Wednesday, October 25, 2017

What Does Small Business Insurance Cover?



As a small business owner, you know the importance of insurance coverage for your business. It helps protect you from financial losses and against specific risks covered by the policy which typically includes fire, wind damage, lightning, falling objects, theft etc.  A normal policy will offer 3 basic types of coverage.

Clothing Store Owner.
https://www.allstate.com/tools-and-resources/business-insurance/small-business-insurance-need.aspx


General Liability Coverage

General liability will cover the medical costs if anyone is injured at your business place due to negligence. Depending on the policy terms, it may also pay for legal costs if you should besued over an accident that occurred at your place of business. General liability coverage is subject to limits. If the medical expenses are in excess to your coverage limit, you may have to pay from your pocket to cover the balance.

Business Property Coverage

Property coverage will protect the business premises (if you own it) from risks that are listed in the policy. For example, if the premises are damaged or destroyed by fire, the policy will help to pay for the repairs or rebuilding. If the furniture or equipment is damaged, destroyed or stolen, the policy will cover the cost of replacement or repair. When buying a small business policy it is important to choose the right deductibles and limits. This means that you can select the amount you will pay yourself before the policy kicks in, and the maximum amount that the policy will pay. As a general rule, higher the deductible, lower the premium.  Because of cash flow limitations, many small businesses make the mistake of keeping deductibles and limits low to reduce the premium outflow. However, saving a few dollars a month could result in paying thousands of dollars from your pocket if damage or loss occurs that is not covered. An insurance agent will be able to help you find the optimal coverage for your business.

Business Interruption Coverage

This will help you to continue operations after a covered peril occurs. It is meant to help in replacing lost income and the higher expenses that arise after your business operationsare affected. For example, if your premises are not usable after a fire, the coverage will help in paying rent for a temporary workplace. This coverage is subject to limits both in terms of the overall dollar amount payable as well as the time period for when it is applicable. Your insurance agent will be able to give you a clear picture of what the limits are to help you to find additional coverage, if you should need it.


Additional Coverage

In addition to these 3 basic coverage, it is often possible to buy additional coverage which can include:

 ·         Data compromise coverage

 ·         Employment practices liability coverage

 ·         Business auto insurance

 ·         Outdoor property coverage

 ·         Equipment breakdown coverage

 ·         Product liability coverage

 ·         Professional liability coverage


Ensure You Are Protected

The loss of your business could have a severe impact on you, your family, and your employees. Small business insurance is a protection to your business and by extension, to the ones who depend on you. The variable coverage limits and options available mean that the best way to get the protection you need, at a cost you can afford, is to consult a professional insurance broker.


Disaster Insurance – What You May Not Know

Hurricane, earthquakes and other natural disasters have been around since the beginning of time. The spurt in the volume and intensity of these disasters appear to be increasing over the years. While part of this may be due to climate change, the expanding population of cities, exponential growth of infrastructure and increasing value of homes are among the major reasons for these massive financial losses. These disasters and the publicity surrounding them have caused homeowners to re-look at their insurance coverage. While the overall policy may appear to offer adequate protection, there are factors that could limit the resources available to repair or rebuild your home.





Issues to Consider

         ·         Your standard disaster policy may not be enough. A typical homeowners’ policy will not normally cover damage from floods or rising water. Some policies pay for damage caused by wind or wind-driven rain but others do not. Some policies issued in areas that are prone to hurricanes include a specific “hurricane deductible” where the policyholder has to pay a large amount from his pocket before the coverage kicks in. For example, if a home valued at $200,000 is destroyed by a fire, the standard deductible is typically from $500 to $1,000. However, under the same policy, if the destruction it is caused by a hurricane, the deductible could be 5% or around $10,000. This is a huge difference. 

          ·         Because of this, you may have to dip into your savings. In the case of earthquake damage, you may need to pay as muchas 15% from your pocket. Without enough cash available, you could be forced to sell off assets to cover the cost of repairs. Ideally, you should have savings set aside for such a contingency or a Home Equity Line of Credit (HELOC) set up to cover you. The HELOC should be set up in advance because no lender will extend credit on a house that has already been damaged.


       ·         Since the standard homeowners insurance does not cover flood damage or loss, taking out flood insurance may be a good idea, depending on the flood risk in your zone. A qualified insurance agent will be able to help you evaluate the risk and find the right coverage. Note that there is awaiting period for this coverage to kick in – it is usually 30 days. This is to discourage people taking out a policy only when a flood threat is imminent. Another factor to keep in mind is that coverage offered by the federal government’s National Flood Insurance Program is limited to $250,000 for property and $100,000 for contents. Additional coverage can be bought from private insurers.


Check Your Coverage

The complexities of insurance coverage mean that it is easy to make mistakes when taking out a policy or misunderstanding the coverage that exists. Talk to a reputed insurance broker about your existing disaster coverage to know if there is a gap that needs to be covered. He will be able to help you stay completely protected.

Sunday, September 24, 2017

Filing a Claim after a Natural Disaster

Natural disasters like hurricanes and floods have been a major topic of conversation of late. The silver lining in the massive loss and damage that has occurred in Texas is that it has caused many homeowners to reevaluate the need for flood and earthquake damage coverage that is not typically covered by a homeowners’ insurance policy. Those who have the coverage will be protected if a disaster occurs. However, ensuring that you get the insurance pay out as quickly as possible is often not easy. It is estimated that the damage caused by hurricane Harvey in Texas could be around $10 billion. It means that insurance companies will have to process tens of thousands of claims. That volume will often lead to delays in the payouts. According to the National Association of Realtors, after a major natural disaster it could take anywhere from a week to a few months for an insurance adjuster to get in touch with a policy holder. It is worthwhile knowing what you can do to speed up the process if you should ever need to make a claim.

