Even Without A Car You Can Have An Accident

Reviewing a new clients insurance.  The corporation owns no cars.  They also have no coverage for an auto accident.



"So what?" says my client.



Your employee is driving to an appointment in her own car.  She causes an accident.



She is going to get sued and so are you - as employers are responsible for the actions of their employees.



Buy non-owned auto liability insurance.

Tiny Insurance Buyers and Insurance Agents

Your insurance agent is an important part of your insurance program.  Without a strong agent, your insurance will be weak.





Your agent should be working with you at each renewal.  Even if you are a tiny client to the agent your coverage should be reviewed at least once a year.





There are a great many insurance buyers out there who spend less than $1,000 a year on property and liability insurance.  Frankly, that's about $125 in revenue to the agent.  Not much.





Here are some pointers if you're not the biggest fish in your agent's pond:





-Have all your insurance with the same agent.  Home, business, auto...  That makes you a more important client to the agency.





-Don't expect 3 visits a year.  A phone call or two can go a long way to making sure that you get the coverage you need.  Do not demand face to face visits - unless you go to the agent's office.





-Refer business to your agent.  If you are getting good service, recognize that by sending business the agent's way.





-Send a note to the boss.  Find out who the agent's boss is and send a note of praise.  This does not happen often and will make you more visible to the agent and agency.





Dump deadwood agents.  Insist on good service.  You may have to change agents.  Do so sooner rather than later.  





There are agents out there who want to deal with very small businesses.  Even the largest insurance agency has inside people dedicated to smaller clients.  





Talk to friends and associates to find out who they do business with.  Check with the local chamber of commerce.  Go to your trade group looking for agents who specialize in your industry.





There are too many good agents out there for any business person to put up with bad service.

Consider critical illness insurance

Dear Mike: I just got life insurance and my agent offered me critical illness insurance as well. I thought it was just an add-on, so I declined. But I’ve been thinking about it since. Is it worth looking into?

A major illness can be a huge emotional burden for you and your family.
Don’t let it become a financial burden, too.
You can protect yourself against the potentially high cost of a serious illness with insurance.
Without this insurance, the odds are against you. Statistics show that at some point in their lives, most Canadians will face a life-threatening illness.
If you are the major income earner in your family, that’s bad financial news.
In fact, a major illness can place a greater burden on your family’s finances than your death.
Critical illness insurance provides a one-time tax-free lump-sum payment if you are diagnosed with an illness covered by the policy.
There are no restrictions on what you can do with the money, so it can be used to cover health-care costs, personal care services, lost income while you are unable to work or for any other purpose.
Of course, you may have other types of insurance to help with the cost of an illness.
Many Canadians have disability insurance policies, for example.
But while disability and critical illness insurance complement each other, your disability policy won’t pay benefits if you are still able to work.
Even if your illness prevents you from working, you might have to wait a number of weeks for your benefits to kick in.
And they may be limited.
Critical illness insurance offers coverage whether you are able to work during or after your serious illness.
Policies vary, but coverage typically includes cancer, heart attack, stroke, multiple sclerosis, kidney failure, blindness, Parkinson’s disease, Alzheimer’s disease and other serious life-altering illnesses.
These plans are offered by life insurance companies, and are generally available to those up to age 65 and in good health. You may be able to renew your policy until age 75 or for your lifetime.
Coverage generally ranges up to $1 million, although it may be possible to buy a larger policy.
The full benefit is available even if you recover from the illness.
But you must usually live for at least 30 days after an illness is diagnosed before the benefits are received.
When buying critical illness insurance, shop carefully. Coverage, exclusions, benefits and prices can vary.
Be sure that you aren’t excluded from coverage because of age or health - particularly by a previous illness.
And don’t look at critical illness insurance on its own. It should be part of an overall insurance plan that includes disability, long-term care and life insurance.
By ensuring you’re well covered, all your family’s financial needs will be met in the event of unexpected circumstances.
Your financial adviser can help determine the level of coverage that you need, and recommend a plan to meet your requirements.

Mike Watkins, CFP, FMA, FCSI, Ch.P., is a financial adviser with Edward Jones and author of the financial planning guide It’s Only Money. To ask a question, e-mail michael.watkins@edwardjones.com

How much life insurance?

It's hard to decide how much life insurance you need. You can't trust your broker as he'll always try to sell you the biggest policy he thinks you'll buy since he's making commission on it.

Here's how you can get an idea of how much is enough...

A simple calculation

The calculation you use to work out how much life insurance is quite simple. The rule of thumb is 10 times your annual earnings plus your debt.

So say for example you earn R200 000 per year and you have debt totaling R500 000, you would need R2.5-million in cover.

Where the problem comes in

The problem, or rather complication, usually comes in when the broker tries to sell you a policy that has an investment component to it.

For example, he or she will suggest that you include X amount as a savings portion to your policy. So after 20 years (or when the term of your policy ends) you will get the money back.

Beware of this pitfall

However, beware of this: you should rather keep your investments separate from a life policy as the returns are usually below average.

In addition, let's say you accumulate R100 000 savings in the policy, and you die, your heirs will only get back the life component while the insurance company will usually keep the investment proceeds.

Saving on your life insurance

A new report has revealed a range of ways of keeping down the cost of life insurance . As consumers look for financial savings during these tough economic times, it makes sense to get the best deal possible.

