent (or a recommended agent) to see whether the company is legitimate. Make sure that you can actually talk with someone at the company itself.
Like most things, if it sounds too good to be true, it probably is.
But if a flyer sparks your interest, consider it just as much as you would an insurance policy you discover through an online search. Do your homework. Compare terms, rates, company ratings, and talk with a trusted agent (or a recommended agent) to see whether the company is legitimate. Make sure that you can actually talk with someone at the company itself.
Like most things, if it sounds too good to be true, it probably is.
Crime Insurance Overview
It was on last night's news. Another business has lost over $100,000 due to an employee theft. There was also a holdup at a local gas station recently.
Crime insurance provides coverage against loss by theft, burglary, robbery, and employee dishonesty. Policies can include protection for forgery, counterfeit currency, and loss of money.
Crime insurance provides coverage against loss by theft, burglary, robbery, and employee dishonesty. Policies can include protection for forgery, counterfeit currency, and loss of money.
Issues to Consider:
-Do you have enough employee dishonesty insurance? Half of all thefts in the US is caused by employees. Get quotations from your insurance agent for higher limits of coverage.
-Be aware of the insurance coverage exclusion included in most policies for employees who have committed past dishonest acts.
-Consider making criminal background checks as a part of your hiring process. Have new employees sign wavers that will allow you to check for criminal records, past employment records, and driving record.
-Demand honesty in all business dealings. Let applicants know that misstatements on employment applications of prior education and work history will result in termination.
-Do you have enough insurance coverage to protect you from theft or destruction of cash that is on your premises or in route to your bank?
-Are incoming checks marked "for deposit only" ASAP after they are received?
-Are employees required to take regular vacations? Embezzling employees have to often perform "juggling acts" to cover up their thievery. Mandatory vacations can increase the chances that an employee is caught.
-Does the employee who reconciles your bank accounts have authority to sign checks? Separation of these duties increases the oversight of your bank accounts.
-Is inventory stored away from employee entrances to prevent property walking out the back door?
-Are regular inventories taken to uncover shortages of stock?
-Inspect outside trash dumpsters regularly. They are often used to hide stolen merchandise.
-If you use a payroll service to process payroll taxes, do you audit their work? Are they really making the deposits to the IRS?
-Consider video cameras at register and stock storage areas. Cameras in public areas and parking lots can also help with liability claims where people sue for slip-and-fall injuries.
Aircraft Insurance Advice
Insurance coverage on your airplane or jet is a specialty line of coverage. There are few insurance companies to choose from. Ask acquaintances for referrals when looking for an agent. Ask other plane owners where they buy their insurance.
Plane Insurance Advice
--Is the amount of liability insurance coverage adequate?
--Does your umbrella policy provide extra liability coverage in addition to the coverage provided by your aircraft insurance policy?
--Is the amount of coverage on the plane's hull adequate?
--Do you need to include business entities as named insured on the policy?
--Consider deductibles to control premiums.
--Are there limitations as to pilot qualifications and who can fly?
--Are there navigational restrictions-where you can fly?
--Are you dealing with a specialty agent? Most agents handle few airplanes. Your best bet may be a specialist.
--Is there any limitation on passenger liability?
Commercial Auto Insurance - An Overview
The commercial auto policy provides insurance coverage for cars and trucks used in a business. Policies can include protection for owned and non-owned vehicles.
Issues to Consider:
-Is your liability coverage adequate? A minimum coverage for most businesses is $1,000,000 with additional limits provided by a commercial umbrella policy.
-Is your liability coverage for "any auto"? Some policies only cover your owned vehicles. What about the liability that comes from employees driving their personal vehicles on company business?
-Does your policy include liability coverage for non-owned and hired autos? Does it cover rented vehicles or employee owned vehicles used in your business?
-Match your uninsured motorist insurance limits to your liability limits.
-Do you need "drive other car" coverage? If an employee uses a company car for personal use and does not have their own personal auto insurance there could be a gap in coverage.
-Consider rental reimbursement insurance that will pay for the rental of a car or truck if yours is damaged in an accident.