Image Courtesy : https://upload.wikimedia.org/


Expediting an Insurance Claim

  • Contact your insurance company as soon as possible. Even a day’s delay could mean weeks or months longer before the payout is made. It is not that the companies intentionally delay payments – they are flooded with claims and so the sooner the claim is filed, the sooner it can be processed.
  • Ask the insurance company when you can expect the adjuster to contact you. This will enable you to be ready when he comes.
  • Take pictures and videos of the damage, including personal items. Include the date of purchase and keep receipts of high-value items in a place where they will not be lost.
  • Keep a record and receipts of everything you spend to make any immediate repairs that maybe possible and are essential. Also, record everything you spend on accommodation and food in case your home is unlivable.
  •  Keep a detailed record of all the actions you take in filing your claim. This includes the people from the insurance company you speak to or correspond with. Note down the dates, times and include details of what was discussed.
  •  Be careful of what you discard. The adjuster may want to see these items. In case you have to discard them because of municipal hazard regulations or for your own safety, take pictures of all that is discarded to show to the adjuster.
  •  If the insurance company offers you the options of signing up for text alerts, do so. This is the quickest way to know the status of your claim, when the estimate is ready and when the payment will be made.

If you have the insurance policies or if you are planning to get additional coverage, talk to your insurance broker about other area or insurance company specific actions you can take to expedite the process, if you should ever have to make a claim.



Most Hurricane Harvey Victims Do Not Have Flood Insurance

Hurricanes are a part of life in many parts of US and people typically take some basic protections against them. It’s good enough at time, but not when something like hurricane Harvey hits. The flooding has been massive as we’ve seen on TV. The billions of dollars of damage that has been caused is a figure that many people may not be able to comprehend; but everyone can relate themselves to pictures of people being taken out of their homes by boats.


Image Courtesy : www.media.defense.gov/


Rescue Is Where Problems Begins

Rescuing people from the flooded areas was, of course, the priority. But for the families, who left flooded basements, water damaged walls and ruined furniture, appliances and valuable behind, the next stage is often a huge question mark. Some may have the resources to rebuild their lives, but the burden will be crushing. For most, the pockets are not deep enough. Many of them will be forced to sell and leave their communities. A major reason is that many of them do not have the insurance coverage they need to rebuild their lives.According to the Consumer Federation of America, only about 2 out of 10 homeowners in Houston have flood insurance.

Homeowners insurance generally covers only damage and loss caused by winds - flooding is not part of the policy.Separate policy is required to protect from flood damage. There are three wrong assumptions that caused so many Houston homeowners to not have the coverage they actually needed:
  •  The premiums flood insurance is thought by many to be too high. Actually, the cost would be even higher if the premiums were not subsidized by the federal government under the National Flood Insurance Program. Unfortunately, people did not realize that the cost of this insurance is reasonable considering the potential loss a flood could cause.
  •  Flood insurance is mandatory for those with federally backed mortgages in high flood risk areas called Special Flood Hazard Zones. Since Houston does not fall into this zone, homeowners thought that the risk was non-existent and so flood insurance was not required. Being outside a flood zone does not guarantee that flooding will not occur, as the residents of Houston found out.
  • A large number of people were under the assumption that state and federal aid that is made available when an emergency is declared will help them to recover. This aid is only meant to help people survive in the aftermath of natural disasters, not to enable them to rebuild their lives and homes.

California Is No Stranger to Flooding

California is no stranger to storms and weather-related property damage. Flooding could happen anywhere, whether or not the area is a flood zone. The fact that fierce storms and wind-related damage has occurred in the past with no flooding does not mean that it will not happen. In Corpus Christi and Rock port the damage was wind-related. In Houston, the same hurricane caused flooding.

California homeowners who do not have flood insurance are at a much greater risk than they realize. To understand the risks and potential loss and get the coverage that is needed, an insurance broker should be consulted. Being rescued from home by boat can be bearable if you know that you have the insurance coverage to rebuild and get back to normal life.


Monday, August 28, 2017

Car Insurance for New Drivers

If you have just gotten your driving license, you probably feel that the world is your oyster – you are now free to travel and go wherever you want. It is important to remember that passing your driving test does not automatically make you a good driver. That comes with experience on the road and an appreciation of the dangers that exist on the road. It is these dangers that you need to protect yourself against. Even if you do not make a mistake, the mistakes of others could put you and your vehicle in danger. That is why it is illegal to drive without insurance.



The Coverage You Must Have

There are varying levels of auto insurance available. In California, the minimum requirement is liability coverage. This is twofold:

 Bodily injury coverage which covers injuries suffered by others in an accident you are involved in.
 Property damage coverage which covers damage to another person’s property caused by an accident you were involved in.

The idea behind this minimum coverage is to protect others from injury or loss; it does not protect you or your car and if you are injured in an accident or your car is damaged, the medical and repair bills will have to be paid by you.

To be fully protected, you should consider optional coverages that will protect both you and your car. There are many types of optional coverage and an insurance broker will be able to help you find the policy that is right for you. That being said, here are the 3 most common types of additional coverage.

Coverage Options

Collision and Comprehensive Coverage:


  • Collison coverage covers damage to your vehicle in the event of an accident.
  • Comprehensive coverage covers damage or loss of your vehicle due to theft, vandalism, natural disasters natural phenomena etc. If your vehicle is an old one that needs to be replaced soon, then comprehensive coverage may not be essential and collision coverage may be enough. An insurance agent will be able to help you make the right decision.


