The Cyber Crook

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Most people think of insurance as a mechanism to insure things such as a house, car, jewelry, boats and other tangible items. Now that the Internet is entrenched in the way we do business there is a new exposure that is just as real-cyber crime.

There have been more and more instances where a hacker has been able to infiltrate not only personal databases but commercial ones as well where information is not only stolen but also utilized to cause further financial damage to the victim. The most frightening scenario is where the hacker thief accesses the banking information of the unsuspecting person or business and arranges a money transfer to an unknown account. The bank will honor the instructions since it appears to come from the depositor. The bank may not take responsibility for the fraudulent transaction since it came from your Internet site and therefore it is not considered a bank error.

Fortunately there are insurance policies that will reimburse for a fraudulent money transfer as well as protect for other first party losses such as a virus which may wipe out an entire database.

In addition, insurance is available for third party cyber liability where a business may inadvertently disclose confidential client information such as social security numbers or credit card data or introduce a virus to another entity.

There are many scenarios of potential cyber crime. It is important for an individual or business to assess their exposure and utilize risk management techniques and/or insurance for protection.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Show Me The Money

money

As a follow up to my previous blog, I would like to comment on the financial issues of both The federal Flood program and the Federal Emergency Management Agency (FEMA) in general. Several years ago the Federal Flood Administration, which is a division of FEMA was financially sound and the premiums charged were roughly equal to the claims paid. Katrina and the Mississippi floods changed all of that and the program was quickly put in the red. Subsequent storms including the latest Hurricane Sandy have exasperated the situation and the Flood program is considerably in debt. FEMA is actually worse off because it has no income source and since the United States has to borrow 40% of its budget, FEMA is part of that borrowing. In other words the Chinese and other creditors are financing the FEMA relief effort. When our President says, “tell us what you need” to the afflicted regions, he must know that there is no reserve or rainy day fund to help. It is not even taxpayer money since all of the taxes have been used for other things and we still have to borrow over one trillion dollars a year to pay remaining expenses-irrespective of FEMA. FEMA is a necessary and important Agency but it is unfunded-just like the Social Security Fund, which should have trillions in cash but really has nothing but “IOUs” in its coffers. FEMA’s noble mission may be disaster aid and assistance but its stewardship is just plain disaster.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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The Cruel Sea

Hurricane Sandy

The recent hurricane “Sandy” caused unprecedented damage here on the Ct. coast as well as in New York and New Jersey. Actually the storm was not declared a hurricane by the Ct. Insurance commissioner which is fortunate since many homeowner policies have a special “hurricane deductible” which is between 2 and 5 percent of the dwelling amount.

  Many of the claims, however, are solely flood losses and the only coverage available is FEMAs flood contract.The homeowner contract excludes flood which is defined as surface water which permeates two or more acreas of normally dry land or two or more properties which are contiguous.The homeowner policy  provides coverage for some water issues but not the inundation of surface water. There are some private companies that offer  flood but they usually require that the government contract respond first-up to the maximum limit provided which is 250000 for a residence.

    Many victims of the storm never anticipated that the  surge would affect their dwellings and thus did not have flood coverage. If they had a mortgage , the bank would have required flood coverage, but it is not mandatory if a home is unencumbered financially.

   Since there are so many claims with too few adjusters to go around, the insured must take an active role in facilitating the claim. The following are suggestions:

1. Take photos and document damaged property.

2. Do what is necessary to protect undamaged property.

3. Separate damaged property from undamaged items.

4. Reconstruction should be delayed until an adjuster visits the site and provides an preliminary estimate.However, emergency construction to prevent further damge should be done immediately.

  The flood policy doesn’t have a lot of “bells and whistles” but it is the only game in town and wasn’t even available until the mid twentieth century.          

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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“Selling vs. Solving”

riskMany in our industry refer to themselves as ”Insurance Salespeople” or “Insurance Brokers” as if the objective of their efforts is to sell an insurance policy and collect a commission. Yes, selling a policy is necessary to make a living, but the real objective for the insurance professional is to identify a problem or exposure for the client and solve it through an appropriate insurance product, risk management process, or through a non-insurance mechanism. The focus should be on design and implementation based on need and perceived risk – where the solution to a problem is the implementation of strategies and techniques which may or may not include insurance. All too often it is the peddling of an insurance policy that trumps a well thought out process of uncovering and addressing what really needs to be protected.

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Saving on Auto Insurance

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There are a number of strategies one can use to save on automobile insurance and get the most for the insurance dollar:

If you have good medical coverage, consider dropping the medical option on your automobile policy since it mostly is a duplication of coverage provided under most health policies.

If you are a senior, take a safe driving course and get an additional discount. Insure your car with the same company that insures your home and get a 10% discount.

If you do not drive a lot, consider high deductibles or even self-insuring on collision and comprehensive. The less you drive the less chance you will be involved in an accident.

Some autos are more expensive than others to insure Each car is assigned a “symbol”. The higher the symbol, the higher the cost of insurance. If you are considering buying a car, call your agent and ask what symbol it is and how it affects your premium.

The cost to raise your liability limits from $100,000 to $300,000 is surprisingly inexpensive – and you triple your coverage.

If you don’t drive a car for long periods of time (winter lay-up) consider suspending the insurance for that period of time.

Insurance is high for young drivers – especially if they have their own car. Consider buying a reliable older car for your teenager where you can self-insure for collision and comprehensive without risking a big investment.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Automobile Rates

auto savingsAutomobile insurance has always been a hot topic since it affects virtually all of us. The premiums involved are significant.