-Review special use vehicles like dump trucks and delivery vehicles for adequate coverage for a temporary rental if the truck is taken out of commission in an accident.
-Review your deductibles. Higher deductibles can reduce your premium.
-Buy collision damage waiver coverage when you lease a car or truck. Short term rentals from Hertz or Avis create special risk management issues. Always buy the rental car company's collision insurance or use a credit card that provides collision protection as a cardholder benefit.
-Racing and stunt driving are excluded from coverage by most commercial auto insurance.
-Repair facilities should purchase a garage policy to provide liability coverage as well as coverage on customer's vehicles.
-Consider garage keepers' insurance if you have a valet parking customer's cars, repair vehicles, or if you "take possession" of customer's vehicles in some way.
Pet Peeve Time
Watching the news this morning...
Commercial with Robert Wagner as spokesman for some insurance policy...
Robert! The plural of "insurance" is "insurance."
There is no such word as "insurances."
There, I feel better.
Insuredly,
Scott
Scott Simmonds, CPCU, ARM, CMC
Insurance and Risk Mitigation Consultant
Scott@insurance-coveragelaw.com
www.insurance-coveragelaw.com
Commercial with Robert Wagner as spokesman for some insurance policy...
Robert! The plural of "insurance" is "insurance."
There is no such word as "insurances."
There, I feel better.
Insuredly,
Scott
Scott Simmonds, CPCU, ARM, CMC
Insurance and Risk Mitigation Consultant
Scott@insurance-coveragelaw.com
www.insurance-coveragelaw.com
Tips on Online Shopping for Insurance
As more and more products become available through the Internet, more and more people are shopping for insurance online. Hundreds, or perhaps thousands, of Web sites are devoted to insurance, with more springing up every day. At the time of this writing, a search for “life insurance,” using one of the large search engines (www.excite.com) revealed thousands of matches. A review of just ten of these matches, selected almost at random, showed that most can lead you to a company from which you can buy life insurance. Follow these steps to make your decision on which online company to buy your life insurance from:
- Do all the shopping and research you can online.
- Narrow your search to the top two or three policies and companies.
- Call and solicit recommendations and advice from the online and telephone assistants (if that option is available). Or use e-mail to correspond.
- Collect all the hard facts about the policy, the company, and the company ratings from the independent ratings companies.
- If the company has both online and agent service, call and make an appointment to meet or talk with a company representative. Have that representative give you guidance, counseling, and a quote.
- From friends and relatives, get the name of an insurance agent who doesn’t represent an online insurance company.
- Talk to that agent and have him or her give you guidance, counseling, and a quote. Assuming you feel that the online companies are all good ones, give the agent a chance to match or beat your online offer.
- Make your decision.
How to select the right life insurance agent?
Many insurance “stores” carry a number of different “brands” of insurance. These kinds of insurance stores or sales agents act as independent brokers, bringing you, the customer, together with the insurance company. In this case, you choose the agent before you choose the insurance company. This method seems to go against Rule 1, but actually, you haven’t yet chosen the company. You’ve chosen an agent to present you with options. Hopefully, that agent will present you with products from more than one company, allowing you to choose both the right product and the right company. If the agent can present you with only one company, rethink your position and consider the first rule: Choose the company, not the agent.
Many insurance agents think of themselves as counselors as well as sales agents. They have a variety of products to sell, one of which you’re interested in buying. The agent’s job is to help you decide which one.
Your insurance sales agent is a knowledgeable resource for you who can serve as a counselor, helping you decide which product is best for you. Therefore, you need to find someone you trust. Through an open dialogue, your agent should be able to steer you to the right product.
Beware of high-pressure tactics. Although most sales agents are honest, you may run across a slick, hard-sell insurance salesperson who only wants to sell you something without due concern for your needs or your budget. Check with others who use a prospective agent, and make sure that he or she is a registered member of the National Association of Life Underwriters (NALU) or the Society of Financial Service Professionals
Many insurance agents think of themselves as counselors as well as sales agents. They have a variety of products to sell, one of which you’re interested in buying. The agent’s job is to help you decide which one.