Underinsured andUninsured Motorist Coverage:

Underinsured motorist coverage protects you should you be involved in an accident with a driver who does not have enough insurance to cover the damage that has occurred.
Uninsured motorist coverage protects you if you are involved in an accident with a driver who has no insurance at all.

Personal Injury Protection:

This will cover your medical expenses if you are injured in an accident, irrespective of whether it was your fault or not. This type of coverage usually allows you to have your medical bills paid without the need to wait for the accident investigation to be completed, a process that could often take a very long time.

What Do You Need?
Insurance is a complex subject and obtaining the guidance and advice of an insurance professional is always a good idea. He will be able to understand the type of driving you do, your current financials status and the type of coverage you require. He will then be able to offer you a policy that best fits your individual needs. 

Too Old For Life Insurance?

Most people buy life insurance during the years that their families are dependent on them financially. This means that the typical age for buying life insurance is between 20 and 40 which is when marriages occur, children are born and homes are purchased. However, this does not mean that you can take a policy after this period. Late marriages are more common, resulting in the financial liabilities continuing until a later age. People are now continuing to work till their 60s and 70s and/or even start new careers. Whether their aim is to simply remain occupied or supplement retirement income, the additional money becomes a part of everyday life and its loss, through the death/disability of the earner, will affect those who are part of their lives.



Life Insurance in Later Years

Contrary to popular belief, life insurance is available for those in their 60s, 70s or even older. Of course, the premiums will be higher as the age increases and there are more procedures to undergolike health checkups, etc. But that is often a small price to pay for the knowledge that if the inevitable should occur, the dependents will not suffer financially, even if they are not completely dependent on the income that is lost. For seniors whose children are financially independent and who have no liabilities, the death benefits from a life insurance policy are often seen as a way of thanking the family for the happiness they brought to the policy holder during their lifetime. Additionally, the benefits from the policy can also help to cover estate duties and other expenses.

The Type of Policy andthe Duration

For seniors, a term life policy is the best option. Death benefits will be paid to the beneficiaries if the policy holder dies during the term of the policy. The benefits of whole life insurance - thecompounding of cash value, liquidity and flexibility are not typically relevant. However, a whole life policy could make sense in some cases. An insurance broker will be able to give guidance on this after studying the policy holder’s financial status.

Age limits for life insurance vary from company to company, but in general the cut offs and duration are:
    • Age 80 for a 10-year term
    • Age 75 for a 15-year term
    • Age 70 for a 20-year term
    • Age 55 for a 25-year term
    • Age 55 for a 30-year term

Is It A Good Option For You?


Every individual and family’s case is different. If you are a senior citizen with no financial liabilities or obligations, you may think that life insurance does not make sense for you. That may be so. However, it is always wise to consult an insurance professional to discuss the matter in detail. There may be benefits for those who are important to you which you may not appreciate. 

Monday, July 24, 2017

4 Wrong Reasons not to have Earthquake Insurance

According to the latest reports, only about 17% of homes in California are covered by earthquake insurance. So what about the remaining 83%? Are they in denial or have they weighed to risk factors and made a rational choice?

It Won’t Happen To Me

To not dwell on the possibility of tragedy striking is human nature. We see images of people whose lives have been destroyed by natural disasters and feel sympathy for them – a sympathy that is tinged with relief that it happened to the other guy. We live in the hope that such things will not happen to us. That is what so many in Northridge thought before the 1994 quake. To know the extent of the risk all that is required is the read the U.S. Geological Survey’s reports on the likelihood of a major temblor hitting California. Optimism, unsupported by fact, is no reason to not have earthquake insurance.

Rational Decisions – The Common Mistakes


  • My home survived the last quake just fine. Every earthquake is different and the next one could be much worse. Also, new fault lines are being discovered and the next one to be found could be under where you live. What happened last time will have no effect on what could happen the next time.
  • My home is bolted to the foundation. This will reduce the risk of damage, not eliminate it. Even bolting cannot offer complete protection. In addition, studies show that bolting is most effective in single storied wood framed structures. Homes that have 2 or more stories or have large picture windows are likely to suffer damage, even if they are bolted to the foundation.  And if the ground gives way below the foundation, bolting will be of no help.
  • State and federal assistance will get me back on my feet. This assistance is meant only to help survivors cope with the aftermath of an earthquake. It is not going to cover the cost of rebuilding a home and the lives of those who lived in it. The low-interest FEMA loans that may be available are just that – loans that have to be paid back and while they are outstanding, they become liabilities on your personal net worth.
  • I’ll just give the keys to the bank and move on. The problem with this course of action is that allowing the bank to foreclose on an earthquake damaged home will mean a complete loss of equity. In addition, your credit rating will be negatively impacted, making it difficult, perhaps even impossible, to arrange financing for a new home.

It Could Happen At Any Time

Thinking about the possibility of losing a home is not scaremongering. It is being realistic. Of all the material possessions, the home is the most difficult to replace. If you do not have earthquake insurance, the right thing to do is to contact an insurance professional to understand in detail the risks, the potential loss, how earthquake insurance can protect you and how much it will cost. To put it simply, your home protects your family and insurance protects your home.

Friday, July 14, 2017

Too Young for Life Insurance?

The young rarely, if ever, think about their mortality. There is too much happening in their lives and so much that lies ahead contemplating the end of life is something that can easily be ignored. A young man or woman entering college has so many demands on their limited income that spending money on life insurance seems a waste when the risk of death seems remote. Insurance is something that can be thought about in the future, when obligations and responsibilities increase.

