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Overpaying to be Under Insured?!

July 3, 2014 by privateriskadvisor

UGWUP4Those who advise financially successful families understand the most cost efficient use of insurance is to transfer large risks that can present a significant financial loss, while self-insuring smaller risks that can be avoided or absorbed. Remarkably, however, many financially successful families do not understand they are taking the opposite approach by renewing insurance policies that feature protection from modest losses, often at inflated costs.

ACE Private Risk Services surveyed 600 independent agents and brokers, and has documented the ways in which affluent consumers commonly over-insure against minor threats and under-insure against major ones. The survey also identifies often overlooked opportunities to improve the cost efficiency of their insurance program. The results are eye-opening and worth sharing with those you care about.

This link to ACE’s website will direct you to the first of a 3 part video series that summarizes the key findings.  Each video installment is only about 3 minutes, and all are worth reviewing. Consider sharing this information with your clients, as at least a few may benefit from examining if they may be overpaying to be under insured.

ACE has also published a white paper to document their findings on this topic. Contact me if you would like to provide your clients with a hard copy of this white paper.

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Dropcam: Wireless Security Cameras Made Easy

June 21, 2014 by privateriskadvisor

privacy-798250Equipping your home(s) with wireless video capabilities is now both easy and affordable. With Dropcam, you can have multiple wireless security cameras at a remarkably low-cost. With high-definition live streaming, night vision, two-way talk and mobile apps, it’s now simple to stay connected with the place you call home.

Especially for seasonal homeowners, the added security and peace of mind benefits make this a must have addition.

Check their site for details  https://www.dropcam.com/home-security

Posted in Property Risks and Solutions | Tagged | 2 Comments »

Step Right Up

June 10, 2014 by privateriskadvisor

910362-businessman-plays-bad-financial-business--constructed-on-deceitAttention Shoppers….

Large retailers like Walmart and Overstock.com have recently announced they are providing shoppers the ability to add insurance to their carts. Of course, leveraging their size to sell commodities at a lower cost is what Walmart and Overstock.com do very well. Unfortunately for consumers, insurance is NOT a commodity, not even car insurance. This inconvenient truth has not deterred Walmart or Overstock.com from perpetuating and trying to cash in on this dangerous myth.

Let the buyer beAware:  there are subtle yet dramatic differences between even car insurance policies that consumers need to be aware of. Bill Wilson of the Insurance Agents and Brokers of America is an educator and insurance consumer activist, helping both agents and consumers to better understand the important “policy fine print” that differentiates coverage among carriers.  Listed below are examples Wilson provides to illustrate the important coverage often omitted from the policies advertised as “same coverage, better price”.

  1. Undisclosed household residents are excluded.  Think “boomerang” kids living at home.
  2. Business use of non-owned autos is excluded. Have you ever borrowed a neighbor’s car or had a dealer loaner auto and made a business stop?
  3. Business use of ANY auto is excluded.  Big problems for those driving to Staples or the post office on business
  4. Use of ANY non-owned auto is excluded. Better not drive anyone’s car but your own.
  5. Vehicles over 10,000 GVW are excluded. Have you ever rented a U-Haul truck or an RV thinking your liability coverage extended to the rental?
  6. Any type of delivery is excluded. Denied claims include pizza, newspapers, Mary Kay cosmetics, and, yes, even the delivery of insurance policies to customers by an agency producer.
  7. Permissive users only get minimum limits of coverage. This can apply to those you loan your car to or even unlisted household drivers.
  8. “Street racing” is excluded. Google “street racing” and see how often people are killed or critically injured while street racing.
  9. Criminal acts are excluded or limits reduced. Don’t think bank robbery; DUI or even speeding tickets may preclude coverage.
  10. Medical payments only include licensed physician fees. One insured incurred a $25,000 “Life Flight” helicopter fee that would not be covered, even in part, by a policy with this exclusion.
  11. Theft without evidence of forced entry is excluded. One insured had a four-figure vehicle theft loss denied because he forgot he had left his keys in the car.
  12. Sales tax is not covered under loss settlement. This cost one “same coverage” insured over $2,000 out-of-pocket for sales tax on a replacement auto.

I can think of additional examples of protection present in some auto insurance policies but not in others. The important take-away for consumers: knowing the protection provided by different insurance policies varies, be very wary of the modern-day shell game tactics used by sales organizations (of any variety) assuring you they are offering “the same coverage for less”.

