Before & After a Windstorm

The season for wind storms is fast approaching. Although last season was relatively quiescent, it’s advisable to be ready this year.  Most of us think: “It won’t happen to me,” but if it does, it  helps to be prepared. Below are a few before & after tips that will get you through just in case.

s_loss_graphic012114

Before The Storm

Know what insurance coverages you have. It’s not unusual for most people to not know what their homeowner insurance policy actually covers. This is mainly because they haven’t read it. “That’s what my agent is for,” might be a typical refrain. The only way to know what isn’t covered is to review the policy contract with your agent. This can go a long way towards preventing unpleasant surprises like coverage gaps or omissions. Some coverage gaps or omissions are only discovered after a loss, not before. Your policy and the Declarations page outline all of your coverages. It’s advisable to sit down with your agent for a thorough review. Although that’s probably not on your top ten list of desirable things to do, it’s not quite as bad as a root canal (apology to Dentists), & it could save you a lot of grief in the long run. For instance, would your policy cover a month-long hotel stay while your floors and cabinets were being replaced? The coverage that provides that sort of thing is called “loss of use coverage,” and it’s very important protection to have. A review of your policy with your agent could determine if you have it or not.

As one insured who recently had a claim, explains…..

 6 left quotegraphic.80As I walked around on a wet floor, tripping over wet towels, trying to find the phone number for my insurance company and my policy number, I was doing  calculations in my mind based on what I thought my deductible was. I almost just gave up and didn’t even file a claim because I thought no way it was going to be over my deductible to fix this mess. I called and discovered that my deductible was less than I thought! I now keep my policy handy so I can call my agent or the claims department quickly. We were unable to stay in our home while it was being repaired, so the insurance company put us up in an extended stay hotel, with two rooms that had complete kitchens and we were even able to bring our dog.

 

Document & Store Before

Perhaps the most important thing you can do before a storm, other than make sure you have adequate coverage & your policy is in-force, is document. Disputes can and do arise over damages. Document the current condition of your property and your belongings. Take pictures or video of each room once a year at least. It’s also a good idea to make a list of the value of your contents and keep receipts. In the event of a loss, this will not only prove to the insurance company that the possessions you’re claiming were actually in your home, but will also show the pre-existing condition of these items as well. And be sure to store the photos or video in a safe place, such as a flash drive that you can easily put in your safety deposit box. And send a copy to a family member or friend. Deerfield makes available at no charge an electronic file folder for select clients. If they video or photograph receipts & send them to us, we will store them so if there ever is a need to resolve a dispute, we can have proof to the adjuster in no time, and our client doesn’t have to hassle with it.

Safety & Loss Control

Be vigilant regarding safety & loss control.

Check and maintain the pipes in your home on a regular basis. Look for cracks in the grout of tile floors and around tubs, sinks & showers. Water damage can be extremely costly.

 Test your smoke and carbon monoxide detectors every 3-4 months. Fire & smoke damage claims average $4,200 nationally.

Keep a quality fire extinguisher in your house at all times & familiarize yourself with it so if the time comes you will know how to use it.

Keep gutters and downspouts clear of debris. Water will eventually destroy anything it comes in contact with given enough time, and clogged downspouts prevent water from draining away from your house.

Inspect your roof. If you can’t do it yourself, paying for an inspection every couple of years may be worth the money compared to the alternative of having interior damage to your home. A breach in your roof can let water in. Again, water in the wrong places can cause a lot of damage over time.

After The Storm

If you have damage after the storm is over,  you should document the conditions. Use your smart phone or a camera before making any repairs. Then quickly make further damage prevention repairs. These types of repairs are called “mitigating damages” and are your responsibility as the policy holder. prepared_illust0207_blogMitigating damages means that you minimize further harm to your property — such as turning off the water if you have a broken pipe, or boarding up a broken window or door, or even tarping over roof damage. If you are forced off premises, you may need to inspect the property often to make sure it isn’t vulnerable to further damage. Do not, however, make any permanent repairs or throw out furniture or other expensive items until the adjuster has inspected the loss.

You should also keep receipts of any emergency repairs you have to make or anything that you have to spend money on, like batteries, fans, food, bottled water, or building materials.