Delaying Is Expensive

What is often not realized is that while life insurance becomes an important issue as their lives and careers take shape, the longer they wait the more expensive it becomes. One of the most significant factors that affect the cost of life insurance is the age at which a policy is taken. The premium is set at the time a policy is purchased and the lower the age, the lower the premium. The premium will remain the same for the duration of the policy. A delay of a few years in purchasing a policy may not seem to be a major issue, but the typical increase in premium is between 8% and 10% for each additional year of age. In other words, each year of delay could mean increased recurring costs for every year of the policy. For example, a 45 year old who is in good health could purchase a 20 year $1,000,000 term life insurance policy for about $250 less per year than one who is in the same health but is 2 years older. This may not seem to be much (it works out to about $20 a month) but over the term of the policy, that translates into an additional cost of $5,000.

The increase may seem to be unreasonable, but there is a reason behind it. A human being has a finite lifespan and with each passing year the end of life comes closer. And in a time when life can be uncertain and filled with unexpected risk, death could come to anyone at any time.

Health Is another Factor

The cost of life insurance is based on the statistical probability of how likely it is that a policy holder will die and the insurance company will have to pay the claim. With increasing age, there is an increasing chance of having health problems that could affect the likelihood of a policyholder dying. The premium will rise to balance out the increased risk. That is why the older a person is, the greater the number of medical tests that have to be done before a premium is calculated and a policy issued.

The Younger the Better

With no obligations and few if any liabilities, purchasing life insurance may seem to be a needless expense for the millennial. What needs to be taken into account is the fact that life insurance is not for today; it is for the years that lie ahead and the savings of taking a policy when young can mean a substantial saving in later years when the need for insurance has grown manifold. To fully understand the benefits of taking out a policy at a young age, consult an insurance broker who will be able to lay out the benefits and savings as they affect different individuals.

Thursday, June 22, 2017

Cyber Insurance Basics

The WannaCry ransomware attacks last May have shown everyone that there is no such thing a complete cyber security. Hackers are among the most creative of software developers and when they go bad and use their skills to invade and cripple businesses through the internet, security agencies play a game of catch up. If large corporates with dedicated IT departments can’t protect themselves against such occurrences, needless to say about small and medium businesses. The off the shelf anti-virus programs are necessary, but will not help against a targeted attack. That is why cyber insurance is growing at a rapid pace. It cannot prevent cyber-attacks, but it can help to mitigate the often disastrous results of a system being hacked.

What Is Cyber Insurance?

Cyber Insurance (also known as “cyber risk insurance” and “cyber liability insurance”) is meant to help provide a business with the financial resources to recover from a cyber-attack. Although there is no standard policy framework as yet, in general cyber insurance will reimburse:


  • Investigation expenses: A forensic investigation into how the attack happened is essential to plug holes and prevent the same thing happening again. Often private security firms are required to help law enforcement in this and the costs can be high.
  • Business losses: A cyber-attack results in business interruption, data loss, network being down and ancillary costs of managing the crisis.
  • Third party loss: Not only do customers have to be notified of data loss that could affect them, in some cases credit monitoring of affected customers is mandated by law. These could total up to a very substantial cost.
  • Ransom and lawsuits:Cyber extortion such a ransomware can mean huge payouts. A business could also be liable for loss of confidential data, intellectual property and regulatory fines. Lawsuits from affected customers are also very common.

What to Look For In Cyber Coverage?

  • Standalone policies are typically better than extensions to an existing policy. They are usually more comprehensive.
  • Do the deductibles work for you?
  • Are third party service providers covered? This is essential if your service providers do not have coverage.
  • Does the policy cover both generalized attacks and those targeted specifically at your business?
  • Are non-malicious acts by employees covered? This may be part of E&O coverage, but it may not.
  • Are phishing and similar attacks covered?
  • Advanced persistent threats  may take place over an extended period of time. What, if any, are there time frames that limit the coverage?

Contact an Insurance Professional That Understands Cyber Insurance

Cyber insurance is a new and rapidly evolving field. The best way to get the right coverage for your business, at the right cost, is to get in touch with and insurance company that has in-depth knowledge of the issues involved. By understanding the nature of your business, the risk you face and the potential liabilities, a coverage that will protect you can be developed. This is not something that can wait. The businesses that were hit by WannaCry thought these things happen to the other guy, until they discover the other guy was them.

Tuesday, June 13, 2017

Are Drunken Cyclists Dangerous? Maybe!

The exercise benefits and environmental friendliness are among the many reasons why cycling is growing in popularity. But cycling can be dangerous, and not just for the cyclist. According to the Insurance Institute for Highway safety, deaths of intoxicated cyclists are a significant problem. While the fatalities from drunken driving have declined over the years, the same is not true in the case of drunken cyclists. Drivers are often berated for the impatience they show cyclists who they think, are getting in their way and change the flow of traffic.  While that may be true, cyclists pose a danger to motorists, especially if drink or drugs have impaired them.

A Case Study

John was a health fanatic who cycled to work every day. One Friday evening, he and some colleagues went out to celebrate the completion of a major project. After a few drinks, he got on his cycle to head home. At a crossing, he jumped the red light and rode out in front of Karen. She swerved to avoid him and in the process hit another car. Not only were both vehicles severely damaged, she sustained major injuries. She was unable to return to work for several months. Her medical bills quickly exhausted John’s meager insurance coverage leaving her with no choice but to sue him for reimbursement. The legal costs were another huge financial burden on her. Since John did not have any significant assets, he had to declare bankruptcy. Karen was left with nothing, so she too had to declare bankruptcy.