Your insurance sales agent is a knowledgeable resource for you who can serve as a counselor, helping you decide which product is best for you. Therefore, you need to find someone you trust. Through an open dialogue, your agent should be able to steer you to the right product.
Beware of high-pressure tactics. Although most sales agents are honest, you may run across a slick, hard-sell insurance salesperson who only wants to sell you something without due concern for your needs or your budget. Check with others who use a prospective agent, and make sure that he or she is a registered member of the National Association of Life Underwriters (NALU) or the Society of Financial Service Professionals
What to do when the life insurance company goes belly-up?
If a company does fail, chances are good that your protection will be honored. The insurance regulators (state and federal agencies) work with other companies to pick up the policies from a failed company. If that effort fails, your policy may be picked up by a guaranty association, a state association made up of all the insurers in your state who collectively ensure that you won’t be left in the lurch.
Although these backups are comforting, if your state association picks up your policy because no other insurance company will, you may lose some of your benefits. Most state guaranty associations have limits on the death benefit (generally not more than $500,000), and they also may not match the interest you’re guaranteed on a cash-value policy. Check with your state insurance commission for more information about insurance company bankruptcies. The best thing you can do to make sure you don’t lose your investment or your protection is to choose your life insurance company wisely.
Although these backups are comforting, if your state association picks up your policy because no other insurance company will, you may lose some of your benefits. Most state guaranty associations have limits on the death benefit (generally not more than $500,000), and they also may not match the interest you’re guaranteed on a cash-value policy. Check with your state insurance commission for more information about insurance company bankruptcies. The best thing you can do to make sure you don’t lose your investment or your protection is to choose your life insurance company wisely.
Nonprofit Directors' and Officers' Liability Insurance
Directors' and officers' liability insurance provides protection for allegations of improper decisions and actions. In short, the policy protects the personal assets of directors and officers when someone says they didn't perform their job properly.
Some Claims Examples:
--Allegations of improper hiring practices
--Employment or sexual harassment
--A donor is unhappy with the use of their money
--A client alleges you are not serving your mission
Call Your Agent to Review the Coverage
How much coverage do you have – what are the limits of liability?
Are defense costs included in the limit of liability?
Do you have coverage for employment practices?
Do you have coverage for prior acts?
What professional services are excluded?
What are the policy exclusions?
If You Don't Have D&O, Here Are Some TipsThe first step is to contact your own insurance agent. You may find that they have the expertise to provide you with the policy that you need.
If, for whatever reason, you're not comfortable obtaining D&O insurance from your current agent, I suggest you find an agent who has an interest in your cause.
Directors' and officers' liability insurance for small nonprofits are not particularly lucrative for an agent. Your business may not get their attention. However, an agent who is a supporter can do an exceptional job for your organization.
Another approach would be to use a board member or a strong supporter who owns a business. Have the board member contact her insurance agent, asking that the agent provide the coverage as a favor to them. Most agents will be reluctant to disappoint a good customer.
You'll have to complete an application before your agent can get quotes. Most insurers will have minimum premiums of at least $1,200. Your premium may be higher depending on your organization's mission and budget.
When your agent comes back with quotes, review the information carefully. Ask the agent to explain the coverage. Ask the same questions from the above section. Ask for a copy of the policy and endorsements. Review alternative limits of coverage and deductibles.
Kidnap and Ransom Insurance
Over the past few months I have either reviewed or have been involved in obtaining kidnap and ransom insurance bids for 5 clients. This may be more than I have done in the past two years.
I
Kidnap and ransom insurance is purchased to provide resources in the event an employee, executive, or family member is kidnapped or if there are threats against people or property. It has long been purchased by international companies and organizations where foreign travel is common.
Here are some issues to consider if you are looking at K&R coverage.
-A key reason to buy kidnap and ransom insurance is the crisis response team that comes with the policy. These are usually international firms with the experience and resources to help if a company or executive is the victim of an extortion attempt. Having such a firm on retainer is the equivalent of having a ready-made plan for such a crisis.