One key piece of advice is to use the Internet, as the online option is often cheaper than the old-fashioned route. You have the benefit of comparison websites for comparing different policies. It is also worth exploring term insurance, as it is the cheapest form of insurance, with the monthly payments depending on the size and length of your mortgage, as well as your age and vices. If you go with an independent financial adviser instead, then cover is usually more expensive.

Another recommended way of keeping costs down is to shop around and switch your insurer as often as required, as paying the same premiums every year doesn’t make financial sense in a competitive market. Insurance providers want your business.

Also be wary of taking out life insurance at the same time as getting a mortgage. Although life insurance is vital, especially if you have a family, it should be researched separately and the policy should be suitable to you and your family’s particular circumstances.

Another way to keep down your premiums is to stop smoking, if you haven’t already, as the charges for term insurance for those who have given up smoking for a year falls significantly. And, if you have given up since taking out your term insurance, it is definitely worth looking for a better deal.

Creditors' rights endorsements removed from title insurance

Here's an article in REBA News by Joel Stein about changes to title insurance. (REBA News is the trade journal for the Real Estate Bar Association for Massachusetts.)

According to the article the American Land Title Association, or ALTA, has withdrawn Endorsements 21 and 21/06 as official forms, effective March 8, 2010. Those endorsements provided "creditors' rights coverage," providing coverage to mortgage lenders who lose their interest in a property due to the bankruptcy of someone in the chain of title.

Massachusetts Appellate Division holds that insured may not recover against tortfeasor after receiving uninsured motorist coverage award

In Johnson v. Lapan, 2010 WL 1170254 (Mass. App. Div.), claimant Sylanda Johnson was injured when she was a passenger in a car that collided with a vehicle operated by Marc Lapan.

Johnson pursued two routes of recovery: she submitted a claim for uninsured motorist coverage to ELCO, the insurer of the vehicle in which she was a passenger, and she filed suit against the Lapans.

The uninsured motorist claim went to arbitration and Johnson was awarded $16,791.24 for pain and suffering and medical expenses.

The Massachusetts Appellate Division held that the doctrine of issue preclusion required that Johnson's claim against the Lapans be dismissed. The arbitrator had awarded to Johnson damages for her injuries, and that award fixed the damages in the suit against the Lapans arising from the same injuries. Johnson could recover such damages pursuant to an uninsured motorist policy (which she did) or from the tortfeasor, but not from both. Otherwise she would receive a double recovery.

Intro to Cyber/Internet Exposures & Insurance

As our dependance on both the computer and the internet grows, computer insurance coverage becomes more and more important.



Let's start with the exposures of the computer.



First, there is damage or loss of your "stuff." For example, your computer equipment is destroyed in a fire, or a voltage surge blows out your network, destroying your data. It might be a hacker or virus that corrupts your data to a point you can't use it.



Related to the property loss is the lost income that results from your computer being down. Often called first party losses, these impact you and your operations.



Liability exposures come from your negligence. For example, your network is down and customers cannot use the services they need. Your computer system could spread a virus that damages a customer's network. Perhaps hackers get access to your data and copy customer information.



Liability comes out of your actions (or lack of actions) that injures or damages another. These losses are known as third party losses.



Often, a first party loss can lead to a third party loss. Your data is destroyed by a hacker. The loss of the data prevents a customer from using your service, resulting in higher costs to your customer and a breach of your contract. Your customer sues you.



The following are examples of the two categories of exposures.



First Party Losses:



--Your computer is destroyed by fire.



--A mechanical failure causes your system to crash.



--Your computer is stolen.



--Your data is accidentally erased.



--Your data is not accessible to you because of a virus.



--As your computer is inaccessible, you lose revenue.



--You are the victim of an extortion where a caller demands $100,000 or he will divulge customer data.



--A data breach forces you to undertake a public relations campaign to minimize damage.







Third Party Losses:



--Your customers' data is published on a website.



--A breach of your system allows thieves to use customer credit cards.



--Your system infects a customer's system with a virus.



--Your employee accidentally erases a customer's data.



--An employee posts defamatory statements about a competitor on Twitter.



--A web design company accuses you of violating their copyright.





Talk with your insurance agent about these exposures and how your insurance responds. The standard insurance coverage (property insurance and general liability insurance) provide some coverage.



Some companies should consider cyber liability insurance. Talk with your insurance advisor.

Just How Bad is the Economy? Looking for Some Humor in Gloomy Days:

In this day and age, the economy is on everyone’s minds.

Some experts are saying that the economy is improving because house sales are increasing and the stock market is turning around.

Other pundits are saying that with gold prices up, and continued job losses, that the economy is flagging.

On a purely tongue-in-cheek basis, I have created a humorous checklist that we regular people can look at to see how the economy is actually doing.

12. If you order a burger at McDonalds and the kid behind the counter asks, "Can you afford fries with that?"

11. If your boss asks you for a personal loan.

10. If the CEO of your company cancels his exclusive country club membership and has recently been seen playing putt-putt golf.

9. If the credit card offer you receive in the mail was already pre-declined.

8. If your stock in Hot Wheels and Matchbox car companies is trading higher than GM and Chrysler.

7. If, instead of the Quarter Pounder, McDonald's starts selling the Quarter Ouncer.

6. If rich people fire their nannies, and actually start to learn their children's names.

5. If the most highly-paid job available you know of is jury duty.

4. If people in Africa start donating money to Americans. (Mothers in Ethiopia start telling their kids, "Finish your plate; do you know how many kids are starving in America?")