John caused the accident, but Karen paid the price! If she had taken an umbrella insurance policy to cover such situations, she would have been well protected. To put it simply, umbrella insurance is extra liability coverage, which is designed to give you additional protection from lawsuits and claims and to protect your assets. It does this in 2 ways. You get additional liability coverage over the limits of your auto, boat and homeowners policies. The protection starts when the coverage on the other policies has been exhausted. It also provides coverage against claims that may be excluded from other liability policies you may have.

Protect Yourself

A drunken cyclist or other factors beyond your control could get you into an accident to result in serious injury and loss. Your auto insurance coverage may not be adequate to protect you. This is where a personal umbrella policy will fill the gap and give you the coverage you need to take care of medical bills, lost wages and legal expenses. An insurance professional will be able to work with you to determine if there are gaps in your insurance that need to be filled and provide you with the options that best suit your needs and budget.

Sunday, May 21, 2017

Is Your Home Under-Insured?

Recent research shows that 60% of the respondents never shopped around or checked on the adequacy of their homeowner’s insurance when the policy was up for renewal. 75% of them said that cost was a major influence on the amount and type of coverage they had. While the cost of insurance cannot be ignored, it should not be the deciding factor in the amount of coverage that is taken. The coverage should be based on what it will cost to rebuild a home that has been destroyed by natural calamity.

Market Value vs. Replacement Cost

The real estate market is yet to recover from the mortgage crisis of a few years ago. Many homeowner’s look at the current market value of their home and, on finding that the value has dropped over the last few years, reduce their insurance accordingly. However, that is a major mistake. A home’s value may have come down by 30% but if it is destroyed, the cost of rebuilding it may be 30% higher. That is the kind of gap that could ruin a family financially. What you need to do is base your coverage on what it will cost you to rebuild a home that has been lost. There are 2 types of insurance options to consider.


  • Actual Cost Value (ACV):This is the less expensive of the options. It covers the “as is” or depreciated cost of the house. Coverage is limited to what is known as “like kind and like quality.” In other words, if a roof of a 12 year old house has to be replaced, the insurance payout will be for the cost of a 12 year old roof. The difference(the current market cost of a new roof) will have to be paid by the homeowner. Since depreciation happens quickly, it is easy to miscalculate the coverage that is available and find that a major part of the repair or replacement cost is not covered by the policy.
  • Replacement Cost: These policies cover the actual repair or replacement cost at the time the work is to be done. In other words, if the 12 year old roof is to be replaced, the policy will cover the cost that is prevalent today. Obviously, this is more expensive than the ACV coverage, but it offers complete protection.

Finding the Right Coverage

Thinking about worst case scenarios can be depressing. Finding your way through the complexities of insurance can be dull and boring. The cost of insurance can lead to efforts to reduce the premiums.  All these factors conspire to create a situation where it is easy to use ballpark estimates to decide on a policy without considering what you really need. You cannot afford to make mistakes or take risks when it comes to protecting your biggest investment. Balancing the cost of insurance and the coverage that is required requires professional expertise. An insurance broker will be able to guide you to the right choices – those that will not waste money on excessive premiums but at the same time give your family and your home the protection it needs. Procrastinate no longer and contact the insurance broker, today.

Monday, May 15, 2017

Why Don’t Californians Have Enough Earthquake Insurance?

One of the reasons why disaster movies are so popular is that watching something terrible happen while sitting safe and comfortable in a movie theater is that it allows people to see what could happen while they remain secure. The movie San Andreas showed how a massive series of earthquakes wiped out most of California. Yes, there was a lot of exaggeration in the storyline and some questionable science. But it was not complete fiction. The 800 mile long San Andreas Fault runs through the state and is one of the most dangerous fault lines in the world.

The Next Major Earthquake Could Happen Soon

Scientists say that the general rule of plate tectonic movement is that 16 feet of accumulated plate movement is relieved by a quake every 100 years. There has been no stress relief on the San Andreas Fault for over a century. The director of the Southern California Earthquake Center says that the fault is “locked, loaded and ready to roll.”

The science of earthquake is improving but it is still in its infancy. Even if a quake could be predicted, the benefit would be in terms of getting people out of the danger zone, not in saving property. A house cannot be moved overnight. The Bay area has 3 major fault lines – the San Andreas, the Hayward and the Calaveras. The U.S. Geological Survey predicts that a major quake will hit the Bay Area in the next 30 years along any of these faults.

A major quake in the Bay Area sometime in the not too distant future appears to be inevitable. The right insurance coverage is the only way to secure a family’s financial future when (not if) it happens.

Earthquake Insurance Is Not Cheap

A 2016 survey found that less than 15% of Bay Area homes have earthquake coverage. It’s not that people are unaware of the danger – everyone knows that this is an earthquake hot zone. The problem is the high premiums and deductibles that can make the cost of insurance appear to be excessively high. Premiums are determined by a home’s replacement value and how high the risk of quakes are in a specific area. Both of these conspire to push up Bay Area insurance costs. According to the California Earthquake Authority(CEA), the average premium for earthquake insurance in San Francisco County was $2,156 in 2014. That is a major reason why less than only 1 million of the almost 7 million single-family homes in the state have earthquake insurance. The issue that homeowners seem to miss is that the premiums are high because the risk is high. If a home is seriously damaged or destroyed in a quake, the cost of restoring it, could wipe out a family financially. Federal and state emergency assistance is only for survival, not for rebuilding lives. Earthquake insurance is the only way to protect a home and a family’s future.

