Put Your Home Insurance Dollars Where They’ll Count

Insurance is probably the least exciting part of buying a home, but it’s one of the most important. Buying the right amount of coverage is essential to protecting your home and your assets, and understanding the most common claims on homeowner policies can help you determine where you need that extra protection.

Fire

Fires can have dire consequences. Insure your house and personal belongings at replacement cost rather than actual cash value. Premiums are higher, but, if you consider you may lose everything, it’s well worth the extra money.

Animal attacks

It’s hard to imagine Fido or Fluffy biting someone. But if they clamp down on a visitor or neighbor, you too may feel the pain. As a pet owner, you’re liable for your animal’s actions, and if someone is bitten and needs medical attention, you’ll have to pay for it. Ensure you have sufficient liability coverage.

Water

Ruptured pipes, clogged drains, leaky roofs or a faucet you forgot to turn off all cause water damage. If it’s serious, the main structural supports of your house can be compromised. Standard homeowner policies do NOT insure against flood, so make sure you purchase supplemental insurance.

Wind and hail

No matter where you live, you’re susceptible to wind and hail: Coastal states suffer through hurricanes; the plains have tornadoes; and blizzards affect the north. The exterior of your house can suffer damage in serious weather conditions, so make sure your coverage limits and deductible are prepared for high-cost repairs.

Update Your Homeowners Insurance Before Summer

As summer draws near and temperatures warm, it’s almost overwhelmingly tempting to jump into summer activities. But before you start enjoying the great outdoors again, examine your homeowners’ policy to make sure it covers the hazards that summer can bring. Updating your insurance now will ensure you have a relaxing summer ahead.

BBQ

As the thermometer rises, you can almost hear the sizzle of the grill. Place it too close to your home, and you might hear the sizzle of your house.

Follow proper safety precautions and make sure your policy covers not only your house, but also other freestanding structures.

Renovations

Now that the winter chill has passed, you can finally put that new roof on your garage. Or maybe it’s time for that addition you’ve been saving for. If you’re making substantial renovations to your home, it likely will drive up the replacement cost. Make sure your homeowners’ insurance policy is updated accordingly.

Pools

Summer means pool time. But with 3,000 plus accidental drownings a year, your pool could be a potential hazard. If you have a pool, be sure to notify your insurance company. Your premiums will increase, but you’ll be protected. Ensure your liability coverage covers all situations, even if someone is in your pool without your permission.

Trampolines

Standard homeowners’ policies come with liability coverage, but they may not extend to trampolines. Many insurers view trampolines as lawsuits in the making and exclude them.

Check your insurance policy to see if there are restrictions on trampolines before making a purchase.

Pets

Summer may seem like a great time to make an addition to your family.

But if you buy a new puppy, don’t forget to tell your insurance company. If your dog bites someone, your liability insurance will cover it … but only if your dog is listed on the policy.

Assure Family Peace Using Life Insurance

Traditionally, we think of life insurance as a way to ensure our loved ones are cared for after our death.

But life insurance can also be used to solve a host of other financial headaches – and some of the most interesting uses can come when the house is paid off and the children are out on their own.

Consider this situation: You have a beach house worth $500,000, and it constitutes half of your wealth. Your two sons don’t use it, but your daughter regularly spends her vacations there. You want your daughter to have the beach house, but you aren’t able to leave an equivalent amount to your sons.

The solution: You purchase a life insurance policy for the value of the beach house. When you and your spouse die, your daughter will inherit the beach house that she loves, one son will get your $500,000 in savings, and the other son will get all of your life-insurance payout.

Once you start thinking of life insurance as way to turn a non-liquid asset into a liquid asset, it’s easy to see other ways it can be used to address liquidity problems, often faced by individuals with family businesses or considerable (illiquid) assets.

For example, the owner of a family business could insure himself in order to distribute the worth of the business to his children, who don’t want to join the company.

Or two business partners could use life-insurance policies to allow one partners’ heirs to buy themselves out of their half the business.

This alternative use of life insurance may look tricky, but it’s actually simple.

It essentially relies on life insurance’s intended purpose – providing your heirs with liquidity when they need it most.

Instead of replacing a salary, however, the policy replaces the value of an asset.

Your advisor can help you decide if a life insurance purchase will solve a liquidity – or family – problem for you.

Popular FSAs May be Less so with ACA Changes

This year brings changes to flexible spending accounts (FSAs) – the workplace arrangement that allows employees to save, pre-tax, for expected medical expenses. You contribute to an FSA through a monthly paycheck deduction by your employer, then the account is available to you for medical expenses, and you are not taxed on it.

As a result, FSAs have been popular, but changes to the Affordable Care Act (ACA) could make them less attractive:

Reduced contributions

Under previous rules, your employer could deduct any amount, usually $3,000 to $5,000 a year. Now FSA contributions are limited to $2,500 a year, adjusted annually for inflation.

Over-the-counter meds

You may recall that FSA dollars could be used for over-the-counter medications up to 2011; since then, FSA dollars can only be used for prescription medications.

Use it or lose it

You must use your FSA dollars by the end of the year, or they revert back to company control.

Who should contribute

Flexible spending accounts may make sense for families with steady, recurring and/or predictable health spending needs that aren’t covered by their medical insurance policies – including deductibles.

