Home Disasters: Do You Need Extended Coverage?

Do you know the limit on your homeowners’ insurance policy? Every policy has a limit, which is the maximum amount of payout you can receive for a claim.

Most homeowner policies today are written with Replacement Cost terms. This means the insurance carrier will pay the full replacement cost for damages, even if the item being replaced has depreciated.

For example, if you need to replace your computer, and a new one costs $1,000, your Replacement Cost policy will cover this entire cost. It does not take into consideration the depreciated value of your two-year-old computer, which may now only be worth around $500. Since it costs $1,000 to replace it, the Replacement Cost coverage provides the full amount. When it comes to homes, this Replacement Cost can get tricky.

If your house suffers significant damage and you need to completely rebuild, you might hit the limit of your Replacement Cost policy before you reach the full cost of rebuilding your home. If this happens, you might not be able to afford the repairs, even though you have homeowners insurance coverage.

This is where Extended Replacement Cost policies come into play.

With this coverage in place, the homeowner policy will pay up to a certain percentage over the policy limit if extra funds are needed to fully replace your home.

These policies are commonly written at 120 to 125 percent of the stated limit of the basic coverage.

These additional funds are crucial when rebuilding costs are at a seasonal high or suddenly spike due to other economic conditions. The extended coverage makes home replacement possible, even when you encounter such costs that are higher than expected.

Do you need this coverage? This will depend on a variety of factors, including the value of your home, current construction and material costs, and the limit of your policy.

Feel free to contact me for a quick review of your coverage to determine if this policy would be in your best interest.

Bonfire Safety Tips for Your Next Backyard Blaze

Fall is a great time for campfires and backyard bonfires. Here’s how to stay safe (and avoid insurance claims) while you roast your marshmallows.

Contain it. Establish a safe zone for your fire that prevents it from spreading. Create a ring of rocks on the outside of the bonfire area. Clear away any grass and leaves around the bonfire, creating a 10-foot circle of dirt around the fire. To further establish this dirt-only zone, dig a hole two feet across and six inches deep for your bonfire, then pile dirt around this pit.

Extinguish it. Never leave a fire unattended. When the bonfire party is over, make sure the fire is completely out. To ensure it is extinguished, douse the fire with water, then stir the embers to make sure everything gets wet. Scrape any partially burned logs to remove hot embers, then mix the ashes and embers with some dirt. Before you leave the area, everything should be cool to the touch, including the ring of rocks.

Plan it. Before you light a bonfire, consider the environment. Check the National Weather Service for Fire Weather Warnings. If there is a Red Flag Warning, consider postponing your bonfire. Other conditions to watch for are dry air (low humidity, which increases the risk of wildfires) and high winds, which can quickly blow embers and ashes onto flammable objects.

Prevent it. Whether you use a portable pit or build a stone ring in your yard, make sure the bonfire is situated at a safe distance from your home. Keep in mind that embers can travel a significant distance from the source. Before you light the fire, take the necessary precautions so you remain safe and won’t have to worry about an insurance issue resulting from your bonfire.

Technology Insurance vs. Cybersecurity Coverage

In today’s business world, most companies are dependent on technology for some or all of their company’s operations. While this makes many new processes and services possible, it also leaves businesses vulnerable to a new realm of risk.

Cyber crimes, computer crashes, and software malfunctions are just a few of the technological risks that modern companies now face. Since technological incidents can cost a business anything from a few minutes of inconvenience to millions of dollars, it’s essential for companies to have appropriate insurance coverage.

Enter technology insurance and cyber insurance.

These two types of policies provide the protection businesses need to recover from technological disasters. Not only is their coverage important, but businesses need to know that these policies are not one in the same. They apply to different circumstances, and a company might need one policy or the other, or both. Here’s the scoop.

Technology Insurance

Technology Errors & Omissions (E&O) policies cover companies that provide technology services (such as data storage) and technology products (such as computer software). The terms of the policy are designed to provide protection for loss and liability. Such losses might be related to liability for media content, damages due to security breaches, or losses due to business interruption. It can also cover extortion threats and crisis management expenses. Technology insurance also typically pays for groundless liability claims and all associated investigations.

Cyber Insurance

While Tech E&O policies are designed to protect technology providers, cyber insurance is intended to protect technology consumers (the company’s customers). It covers situations in which customers’ identities, credit cards, health records, or other sensitive information is compromised. The policy pays for any damages incurred.

Overlap

Cyber insurance policies and technology insurance do have some overlap. Either policy may provide coverage if a business experiences a loss related to technology. Since many situations impact both the technology provider and the consumer, this overlap is inevitable. However, the specifics of each policy’s terms will determine which situations are covered and which are not included.

Who Needs Coverage?

Since most businesses rely on technology for at least a portion of their operations, some form of coverage is recommended for a majority of companies. Those that serve customers and store sensitive customer information should strongly consider a cyber insurance policy.

For high-tech and internet-based businesses, technology business insurance is recommended. Such companies would include IT businesses, website developers, internet service providers, and programmers. Additionally, those who rely heavily on technology solutions as part of their operations (intranet communications, customer e-mails, database management) may also want to add this coverage.

Does your business fall into any of these categories? Are you properly protected with insurance for the tech side of your operations?

If you’re not sure which policy would be right for you or are unsure about your current coverage, contact our office. I’d be happy to review your current policies and coverage options to make sure you are prepared for any technological incidents that may come your way.

How Telematics Is Transforming Insurance

Technology is transforming every aspect of our lives, and insurance is no exception. Insurance carriers are tapping into automotive telematics to guide insurance premiums.