Contacting an insurance broker to find the right coverage, as that is also essential. An insurance professional can help you to work out the coverage you need within the budget you have. It may not, afterall be as expensive as you think it is.

Friday, April 28, 2017

Floods - California’s Uncertain Future

According to a state report, California is at increasing danger of severe flooding in the future. What happened in San Jose recently could be just a taste of things to come. A report from the nonpartisan Legislative Analyst’s Office (LAO) says that 1 in 5 Californians live in a flood plain. The structures at risk of flood damage are estimated to be $575 billion. The current expenditure on flood reduction is far less than the tens of billions of dollars that will be required to increase the level of protection. In San Jose, 14,000 people had to be evacuated and the damage is estimated to be about $100 million.

Inadequate Funding – A Huge Challenge

According to the LAO, the funding for flood control is both limited and inconsistent. The Public Policy Institute of California estimates that between 2008 and 20011 the state spent $2.2 billion a year on flood control measures. Most of the dams and weirs in the state are a minimum of 60 years old and many of the levees were built 100 or more years ago. These are not to modern design and structural standards. The Department of Water Resources and the U.S. Army Corps of Engineers, in a study released in 2013, says that there are 836 flood management projects in the state that will require $52 billion and an additional $100 billion is required to address the problem of future flood risk.

Climate Change and New Developments Add To the Problem

The effects of climate change are well known and even if the trend is reversed in the foreseeable future, undoing the damage already caused will take decades. Expecting the scope of the problem to increase is not scaremongering – it is scientific fact. Added to this is the population growth that is pushing development into new and often unsafe areas and compounding the problem. One example is the approval given for the construction of apartments in Nordale Avenue in San Jose. This is an area that was inundated by the recent flood.

Flood Insurance Is No Longer Optional
 
The dangers to homes and property are obvious and there is no immediate solution in sight. Flood insurance is no longer an issue that Californians can afford to just think about. It is essential and needed now. Many homeowners think that their homeowner's insurance will cover such calamities and that state and federal flood assistance programs will offer them the additional protection they need. Standard homeowner’s insurance policies do not cover damage and loss caused by floods. State and federal programs are intended to offer immediate relief from the havoc that floods cause, not to help in recovery and rebuilding lives. If you do not have flood insurance, you should contact an insurance broker without delay to get the coverage you need to protect your family’s future. If you do have coverage, are you sure it is enough? Why not talk to an insurance professional to see what kind of protection you really have and if you should increase it?

Sunday, April 16, 2017

Life Insurance - Do Your Children Have The Right Coverage?

According to some estimates, about 30 million Generation X and Y people in the country do not have adequate life insurance coverage. In their younger years the thoughts of family, responsibilities and death are not serious concerns. However, time passes quickly and responsibilities grow faster than they think are possible. With so many competing financial obligations and life insurance options available, finding the right coverage is not easy.If you are the parent of a young person starting an independent life, talking to them about life insurance is not interference, it is parental guidance. Here are the 3 basics of life insurance that you should discuss with them.

Do You Need Life Insurance?

If you are single and have no dependents, you may not need life insurance. If you are working, you may qualify for a small policy through your employer which will cover the basic funeral expenses if you die. However, if you are married, or have taken on guardianship of siblings or have people who are dependent on you, then life insurance is no longer an option. You need to ensure that those who depend on you are taken care of if you should die. The younger the age at which a policy is taken out, the less expensive it is. Beneficiaries can always be changed as circumstances alter.

How Much Do You Need?

This is difficult to decide. Millennials will not be able to appreciate the financial liabilities that are placed on them as they progress through life. As a parent, you can use your own example of where you were 20 years ago and where you are now. That will provide a framework for what they have to plan for. They need to look at where they will be 10, 20, 30 and 40 years from now and what their responsibilities will be. In general, the coverage should be enough so that their dependents can live off the interest. This will include paying off any debts and paying for children’s education. These may be difficult to determine so much in advance, but by planning for the future in 5 or 10 year blocks, getting the right coverage will be easier.

What Type Of Life Insurance Is Right For You?

Term life insurance, as the name implies, is a coverage that is taken for a fixed period of time. If the policyholder dies during the validity of the policy, the beneficiaries will be paid the policy value. A whole life policy provides for lifelong coverage and contains a tax deferred investment component called the “cash value.” Money can be borrowed against the policy or it can be surrendered for cash. Both options have their pros and cons.

Professional Guidance Is the Best Option

Once the need for life insurance has been understood and accepted, an insurance broker should be consulted. An insurance professional will be able to explain the intricacies of life insurance, the various options and how the coverage can be changed to meet the demands of different stages of life. Insurance is a constantly evolving business and the coverage you, as a parent have had over the years, may not be the best for your children.

Wednesday, March 29, 2017

Earthquakes - The Increasing Risk in California

Nature can be a cruel mistress. The wet winter we have experienced has been seen as a blessing – it has refilled the reservoirs and ended the drought that had affected over 75% of the state. But while the rain has been welcomed, it has also brought with it an increased risk of earthquakes. Californians are no strangers to quakes and accept the tremors in the ground as part of life. But the record amount of rain over the last few months may have created such a large amount of pressure in the groundwater system to be a trigger for major disasters.

Frightening Research

A recent study by Durham University says that “"earthquakes are triggered by a tiny additional increment of stress added to a fault already loaded almost to breaking point.” Itgoes on to say that hydrological changes do not need to be either large or sudden to cause changes in the water pressure at geological fault zones. It concludes that "It is thus unsurprising that extreme rainfall events might also encourage earthquakes. A number of instances of this have been flagged by scientists."