Be organized, keep a log of calls and emails and take detailed notes – including the names of contractors, claims adjusters, city or county personnel. Adjusters can be reassigned during a claim, or there may be more than one adjuster. Documentation of all contacts will prove helpful if you and the insurance company later have different versions of who said what to whom.

When your adjuster arrives to inspect the damages, have evidence of your loss available, such as receipts, pictures or videos. These can be compared to photos taken before the loss to help establish the value of damaged or destroyed items & proof they actually existed. And don’t forget your policies; some claims can be included in more than one policy, & coverages may overlap. At this point you will be in the claims adjustment driver’s seat assuming you have done all of the above. And whatever you do, don’t stop paying your insurance premiums! Even if your home is uninhabitable, your policy includes other coverages that you may need, & you will still have value there even if your home is a wreck.

Work With the Contractor

Your homeowner policy allows you to repair your home and choose your contractor. Be sure to hire one who has experience with insurance companies, and be very sure that you, your contractor, and the insurance company all agree on the scope of work being done.

Working with a contractor who may be going to subcontract the work may be the most frustrating part of your claim. So make sure you also monitor closely, & interact with the subcontractor who is actually doing the work.

The insured continues…..

4 left quotegraphic .60 The claims process takes longer than you would think. You have to file the claim, wait for the adjuster to call you back, then more waiting on the inspector to come and inspect the damage. Then the claim has to be sent to the insurance company to be evaluated. Once it’s approved, they send you the claim payment breakdown. Take ‘before’ pictures of all areas that will be worked on before the work starts so you will have a reference to go back to if there are any issues with the final job. Then take ‘after’ pictures to document the repairs.

Our Recommendation

Having the right coverages in place before a loss, as well as photos or videos easily accessible, is key to a successful claim outcome. We recommend a thorough review of your policies at each renewal with your agent. You should understand what your policy does and does not cover, so you can be prepared to secure the coverage you need, or if a particular coverage is not available or feasible, consider safety & loss control techniques like a water shut off system. And finally, be mindful of the fact that an insurance policy has its limitations, so self-insure to the extent necessary by setting up a separate dedicated escrow or insurance account & fund it to take care of those items that insurance won’t.  

The Deerfield Team
800.233.6428
j@deerfieldadvisors.com

DISCLAIMER

This article is intended only as a general discussion of these issues & we cannot guarantee the accuracy thereof. It does not purport to provide legal, accounting, or other professional advice. If such advice is needed, please consult with your attorney, accountant, or other qualified adviser. The Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Accordingly, the information provided herein is provided with the understanding that Deerfield Advisors is not engaged in rendering legal advice. Deerfield Advisors strongly advises that clients and/or the reader of this publication contact an attorney to obtain advice with respect to any particular issue or problem discussed here. Also, please know that discussions of insurance policy language is descriptive only. We strongly advise that one’s individual policy & ones advisor be consulted regarding this subject matter before any action is taken in any way. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. The Deerfield Advisor White Paper Series is a registered trademark of Deerfield Asset Management Inc. DBA, Deerfield Advisors and is produced by Deerfield Advisors for the benefit of its clients, and any other use is strictly prohibited. All rights reserved. Copyright © 2014.

Holiday Gatherings & Liability Risk

Happy Thanksgiving,

The BIG I, one of the professional organizations our agency maintains aholday5_2013 membership with has published a reminder to homeowners & sponsors of Thanksgiving parties or gatherings. They advise that as millions of Americans host and attend Thanksgiving dinners this Thursday; Many may be unaware of the risks. We advise our clients to consider the risk of being held liable if a guest gets food poisoning or drives home drunk?

Party hosts need to understand their responsibilities when inviting others into their homes and serving food and drinks. “All hosts should be aware that if someone drives drunk or becomes sick after consuming food at a holiday party, the host could actually be liable,” says Robert A. Rusbuldt, Big “I” president & CEO. “In fact, a casserole could bring just as many risks as a cocktail.

A 2012 survey by Trusted Choice® and IIABA found that almost three-fourths of homeowners had served food in their home that was prepared by someone other than themselves. That means more than 111 million homeowners in the United States have put themselves at risk for a lawsuit by just feeding their guests.

The Big “I” and Trusted Choice® provide the following tips for holiday hosts and guests.