-The basic policy provides protection in the form of indemnification for payments made for the kidnap of a company employee or a family member of an employee. Policies cover the expenses related to the kidnapping including hostage negotiators, lost wages, and the ransom paid. Many insurers provide coverage for medical treatments after the event is over including psychiatric services, plastic surgery and rehabilitation services.
-Most K&R policies also include protection for threats to damage property as well as cyber extortion coverage.
-As there are no standard policies in this area a detailed review of each proposal must be made. Limits of liability should be chosen carefully.
Most K&R policies are purchased by corporations with overseas operations. Coverage is also available for families worried about their exposure to kidnappings and extortion.
Insuredly,
Scott
Scott Simmonds, CPCU, ARM, CMC
Insurance and Risk Mitigation Consultant
Scott@insurance-coveragelaw.com
www.insurance-coveragelaw.com
Help With Workers' Compensation Premiums
Insurance Market is Very Competative - Bid Your Insurance!
I've talked about this many times over the past year. The insurance press is also full of articles on the subject. The insurance marketplace is as competitive as ever. Insurers are very aggressive in their pricing for good risks (well run companies with low losses). This is the time to push your agent and current insurers. If you have not been to bid recently, do it this year.
The John Liner Letter is a well respected monthly insurance publication. They tackle the tough insurance issues.
Their February issue covers the current state of the market. They have graciously allowed me to post a summary of their report.
In short, competition remains at a high level and will for most of the year. Premiums are dropping for good risks. Underwriters are aggressive - with coverage and price.
Seriously consider bidding your insurance at the next renewal. It is the best way to get better coverage and better pricing.
Insuredly,
Scott
The John Liner Letter is a well respected monthly insurance publication. They tackle the tough insurance issues.
Their February issue covers the current state of the market. They have graciously allowed me to post a summary of their report.
In short, competition remains at a high level and will for most of the year. Premiums are dropping for good risks. Underwriters are aggressive - with coverage and price.
Seriously consider bidding your insurance at the next renewal. It is the best way to get better coverage and better pricing.
Insuredly,
Scott
Disaster Planning
A month ago I blogged on disaster planning. I received a few emails chastising me for putting a communications plan as step one. Here is my response, so you can stop emailing me.
When I work with a client on disaster planning I take a holistic approach. That's easy for a consultant to do - move forward step by step. My earlier post was not a holistic approach, but for the "do-it-yourselfer" where the need is to move the ball down the field quickly, before they are sidetracked by everyday life.
Here is the approach I take with clients:
Step One - Identify Threats and Exposures to Your Operation - What can cause disruption? What is the severity of the disruption? What supplier vulnerabilities do we have? What impact can disruption to client operations have on us?
Step Two - Identify Impact and Rank Severity of Threats - What is the impact on us of the threat? What threats are the most severe? Rank as inconvenient, minor disruption, major disruption, or catastrophic.
Step Three - Build Communication Strategy - How will we communicate with employees, owners, suppliers, and customers?
Step Four - Identify Strategies to Mitigate Disruption and Loss - What resources can be developed? What plans can be designed? What information is needed? How does insurance respond to exposures?
Step Five - Test Strategies Where Possible - Do walk through drills where appropriate. Simulate, role-play, test.
Step Six - Reevaluate - What changes need to be made? How often does the plan need to be reviewed and updated? What events allow for real-world testing?
So there critics! No, there is no conflict here. Ultimately, the do-it-yourselfer will get to all the steps above. It will take them longer. There is, after all, an advantage in hiring an expert!
When I work with a client on disaster planning I take a holistic approach. That's easy for a consultant to do - move forward step by step. My earlier post was not a holistic approach, but for the "do-it-yourselfer" where the need is to move the ball down the field quickly, before they are sidetracked by everyday life.
Here is the approach I take with clients:
Step One - Identify Threats and Exposures to Your Operation - What can cause disruption? What is the severity of the disruption? What supplier vulnerabilities do we have? What impact can disruption to client operations have on us?