3. If Motel Six just won't leave the lights on for you.

2. If airlines begin charging by the pound.

1. If your bank returns your check marked as "insufficient funds," and they call and say it was their funds that were insufficient, not yours!

There is just nothing wrong with this country that a Great Depression or a World War couldn’t fix.

Court Appeal Rules Summary Judgment is not available in Small Claims Court

Van de Vrande vs. Butkowsky, [2010] O.J. No. 1239 (C.A.)

The Court of Appeal has held that summary judgment is not available in Small Claims Court, clarifying an area where there were two separate lines of case law.

In this case, the defendant was retained to perform an assessment in the context of a custody dispute between the plaintiff and his spouse. The plaintiff alleged that instead of simply conducting and submitting an assessment, the defendant took on an additional role of mediator in the dispute. The defendant brought a motion seeking summary judgment and the court granted the motion pursuant to Rules 1.03 (2) and 12.02 of the Small Claims Court Rules, on the basis that in his capacity as a court appointed assessor, the defendant was immune from suit pursuant to the doctrine of expert witness immunity. The deputy judge also found that the action had been commenced outside of the applicable limitation period.

The Court of Appeal held that the absence of a summary judgment procedure in the Small Claims Court Rule is not a gap but rather a deliberate omission. It is not up to the court to read in such provision, since Rule 12.02 specifically addresses the ability to bring a motion similar to that contemplated by Rules 20, 21 & 76 of Rules of Civil Procedure. The court held that Rule 12 is similar to a Rule 21 motion, although it is worded more broadly and does not have the same prohibition on filing affidavit evidence. It involves an analysis of whether a reasonable cause of action has been disclosed or whether the proceeding should be ended at an early stage because its continuation would be inflammatory, a waste of time or a nuisance.

Although the court has now clarified that summary judgment is not available in Small Claims Court, Rule 12 remains a valuable tool that can assist in disposing of cases that are without merit without the need to progress to a full blown trial.

Seeking attorneys who represent insureds in coverage litigation

I receive a number of calls from insureds seeking representation in coverage disputes. I am frequently conflicted out by my direct or indirect representation of the insurer on other matters. (By indirect I mean that I work on a subcontract basis for attorneys who represent the insurer.)

I would like to have a database of attorneys I can refer these people to. If you specialize in representing insureds in coverage disputes and would be interested in receiving referrals, send me an email with your contact information, experience generally and with respect to insurance coverage disputes, and what, if any, types of policies or disputes you specialize in.

I am not seeking and would not accept a referral fee for these cases. I also don't screen them. Once I find out I have a conflict I want to give them a name and move on.

Loss Data Bases

When you report a claim to your insurance company, the data on the claim is almost always put into a database of losses.



Insurance Services Office (ISO) is an organization that shares claims, premium, and coverage information with participating insurance companies.



Here's info on the claim database.



Most commercial insurance policies are issued using ISO forms.  Look at the bottom of your insurance policy forms.  You'll probably find a copyright notice that shows Insurance Services Office.



This clearing house is a good thing for insurance companies, the industry, agents, and insurance buyers.  Frankly, ISO and operations like it are the reason insurance operations are exempt by law from anti-trust laws.



Without the ability for insurance companies to share information, there would be even less standardization than there is now.  Each insurance company would have to have its own policy forms written.  Any similarities in coverage would be subject to an allegation of collusion.  Insurance company expenses would be dramatically increased as each company would have to hire 30 times the number of actuaries to compute loss costs and perhaps hundreds of attorneys to defend policy interpretation lawsuits.



Only large insurers would survive a regulatory climate that did not allow the sharing of insurance information between insurance companies.  Premium costs would rise because of lack of competition and increased operating costs for insurers.



The McCarran-Ferguson Act of 1945 established the antitrust exemption for insurers.  The exemption is vital to the insurance industry and to commerce. (Of course many other industries could benefit from similar exemptions.  That's a topic for another day.)

Massachusetts Appeals Court holds that claimant can recover for breach of 93A and 176D even when there is no coverage under the policy

In my last post I discussed Vt. Mut. Ins. Co. v. Eldridge, 76 Mass. App. Ct. 1122, 2010 WL 1253170 (unpublished opinion), in which the Massachusetts Appeals Court held that coverage under a homeowners policy was voided by the insureds' failure to disclose the ownership of two bull mastiffs on their insurance application even though the application asked if they kept any animals on the premises.

Even though the court found that coverage was voided under the policy, it affirmed the denial of summary judgment to the insurer on a claim that the insurer breached Mass. Gen. Laws chs. 93A and 176D.

The claimant, Gagnon, alleged that the insurer violated those statutes by "failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies," in violation of Mass. Gen. Laws ch. 176D § 3(9)(b). The court held:

[A] court will not find unfair or deceptive acts or practices where there was no inordinate or unreasonable delay, or if there was no resulting prejudice or harm caused by the delay. . . .

On this record, we also cannot say that Gagnon has no reasonable expectation of proving an essential element of her claim at trial.

Thus, we conclude that the trial judge correctly denied summary judgment, leaving the determination of unreasonable delay and resulting prejudice to the fact finder.

When I first read this opinion, I assumed that Gagnon had brought the motion for summary judgment on the 93A/176D count, in which case it would have made common sense to affirm the denial of the motion, since the court had found that the policy did not provide coverage for her claim. Upon rereading the decision, however, it appears that it was the insurer who brought the motion for summary judgment on the 93A/176D claim. If that is so, then the court is saying that an insurer can be liable for breach of 93A and 176D even when there is no coverage under the policy. That is contrary to many opinions which simply dismiss 93A/176D claims after finding no coverage.

