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Posts Tagged ‘the new york times’

 Perhaps 95% of the consumers and professional advisors I meet with attempt to focus their discussion simply on the insurance policies they own.  Ours is a product focused culture, and our buying decisions are guided by products receiving 5 star reviews, Consumer’s Digest Best Buy recommendations, and / or finding a “good deal”.  The power of product advertising has robbed us of the ability to ask ourselves the larger questions.   Questions like “Why am I buying this product?”

Why buy insurance for your home?  Why buy insurance for your car?  When I ask these questions of my clients, I often receive an expression suggesting puzzlement, annoyance, or both.  To ease both emotions, I ask if the reason is to replace what they own in the event it were damaged or destroyed.  “Of course!” is the most common answer. 

Since the real reason to buy insurance is to replace what we own, why is “Save Money Now” the central theme in most insurance company advertising campaigns? Because advertisers have reminded insurance carriers that consumers respond best to “save money” offers.  To gain market share, they focus their ads on product, making save money the product.  Do consumers ever ask how the savings are being achieved?  Insurance carrier benevolence???  These campaigns are effective, and despite the “savings” provided to some consumers, these carriers earn a profit, content to sell products that often do not provide the desired protection.  All because no one ever asked “Why”.

Carl Richards, Contributor at New York Times Bucks Blog and the author of Behavior Gap, reminds us that in the financial services industry, consumer focus on product is exploited by those who are paid to sell product. Richards is well known for using illustrations that lend clarity to issues that many journalists do not understand. While the lesson of the illustration above is aimed at investors, it is just as relevant to those seeking the right way to protect their homes, cars and other assets from unforeseen loss. Richards explains: “Most of us are trained to think ‘What’ first, because it’s what you hear about all day long. It’s the message you read in financial publications and see on CNBC. But ‘What’ questions should come after we think about ‘Why’ and ‘How’ ….Starting with ‘Why’ means achieving clarity about your personal financial goals and creating a plan.” Thank you, Carl Richards, for reminding us that before we focus on the ‘what’ product solutions, we first need to start with asking ourselves the larger ‘Why’ questions. 

For more about Carl Richards work: http://www.behaviorgap.com/

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It is no secret that financially successful families are often early adopters of all the new must-have home technology products rushed to market each holiday season.  What few early adopters realize is the degree to which many of these new products provide new and easy opportunities for those in the “hacking community” to run familiar scams to steal identities, credit card information, etc. In a Dec 26 article titled Gadgets Bring New Opportunities for Hackers, The New York Times provides great insights on how many new technology products are exposing consumers to this growing risk.

Love your i Phone and i Pad?  The Wall Street Journal reported Dec 18 that many popular apps for both products help to share user data widely and freely without the user’s knowledge. It seems Apple assigns a Unique Device ID to the devices it sells that enable others to track how the devices are used.  This article in the Dec 28 edition of The New York Times by Reuters summarizes the class action lawsuits Apple is facing.  

With all of this unsettling news, consumers should minimally examine the protection they are provided by their insurance program for the risks of identity theft and restoration.  Extra attention for taking prentative steps should also be considered.

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There are many examples to support my strongly held belief that proper insurance planning is not a DIY project. One recent example: when the mainstream press offers guidance on how to manage your risks, be aware that such stories often omit important pieces of information that can leave you and your family’s assets exposed to uncovered losses

In a recent article by Paul Sullivan, the highly acclaimed Wealth Matters columnist for The New York Times, readers are urged to understand and manage the many insurable risks associated with children attending college. Mr. Sullivan begins by reminding his readers that “insurable risks faced by college students have gone up tremendously in the decades since their parents lugged stereos and crates of vinyl records into dormitory rooms”.  So far, so good. 

So, you ask, just what are these new risks facing college students in the 21st Century? Surprisingly, instead of learning about any new insurable risks that have “gone up tremendously”, readers are simply reminded of the usual and obvious risks that I sure hope every parent already knows to prepare for: theft of valuable items, automobile claims, serving alcohol, trip and fall injuries, and identity theft.  While the risk of identity theft has surely risen in the past decade, readers are left to wonder what are the other risks that have actually “gone up tremendously in the decades since…stereos and…records”, as the article forewarns???  

Unfortunately, there actually are risks facing college students and their families that are on the rise, and although these risks were not revealed in this article, you can learn about them here.  Consider for a moment the liability risks (and defense costs) that can arise from your student’s improper use of e mail, blogs, social media sites like Facebook and Twitter, and webcams.  Had The New York Times consulted this risk advisor, they would have learned to warn readers of the increased risk of “personal injury” — the very broad and overlooked category of risks that all parents of teenagers should understand and secure protection for.  Not to be confused with bodily injury, “personal injury” refers to those injuries that don’t affect the body. These include false arrest, wrongful eviction or entry, invasion of the right of privacy in a room or dwelling, slander and defamation, or the violation of the person’s right to privacy.

Few consumers (or even traditional insurance agents, for that matter) ever examine whether coverage for the increasingly real risk of “personal injury” is even covered by the policies that provide their family’s personal liability protection.  Especially for families with children in high school or college, consumers should learn if the liability insurance covering the actions of their family members includes coverage for “personal injury”, as a great many personal insurance policies do not. If your policies do not provide this important protection, contact me for access to the handful of carriers that provide policies that do.  And —- please do not rely on newspaper articles for guidance on how to craft your insurance program, even those appearing in The New York Times.  

For a link to the New York Times article that omits this important information: http://www.nytimes.com/2010/09/18/your-money/home-insurance/18wealth.html?pagewanted=print

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ex pointIn this great article, Paul Sullivan, the Wealth Matters columnist for The New York Times, examines the many issues posed by the title: How Do I Know You’re Not Bernie Madoff?

With a close understanding of the heightened desire among affluent and high net worth insurance consumers to better vet who they are doing business with, Ace Private Risk Services has introduced an outsourced background screening service for financial advisors and contractors (in addition to domestic staff). While I have not yet “vetted” the firm they will be using to perform the “vetting”, the firm’s web site includes a reference from a former U.S. President. Click here to read a press release  offering details of this new service, or contact me for more information.

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It is alarming how many people confuse the purchase price or appraised value of a residence with the cost to rebuild it.

The common thinking: My house is worth X, the land is probably worth 30 – 40% of that, so I will insure it for 70% of X, since the property won’t burn. Realtors, mortgage lenders, and tax assessors confuse the issue by inserting their own valuation methods. Since you will want your insurance policy to provide the coverage to rebuild your home after a loss, you need to insure it for the cost to rebuild it, and not some other unrelated value. You should also want your insurance carrier to guarantee that they will provide the full costs to rebuild should those costs escalate.

This excellent New York Times article  explains that ariving at the proper cost to rebuild a home (and securing coverage that actually guarantees to do so) is much easier said than done.

Essentially, the insurance industry takes what can be categorized as two very different approaches to valuing and insuring homes (and cooperative apartments and condominiums). Using the most common approach, you and your agent guesstimate the cost to rebuild your home, and the insurance carrier either accepts or modestly adjusts the result. The downside?  Since this is only a guesstimate, your receive no contractual guarantee that the carrier will pay the full costs to rebuild your home after a covered loss. (often referred to as”the fine print”). The article shares the plight of the many who proceeded using this approach.

The second approach is the one we recommend: have the cost to rebuild calculated by a trained professional, and place coverage with a carrier who will provide a contractual guarantee to rebuild, regardless of any future cost surges. Contact me to learn more about how this can be accomplished.

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