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Homeowner and other policies that protect private residences have, for most of their history, been written assuming that the property owner is an individual or married couple. Policies traditionally defined an “insured” or covered person as an individual, married couple or spouse of the individual listed on the policy. However such policies had to respond to a, formerly, rare form of home ownership….trusts.
Besides use as a residence, a home is also often a primary financial asset. As property owners become more sensitive and savvy in handling their finances, the use of trusts to pass on property has expanded. A trust refers to any asset that is controlled or owned by an artificial entity, the trust agreement. Typically, the property owner becomes the trustee, having rights to use the home as a residence, but the legal ownership resides in the trust. The trust allows for tangible property to be passed along to heirs with much more for favorable tax treatment. However, there are consequences that affect insurance coverage and which should not be ignored.
If your home or personal property (furniture, furnishings, etc.) have been transferred into a trust, it is important to share this information with your insurance agent. Then you both may take steps to make sure that the insurance needs of both the trust and the property-users are covered. It is particularly important that liability protection remains intact.
Depending upon the insurer, your homeowner, auto and umbrella policies may have to be modified so that the trust arrangement is specifically recognized and is protected by the policies. It may be that the policy wording already handles things by including trusts or trustees within the meaning of “insured.” In other instances, endorsements may have to be added to include the proper additional insurable interest so that property and liability coverage expands to protect the property held in trust and the trustees.
The existence of a trust means you need to get an insurance professional involved to make sure you can still trust the protection of your various insurance policies.
COPYRIGHT: Insurance Publishing Plus, Inc. 2016+6
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Insurance is not a product, nor is it a service. Insurance is a promise, a contractual promise that should be entered into with trusted parties.
Insurance policies involve trust. Insurance policies are written agreements that involve at least two parties. One is the insurance company that provides the applicable form of protection. The other is the party who is protected by the policy. These two parties have a contractual relationship with each other. The insurer agrees to protect the insured if the insured agrees to pay for the protection.
The trusting relationship begins before any policy is issued. Insurers want to provide policies to persons who meet their qualifications. Qualified persons are discovered by using applications. Besides collecting identifying information, applications also gather details that determine if a person is eligible for a given policy. The information also helps the insurer decide how much to charge for the coverage, what level of coverage it should agree to grant and the conditions for providing the protection.
The insured should also to be able to trust the insurer. He, she (or a business entity) has to rely on the company actually issuing the type of coverage it promises. The insured also trusts the company to pay for a loss (that is eligible under the coverage) and to handle any loss fairly and efficiently. Both parties must approach the contractual agreement honestly and fairly. The contract is affected if either party fails to act in good faith.
Do you know the details of your insurance policy? Who does?
When an insurance company refuses to cover an eligible loss without a valid reason or when an insured refuses to pay for the policy; these are instances of breaking the contract. An insured may also break the contract if he or she either withheld information or intentionally supplied false information. Of course the information must involve some significant item that would have affected the company’s decision to accept the insured. Breaching a contract may allow an insured to sue a company for coverage or allow a company to void the policy it issued.
Whenever policies are not handled in good faith, there are consequences that impact more than just the two parties. Third parties, such as other businesses or persons, may also be harmed by insurance contracts that turn out to be invalid. Modern economies depend upon the role played by insurance contracts. It would be impossible to handle large transactions without a way to protect all parties against possible losses. Further, many parties would not even attempt certain types of transactions without the support of insurance, such as large building projects, major equipment sales, vehicle rentals and numerous other transactions.
Certainly there are many times when one party fails to handle their insurance obligations in good faith. However, such instances are the exception. Our economy and standard of living are made possible because most parties deal with each other honestly and we all benefit when that happens.
COPYRIGHT: Insurance Publishing Plus, Inc. 2016
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.
One issue that may arise because of storms, extreme heat or natural catastrophe is the loss of electrical power. While power outages are often, merely a nuisance, extended power interruptions can cause problems ranging from loss of perishables (particularly frozen and refrigerated foods), damage to property that is vulnerable to temperature extremes, and personal endangerment caused by overheating or freezing.
Even if your home isn’t hit, you could go days without electricity.
Many homeowners who, for various reasons, are prone to suffering power loss, use an option to protect themselves; home generators. Such generators are capable of temporarily supplying electrical power to run household appliances and utilities. Home generators come in two basic forms:
Having a portable generator a key step in becoming storm ready!
Portable Generators – lower-powered units that operate externally from a home’s wiring system.