What is telematics? This is a form of communications technology that can be used for monitoring a vehicle to determine driving behaviors. Using a combination of GPS, Bluetooth, and mobile devices, insurance companies can review customers’ driving habits and reward safe behaviors with reduced premiums.

For example, a telematic device can monitor the times of day drivers are on the road, their mileage, and sudden changes in speed (which indicate rapid accelerations or hard braking).

Insurance companies can use this data to predict driving habits and generate a reasonable premium based on these behaviors. Drivers are typically required to have the device in their vehicle for a set period of time before a premium is established. The premium may also fluctuate as driving changes. As vehicle operators drive more safely, the premium lowers.

Of course, if drivers have poor driving habits, this can cost the policyholder. If the telematics data shows risky behaviors, the premium could go up! However, the knowledge that they are being monitored and the incentive of monetary savings may actually help drivers develop better habits on the road.

Do your operations rely on any commercial vehicles? These safe-driving programs are a growing trend and could provide significant savings on your premiums. To find out more about telematics and how it can help you save money, contact our office.

Is Vision Coverage Worth the Investment?

Should you purchase vision coverage? To decide whether the cost outweighs the benefits, consider what the insurance will cover.

Your eye doctor (optometrist) likely will refer you to a medical eye doctor (ophthalmologist) if your eye exam reveals a medical issue, such as an eye infection, sties, or glaucoma. In the case of a significant vision-related medical issue, your health insurance protects you from serious financial loss.
However, vision insurance usually covers the following:

  • Annual or biannual eye exams
  • Eyeglass lenses, frames, and scratch protection for lenses
  • Contact lenses
  • Break-resistant lenses for children under 18 years old

Vision insurance typically costs between $5 and $20 per month, whether your employer offers coverage or you must buy it individually. Adding family members costs somewhat less per person. In addition, you may pay part of the visit cost, a part of any recommended treatment, and a co-pay of $10 to $25.

FAIRhealth.org analyzed annual vision costs, with and without vision insurance. Without insurance, a routine eye exam costs about $128 per year, and a new patient eye exam costs around $200 per year. Insurance that covers the routine eye exam costs $192 annually, and that covers the new-patient eye exam. If your exam shows you do not need glasses or contact lenses, you might come out ahead without insurance.

However, according to the National Eye Institute, 66% of Americans 18 and over use glasses, contacts, or both. In addition, without a regular eye exam, you might not find one of the serious vision-related medical problems mentioned previously. If you have a chronic health condition, such as diabetes or hypertension, you are more at risk for eye problems.

It might be the best choice to obtain vision insurance. The low cost greatly reduces your chances of undetected vision problems.

Contact our office for more information and a free quote.

The Sandwich Generation Seeks Solutions for Parents

While the majority of today’s long-term care buyers average age 60, millennials are showing interest in these policies, too. This interest stems from an important question: Will their parents have the assets to take care of themselves in their older years?

According to one provider of long-term care insurance, in 2018, an assisted living residence that didn’t include special care cost about $4,000 per month. Nursing-home care in 2018 cost about $8,300 per month. These costs can drain a well-planned retirement fund in just a few years.

While many seniors purchase long-term care coverage to protect themselves in the event that they require assistance, millennials are taking an active role to ensure their parents have long-term care (LTC) coverage. With today’s easy access to virtual meetings, many financial planners assist the children of aging parents in providing LTC insurance for their parents, even when those parents live in other states.

If you’re considering LTC insurance for yourself or an aging parent, determining which policy to buy can be challenging. Here are some critical details an agent can help you understand.

Covered services: An LTC policy should cover home health care, nursing-home care, and assisted-living care.

Coverage triggers: Cognitive impairment like memory loss or a need for help to complete several daily living activities usually triggers the start of the coverage.

Inflation endorsements: If today’s LTC policy pays $150 per day, how much will you need after factoring for inflation? We can help you choose an adequate level of inflation coverage.

Long-term care coverage can provide you with peace of mind. Call us today to discuss options for yourself or your parents.

How to Avoid Losing Life Insurance Coverage

How secure is your life insurance?

Given how important it is to an individual’s financial plan, it seems like something that would be guaranteed. Without a stable provider, this might not always be the case.

Consider the recent bankruptcy of retail giant Sears, which announced earlier this year that it would end life insurance benefits for many of its 90,000 retirees.

According to the leader of the retirees’ association chapter in upstate New York, Sears sent notices to people in their 80s who had maintained life insurance coverage for a significant period of time. Affected retirees were given few appealing options, and one reported that he will have to pay more than $3,000 annually to maintain current coverage with another company.

Granted, this is an unusual case, but no one wants to end up in that situation. So, regardless of how you obtain your life insurance, it is worth exploring its security and considering options.

It is critical to choose a financially strong life insurance company, because you want the company to be around to pay your beneficiary, whether you die in five years or 50.

You can research a life insurance company’s financial strength through independent rating firms, including Moody’s Investor Services, Fitch Ratings, A.M. Best, and Standard & Poor’s Ratings Services.

Ratings can be viewed for free on the firms’ websites, although registration may be required. Each of these firms has its own rating system, so you may not be comparing apples to apples.

You also may want to avoid judging a company’s stability based on its size. Smaller companies often offer the same longevity and reliability as the bigger insurance names.

Are you looking for a stable life insurance provider you can count on?

I’d be happy to review your options with you and ensure you have solid coverage to protect your future. Simply contact my office today.