Update Your Replacement Costs

Marshall & Swift/Boeckh follows construction costs.  They provide detailed figures on how much it costs to build buildings.  They have been doing this a long time.



If you built a building in 2005, the service says, on average, that the cost of construction has increase by 15% to 22%, depending on construction type and where the building is located.



Have you increased your coverage amounts in the past 5 years.?  I know some insurance buyers who have had the same building coverage amounts for the past 10 years.



Boy, won't they be surprised at how underinsured they are if they have a fire?

Amendments to MMS

Final comment from Jennifer Stirton on the new Ontario Municipal Maintenance Standards:

7. Inspection for Sidewalk Discontinuity

The MMS now require annual inspections of sidewalks to check for surface discontinuities. There was no previous annual inspection requirement. In addition, municipalities are now required to treat sidewalk surface discontinuities that exceed two centimetres within 14 days after becoming aware of the fact. The constructive knowledge provision discussed above will also apply. Treating a surface discontinuity on a sidewalk involves taking reasonable measures to protect users of the sidewalk from it, including permanent or temporary repairs, alerting users’ attention to it or preventing access to the area of discontinuity.

Tiger’s Transgressions

Famous golfer Tiger Woods has confessed many sins of late, after the tabloids were hot on his trail.

His selfish behavior put his wife and children at risk, threatened his employees’ livelihoods, eroded the trust of his wife and left a legacy of disillusionment for his children. In his own words, he said he felt “entitled” to the pleasure of such misdeeds. How could he say such a thing?

There is a simple answer. It’s called “Narcissism.”

Someone with Narcissistic Personality disorder (NPD) has at least 5 of these symptoms:

.has a grandiose sense of self-importance (e.g., exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements)

.is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love

.believes that he or she is "special" and unique and can only be understood by, or should associate with, other special or high-status people (or institutions)

.requires excessive admiration

.has a sense of entitlement, i.e., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations

.takes advantage of others to achieve his or her own ends

.lacks empathy: is unwilling to recognize or identify with the feelings and needs of others

.is often envious of others or believes that others are envious of him or her

.shows arrogant, haughty behaviors or attitudes

If you are living with a person with NPD, you will likely find them blaming you for behaviors or feelings (i.e., "YOU made me do this," or "YOU made me feel this way.")

They will seldom if ever take responsibility for angry behavior and hurtful acts. They will have an attitude that demonstrates "the world revolves around me" and "you need to cater to my ideas, opinions, thoughts, and feelings."

But you may think that you can just talk to them. But, those with NPD have an extreme unwillingness to reflect on his/her own behaviors. In other words, when you talk to a normal person who has offended you, they might realize they are wrong. Narcissists will be far too busy determining how you are wrong to consider their part. If there is an apology, it will be an explanation and there is likely a false motive behind it. 


Finally, they lie. A lot. About everything and nothing. Lying is as easy to them as the truth. It is all about what they think others think of them. For instance, if a Narcissist thinks of herself as one who does the appropriate thing, and that includes sending you a card, she may lie and claim she mailed one to you. If you explain you never received it, then she will say that is the mail’s fault, or yours. Why? Because the reality that she has failed to live up to the “false self” is more than she can handle.

Those with NPD usually cannot turn lose of their adult kids and cause a lot of problems in marriages. Almost all folks with NPD die abandoned by those who cannot fit into their fantasy world.

In Case of My Death

About 5 years ago I started a document on my computer that outlines what I think people need to know if I die.



Every six months I pull up the file and make revisions.  It is not a will. (I have one of those too.)  It discusses bank accounts, computer codes, life insurance policies.  The object is to help those left with the details of sorting things out.



I list things like where I'd like to be buried, that I want to be cremated.  I have left no question that I want my organs harvested like a peanut field - take 'em all. (Yes, I have a donor card and a signed paper in my will, and I've talked about it with my wife.)  The most recent letter even outlines that I'm thinking about donating what's left of my body to a local medical school - I'm thinking about it.  I have not decided yet.



There are details in the letter about my funeral and what I want.



I also say that everything is subject to what my wife wants done at the time.



To me this is part of risk management.  I've watched families argue of what the dead guy wanted.  I'm leaving no doubt.



The most recent version of the letter was just printed.  I fold it up and put it in our home safe.  I'll remind Kathy that it's there and again ask her to do a similar letter.  One last time she will get to tell me what to do.

Appeals court holds that nondisclosure of ownership of dogs on homeowners application voided coverage

In Vt. Mut. Ins. Co. v. Eldridge, 76 Mass. App. Ct. 1122, 2010 WL 1253170 (unpublished opinion), the Massachusetts Appeals Court held that nondisclosure of ownership of dogs on an application for homeowners insurance was a material misrepresentation that voided coverage under the policy.

In their application for homeowners insurance the Eldridges, defendants in the declaratory judgment action, had answered "no" to the question "are there any animals or exotic pets kept on the premises?" In fact, they were keeping two bull mastiffs on the premises.

The court held that the question on the application was not ambiguous. It overturned the holding of the trial court that the Eldridges could have reasonably concluded that it only asked for the disclosure of pets if they were exotic pets. The Appeals Court held that the failure of the Eldridges to disclose their ownership of the dogs constituted a misrepresentation.

The court then held that the misrepresentation was material and defeated coverage.