Standby Generators – high-power units that are attached directly to a home’s wiring system and which takes over automatically when utility power is interrupted
Regardless the type, it is critical to take proper precautions to make sure that no harm or injury results from their use.
With standby generators, installation should be performed by a licensed electrician and installations should be inspected by authorized persons before initial use. Installations should include a proper transfer switch and local utilities should be notified that an installation has occurred. Transfer switches insure that electrical power is properly and safely switched from the generator to a utility supply when power is restored.
Portable generators have a host of procedures that should be adhered to, such as the following:
generators should be located outside the home, in an area that provides proper ventilation and which shields the unit from moisture
generators should NOT be located near window or doors since carbon monoxide exhaust could seep into a home
care must be taken to prevent burns due to contact with hot generator parts
generators should never be plugged into house outlets. This can cause back feeds which results in damaging wiring and endangering utility company personnel (backed power can be transmitted through power lines at fatal power levels)
proper, exterior-rated cords should be the only kinds used with generators
generator power should be matched with essential power needs (core appliances, heating/cooling) and not overloaded (which could damage the generator and powered appliances, etc.)
fuel for generators should be stored properly and refueling should take place ONLY after the generator has cooled after being turned off
Generators can be a tremendous method to compensate for temporary power outages but care must be taken to be sure they don’t generate more problems than solutions.
COPYRIGHT: Insurance Publishing Plus, Inc. 2017
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.
New Remote Workers are still working out the kinks
If you work from your home for part of your workweek and if the situation is an ongoing arrangement with your employer…that’s telecommuting! That is also an opportunity to make special insurance considerations. Consider the following:
Property Considerations
You may have gaps in coverage because of your work arrangement. You may not have the insurance protection you need for your employer’s business property that is kept in your home or your own property that is used to perform your job. This is because residential insurance policies severely restrict or exclude coverage for business property. A further complication is that business property usually consists of high-valued items that are vulnerable to damage and/or to theft. Such property includes fax machines, copiers, computers, pads, smart phones, computer peripherals, GPS, etc.
Liability Considerations
Personal insurance policies that include liability protection typically exclude business-related losses. Further, different policies can be quite broad in interpreting how a loss is connected to “business.” Liability Policies A and B would routinely respond to handling an insured who spilled hot coffee on a guest in his home. What if, instead of being a social guest, the visitor was your employer’s client? Policy A may still offer coverage because it considers the coffee spill to be a common home hazard. Policy B, however, may flat-out exclude the loss because the injured person was in the home for a business reason.
Vehicle Liability
Instead of using your personal vehicle for going to and from work, more of your vehicle use may be related to your job, such as making deliveries, calling on clients or visiting jobsites. Many instances of job related use might be excluded from your personal auto coverage.
Home Accidents
Simple events may be complicated when they occur in the course of performing your job at home. Coverage for injuries suffered while going up the stairs or experiencing a prolonged illness may cause coverage questions for your employer. Individual company or state-mandated coverage for employees may not apply to work-related accidents that occur at home.
Issues with working remotely
Document What You Do
In order to determine your coverage needs, you must clearly identify your exposure to business losses. Document the following:
What routine job duties do you perform in your home?
Are any tasks hazardous?
Who visits your home because of your job (clients, vendors, repair personnel, suppliers, others)? Be Specific.
How often do such persons visit?
Is a certain part of your home dedicated as a work area/office?
What equipment is used in your job? (Is the equipment used only for your job? Who owns each piece of equipment?)
Once you have a good idea of the loss exposures from performing your job at home, you need to discuss your situation with an insurance professional. An insurance pro can help you find additional coverage options as well as help to identify what coverage gaps must be addressed by your employer. While it can be liberating to telecommute, you must make sure that you haven’t given up important protection along with your cubicle or office.
COPYRIGHT: Insurance Publishing Plus, Inc. 2015
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Homes may be built with solid craftsmanship and with the use of the best materials, but most residences offer little to no protection against a common hazard…..tornadoes. Recently, homeowners have begun to embrace the use of tornado shelters. Before discussing this protection method, here is some background information.
In the U.S., tornadoes most often occur in the Midwest, Plains and Southern states. Tornadoes are created by thunderstorm fronts where moist, warm air meets moving cool fronts. Winds first form a horizontal rotation that is lifted upwards by warm air. When the rotating column is tilted high enough, it becomes a tornado.
