Messin’ Around in Boats

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When it comes to insuring boats, coverage can be tricky and inconsistent. Some insurance companies sell a marine policy for boats which is no more than a glorified auto policy. The rates are great-but the coverage is not. All policies will cover you if the boat sinks, or if you have a fire or collision,  but the more streamlined  policies may not cover  some of the more subtle losses which could turn out to be big claims. I ran across one company that excluded losses resulting from a “latent” (hidden) defect within the boat. The loss involved a gas tank which  severed from metal fatigue-spilling gasoline throughout the bilge. Luckily it was discovered before an explosion or fire occurred. Since the policy excluded damage resulting from the latent defect, The cleanup was not covered and if the boat exploded there would also be no coverage. The better policies would have excluded the defect itself (the gas tank)-but cover the resulting damage. The policy wording can make a big difference in the extent of coverage provided. The moral of this blog is that it is important to buy yacht insurance from a company that specializes in marine coverage and has the depth (no pun intended) of coverage necessary to address losses that are specific to boats. This will make for happy motoring-or sailing.

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

Why Me?

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In this new age of multiple access to insurance products it is important to have a unique selling proposition to stand apart from the competition.  If one is going to do business like everyone else, the prospect of success is grim. Why should people buy insurance from me? I came up with a list which I believe distinguishes me from a 1,800 customer rep or someone hiding behind an Internet website.

1. I have a graduate degree in Business (MBA) and an advanced degree in insurance (CPCU).

2. I take the time to educate and advise on insurance matters.

3. We don’t just sell insurance products. We design a needs based insurance program.

4. I help solve problems with claims and other insurance issues.

5. I position myself as a colleague with my clients and help with matters other than insurance.

6. My Firm participates in the community and donates funds for worthy causes.

7. We have a cadre of affiliates in law, accounting, real estate, and mortgage services available for our clients.

It is important to be “a cut above” the competition for both the welfare of those we serve as well as our own success. If one fails to do this, one will fall into that dreaded abyss of mediocrity.

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

Getting Mold

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Mold has become a discussion most of us would like to avoid since it has” blossomed” into a real menace in the insurance world. Mold by itself is not covered by insurance but when it appears as a result of a claim, there is coverage. Mold often occurs when there is water involved-i.e. putting out a fire, flooding, or proliferation of rain. In the old days it was eliminated through common cleaning methods with relatively little cost. Now, however, mold has been trumped up to be a biological hazard and people exposed to it have claimed to have experienced respiratory problems. Because of this the methodology used to eliminate it has become specialized and expensive. Many companies have curtailed the amount of coverage available when it used to be open ended. In addition the testing procedure is intricate and costly with very little tolerance for acceptable levels. The hysteria regarding mold has abated a bit but it will continue to be a problem for insurance companies and victims alike. Insureds should ask what coverage is provided in their policies for mold and other potential “pollution” possibilities.. Insurance carriers have been quietly withdrawing from the generous levels of coverage provided in the past.

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

The Name Game

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What is the importance of the name on an insurance policy? It turns out there is plenty of importance because the coverage is going to respond to the person or entity listed as the named insured and any others that are included by definition in the contract – and nobody else. For instance, I find that many homeowner policies list just the husband as the named insured. Yes, the spouse and any relatives are included as insureds – but only if they live in the residence premises. What happens if there is a separation and the wife moves out? If she is not listed specifically on the policy, she has no coverage because she is no longer a resident. I am also finding that LLCs are becoming popular as an ownership mechanism for property – presumably to hide the identity of the owner from others who are not exactly friends. Some think that the LLC will provide a shield from liability. Not so fast on that one. There may be protection from creditors but not necessarily for a bodily injury incident. Many landlords think that by being added as an “additional insured” on their tenant’s policy, there is no need to carry insurance for themselves. The additional insured status will provide protection if the landlord is brought in on a suit that is due to the negligence of the tenant. However, if the claim is a result of something the landlord did or didn’t do, there is no coverage and therefore a separate policy for the owner/landlord is necessary. Then there is the unfortunate situation of the life insurance policy where the beneficiary was selected years ago – and not amended. So the proceeds of the policy go to the ex-wife or the long gone partner instead of the intended person or organization. Dale Carnegie said in “How to Win Friends and Influence People” that a person’s name is to that person the sweetest and most important sound in any language. In the insurance world the accuracy of a name is equally as sweet and important.

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

“You’re Fired!”

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Being fired can be a traumatic experience for an employee – and also for the employer if there are repercussions from the event. The process of letting an employee go should be well thought out and the reason for termination documented as much as possible. Wrongful termination can be a costly backlash to a Firm and it is hard to defend against because the evidence is often subjective. The reason for a termination may be justified such as incompetence, bad work habits, or the person may no longer be needed. The retaliation from the employee could be in the form of alleged discrimination or even harassment. The charge of sexual harassment is most insidious since it is difficult to defend and disprove. Often these cases are settled even if the charge is bogus. Businesses can protect themselves from the allegation of wrongful termination through the purchase of Employment Practices liability Insurance. This coverage is especially important for Firms that primarily have clerical personnel and where turnover may be frequent. However, any business is vulnerable and should consider purchasing insurance. Many employment litigation cases are settled-often for high amounts and therefore the defense cost element of the insurance program is critical. My advice would be to have a competent labor attorney as an ongoing resource to help prevent any unpleasantness resulting from a firing. Early counseling on a prospective firing would be much less expensive than defending an actual employment lawsuit. Legal advice coupled with insurance protection will help take the fear out of saying “you’re fired”.

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

Beware of the Fine Print!

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I have written in previous articles about the need to become familiar with one’s insurance policy. I don’t expect everyone  to read the document cover to cover but it is important to at least review the exclusions and limitations as well as the limits provided. A good insurance professional will alert you to many of the important restrictions but as the old saying goes “two heads are better than one”in any review.. In the homeowner policy be aware of the listing of sub-limits for jewelry, furs, silver, guns. coins, and other similar items. Note that there is no liability protection for businesses even if they are conducted in the home. Flood and earthquake are excluded but can be purchased independently.Your auto policy won’t do you any good if you rent a car in Europe and take particular note of the importance of uninsured/under-insured motorist protection in the auto policy. Yacht polices are particularly diverse in coverage-especially in the definition of what is determined to be a “latent defect”. Insurance documents are tricky and hard to read. Don’t be shy in directing questions to your insurance representative who hopefully is knowledgeable-and available.

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

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It Takes Two to Tango!

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In one of the cases I worked on as a consultant/expert witness, the expert for the other side stated that insureds don’t usually read their policies and therefore the agent/broker is responsible for explaining and ultimately any misunderstandings regarding the insurance coverage. This is nonsense in my opinion. The insurance mechanism is a collaborative effort. The insurance professional provides the product and the expertise that goes with it. The client, in turn, is responsible for providing information and insights into exposure as well as familiarizing themselves with the coverage and limits of the policy. The insured cannot just acquiesce and expect the insurance broker to take care the whole matter. The insurance purchaser is the one that has the understanding of his or her business or personal insurance needs- and has to take the process seriously and have a dialogue with their insurance representative. Failure to do this may result in gaps or inadequate coverage and more times than not it is not the fault of the broker but rather the disinterest of the client. Both parties have to go to the dance floor in designing and implementing a logical need based insurance program.

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

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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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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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