California’s History of Natural Disasters

Once again the Governor has had to ask for federal help to combat the flood conditions. That will help the state to cope with the damage. However, such help is always post facto. Help cannot be requested for a disaster that is in the future such as the increased probability of earthquakes due to the flooding. Federal and state relief programs are meant to tide over the immediate aftermath of disasters. They are not insurance against them and do not help in rebuilding lives that have been affected by them. However, as a homeowner you can get the flood and earthquake insurance you need to protect your family and your future.

Studies show that the majority of Californians are under-insured when it comes to protection from natural disasters. Your homeowner’s insurance policy may look good on paper and the coverage may seem to be adequate to protect your home, but does it cover flood and earthquakes? A major flooding incident or a massive earthquake could not just damage your home, it could destroy it along with all its contents. Recovering from that kind of loss requires a huge amount of resources. It is not just a matter of rebuilding the house and replacing everything in it. You will need a roof over your head during the months or more that it could take to move back home. Your living expenses will increase during this time. Are you sure your homeowner’s coverage will compensate you for all of this? You cannot hope that you are covered – you must be sure. The best way to do that is by contacting an insurance broker to help you review your existing coverage and supplement it with flood and earthquake insurance to give your family the protection it needs. Paying more for insurance may seem to be a needless expense but the odds of being affected by a natural disaster are not in your favor and they are getting worse. Balancing out your natural disaster protection may be less expensive than you think and an insurance professional will be able to help you find the optimum balance.

Thursday, March 16, 2017

Flooding - California’s Real and Present Danger

It never rains, it pours. The rains that have hit California so hard over the last few months have caused major flooding and damage across northern parts of the state. The Governor’s office says that the cost of repairing flood damaged roads, dams and other infrastructure could be over $1 billion. Just the cost of repairing the Oroville Dam spillway could top $200 million. While all these numbers point to the magnitude of the problem, they do not include the damage and property loss that individuals and businesses have suffered.

What the State Government Says

The California Department of Water Resources says that “every year millions of Californians are at risk from flooding along thousands of miles of streams, rivers, lakes and coastline.” It goes on to say that no one can predict when flooding will occur – it could be a regular event or occurring after a gap of many years. What can be stated with certainty is that lives will be lost, homes flooded, damaged and destroyed, jobs and income lost and ecosystems damaged. Since 1950 flood disasters have been declared in every county in the state at least 10 times. Some counties have had up to 29 state and federal disaster declarations.

The Low Flood Risk Myth

Living in a low flood risk zone can instill a false sense of confidence about the why you do not need flood insurance. Low risk does not mean no risk. Those living outside high risk zones file over 20% of National Flood Insurance Program (NIFP) claims and receive one third of flooding disaster assistance. Bad drainage, heavy rain, snowmelt, and even something as basic as a broken water main, can cause flooding and severe damage. If you live on a hillside you may not be at risk of water damage, but a mudslide (covered by most flood insurance policies) could damage or destroy your home. The bottom line is that no one is completely safe from the risk of flooding. Being at low risk means only that the chances of being affected by flooding is lower. Are you willing to take a chance with your home and your family’s security?

Taking action to protect your home and family from the effects of a flood is not something to be ignored. You may think your homeowner’s insurance policy will help you to recover from a flooding event. But generally speaking, a standard home insurance policy will not cover flood damage and loss. And even if some protection is available, it may not be enough to help your family get back on their feet after the kind of major property and financial loss that a flood can cause. Flood insurance usually requires a separate policy and navigating through the often confusing world of insurance can lead to mistakes that you may only realize when the time comes to file a claim. That is why calling in on an insurance agent to check to see if you have the flood protection you need is the safest way to keep your home and family secure.

Monday, February 20, 2017

Flood Insurance - What You Need To Know

If you have been through a major flood, you know the kind of damage and property loss it can cause. If you haven’t experienced it, it is difficult to image what it is like.

The National Flood Insurance Program (NFIP) was created in 1968 as a means for property owners to protect themselves financially in the event of flood damage. Flood insurance is offered to homeowners, renters and businesses in communities that participate in the program. According to the NFIP flood is the number one natural disaster in the U.S. From 2011 to 2015, the average flood claim was over $46,000. From 2006 to 2015, flood damage insurance claims exceeded $1.9 billion per year. Major changes to the program will come into effect from 1st April this year as continuing with the program with the current subsidized rates is no longer viable, and it is important that homeowners know about them so they can plan for the future.

NFIP Changes

Flood insurance premiums will increase. On an average, this will be about 6.3%. This increase does not include the Homeowner Flood Insurance Affordability Act (HFIAA) surcharge or the Federal Policy Fee (FPF). If the HFIAA surcharge and FPF are taken into account, the total impact on the policy holder will be around 5.4%. There will be no changes to the:


  • Deductible Factors
  • Federal Policy Fee
  • Reserve Fund Assessment
  • HFIAA Surcharge
  • Probation Surcharge
  • Increased Cost of Compliance (ICC) Premiums
  • Tentative & Provisional Rates
  • Mortgage Portfolio Protection Program (MPPP)

The annual premium rate increase is normally limited to 15% but in some cases it may go up to 18%. Additionally, the premiums for following Pre-Flood Insurance Rate Map (Pre-FIRM) subsidized policies will be increased by 25% per year until the rate is at full risk levels:

  • Non-primary residential properties
  • Business properties
  • Severe Repetitive Loss (SRL) properties, which includes cumulatively damage
  • properties
  • Substantially improved properties

In the case of Pre-FIRM Subsidized Policies the following increases will be effective:

  • Primary residences – premiums will increase on average by 5%
  • Non-primary residences – premiums will increase on average by 24%
  • Policies subject to 25% annual increases – premiums will increase on average by 23%
  • All other Pre-FIRM subsidized risks not covered in the first three bullets (primarily

Condominium and multi-family policies) – premiums will increase on average by 8%

How Are You Affected?