Thankfully, rates have stabilized and, in many cases, premiums are declining. There are a number of reasons why this has occurred.

Companies now share information with each other.  Because of this the correct premium can be established right from the very start since the applicant’s record is readily available. Before this system was implemented, insurance agents and companies had to rely on the “memory” of the prospective insured who often failed to disclose every incident. Now every individual is charged the appropriate premium based on his or her motor vehicle record and loss history.

People are more safety conscious and certainly are more aware of the dangers and penalties of driving under the influence of alcohol. Teen-awareness seminars and “safe ride programs” have done much to curtail the high incidence of youthful accidents.

Cars aren’t made like they used to be – and thank goodness! Automobiles are much safer now with the advent of airbags, anti-lock brakes and other safety features. The better vehicular design has done much to reduce bodily injury claims.

Even though premiums are on the decline, be careful of companies that use the overused slogan “great rates for safe drivers”. Some insurance carriers advertise low rates for a safe driver but as soon as you have an accident you may be considered “unsafe” – and you might be dropped like a hot potato. Choose an insurance carrier that won’t cancel you at the first sign of trouble and, above all, choose an agent that will go to bat for you if you are unfairly treated.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Growing Too Old

We all wish for longevity but sometimes living too long comes with a price – an expensive one if you need convalescent care in your final years.

Convalescent care can cost in excess of $100,000/yr and Medicare will not pick up the tab. Long term care (LTC) contracts are what is needed to address this potential problem.

LTC contracts will provide a daily amount for a specific number of years in the event you need care. Many will reimburse for care in your own home and some will pay for modifications such as ramps, a remodeled kitchen, etc.

Think of your premiums as a purchase of a “reserve”. $2,500 a year will buy a “reserve” of up to $365,000 (a contract for 5 years at $200/day) for someone in their mid sixties.

Give us a call and we will design a proposal for you.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660

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Speaking of Insurance

Board of Directors Insurance

If you are a director for a profit or a not for profit venture, make sure the organization is providing Directors and Officers D & O liability insurance for your protection. If the company has general liability insurance, coverage will extend to the directors for bodily injury and property damage incidents. However, if the board of directors is sued for a mistake or wrongful act, a separate D & O policy is necessary.

There is some immunity for serving on a charitable Board as long as the mistake was made in “good faith”. Your personal Umbrella Liability policy will provide coverage for bodily injury or property damage for your service as a Board member for a charitable organization. However, coverage will not extend to mistakes or errors that result in financial harm to other parties.

Even if the alleged mistake is erroneous, defense costs could be considerable and a large part of the value of Directors & Officers liability policies is the legal reimbursement provided.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Getting the Right Insurance Means Consulting a Professional

insurance professional

Selecting an insurance program solely on the lowest price is dangerous territory. Unlike other products insurance is a “promise” to perform. The product is invisible except for a piece of paper that is filled with tricky language intermingled with double negatives. Most insurance companies and polices are sound but I recommend that you talk to someone that completely understands insurance before you entrust the protection of your assets to an insurance company.

As a consultant, I have been brought into many cases where the consumer did not get the coverage he or she thought was in place. All insurance programs are great – until there is a claim – that is not covered.

Find a knowledgeable insurance professional that will help you choose the coverage and options that are best for you. For instance, if you are the breadwinner of the family make sure that you “load up” on the uninsured/underinsured motorist option on your auto policy. Some people think this coverage is strictly for medical reimbursement. The most important feature of this coverage is the disability award provided in the event that you are disabled by another driver who has little or no coverage to compensate you for the injury. How about all those exclusions under the homeowner policy? Are you aware of them? Did you know that many homeowner policies are all risk on the structure but not all risk on the contents? If you rent a car should you take the insurance offered?

Insurance is not a shelf product and there are traps waiting for the complacent consumer. Find someone who is available to answer questions like the ones above. Like the old saying goes, you get what you pay for.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Insurance Needed for the Long Term

long term insurance

One of my insurance colleagues in the estate-planning area points out two critical issues we should be concerned about: dying too soon – or living too long.

Naturally, most of us would find dying too soon a much bigger concern. If you are worried about the economic implications of death, life insurance is a good remedy. However, living to a ripe old age may bring an unanticipated financial burden as well – especially if convalescent care is required.

Neither Medicare or health insurance policies will pay for services provided for convalescent care. Medicaid will step in but only after your own personal assets have been expended. The state of Connecticut is concerned that many citizens will have their savings depleted and will have to resort to Medicaid in the event of a lengthy convalescent stay.

Because of this, the state has developed a “partnership” arrangement with certain insurance companies in an effort to encourage the purchase of long-term-care polices.

Fortunately, there are a number of very good long-term-care (LTC) insurance policies that will provide per diem funds for this type of care.

You can choose how many years it will be available (1 year, 3 years, a lifetime) and the waiting period before benefits  will be paid (30 days after convalescence, 90 days, etc.)

Many contracts will reimburse for care in your own home if you choose not to go to a facility. Some will pay for modifications such as ramps, a remodeled kitchen or a modified bathroom.

Many people procrastinate over purchasing  long-term-convelescent policy because of the expense and the thought that ending up in a nursing home is “unthinkable.” If you wait too long to invest in a LTC contract, the premium will be prohibitively expensive. There is a big in your mid-60′s as opposed to late 70′s.

It’s easier to think of your premiums as buying a “reserve”: $1,800 a year will buy a “reserve” of up to $365,000 (a contract for 5 years at $200 a day) for someone in their mid-60s.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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