Misstatements shall be deemed material and "defeat or avoid the policy" only where such statements were "made with actual intent to deceive, or . . . increased the risk of loss" to the insurer. G.L. c. 175, § 186. "A material fact, measured by an objective standard, is one which would naturally influence the judgment of an underwriter in making the contract at all, or in estimating the degree and character of the risk."

The insurer received notice that the Eldridges owned the dogs before it received notice of the claim that the dogs had caused an injury. Upon receipt of the notice of ownership of the dogs the insurer informed the Eldridges that coverage would not have been forthcoming had the application disclosed the dogs. The insurer proceeded to terminate coverage. The court held that was proof that the nondisclosure was material.

Amendments to MMS

More from Jennifer Stirton on the new Municipal Maintenance Standards:

6. Expanded Sign Inspections

The MMS previously required road sign repairs where signs were illegible, improperly oriented or missing. There is now an additional requirement to repair road signs that are obscured. There is also a new requirement to conduct annual inspections of road signs to ensure that they meet the retro-reflectivity requirements of the Ontario Traffic Manual.

Lightning Damage and Your Insurance

Data accumulated by the Insurance Information Institute reveals that there were 185,789 home insurance lightning claims in 2009.



These claims include damage to homes, contents, and electronics.



The total cost of the claims was $798 million.  In 2008 lighting damage topped $1 billion.



Surge protectors (at individual outlets or on your power panel) and lightning rods can prevent a great deal of the damage caused by lightning.



Of course, lightning and the fires that can come after are covered by property insurance - both personal and commercial insurance.



A power surge from a lightning strike away from your premises is another matter - it's often excluded except when your policy incudes "mechanical breakdown" and/or machinery coverage.



Talk with your insurance advisor.







Photo By PenginOpus

Home Based Business Insurance

Rule of thumb: your home insurance will not cover your business.



Sure, there is a bit of property coverage ($2500). There is no liability coverage for your business. None, none, none!



If you run a business out of your home (like I do), tell your insurance agent. Consider business insurance coverage to protect your business stuff and for liability insurance.



Another tip: Insure your home based business with your home insurance company. It makes claims easier when you are only dealing with one insurance company.

United States District Court holds that an all risk marine policy covers loss with unknown cause

In Markel Am. Ins. Co. v. Pajam Fishing Corp., __ F.2d __, 2010 WL 742485 (D. Mass.), Markel provided an all risk marine insurance policy to Pajam. The policy included coverage for "accidental, direct, physical loss" to a fishing vessel called the Miss Sonya.

The Miss Sonya sank on March 24, 2008 and could not be examined. The men on the ship observed water splashing about in a compartment on the stern of the ship and followed the instructions of the coast guard to abandon the ship. The ship had been in good condition. They men felt no impact on the ship but there could have been an impact that was disguised by choppy conditions.

The policy did not define the term "accidental physical loss." The court held that the word "accident" is synonymous with "fortuitous," and that a loss is fortuitous unless it results from an inherent defect, ordinary wear and tear, or intentional misconduct of the insured. It held that the loss of the Miss Sonya was an accidental physical loss for which there was coverage.

The court rejected the insurer's argument that the insured must prove the cause of the sinking. The court held, "To establish a fortuitous loss it is generally sufficient for the insured to show only that the loss occurred." This was probably an overstatement by the court, since it went on to hold that the insured had established "that the vessel was well maintained, and that there was no intentional misconduct which caused the vessel to sink. This is sufficient 'to prove a fortuitous loss of the covered property' and the insured 'need not prove the cause of the loss.'"

Business Interruption Week - Part 5 - BOP Trouble

Many small businesses buy insurance in the form of a package policy known as the business owners policy (BOP). It is a great tool for insurance companies to provide common coverage to a multitude of businesses (mostly retail and office exposures). Included are the usually needed property and liability coverages.



Within most BOPs is business interruption insurance without limit. Ya-hoo! Nobody has to figure out how much insurance to buy! Nobody has to fill out an onerous worksheet (see yesterday's posting on the BII worksheet). No thought is needed! The coverage is already in there and saints be praised!



Not so fast, Skippy!



Two big problems. (Yes, there are more than two problems. Let's keep it simple here.)



First, the BOP only provides coverage for loss of income and extra expense for 12 months. Two days ago I talked about running out of time. What if it takes 15 months for your building to be rebuilt? What if the damage done to your building was also done to many many other buildings, like in a hurricane? You may have to wait in line for contractors or your local zoning board may go on vacation and not get your building application approved for 4 months.



Second big problem is on the other side. Your business is up and running but the customers don't come to see you for a while. A damaged gift shop in Maine that reopens in February is going to be almost without customers until those nice New Yorkers and New Jersey people come up here in July. Your insurance company will pay loss of business income for March (most policies include 30 days of coverage to get up and running after your building is repaired.) You are going to have a tough April, May, and June, though.



Your agent should be working with you on getting the right insurance. Sure, BOPs are nice and easy. There are issues that need adjusting though.

WHAT MATTERS MOST

What Matters Most

A couple of my favorite sayings discuss priorities.

“Don’t Major in the Minors.”

“The Main Thing is to keep the Main Thing, the Main Thing.”

Priorities are always present, where do you set them or allow them to set themselves. Unfortunately, many of our priorities are just set by default. In other words, we wind up doing what is urgent, but not necessarily what is important.

Business consultants and other motivational professionals have made a living for years helping executives prioritize and be more productive with their time. In order to do that, they first establish with the executive what his or her priorities are.