Step Two - Identify Impact and Rank Severity of Threats - What is the impact on us of the threat? What threats are the most severe? Rank as inconvenient, minor disruption, major disruption, or catastrophic.
Step Three - Build Communication Strategy - How will we communicate with employees, owners, suppliers, and customers?
Step Four - Identify Strategies to Mitigate Disruption and Loss - What resources can be developed? What plans can be designed? What information is needed? How does insurance respond to exposures?
Step Five - Test Strategies Where Possible - Do walk through drills where appropriate. Simulate, role-play, test.
So there critics! No, there is no conflict here. Ultimately, the do-it-yourselfer will get to all the steps above. It will take them longer. There is, after all, an advantage in hiring an expert!
Use the Services Offered by Your Employment Practices Insurance Company
Check into the services offered by your employment practices liability insurance company. They may help you prevent a claim.
Many insurers offer training programs on preventing employment practices losses (wrongful termination, discrimination, harassment, and the like). Some offer access to attorneys. Some even offer reduced deductibles if you talk to their law firm prior to terminating employees.
These services are paid for with your premiums. You should take advantage of the help they offer.
Insuredly,
Scott
Many insurers offer training programs on preventing employment practices losses (wrongful termination, discrimination, harassment, and the like). Some offer access to attorneys. Some even offer reduced deductibles if you talk to their law firm prior to terminating employees.
These services are paid for with your premiums. You should take advantage of the help they offer.
Insuredly,
Scott
How to check a life insurance company rating?
Five major independent insurance ratings companies analyze almost all the insurance companies:
When selecting an insurance company, get the ratings on several from at least two ratings companies. The ratings systems vary: An A from Weiss, for example, is the second-best rating a company can receive. Only an A+ is better. But an A from Standard & Poor’s is much farther down the list. It’s sixth, behind AAA, AA+, AA, AA-, and A+. Quite a difference.
Even if you can equate the scales, the ratings of the ratings companies differ from one another. For example, Best may offer an insurance company its top rating (AAA), while Moody’s gives the company its fourth-highest rating (Aa3). So how can you judge?
You can check Consumer Reports magazine. The magazine evaluates the different life insurance companies and uses a rating system that averages all the other systems to make its determinations. You can get a copy of Consumer Reports at your local library or check its Web site at www.consumerreports.com.
- A.M. Best Company
- Duff & Phelps Credit Rating Co.
- Moody’s Investors Service
- Standard & Poor’s Insurance Rating Services
- Weiss Research
- Analyze the financial strength of insurance companies
- Evaluate the stability of insurance companies
- Make judgments about the reliability of insurance companies
When selecting an insurance company, get the ratings on several from at least two ratings companies. The ratings systems vary: An A from Weiss, for example, is the second-best rating a company can receive. Only an A+ is better. But an A from Standard & Poor’s is much farther down the list. It’s sixth, behind AAA, AA+, AA, AA-, and A+. Quite a difference.
Even if you can equate the scales, the ratings of the ratings companies differ from one another. For example, Best may offer an insurance company its top rating (AAA), while Moody’s gives the company its fourth-highest rating (Aa3). So how can you judge?
You can check Consumer Reports magazine. The magazine evaluates the different life insurance companies and uses a rating system that averages all the other systems to make its determinations. You can get a copy of Consumer Reports at your local library or check its Web site at www.consumerreports.com.
How to Select the Right Life Insurance Company?
As with any product you purchase, keep the following things in mind during your search for a life insurance provider:
- Make sure that you’re selecting the right company for your needs.
- Be certain that if you’re dissatisfied, you can cancel your policy without incurring any charges.
- Make sure that the insurance company backs up its product,even if an individual agent goes out of business.
Understanding Policy protection: Waiver of premium
If you become disabled and can no longer work, you probably won’t be able to pay your life insurance premium either. By purchasing a waiver of premium rider, you ensure that your insurance isn’t canceled, even though you don’t pay the premiums. You usually have to wait six months from the time you become disabled before this benefit kicks in. Read the definitions and terms in these riders carefully and discuss them with your agent.
