“You Ruined My Piano”

piano

Ah, the Christmas parties will soon be in full swing and the crowds will be in your living room feeling no pain from the wine and spirits that go with celebrating the season. Sure enough there is that particularly clumsy inebriated guest that admires your piano and then proceeds to spill his wine all over the felt hammers and into the guts of the instrument – staining the sounding board and making a general mess. After you ask him to leave and never come back, you ponder over the repair. Most homeowner polices provide coverage for contents but not for something like this since most policies are written on a  “named perils” basis-and there is no peril listed for spilled wine. Named perils would include fire, theft, smoke, vandalism and several other possible calamities but not the actions of your obnoxious guest. You can expand coverage for contents to “all risk” which would cover this incident but there is another problem-the deductible.  If the piano had been “scheduled” on a special valuable items  “floater” all would be forgiven since the restoration would be fully covered – with no deductible. There may be several items of fine art that are vulnerable to off beat losses. I had a client that had a vascular problem and one of his blood vessels ruptured – damaging his oriental rug. Fortunately he survived the incident and also, happily, the rug was scheduled. Certainly items that have restrictive sublimits in a homeowner policy like jewelry, silver, and other singular items should be scheduled. Those that are not subject to a sublimit should also be considered for the reasons discussed in this article. The season will be especially jolly and you won’t have to stand guard over your precious furniture and keepsakes if you have the proper coverage.

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

Getting Mold

mold

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.

Raindrops

rain

 

If you want to keep the raindrops from falling on your head you will need an umbrella. If you want to protect against a deluge of financial disaster, you should consider an insurance umbrella. The insurance concept of an  ”umbrella” has been used loosely over the years. Some think it is some kind of comprehensive omnibus insurance document that covers just about everything. In truth, the umbrella is a policy that provides excess liability over other policies. For personal insurance matters, the umbrella gives extra liability over your home, autos, boats, vacation homes, and any other eligible assets. There are also umbrellas for businesses and corporations which tend to be much more expensive since the exposures can be significant. Personal umbrellas come in increments of 1,000,000. If you have a house and 2 cars, you can expect to pay about $300 for a 1,000,000 umbrella. The excess coverage provided by an umbrella will not kick in until the “underlying” (home, auto, etc.) policies pay out to their limit. There is a specified requirement of coverage necessary before the umbrella will respond. For homes and autos that requirement is usually 300,000. The umbrella will start responding once the 300,000 is expended. Umbrellas often provide some extra coverage not usually found in the underlying policies. For instance, most personal umbrellas will provide excess liability if you rent a vehicle overseas. The underlying auto policy does not provide this coverage. Not all umbrellas are the same so it is important to check with your insurance professional as to what is and what is not covered. All your relatives living in the household, whether you like them or not, are insureds and protected under this grand parasol of coverage.

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

Where’s the Necklace?

guy

No insurance professional ever wants a call from a client who has just lost an expensive piece of jewelry or some other expensive item that was not properly insured. The homeowner policy provides very little coverage for items such as jewelry, watches, furs, money, silver, guns, precious gems, and stamp and coin collections. One can, however, increase the sub limits in the policy or specifically insure the items with a special policy called a “Scheduled Floater” or “Valuable Items Floater”. The floaters are useful because they are “all risk” and there is no deductible to contend with. Most people think that the primary reason to insure a valuable item is for theft. There are many other things that can happen. A stone could fall out of a setting or a ring could slip off a finger or be accidentally flushed down the drain. Someone could spill a glass of wine while admiring your stamp collection or a child could decide to change the color of your mink. Some people schedule items that are not restricted on the homeowner policy such as cameras, musical instruments, and fine arts. Again, the appeal is that there is no deductible and the coverage is broad. Also, by placing a value on the item, you establish its worth up front so there is no dispute if there is a claim. We often advise our clients to consider not insuring valuable items that are inherited. The sentimental value can’t be replaced and since there is no monetary investment, paying a premium to protect them may not be worth it. Since many are using higher deductibles on their homeowner policies to save premium, the use of floaters for singular items of value makes even more sense. By having a scheduled floater, you can relax a little- knowing that if that Rolex you got for Christmas is missing, you will get another one without despair, tears, and regret.