Most executives talk about time with family, business productivity and some type of personal fulfillment.

However when pressed, most of the same executives are unable to identify any amount of time spent in the last week directed towards bettering their family or achieving personal fulfillment. In fact, because of the fast-paced nature of business, the “urgent but unimportant” matters have taken up their entire week. At best, their time has been spent trying to achieve productivity of the company. Recall however, that productivity of the company was only one of three major priorities in his or her life.

The real issue is not easily defined. In our “instant gratification” “what have you done for me lately?” culture we are sending e-mails, instant messaging, texting, but spend precious little time planning for the future. As a matter of fact, when is the last time you sat calmly and thoughtfully planned? If you're like most of us, we find that, with the commercial says is true: "life comes at you fast."

We hear a lot about goal setting and prioritizing our life. But so few of us do it, I don't know if we see the benefits. Possibly, if we saw the upside to doing it, we'd be more likely to pursue the time-consuming practice of planning. As a shortcut to get started, list several things that you want to do better in the next 30 days. Then take those 30 days, divide them into four weeks and decide which goals you will work on this week. Now, pick one for today before five o'clock. That will put a particularly sharp importance on it.

Here are some sample goals to get you started in making the next 30 days the best they can be. Number one, resolve to actively show love and appreciation to those closest to you. Whether that be sending flowers to your wife, cooking your husband's favorite dinner, or an unexpected matinee for the kids.

Number two, spend time getting to know your Maker. Regardless of what you may believe, you were specially made by the Lord above, and He has a plan for your life. If you don't know Him personally, then don't be surprised if He seems distant and harsh. If you had an earthly father you have never seen, and you only heard fairly negative things about him, I suspect that your earthly father would seem distant harsh, as well. If you're not sure where to start, open the book of John and begin to read. Ask God to make himself real to you, as He always answers that prayer in the heart of a truth seeker.

Thirdly, meet a personal goal of learning. What is it that you would like to learn, or do, or become in the future? The way to achieve a goal like that is to set the goal out and then figure out what steps it will take to get you there. If you want to get a degree, but you have to take some prerequisite courses, sign up for the course today! If you want to have your own business, make appointments with successful business owners ask them what they wish they knew starting out. If you want to get out of debt, cut up the stupid credit cards today!

The important thing is to do something. Many are those who will give you excuses why you cannot succeed. But if you listen closely to their “reasons," you will find that they are really merely excuses. There is no reason why a 65 year old should have been successful starting Kentucky Fried Chicken, but he was. There were plenty of excuses to stop him. There is no reason George Washington Carver should have succeeded as a scientist as a black man in the South during the time that he lived. He had many excuses why not to try, but he tried anyway. There is no reason you cannot do whatever it is God has put into your heart. He never calls you into an area that He doesn't also equip you go.

But, just like eating, while He “feeds the birds of the air,” He doesn't throw it up in the nest every morning. They have got to go out and scratch for it. I can almost hear God wish us all, “Happy scratching!”

See more of Mr. Peel’s articles on insurance-coveragelaw.blogspot.com. Mr. Peel may be available to speak to your church or club. Contact PeelLawFirm.com.

Business Interruption Week - Part 4 - How Much To Buy

In part three of Business Interruption Week (yesterday) I mentioned several times the idea of the business income worksheet - an almost mythic beast (according to many insurance people).



Actually, it's not that bad.



First, the worksheet is to help you, the insurance buyer, determine what amount of insurance is the correct amount. It will help you buy enough, but not too much, insurance. It will help you convince the insurance company to remove the coinsurance penalty (removal of that beast is a very good thing for you.)



The form looks worse than it is (sample copy here). In most cases, you are only going to fill out two of the four columns.



Chris Boggs of the Insurance Journal and MyNewMarkets.com has written an excellent book on the subject of loss of business income. (A test of a good agent would be to ask if he owns Chris' book! Agents, order your copy here.) On his company's website, he shares his instructions on completing the worksheet - Here. Part two is Here.



Follow Chris' instructions and you will have a much better feel for the business income coverage you need.



I just finished helping my oldest daughter with her income tax forms. The IRS 1040 makes this the loss of business income form look like a coloring book.

Amendments to MMS

More comments on the new Minimum Maintenance Standards, by Jennifer Stirton.

4. Slush Included in Snow Accumulation

The MMS have also been criticized for failing to address slushy road conditions.[1] The MMS now provide that snow accumulation on a road includes new fallen snow, wind-blown snow and slush. Snow clearing standards are triggered when snow accumulation reaches a prescribed depth.

[1] See Thornhill (Litigation Guardian of) v. Shadid, [2008] O.J. No. 372 at paras. 94-97 (S.C.J.). Note that although it was argued by counsel, the trial judge did not agree that the failure to address slush in the MMS was a gap in the regulation.

5. Annual Inspection of Luminaires

The MMS now provide for annual inspections of all luminaires to ensure that they are functioning. There was no previous inspection requirement.

Business Interruption Week - Part 3 - Land Mines

Here are some of the business interruption issues to discuss with your insurance agent:



Coinsurance

Does your loss of business income coverage include a penalty for under insurance? Ask your agent. If the answer is yes, find out how to get rid of it. You may have to fill out a worksheet that helps to determine the amount of coverage you should buy. Many agents (and many insurance buyers) hate these forms. However, filling them out is the best way to tell if you have the right amount of insurance. Tell your agent you want the agreed amount endorsement.