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A Solution to Transfer the Financial Risk of Contract Litigation

May 23, 2014 by privateriskadvisor

pounce of protectionA common provision in many contracts stipulates in the event of litigation between parties to the contract, the prevailing party in the litigation is entitled to recover their attorneys’ fees from the losing party. Coverage for this risk is almost always excluded by all forms of insurance policies, leaving unsuccessful litigants exposed to what can become a very significant financial loss.  Contract Litigation Insurance (CLI) provides a degree of protection from the uncertain nature of litigation.  This new form of insurance coverage can insure a plaintiff or defendant in a contractual lawsuit against the risk of paying their adversary’s attorneys’ fees if unsuccessful in prosecuting or defending their contract claim.

This coverage is even available to businesses or individuals during the early stages of a contractual dispute.  What types of contract disputes are most common? The risk of paying an adversary’s attorneys’ fees are especially common in contract actions arising out of employment contracts, real estate contracts, loan agreements, purchase agreements, partnership agreements and leases.

 To summarize:

  • Coverage may be purchased by individuals or businesses currently involved in contractual litigation;
  • CLI is available upon the filing of a contract action for a period of 1 year from the filing/service date;
  • The coverage period matches the duration of the covered litigation; and
  • Coverage is triggered when the opposing party prevails after a contested trial or summary judgment.

Coverage is underwritten by Zurich, an A+ rated carrier, and is available through Sonoma Risk Insurance in Los Angeles, CA. To learn more: http://www.sonomarisk.com/

 

Posted in Liability Risks and Solutions | Tagged , , | Leave a Comment »

El Nino 2014 Could Be Historic

April 11, 2014 by privateriskadvisor

flood surf shotIf early forecasts from experts stay on track, a monster El Nino is in the works for 2014.

Years when El Nino has been very active often reduce the chances of a highly active hurricane season in the Atlantic.  Meanwhile, those proximate to the Pacific Ocean are at a greatly increased risk of violent weather conditions.  For those living in drought stricken areas looking forward to extra rain (the entire Western half of the US, for example) the risk of landslide / mudslide increases greatly.  Check the link that follows for a report offering interesting insights on El Nino and the potential for a dangerously historic 2014:  El Nino could grow into a monster, data show

Readers should be aware: property damage caused by landslide / mudslide is specifically excluded by homeowner AND flood insurance policies. Specialty coverage can be available for those concerned about adding protection for damage caused by landslide / mudslide, though many conditions apply. Let me know if you’d like more information on this specialty coverage.

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Einstein or Carnival Hucksters : You Decide

March 15, 2014 by privateriskadvisor

ImageAlbert Einstein on the topic of problem solving: “If I had an hour to solve a problem and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask, for once I know the proper question, I could solve the problem in less than five minutes.”

As it concerns the problem of deciding which insurance product to buy, I remind the clients and advisors I serve to approach the decision by first asking the right question. Consider which of these two questions is likely to provide the best solution should you ever actually need the insurance you are selecting to  protect your assets from a loss (the reason to buy insurance in the first place):

1. Which insurance product costs less?  

2. Which insurance product best protects me from the risks that can cause me the greatest harm? 

Can we agree asking the second question will provide consumers a far better chance of selecting insurance coverage that will not disappoint them after a loss? Why is it then that so many consumers approach the “which-insurance-to-buy-problem” by focusing instead on the first question?

Remarkably, we need only look to the insurance industry itself (and their advertising allies) for the answer. Marketers know when the product is confusing, interest level low, and benefits are intangible, consumers make buying decisions by focusing on the one factor we can all most easily distinguish — cost. While there are a few exceptions, the prevailing advertising theme “save X % in Y minutes” tricks consumers into asking the wrong question to select a product they may one day need to protect their assets from a possibly life changing loss.

While the image of a carnival shell game as a metaphor for insurance marketing is harsh, it is sadly fitting. The loss protection provided by insurance products varies widely, in important ways that are much more hard to discern than cost. Providing consumers with thoughtful and strategic answers to the second question is my commitment to the clients and advisors I serve.

Why not follow Albert Einstein’s advice before simply accepting the renewal offer on your next insurance policy?

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People vs. Mother Nature

March 9, 2014 by privateriskadvisor

Check this fascinating 3 minute video on You Tube documenting the “best of the winter of 2013-2014” !

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What Risks are NOT Covered?

February 23, 2014 by privateriskadvisor

Fine print redI often hear senior executives for leading insurance carriers lament the common public perception that insurance products are a “commodity”, to be differentiated only by price.  I share the concern about this dangerous mis-perception, and work hard to help others realize the protection provided by policies as common as homeowners and automobile insurance can vary in many important ways.