Watch What You Eat and Feed Others: Even if food was prepared outside your home by a caterer, another guest, a local deli or the neighborhood pizza joint, YOU could be held liable if someone becomes ill from consuming it on your property. Make sure that you check food and don’t put anything out that you suspect may be undercooked, spoiled or contaminated. Use only reputable food purveyors. Follow proper food-handling, heating/cooling and storage recommendations. When in doubt, throw it out.

Mix up the Activities, not just the Cocktails: If the party centers on drinking, guests will likely drink more. Schedule entertainment or activities that do not involve alcohol. Provide safe filling food for guests and alternative non-alcoholic beverages. Know who the designated drivers are ahead of time.

Party Elsewhere: Host your party at a restaurant or bar that has a liquor license, rather than in a home or office to decrease your liability.

Call a Cab, Get a Room or Have a Slumber Party: Arrange transportation or overnight accommodations for those who cannot or should not drive home.

Just Say No: Do not serve guests who are visibly intoxicated. Stop serving alcohol at least one hour before the party is scheduled to end. Stay alert and always remember your responsibilities as a host. You might also consider hiring an off-duty police officer or professional bouncer to discreetly monitor guests’ sobriety or handle any alcohol-related problems as guests leave.

Do Your Homework: When hosting a holiday party, individuals should look to the liability portion of their homeowners or renters insurance policy to protect them if they are sued and found liable for an accident involving a guest who drank or got sick after consuming food at their home. Consumers should regularly review their liability coverage limits to ensure they are adequately covered should an accident or illness occur.

Know Your State Laws and Statutes: In many states, party hosts can be held liable if a guest is involved in an alcohol-related accident. Many courts have found hosts liable for damages their party guests cause as a result of consuming alcohol and then driving motor vehicles. Many states have also enacted statutes that can be interpreted as mandating non-commercial social host liability. So, if a guest or third party is injured in an accident that is related to alcohol consumption and the drinking can be linked to you, you could be held responsible for the payment of medical bills, vehicle repair costs, lost time from work and – in the worst case – claims for wrongful death resulting in huge monetary settlements.

Consider an Umbrella Policy: While holiday partygoers and hosts alike should act responsibly and know their limits, consumers need to acknowledge that most risks cannot be entirely eliminated. But planning ahead and learning about what’s involved in hosting a reception is the best defense. Purchasing a personal “umbrella” liability policy – providing $1 million or more in additional coverage over the limit of a standard homeowners or renters policy – may be a prudent move for the frequent party host.

Thanksgiving dinner or even a neighborhood holiday potluck could have disastrous results for the host if someone is stricken with food-poisoning, Whether the food served came from your kitchen, a fancy caterer, or a Chinese restaurant down the street, if you serve it, you could be liable if anyone gets sick.

We hope this is helpful. Please remember that if we are your current agent and you have a potential issue, please call our main number immediately at 800-233-6428 & leave a voice mail if after hours. We will call you back shortly.

Bon Appetit!

Law & Ordinance

 banner_law_ordinance102813

What is Law & Ordinance Coverage? ~

One of the most important or potentially important types of property or homeowner’s insurance coverage available in some policies & also one of the most commonly overlooked is a coverage called Law & Ordinance. County and city building ordinance codes often change to reflect new standards for building or home construction. This can present a problem if your property suffers a substantial loss because getting that property back to pre-loss condition may require a higher construction standard to reflect these new building & construction codes.

Bringing you homestead up to Code ~

Let’s say, for example, your home was built in 1992 and new building codes were put in place that required updated plumbing or electrical systems, or a change in design and building materials for all new homes, major renovations, or reconstructions from 2001 on. The standard unendorsed homeowner policy may not provide or might exclude coverage for these upgrades. The policy language may state that repairs or reconstructions are done on a replacement cost basis with like kind & quality of materials. The key language is “like kind & quality”, not “new updated” materials. This of course means that the homeowner bears the full monetary burden for complying with the new code. These additional costs for labor and materials could be substantial. Hence, the cost of replacing your dwelling due to a partial or complete loss can be greatly increased. If these new building codes are not met during re-construction the code inspector may have the power to stop construction and declare the dwelling as uninhabitable until such time as these building standards are properly met. If your insurance policy doesn’t provide any or inadequate Law & Ordinance coverage to allow for these new government standards, then you risk being in the untenable position of funding these upgrades yourself before completing the repairs and resuming construction.