Running out of Time

Does your policy limit the time that you can receive lost income payments? Most policies limit coverage to 12 months. Is that long enough? If your building were destroyed by a fire you may have all kinds of contractors ready to help. However, if a windstorm hits, you may have to wait for some of your neighbors. Running out of coverage after a loss is as bad as having no coverage. Don't forget that your local zoning boards and inspectors are ready, willing, and able to slow things down for you too.



Running out of Coverage

This is related to the worksheets I mentioned in the coinsurance item above. Talk with your agent about how you can be assured that you will not run out of coverage after a loss. Trust me. Few businesses really have enough coverage here. Fill out those worksheets!

Massachusetts Appeals Court holds that only fine under Mass. Gen. Laws ch. 175 s. 177 applies where insurance agency employed unlicensed broker

I have been discussing Anawan Ins. Agency, Inc. v. Division of Ins., 76 Mass. App. Ct. 447 (2010), in which an insurance agency was accused of employing an unlicensed broker.

In paying the unlicensed broker, the insurance agency had violated both Mass. Gen. Laws ch. 175 § 177, the statute prohibiting payment to unlicensed brokers, and Mass. Gen. Laws ch. 176D, § 2, which prohibits unfair or deceptive acts or practices in the business of insurance.

Violation of Mass. Gen. Laws ch. 175 § 177 was punishable by a fine (prior to the inapplicable amendment to the statute) of "not less than twenty nor more than two hundred dollars."

Pursuant to § 7 of ch. 176D, violation of ch. 176D is punishable by a fine of "not more than one thousand dollars for each and every act or practice."

The court held that only the fine under § 177 could be assessed, because § 7 of ch. 176D is a statute of general application to all unfair practices in the insurance industry, but § 177 of ch. 175 applies specifically to transactions with unlicensed brokers. As a matter of statutory interpretation, the more specific statute must govern.

Amendments to MMS

More commentary on the recent amendments to the MMS, by Jennifer Stirton.

3. Additional Winter Patrolling Requirements

One of the criticisms of the MMS was that the patrolling requirements were inadequate to respond to winter road conditions.[1] The MMS now provide that during the winter maintenance season, municipalities must conduct the routine patrols that were previously required but must also patrol highways that are representative of its highways, as necessary, for snow and ice conditions. The standard also allows patrolling to be done by patrollers or by winter maintenance operators. As neither “representative” nor “as necessary” are defined terms and, we expect to see claims challenging municipal decisions about representative highways and necessary patrol frequencies.

[1] See Thornhill (Litigation Guardian of) v. Shadid, [2008] O.J. No. 372 at paras. 98-103 (S.C.J.).

Business Interruption Week - Part 2 - Different Types

Loss of business income insurance pays your lost profits and continuing expenses while your business is shut down after a fire or other insured loss.



Extra expense coverage pays your increased costs of operation with the purpose of getting you back into business quickly. EE pays for renting temporary quarters, advertising to get customers back, costs of wiring, and setting up your temporary quarters, costs of expedited shipping, etc.



Loss of rent insurances pays the income you would have received from renters had the fire or loss not occurred.



Business interruption from dependent properties pays you when a business you depend on is shut down. This could be a supplier, a customer, or a business that you depend on as a draw for customers (think about a restaurant outside of town, next to a museum - museum burns - the restaurant now has no customers).



All coverages above are triggered by damage to your property by a peril insured by your policy. If your building is damaged by a flood and flood is excluded by your policy, your lost income will also be excluded.

IRS Service Standards

I urge clients to develop standards for the service they provide.



Forbes Magazine recently reported the IRS's standards for call center assistance. Their goal is to answer 71% of the calls they get within 12 minutes.



An we want these people to run health insurance?

Massachusetts Appeals Court holds that amendment to Mass. Gen. Laws ch. 175 s. 177 does not apply retroactively

I have been discussing Anawan Ins. Agency v. Division of Ins., 76 Mass. App. Ct. 447 (2010), in which an insurance agency was accused of employing an unlicensed broker.

The applicable statute, Mass. Gen. Laws ch. 175, § 177, which prohibits payments to unlicensed brokers, was amended in 2002 by inserting the word "knowingly" in the sentence, "Whoever knowingly violates a provision of this section shall be punished by a fine of not less than $50 nor more than $500."

The court noted that an amendment to a statute applies retroactively where the amendment is a clarification or a fine-tuning of the earlier provision. It held that the word "knowingly" was not a clarification or fine-tuning and would not apply retroactively.

Business Interruption Week - Part 1 - What is it?

For many years I've used the same story to help business owners understand what exactly business income coverage does. It's a silly story but it does the job.



Pretend you own a goose (a building). Your goose lays golden eggs (cash flow). If your goose is run over by a truck, it's going to take you nine months to get a new goose (get back into operation). You have insurance that will pay for the cost of the new goose (property insurance), but what about the value of the eggs you won't get in the nine months you're without a goose?



Business income coverage pays the value of the eggs while you're waiting for your new goose.



(Photo By Steve Fields)

Barbie Jeep Exclusion on the HO policy

Chris Boggs of the Academy of Insurance pointed out an exclusion on most home insurance policies I had never thought of. The policy excludes liability from Barbie Jeeps operated off the residence premises.



Barbie Jeeps are those battery operated "cars" that kids sit in and ride down the sidewalk.



Now, certainly there is no specific exclusion. However, the Jeep does meet the definition of a motor vehicle and the exclusion is pretty clear. If it were a golf cart, there might be coverage.



