“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

auto savings

 

 

 

 

 

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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Commercial Lease

commercial lease

Proper insurance can take the sting out of most claims, but, if you experience a major loss, your prior agreements with other parties may hinder the recovery process or reveal gaps in insurance.

Take, for instance, that commercial lease you quickly signed but never got around to actually reading.  All leases are not standard and many contain clauses that obligate the lessee to strict and sometimes unreasonable demands from the Landlord.  You are responsible for the space you rent and your responsibilities are contained in the lease agreements. Do you have to include the Landlord as additional insured under your insurance policy? If so, for what limits? Does the agreement specify that you have to replace plate glass, doors, outside siding, etc. that are associated with your space? Does your insurance include coverage for this?

If you are the only tenant, don’t be surprised if you are instructed to insure the entire structure. The tenant usually has to insure that portion of the building occupied by the business. For example, if you rent 20% of the building and the building costs $500,000 to replace, the tenant (lessee) has to insure their space for $100,000 – just as if you owned it. This is called “fire legal liability” in the insurance world. Your liability policy will apply to the rest of the building if you are responsible for damage to it but will not pay for the space you occupy.

The only way around this is to introduce a clause in the lease referred to as a “Waiver of Subrogation”.  The waiver is an agreement between Landlord and tenant that each is responsible for their respective interests. It is a “quid pro quo” arrangement which may make fire legal coverage unnecessary (ask your attorney about this).

Of critical importance is the procedure after a loss. Who pays for the reconstruction of tenant improvements? Is the lease terminated if restoration is not accomplished by a certain date? Does the Landlord have the right to approve every thing that is done in the settlement of your loss?

Make sure you understand your obligation as lessee before you sign a lease. Have your attorney who specializes in lease negotiations look it over. Ask your insurance professional to comment on it also.

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

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So What’s Your Plan?

disaster plan

Insurance is a very important ingredient in the recipe to keep a business going after a disaster strikes. Yet, insurance alone will not guarantee that your Company will retain its customer base during and after the recovery period. Therefore, it is important to develop a business disaster plan that will focus on two strategies – to get back into business as soon as possible and, secondly, to keep your clients happy during the down period.

Many services and retail businesses have the advantage of relocating quickly and returning as a functional operation in a short period of time. Proper insurance coverage will pay the “extra expense” to set up shop and promptly replenish lost inventory and equipment.

Most manufacturers, however, cannot relocate and must stay put in a nonproductive mode until the facility is repaired.

A good disaster plan that is forged before a loss occurs can help your business continue to operate even under difficult circumstances. Some techniques that should be considered are as follows:

  1. Make a deal with a friendly competitor to manufacture your product or service your customers during the recovery period. Your Company must be prepared to do the same if your colleague suffers a loss.
  2. Keep backup records and computer discs away from your headquarters so that they can be accessed easily and utilized if the originals are destroyed.
  3. Store a few months inventory of goods at another location so that your customers will continue to receive your goods even if you have no manufacturing capability.
  4. Seek out alternative suppliers beforehand so you don’t have to scramble if your major supplier suffers a loss of their own.

A copy of the disaster plan should be given to each manager so that he or she can refer to a specific emergency action plan. The manual should contain the names, addresses  (including email), phone and fax numbers of key vendors, support personnel, and customers. Some larger Firms have gone so far as to have a duplicate second office already set up in case of an emergency.

You will find that for the most part the public will be supportive and sympathetic regarding a Firm’s setback because of a loss. Nevertheless that support will wane unless it is perceived that you are determined to get back into business – fast!

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

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“A Matter of Trust”

trust

The recent episodes of corporate dishonesty and negligence is disturbing and no one wants to be on the short end of a business deception. When one places their insurance with a Firm there is an assumption that there will be an honest and competent approach from those persons protecting your assets. There are several methods to test the credibility and competence of those handling your insurance affairs. The following are some recommendations:

1. Ask someone you already trust and respect to recommend an insurance broker. The recommended party presumably has demonstrated their capabilities through a long term relationship with your friend.

2. Your insurance representative should be financially sound and the minimum recommended ratio of current assets to liabilities is 2:1. Their accountant should verify this.

3. It is suggested that you contact the State Insurance Department to see if there are an complaints about the insurance Firm you are researching.

4. Request that the Firm provide testimonial letters and references for you to call.

5. As a test for competency, research the education of the Firm’s personnel and how many employees are licensed or have advanced degrees in insurance. The Firm should profile their employees and comment on how long they have worked for the Firm.

Insurance is a complex business and it is crucial that you deal with honest and technically proficient individuals that will give you the right counsel. If an insurance Firm is unwilling to provide evidence of their capability, don’t deal with them.

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

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