One Conclusion ~

Single family homes built more than ten years ago are potentially deficient in some aspect of the applicable building code. Ordinance or Law Coverage (CP 04 05) and Ordinance or Law – Increased Period of Restoration (CP 15 31) are very broad forms designed to close this coverage gap for commercial property policies. Purchased together, these endorsements pay the additional costs and loss of income resulting from the application of any ordinance or law affecting the reconstruction of the covered structure.

For the non-commercial property such as an owner occupied dwelling otherwise known as “single family dwelling endorsements can be added by manuscript , built into the policy contract language itself, or added by endorsement.

 

Not Having Law & Ordinance Can Make a Small Loss Even Bigger ~

Another serious issue is the requirement in some jurisdictions that call for the complete destruction & rebuilding of an entire structure if a certain percentage of the structure is destroyed in a partial loss situation. The insurance company may deny the claim out right or pay just that amount of Law & Ordinance coverage you have in force unless the policy provides this coverage either through endorsement or the policy contract corpus itself.

It is also worth noting that people with older homes are not the only ones with a risk exposure related to the Law & Ordinance issue. Government entities, be they city, county, state or federal often times have the power to decree changes of these sorts at will, age of home will not matter at that point.

Law & ordinance issues, although rare can be quite problematic for the uninformed insured because of the opaque nature of the particulars surrounding the coverage. Many insured’s, understandably believe they have coverage because of the replacement cost promise clause in most modern homeowner policies. So in essence, they go about their merry way not knowing that there is an uninsured risk exposure just waiting to happen. Insured’s should have a long talk with their agent or broker about law & ordinance coverage before it’s too late.

 

 The Main Issues Surrounding Law & Ordinance ~

At the end of the day here’s a brief of the main issues surrounding law & ordinance insurance coverage

  • Replacement Cost Loss Settlement. Most unendorsed homeowner policies do not adequately provide coverage replacing damaged property that represents a higher dollar value because of a city or county ordinance.
  • Partial Damage. Even if you have no damage whatsoever to part of your property in the event of a loss but do because of adjoining or nearby property. You may still be forced to replace the “still good undamaged property” because that’s what is required to properly replace the actual damage or to not replace would violate safety regulations.
  • Cleanup, Debris Removal & Demolition. All these items are usually covered courtesy of Law & ordinance coverage. Bur probably not if the policy is not endorsed. Another important point to consider from a risk exposure stand point.
  • Age of Property Considerations. Be advised, if the property you are insuring is over 30 years old. Law & ordinance coverage can be a life saver if there is ever a loss. At this point the cost vs benefit value ratio becomes overwhelmingly favorable for the insurance buy.

Final Thoughts ~

Law & ordinance coverage, although not inexpensive is a wise investment & an excellent way to transfer the risk of finding yourself out of compliance with a county or city building code. I made the decision to purchase the coverage on my own homeowner policy & I’m glad I did. The peace of mind I have knowing that risk is mitigated goes a long way. We can help you think through the pros & cons of law & ordinance coverage. Call us at your convenience if you care to find out more or have questions.

The Deerfield Team
800.233.6428
j@deerfieldadvisors.com

Insurance Intelligence – Umbrella Liability Coverage

On the Need for Umbrella Liability Coverage. It’s All About Financial Independence~

umbrella1Have you ever heard the phrase “you don’t have to be a millionaire to be sued like one?” Well, it’s true. It happens every day in the court systems all across Texas. There are many nightmare scenarios that demonstrate the need for liability insurance protection; so many, in fact, that the most careful, most conservative person I know…yours truly, has an umbrella policy, and I umbrella2highly recommend it for our clients as well.