If you or a family member has regular health expenditures or needs orthodontic care, you may want to consider contributing to an FSA. But don’t over-contribute. You’ll run into the use-it-or-lose-it provisions.

If you’re not sure about FSA changes and how they affect you, your advisor can help you understand your options.

Accident Insurance Can Give You Peace of Mind

Accidents can happen anytime to anyone. Whether it’s a broken bone or a bee sting, sometimes the unexpected medical costs can be more shocking than the actual accident. That’s why it’s important to be prepared. While major medical insurance will cover most accident treatments, every insurance policy has exclusions.

How can you fill the gaps caused by those exclusions? Through accident insurance – an affordable policy that can assist you with excluded expenses and unexpected costs during recovery.

But accident insurance has other benefits. These include:

Income replacement

If you’re hurt and can’t work, you won’t receive a paycheck unless the accident happened on the job. Even if you have savings, this can create significant problems.

Accident insurance can replace your income if you’re injured, or if you must take time off work to care for an injured family member.

You can use this money just like your regular paycheck, but here’s the real bonus: it’s tax free!

Coverage for non-medical expenses

Your medical insurance will help with most major medical costs, but when you’re injured, every aspect of your life is affected.

With accident insurance, you can get cash to cover non-medical expenses like extra childcare and/or educational expenses, hospital parking and meals.

Personalization

Your plan can be tailored to your needs. For example, children are covered under family plans and most policies don’t have age or claim penalties. Individual plans are also available, and depending on your occupation and risk level, coverage can be extended to cover additional medical and non-medical expenses.

Priceless peace of mind

There are many accident insurance policies available – all with different benefits. Discuss your needs with your advisor, who will be able to help you select the policy for you. And, while accident insurance has all the benefits noted above, it’s most important benefit is peace of mind – which is priceless.

CGL Policies Offer Business Owners Peace of Mind

A commercial general liability policy (CGL) provides coverage for bodily injury to a person, or damage to the property of others caused by a company’s negligence. Although you never think it will happen to you, damage caused by negligence does happen, and it’s something you should prepare for.

Effectively, your CGL offers broad coverage and peace of mind. If you read an insuring agreement – which is at the heart of the CGL policy – it says: “We will pay those sums that the insured becomes legally obligated to pay as compensatory damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”

But your coverage doesn’t end there: Your CGL also covers personal injury liability, including libel and slander, as well as advertising injury, a very important addition for many businesses.

For the last several years, courts have repeatedly ruled that the CGL policy is not a performance bond.

This means that a CGL policy does not cover the quality of a company’s advice or services. As a result, a business owner is less likely to low-bid a job and perform poorly, because the owner is not able to rely on an insurance carrier to assume that risk.

Following are several factors you should be aware of when deciding if your company needs CGL cover:

A few of many business exposures covered under CGL:

  • Additional insured coverage when you sign agreements or contracts.
  • Premises and operations liability for persons injured or items damaged while on your premises, or due to your business operations.
  • Tenant’s liability, which protects tenants in the event they damage someone else’s property. For example, they accidentally start a fire in rented premises.

Benefits of having CGL cover:

  • A legal defense for covered claims.
  • Payment of bonds and court costs associated with a claim.
  • Limited financial remuneration when assisting the carrier in the defense of a claim.

CGL exclusions:

There are exclusions under CGL cover, but understanding all of them can be tricky. Forms differ, and different jurisdictions render very diverse opinions. Here, however, are some general exclusions:

  • Intentional injury is excluded. Generally, there is coverage if you act in self-defense.
  • Loss of property owned by others in your care, custody and control is excluded. If you repair equipment such as computers, you may need additional bailee coverage (protecting individuals who, with the approval the property’s owner, have temporary possession of someone else’s property.)
  • Faulty workmanship is excluded.
  • Liability arising from an aircraft, auto or watercraft is excluded. However, entrusting an automobile to a negligent employee may trigger coverage, depending on the coverage form and the jurisdiction.
  • Perhaps most importantly, CGL cover excludes losses arising out of your employees’ injuries.

While the CGL policy offers broad coverage, it may not protect all your company’s exposures as your business grows, particularly when you begin to hire employees. For assistance in selecting the right policy for your business, contact your advisor.

‘Green’ Upgrades May Mean Checking Your Coverage

As Kermit the Frog once said, “It’s not easy being green.” Despite many obvious advantages to the greening of your commercial space, green upgrades may mean your current insurance coverage could be insufficient in the event of a loss.

Over the last few years, green building improvements have continued to help building owners cut costs. A number of corporations across the US have installed vegetative roof systems in their buildings and have benefited from the shading and cooling properties that reduce energy consumption.

Experts predict the green market will double over the next few years. As quoted by EarthShare, a 2011 study by MIT indicated that sustainability is now on the agendas of 70 percent of the country’s corporations. In response, insurance carriers now offer coverage options for these growing green initiatives.

Some coverages for green initiatives that have been or are being developed are:

  • Coverage to replace normal HVAC systems with green systems upon loss.
  • Coverage for the installation of alternative plumbing systems for reduced water consumption.
  • Coverage for the use of materials that emit fewer indoor air contaminants.
  • Coverage for the cost of recycling building materials after a loss.
  • Coverage for increased business interruption after a loss due to longer construction periods required for green rebuilds.

Discuss your green coverage – before you suffer a loss – with your advisor, who can suggest options.