Some waivers take over the payments if you can’t work in your chosen profession (or a profession in which you have experience or for which you’re trained), while other waiver of premium riders pay only if you can’t work in any job. Still others may combine these requirements so that for a period of time (two years, for example), the company waives the premium if you can’t work in your normal line of work, but after that waives the premium only if you can’t work in any job. The insurance company will most likely conduct its own medical exam to verify that you are disabled and unable to work.
For universal life insurance policyholders, the waiver of premium rider works a bit differently. Because a changing portion of your premium goes toward the insurance coverage and the rest for administrative fees and cash value, the waiver of premium rider only covers the cost of the insurance and the administrative fees. No additions are made to your cash value portion except from any interest that is earned.
Buying this rider usually costs you 5 to 10 percent more, possibly higher for term life because you’re always renewing it. To qualify, you must have documentation from your physician that you’ve become disabled and can’t work. For most life insurance holders, a waiver of premium rider is probably not such a good deal. You’re better off increasing a disability insurance policy because it would pay for your expenses — including a life insurance premium — if you became disabled. But if you don’t have disability insurance, this rider may be an inexpensive means to add that coverage without having to buy a whole new disability policy.
Some waivers take over the payments if you can’t work in your chosen profession (or a profession in which you have experience or for which you’re trained), while other waiver of premium riders pay only if you can’t work in any job. Still others may combine these requirements so that for a period of time (two years, for example), the company waives the premium if you can’t work in your normal line of work, but after that waives the premium only if you can’t work in any job. The insurance company will most likely conduct its own medical exam to verify that you are disabled and unable to work.
For universal life insurance policyholders, the waiver of premium rider works a bit differently. Because a changing portion of your premium goes toward the insurance coverage and the rest for administrative fees and cash value, the waiver of premium rider only covers the cost of the insurance and the administrative fees. No additions are made to your cash value portion except from any interest that is earned.
Buying this rider usually costs you 5 to 10 percent more, possibly higher for term life because you’re always renewing it. To qualify, you must have documentation from your physician that you’ve become disabled and can’t work. For most life insurance holders, a waiver of premium rider is probably not such a good deal. You’re better off increasing a disability insurance policy because it would pay for your expenses — including a life insurance premium — if you became disabled. But if you don’t have disability insurance, this rider may be an inexpensive means to add that coverage without having to buy a whole new disability policy.
Controlling Costs in a Recession
I recently received a request from a reporter from a national magazine asking about actions a business can take to survive a recession.
My response:
Companies that bid their insurance can save 20 to 40 percent on their coverage.
The current property and casualty insurance marketplace is as competitive as any in recent memory. Insurers want to keep good customers and gain new business.
An orderly, well-planned bid process can result in both coverage enhancements and lower rates.
Even if a company does not want to go to bid, there are actions that can be taken to control premiums:
-Review coverage for value. Make sure you have the coverage you need but reconsider the frills.
-Review premium basis to reflect the current economy. Payroll and sales numbers are used to determine premium. Perhaps the policy estimates overstate expectations. Why let the insurance company use your money?
Regular bidding is the single most effective tactic to control premiums and optimize coverage. See my booklet on the subject.
My response:
Companies that bid their insurance can save 20 to 40 percent on their coverage.
The current property and casualty insurance marketplace is as competitive as any in recent memory. Insurers want to keep good customers and gain new business.
Even if a company does not want to go to bid, there are actions that can be taken to control premiums:
-Review coverage for value. Make sure you have the coverage you need but reconsider the frills.
-Review premium basis to reflect the current economy. Payroll and sales numbers are used to determine premium. Perhaps the policy estimates overstate expectations. Why let the insurance company use your money?
Regular bidding is the single most effective tactic to control premiums and optimize coverage. See my booklet on the subject.
Claims Made vs Occurrence Liability Insurance Policies
Most casualty insurance policies (general liability, automobile, workers' compensation) pay for events that occur during the policy period. For example, an auto insurance policy will pay for an accident that occurs while the policy is in force.