Meanwhile, I believe the insurance industry contributes greatly to this problem, and often ask carrier executives why we in the industry — both carriers and brokers — are not doing more to fix it. Many in my industry are not pleased with this view, and often bristle at the question.

How does the industry contribute to the perception that insurance is a commodity?  Consider the commodity oriented messages behind glib advertising campaigns imploring consumers to invest just 15 minutes to save 15%, or to “name your own price”. What message is to be received as policies renew each year from those insurance carriers that send only the few declarations pages of the policy and not the entire policy?  Armed with the scant information provided by a few declarations pages, consumers focus on what they can see —-  the limits of coverage and the premium.  The implication: if the actual policy language detailing the risks that are and are not covered was important we would have sent it. Is it any wonder why consumers perceive cost is the only differentiator when buying insurance?     

Carriers can help consumers better understand the protection they provide by revising the contract language used in their policies to be more easily understood, and sending the entire policy each year upon renewal. Agents and brokers can also be of greater assistance, as too many limit their client conversations to review only coverage limits and associated premiums. While coverage limits and cost are important, few agents expand their conversations to also explain how one carrier’s coverage may provide protection that is different from the next carrier.

Consumers who REALLY wish to understand the protection provided by their policy should ask their insurance provider to document the risks that are NOT covered by their policies, as well as the risks for which coverage is significantly limited. “What are the risks that are excluded by this policy?”  Expect many providers to be stumped by this basic but essential question.

If you or your clients are interested in learning what is NOT covered by your policy, call me to examine the “Fine Print Protection Audit” report I make available for my clients.

Posted in Caveat Emptor | Tagged | 2 Comments »

Preventing home losses during prolonged cold spells

January 21, 2014 by privateriskadvisor

frozenAnother severe cold spell is expected in our area this week, with temperatures expected to dip into the single digits in some areas, along with heavy snowfall.  We receive a lot of good suggestions on preventing home losses from the claims and restoration specialists we work with. The following suggestions were provided to us by Maxons Restorations.  Consider forwarding these often overlooked ideas to those you know, especially those with second homes in our are most vulnerable to cold weather related losses,

  • Look for cold spots in your property near outside walls, roofs or windows. If there are pipes nearby, seek out ways to insulate them. If the pipes get cold enough, the water inside will freeze. When water freezes, it expands, building up pressure and bursting pipes.
  • Think about leaving cabinet or closet doors open during extreme cold, it will help to circulate heat around pipes.
  • Leaving faucets running at a slow trickle will allow water to flow through your system, preventing freezing.
  • Inspect pipes that run to water spigots outside. If you still have a hose connected to it, disconnect it immediately. The water freezing in that hose will send cold and pressure back into the pipes inside.
  • Make sure you know where the water shut-off valves are in case of a pipe break or leak.
  • Avoid turning the thermostat down. It’s normally a great way to save energy when you’re not at home, but it’s probably not worth the risk when it’s this cold out. Set the temperature close to 65 degrees at all times and definitely no lower than 55, experts say.

While most of us know to take steps to avoid frozen pipes and water damage during cold temperatures, we often overlook the increased risk of FIRE when the temperatures drop.

  • Make sure you’re prepared for an alternative heating arrangement in the event of a service interruption, especially if you have electric heat.
  • When using equipment such as space heaters, check to make sure they have been approved for use indoors and are turned on at a safe level and away from furniture, carpet or anything else flammable.
  • Keep fire extinguishers on hand, and make sure everyone in your house knows how to use them. House fires pose an additional risk, as more people turn to alternate heating sources without making the necessary safety precautions.
  • Be careful to not overload power points and power boards.
  • Regularly clean fireplaces.

To access a helpful 1 page guide from Maxons Restorations on preventing pipe breaks, check this link: http://origin.library.constantcontact.com/download/get/file/1104123010409-778/Maxons+Pipe+Break+Tips.pdf

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Lawsuits for 86 Ivy League Fraternity Members

January 17, 2014 by privateriskadvisor

ImageA total of 86 current and former members of a fraternity at Yale University are being personally sued in connection with a deadly tailgating crash at the annual Yale-Harvard football game in New Haven in 2011.  How is it that the 86 local fraternity members are being sued personally?

It seems the insurance carrier of the national chapter of the fraternity has disavowed coverage, indicating the national chapter was not responsible for the Yale chapter’s actions, didn’t sanction the tailgating event at the game and its insurance company doesn’t cover non-fraternity events. Yet another reminder why it is extra important for parents of college students to re-examine their personal liability insurance  protection. To learn more:  http://www.claimsjournal.com/news/east/2014/01/17/243069.htm

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