 A Nightmare Scenario~

Let’s say, for example, you’re driving down the freeway safely, carefully, and within the posted speed limit, when suddenly an irresponsible driver pulls in front of you trying to get into the other lane to exit, then for some reason slams on his brakes, so you have to swerve over to the next lane to avoid hitting him, and end up rear ending a family of four at 50 mph that’s stopped in traffic. You’ve done untold damage, and it’s really not even your fault, but, because it was a rear-end collision, you will probably be held liable. Not fair, but that’s usually how it goes…The cost of the accident after everything is said and done; medical expenses, lost wages, property damage, etc is off the charts. The next thing you know, you’re served with papers informing you that you’re being sued. The trial happens, a sympathetic jury rules; the verdict comes down for the plaintiff; you were found to be “negligent”. So, with pain & suffering and all the rest added to the award, the grand total comes to an obscene $1.5 million; and to add insult to injury it’s all due within 60 days. What do you do? Well, at this point you have three options: Number one: You write a check for $1.5 million. Number two: If you don’t have the money, you liquidate all the assets you have except your home and a small amount of savings, and perhaps your IRA or 401k. If you’re still short, they come after you for the balance & you file bankruptcy. Losing that kind of money and assets is devastating, but it’s not all bad, at least after 10 years the bankruptcy will be off your credit record, the judgment cleared, and you can start fresh again, right? Wrong! The judgment can be renewed every ten years, which means that the person and his lawyer can hound you for the rest of your life, or until you pay up, whichever comes first. Much better to avoid that nightmare & employ the third option: Call your insurance agent, file the claim and be done with it. Of course option number three only applies if you have an umbrella insurance policy.

Cost Benefit Analysis~

 Which of the above scenarios sounds best to you? The third, of course, just do the cost benefit analysis. Why a cost benefit analysis? Well, it’s very simple. Just like any important purchase or investment decision, you weigh the cost vs. the benefit. There needs to be a reasoned & logical rationale for any insurance buy. For example, if I told you that you could have a $2 million umbrella policy for $4,250 per year, you might say ‘no way, I’ll just be extra careful.” But if I tell you that you can obtain $2 million of coverage for $425, now you have something to think about. I think the latter scenario is a no brainier, which is why I secured umbrella coverage for myself, it meets the common “financial” sense test. If you can transfer that kind of liability to another entity (an insurance company), for that kind of price, you do it. Sign up as quickly as you can before they change their mind. I did it, & I sleep well at night. It’s called peace of mind…financial peace of mind!

How it Works~

How does umbrella coverage work? Umbrella coverage simply “extends” the underlying or primary liability limits you have in place for your auto or home insurance. The need for umbrella coverage is created because carriers limit the amount of primary liability you may purchase. So, let’s say your auto carrier will only allow up to $500,000 of liability, but you determine that you need more insurance protection than that, so you have to seek coverage in the umbrella market to reach your desired limit or amount. Most often, you can secure an umbrella policy through your auto carrier, but not always.

Umbrella coverage is really that simple. It’s just a vehicle to increase your protection from legal liability.

What you’re accomplishing with liability insurance is the transfer of financial risk from yourself to another entity, the insurance company, an important risk management technique.

Final Thoughts~

You can do everything right your whole working life, good investment returns, high rate of savings, careful conservative lifestyle, just to have it all dissolve like a desert mirage, right in front of your eyes, and all for one catastrophic mistake. One mistake in thirty years, but it was the mother of all mistakes, and it not only brought you all the way back to where you started when you were 25 but left you indebted for a long while after that to boot.

It doesn’t matter who you are or what you do, anyone can be sued for the tort of negligence. The society we live in & the system of civil law we live under says you owe a “duty of care” not to inflict bodily injury or property damage on another person.

Many things in life are trade-offs… risk versus reward, cost versus benefit. It’s up to you to weigh the risks and make a wise choice. For me, the consequences of not securing coverage were unacceptable, but only you can decide what’s best for you! At the end of the day, it’s really all about Financial Independence, getting there, and staying there, everyone’s ultimate goal.

The Deerfield Team
800.233.6428
j@deerfieldadvisors.com

DISCLAIMER

This article is intended only as a general discussion of these issues & we cannot guarantee the accuracy thereof. It does not purport to provide legal, accounting, or other professional advice. If such advice is needed, please consult with your attorney, accountant, or other qualified adviser. The Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Accordingly, the information provided herein is provided with the understanding that Deerfield Advisors is not engaged in rendering legal advice. Deerfield Advisors strongly advises that clients and/or the reader of this publication contact an attorney to obtain advice with respect to any particular issue or problem discussed here. Also, please know that discussions of insurance policy language is descriptive only. We strongly advise that one’s individual policy & ones advisor be consulted regarding this subject matter before any action is taken in any way. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. The Deerfield Advisor White Paper Series is a registered trademark of Deerfield Asset Management Inc. DBA, Deerfield Advisors and is produced by Deerfield Advisors for the benefit of its clients, and any other use is strictly prohibited. All rights reserved. Copyright © 2014.