Directors and officers liability insurance policies, professional liability and employment practices liability policies, however, pay for lawsuits filed during the policy period; the wrongful act could have occurred years before. Claims-made policies respond only when a suit is filed, or when a strong threat of a suit exist.
Occurrence policy: pays based on the date of the accident or occurrence.
Claims-made policy: pays based on the date of the lawsuit.
The downside of a claims-made policy comes if the policy is cancelled.
Example: A directors and officers liability insurance policy is put in force January 1, 2004, and is renewed in 2005 and 2006. In 2007, however, the insured decides to end the coverage, as the premium has increased. Six months later, a letter from an attorney arrives announcing a lawsuit for discrimination in hiring that occurred in 2006. No coverage. Although the policy was in force at the time of the alleged discrimination, the policy was not in force when the suit was filed.
The solution to the above problem is the extended reporting period feature found in claims-made policies. For an additional premium (paid at the time the policy is cancelled) coverage is extended for incidents that occurred during the policy period but for which no claim was filed until after cancellation.
Directors and officers liability insurance policies, professional liability and employment practices liability policies, however, pay for lawsuits filed during the policy period; the wrongful act could have occurred years before. Claims-made policies respond only when a suit is filed, or when a strong threat of a suit exist.
Occurrence policy: pays based on the date of the accident or occurrence.
Claims-made policy: pays based on the date of the lawsuit.
The downside of a claims-made policy comes if the policy is cancelled.
Example: A directors and officers liability insurance policy is put in force January 1, 2004, and is renewed in 2005 and 2006. In 2007, however, the insured decides to end the coverage, as the premium has increased. Six months later, a letter from an attorney arrives announcing a lawsuit for discrimination in hiring that occurred in 2006. No coverage. Although the policy was in force at the time of the alleged discrimination, the policy was not in force when the suit was filed.
The solution to the above problem is the extended reporting period feature found in claims-made policies. For an additional premium (paid at the time the policy is cancelled) coverage is extended for incidents that occurred during the policy period but for which no claim was filed until after cancellation.
Counterfeit Money Risk Management
While I was at a local convenience store recently, a clerk had a confrontation with a customer over a questionable $100 bill. The clerk was using a counterfeit detecting pen. While the bill appeared to be legitimate, the pen indicated it was a counterfeit. The customer made a scene and stormed out of the store. Who knows if the bill was legitimate or not.
It got me thinking about the proper steps to take if you suspect that a bill is counterfeit. The following is from the US Treasury Department's "Know Your Money" website (http://www.ustreas.gov/usss/know_your_money.shtml ):
If You Receive a Counterfeit Bill:
The clerk in my example returned the hundred dollar bill to the customer. Given the temperament of the customer, there was a better than good chance that the confrontation would have turned physical if the clerk had not return the bill. I doubt that the clerk had the proper level of training to really tell if the bill was real or not.
All things considered, I would have returned the bill too. I probably would have added a comment like, "I'm sorry I can't accept this bill. Perhaps this pen is defective. Sorry, I'll lose my job if I accept it."
It got me thinking about the proper steps to take if you suspect that a bill is counterfeit. The following is from the US Treasury Department's "Know Your Money" website (http://www.ustreas.gov/usss
If You Receive a Counterfeit Bill:
- Do not return it to the passer.
- Delay the passer if possible.
- Observe the passer's description, as well as that of any companions, and the license plate numbers of any vehicles used.
- Contact your local police department or United States Secret Service field office. These numbers can be found on the inside front page of your local telephone directory.
- Write your initials and the date in the white border areas of the suspect note.
- Limit the handling of the note. Carefully place it in a protective covering, such as an envelope.
- Surrender the note or coin only to a properly identified police officer or a U.S. Secret Service special agent.
The clerk in my example returned the hundred dollar bill to the customer. Given the temperament of the customer, there was a better than good chance that the confrontation would have turned physical if the clerk had not return the bill. I doubt that the clerk had the proper level of training to really tell if the bill was real or not.
All things considered, I would have returned the bill too. I probably would have added a comment like, "I'm sorry I can't accept this bill. Perhaps this pen is defective. Sorry, I'll lose my job if I accept it."