The changes that will come into effect are complex and technical. Most home and business owners will have difficulty in understanding the effect these will have on them. Now is the time to contact your insurance broker to know how the changes will affect you and how much you will pay for flood insurance. If you do not have flood coverage, an insurance professional will be able to help you find the policy you need at the cost that is right for you.

Wednesday, February 15, 2017

Earthquake Insurance is Cheaper than You Think

In 2015 the United States Geological Survey released its Uniform Earthquake Rupture Forecast which says that there is a 93% chance that California will be hit by a 6.7 magnitude earthquake in the next 30 years. That is almost double the size of the Northridge quake. Quakes are a clear and present danger for everyone living in the state. Northridge caused about $40 billion is property damage and about half of that was for homes. Because of the huge payouts, not only did premiums rise, many insurance companies reduced the number of polices they wrote. In response to this, the state Legislature created a basic no-frills policy that insurers could offer, but the coverage left a lot to be desired. Earthquake insurance coverage stagnated.

Earthquake Insurance Coverage Is Low

Despite the danger we all face, only about 10% of California homes have earthquake insurance. There are 2 main reasons for this. The first is that the rates for this coverage were high and many homeowners thought that they couldn’t afford it, in spite of knowing the risks they ran. The other reason is that many presumed that if a quake hit them, federal and state aid would help them recover. That is a major misconception. The aid is meant only to help families survive in the aftermath of a quake, not to repair the damage and rebuild their homes. As for the cost of the coverage, it is less expensive than you think.

New Coverage Options

The California Earthquake Authority (CEA) is a publicly managed organization that provides earthquake insurance through a number of leading insurance companies. Today, the CEA provides around 75% of all earthquake policies sold in California. The Authority’s CEO says that a new research has allowed the risk to be recalibrated and that rates have come down by almost 50%. The large amount of options available enables homeowners to tailor their earthquake insurance options to match their needs and their budgets. For example, the deductible can now be set at anywhere from 5% to 25%, instead of the old range of 10% to 15%.  Coverage for property inside the home can now range from zero to $200,000 instead of the old limit of $5,000. And when a home is uninhabitable after a quake, the loss of use coverage can be between 0 to $100,000.

Today, a home with slab foundation and frame construction can get a basic CEA coverage for just $804 per year.

Get the Coverage that is Right for You

If you do not have earthquake insurance, now is the time to get the coverage you need. And if you do have a policy, this is when you can relook to see if it offers you the protection you need and if not, get additional coverage without emptying your bank account. Earthquake insurance is a complex subject and balancing coverage, deductibles and premiums requires expert knowledge. Contact an insurance broker to know where you stand and what additional coverage is available to you.

Monday, January 23, 2017

The Different Types of Homeowner’s Insurance

There is no one-size-fits-all homeowner’s insurance. Each insurance company has its own coverage types and limitations. When purchasing a homeowners insurance policy, spend time looking at all the options available and also discuss the matter with your insurance broker. He will be able to help you find the right coverage at the right cost. Taking out coverage you don’t need is a waste of money, but not having the protection you require could be disastrous. The following outlines are intended to help you understand the basic homeowner’s insurance types that are available.

Policy Types

  • HO-1: Limited coverage Policy – This is a very basic policy that provides coverage against only a few specific types of disaster. It is no longer available in many states.
  • HO-2: Basic Policy – This is an expanded version of HO-1 that offers protection against a slightly larger range of disasters. There is a version of this available that has been created specifically for mobile homes.
  • HO-3: General Coverage Policy – This is the most common and popular type of policy. It offers protection against all types of risks, excepting those that have been specifically excluded in the policy document.
  • HO-8: Old Home Policy – This policy, designed for older homes provides for compensation for damage on an actual cash basis. This equates to replacement cost less depreciation. In some cases, if the home is very old, full replacement cost coverage may not be available.
  • HO-4: Renter’s Policy – As the names says, this policy is for those who stay in rented homes. It offers protection for all the renter’s possession and any fixtures or fittings, such as new kitchen cabinets, that the renter may have installed at his own cost.
  • HO-6: Condo / Co-Op Policy– This policy provides condo and co-op owners coverage for their belongings in the condo or co-op and also for any parts of the structure that they may own.

Options

The following options are normally available for all types of homeowner’s insurance.

  • Actual Cash Value: This covers the replacement of a home and/or possession with  deduction for depreciation
  • Replacement Cost: This covers the actual cost of replacing a home and/or possession. There is no deduction for depreciation.
  • Guaranteed / Extended Replacement Cost: This is the most comprehensive type of coverage with the greatest protection. Under this option, the policy will cover the full cost of replacing a home to what it was before the loss, irrespective of the actual cost. This means the homeowner is covered even if the replacement cost is greater than the policy limit. This option will normally not cover the cost of upgrading the home to comply with current building codes. However, it is often possible to get an endorsement that will also cover these costs. In some cases, an insurance company may offer an extended replacement coverage instead of a guaranteed one. This will cover replacement cost to a fixed percentage over the policy limit.

If you are planning on purchasing a homeowner’s insurance or want to check if your existing coverage is right for you, consult an insurance professional. He will be able to guide you through the different policy types and options to find the coverage that is right for you.