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

Windfall

trees

I am just finishing up on the claims from Hurricane Sandy. A lot of the claims had do with trees and the damage they did-or didn’t do. One of the concepts that homeowners have difficulty with is who is responsible for a fallen tree. If a neighbor’s tree falls on your lawn, fence, or house, it is your responsibility to pay for the repair and/or removal. A tree is considered by the insurance industry as a neutral item of nature and therefore you are not responsible for damage it does to others. The only exception is when the tree in question was obviously rotted and the neighbor knew of the condition. If this were the case the neighbor would be “liable” and obligated to pay the claim. If a tree lands on a “structure” your insurance will pay for the removal of the tree and the damage to the structure. Driveways, walkways, fences, garages, as well as the house are considered structures. If there are trees that just fall on the lawn, there is usually a small amount of compensation (usually $1000) to get rid of it-after the deductible is expended. There is compensation of usually $1000 for lightning strikes even if the tree is left standing. Lightning normally kills the tree and the insurance company wants to encourage its removal. I often get inquiries regarding “preventative maintenance”. “My tree has gotten so big and I think it may fall on the house if there is a storm”. The insurance industry expects people to take care of their house and property that includes appropriate tree trimming. They won’t pay you to possibly avert a claim. A tree is a beautiful thing but costly to maintain and dispose of. In our early history the tall majestic trees were cut and sold to the British for use as masts on the warships. If a tree happened to fall on its own, the owner could keep it for his own use-hence the derivation of the word “windfall”.

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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Special Insurance Needed for Domestic Employees

Worker's Compensation

Lately, I have been finding that many households are hiring part-time and full-time employees to help manage the complexities of modern-day lifestyles. Mothers’ helpers are becoming commonplace since it is so routine to have two breadwinners in the family. It is also common to see private nurses and home health aides hired to take care of an elderly relative.

These caretakers are your employees and the latter are entitled to state statutory medical and disability benefits. If someone you hire gets hurt on the job, you will be responsible for providing these benefits~regardless of the circumstances of the accidents.

Because of this, it is imperative that as an “employer” you purchase a Worker’s Compensation insurance policy which will respond to these mandated benefits. What happens if an employee gets hurt and you don’t have a Worker’s Compensation policy?

Well, be prepared to pay out of your pocket the full medical costs, lost wages and possible disability settlement. This could cripple a family financially. It doesn’t matter if your employee falls down the stairs because they are clumsy or gets hurt in an auto accident while doing an errand. You will probably be on the hook to provide benefits.

The cost of these policies vary depending on the type of work provided and the weekly hours on the job. If you hire a couple of college kids to paint your house, the policy will be expensive because of the greater likelihood of injury. The rate for a housekeeper will be much less. Don’t be fooled by terms, “I’m fully insured” or “I’m an independent contractor.” In a court of law you may be held responsible if they are working for you. If a person performing work for you has the characteristics of an employee, he or she will most likely be declared an employee if there is a lawsuit over an injury. The homeowner policy specifically excludes bodily injury to anyone who is eligible to receive Worker’s Compensation.

Also, if you run a business, anyone working for you is entitled to benefits for on the job injury~regardless of how many hours they spend on the job.

For more information of this tricky area of insurance, please contact me, Guy Hatfield at 203.256.5660. I’d be happy to answer all your questions and clarify anything that seems confusing.

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An Umbrella for Stormy Weather

umbrella policy

All of us have the potential of experiencing “stormy weather” when it comes to insurance claims. Even careful drivers could find themselves negligent in a car accident where bodily injury claims reach staggering amounts. Although severe accidents are rare, it is advisable to “load up’ on insurance coverage for our protection against liability claims from others you may injure. A good way to do this is to purchase what is referred to as an “umbrella” policy. Many think that the term “umbrella” is some mysterious all-encompassing insurance contract that will cover everything imaginable. The umbrella is merely a policy that provides excess liability insurance. It is additional insurance beyond what is provided by other policies you may have. For instance, if you have an auto policy that has $300,000 of liability limits and you purchase an umbrella for $1,000,000, your total protection is $1,300,000. The umbrella will provide excess liability over a variety of insurable interests such as auto, home and investment (non business) properties, and boats. The cost of an umbrella is surprisingly low. The premium for a $1,000,000 contract providing excess liability over two cars and a home is approximately $180 a year. Personal insurance umbrella limits are available up to $10,000,000 usually.

Umbrellas are frequently used in business insurance as well. Limits could exceed $100,000,000 for some industries where there is a possibility of catastrophic loss. Movie theatres and other businesses where a large number of people congregate in a confined space purchase high limits.

Umbrellas normally provide the same coverage found in the underlying policy and some provide expanded coverage such as automobile liability while driving in other countries.

Ask your insurance agent to design an umbrella program that is right for you.

For further information about the personal and commercial umbrella and other insurance matters contact Guy Hatfield at 203.256.5660.

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