Next time your kid wants you to buy a toy Jeep, explain to them that your insurance doesn't cover you.



(Tongue now removed from my cheek.)

Six Steps To Avoiding An Harassment Lawsuit

1. Have a strong anti harassment policy

2. Enforce that policy

3. Conduct regular training

4. Insist on professional conduct

5. Investigate all allegations of harassment

6. Lead by example



Check out my book, How to Buy Employment Practices Liability Insurance.

Next Week Is Loss of Business Income Week

Pass the word to your friends and colleagues!



Next week I'll be posting every day on issues around loss of business income. This is one of the most misunderstood parts of property insurance - misunderstood by insurance buyers and agents.



I'll try to remove the some of the mystery.



Stay tuned.

Changing Insurance Agents

Earlier this week I helped a client fire their current agent.



My client had been working with the same agency for 20 years. In the past 6 years they have had three different service teams from the agency.



Other than that, there were no real service complaints.



We interviewed the current agent and three others as we tried to decide what to do for the upcoming renewal.



All 3 prospective agents made good presentations and offered advice and information not shared by the current agent. In the end, the decision was made to change agents because, (in the client's words) sometimes change is healthy.



The new agent is very excited to have a new account and is tripping over himself to get off to the right start. The client is looking forward to new blood.



Everyone has the expectation of a great result.



Of course, the old agent is not too pleased. I don't blame them for wondering what happened. They really did not do anything wrong.



As the client said, sometimes change is good. It doesn't mean that there are not wounds inflicted though.



I have no doubt that the change was the right decision. I write this to remind my agent readers that sometimes, despite your best efforts you still lose the account.



Agents, another lesson here is to figure out how to get honest feedback about how firm your relationship really is with your client.

Amendments to MMS

More commentary on the recent amendments to the MMS, by Jennifer Stirton.

2. Application of MMS Not Restricted to Motor Vehicles

The MMS previously provided that they applied only in respect of motor vehicles using highways. This provision has been repealed, which suggests that the MMS now apply to pedestrians and bicycles using highways. This may be a response to recent case law which held that where roads are kept in a reasonable state of repair for vehicular traffic, which can include MMS compliance, a municipality may not be liable to pedestrians injured while walking on the road surface. Holmes v. Kingston (City), [2009] O.J. No. 1838 (S.C.J.).

NOAH’S ARK: FAIRY TALE OR FANTASTIC VOYAGE?

Evolution vs. Creation PART 5 of 12

A story about eight humans and two of every kind of animal in one giant boat during a global flood? Sounds to most like a fairy tale.

As children, most of us saw renderings of Noah’s Ark as a little banana-shaped boat, with giraffe’s necks looping comically out the windows. Fluffy clouds with a cute rainbow always seemed to complete the picture. Evolutionists especially discount the story.

But the Bible seems to describe it as a real event, not an allegory or a parable. This has caused a lot of controversy, to say the least. Even more troubling for Christians who doubt the veracity of the Scriptures, is that Jesus Himself quoted it as fact:

“As it was in the days of Noah, so it will be at the coming of the Son of Man. For in the days before the flood, people were eating and drinking, marrying and giving in marriage, up to the day Noah entered the ark; and they knew nothing about what would happen until the flood came and took them all away. That is how it will be at the coming of the Son of Man.” —Matthew 24:37-39.

So, why not just believe it as written?

There are many arguments that are espoused against the story.

The boat was too big. In order to hold the animals, it would have to be very large. The size of the boat itself is given in Scripture (Gen. 6:15), and would measure at least 450 feet long and about 75 feet wide and 45 feet high. While this is the proportion of modern cargo ships, it would be an enormous wooden ship, at a length longer than a football field. However, there is no reason it could not have been built.

The animals would not fit. Actually, since the Bible only requires “kinds” (Gen. 20) there would be far fewer animals needed than most expect at two of all and seven of some. Probably about 15,000 animals total, and if they were juveniles or even eggs, they would be smaller. This would help out, especially on the dinosaurs that were called to the Ark.

There could not have been dinosaurs on the ark! Well, “behemoth” in Job 40, written after the flood, is what most of us think as long-necked dinosaur. His ancestors had to survive the flood, where most did not. Bones of dinosaurs are usually found fossilized in Flood sediment. Some had to survive. Juveniles of dinosaurs are small, and can breed in the future.

Animals won’t just come in to a ship. We still see inexplicable homing instincts and migration patterns even in modern animals. It is consistent with a supernatural God who controls the waves to guide the animals.

Eight people could not feed the animals. The most common answer to this argument (and the related amount of waste) is hibernation. This is practiced in many species even now. Whether God caused it, or it was just the normal response to the darkness of a moving ship, this seems quite plausible. Also, Noah was told to build rooms (“qen”—literally in Hebrew “nests”) in Genesis 6:14 seems to tell us they were nesting.

If they slept, who was the food for? Remember that there were seven of each clean kind. Surely, some of those produced dairy products, and possibly meat, for the humans. The clean animals had to eat something. Further, feed hoppers are used on farms even now for ease of animal feeding.

Much more can be said, but the message of the Ark is really the message of the cross: the judgment of God comes, but the mercy of God made a way for safety. Once sealed in the Ark, through tossed to and fro, they were safe. In Christ, regardless of the storm-tossed seas of life, the Bible assures us that we are sealed in Him.

All prior articles in this series can be found by searching my blog at insurance-coveragelaw.Blogspot.com.