Tornadoes can occur anywhere and at any time, but the peak season is in late spring through the summer. Wind speeds range from less than 100 to +250 mph. The stronger the storm, the longer its lifespan (generally 10-15 minutes). The damage path of a hurricane is usually narrow and short, but they can be as large as a mile in width and travel tens of miles. Tornado damage can be substantial as the winds and wind-carried debris are powerful enough to demolish buildings.
When a tornado threatens a home, the safest response is to get to the lowest and innermost space; away from all doors and windows. Basements and cellars are ideal, but these features are not found in most homes. In the past, it was common to equip homes with storm cellars, located adjacent to home, to protect against severe storm winds. Today, in response to the need for more protection, there has been a revival in the use of tornado shelters.
Christie England stands in the storm shelter in front of the remains of her home May 27, 2013, in Moore, Okla. England’s home was destroyed in the May 20, 2013, EF-5 tornado that ripped through Moore. The storm killed 24, injured hundreds and damaged thousands of homes. (U.S. Air Force photo/Tech. Sgt. Bradley C. Church)
Tornado shelter are, essentially, reinforced safe rooms, ranging from regular room size, down to small enclosures that are fitted within closets or garages. They may even, like storm cellars of old, be buried in the ground. They are constructed of reinforced metal walls that are, ideally, bolted to a cement floor. Such structures are capable of staying intact even when the surrounding structure is obliterated by tornado winds. Shelters are designed to accommodate a typical family and may cost several thousand dollars.
While shelters do little to protect a residence, they do respond to the most important issue, increasing the chance that residents can survive a tornado and rebuild.
COPYRIGHT: Insurance Publishing Plus, Inc. 2015
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Homeowner (HO) policies aren’t meant to insure businesses that are run out of a home. Premiums paid for homeowner’s coverage are for handling losses related to the ownership and use of a residence and related structures. Therefore no liability coverage is available for business activities such as customers who slip and fall on your premises, damage to business property (owned or in your control), injury caused by things you make (product liability), or damage due to services that you promote or provide. It is also unlikely that an insurer would provide a legal defense against business-related claims.
Be sure to speak with your insurance agent before opening a business in your home.
Generally, an HO policy does not provide workers compensation coverage for any employee. Medical expense and liability coverage may be available for workers who are ineligible for worker’s compensation, such as maids, butlers, or nannies, but such coverage only applies if an injury occurs while performing residential tasks.
Example: You send your nanny to deliver copies of your business
proposal and, on the way to the client, she is seriously injured in a fall.
Your policy won’t provide any medical expense coverage for your nanny because
she was performing a business-related chore.
There is no coverage for detached garages, barns, or similar structures on your residence premises if they are used in whole or part for the business.
Example: You store $3,000 worth of equipment and
supplies that you use in your job in your garage and the garage burns down. The
fire loss to the garage becomes ineligible because of its partial business use.
A basic HO policy may
protect certain property. However, the coverage may be limited to as little as
a few hundred dollars. Items qualifying for limited coverage include business
personal property kept in or around your home, business personal property kept
at a location other than in or around your home or landlord’s furnishings. One
way to improve your coverage is to add policy options that do the following:
increase the coverage limits for business personal property
cover garages and other buildings that are rented to others
protect electronic business equipment which is usually used in a vehicle while such equipment is located outside of a vehicle
provide theft coverage for the landlord’s property
acquire limited business personal property and liability coverage for an in-home daycare
cover a condo unit owners’ liability for damage caused by renters
provide premises liability coverage (i.e. a customer slips and falls)
A variety of businesses
are routinely operated in homes. This article discusses aspects of particular
operations. Refer to part one for background information on coverage
basics as well as our other parts discussing different businesses.
Sales Office
Usually, an HO policy does not offer much protection for business property. In fact, available coverage may be up to only $2,500 for personal property used for business and kept on the residence premises. Further, no coverage applies to a business property such as inventory, product samples, or items being held for delivery. Finally, even optional coverage excludes property related to a business conducted on the premises. For example, you are a cosmetic sales rep who also holds make-up parties in your home. For customer convenience, you keep an inventory of cosmetics at home. The HO policy will not cover this property.
If you are a salesperson operating out of your home and have limited inventory, some companies will cover you with a Businessowners Policy (BOP). A BOP provides broad coverages for buildings, personal property, loss of business income and extra expense incurred to remain in business (after a fire or other covered cause of loss), premises liability and medical payments. If you have more than $1,000 of goods off-premises in transit, you will need to add additional coverage. Goods stored at other locations must be added to the policy.
If you cannot qualify for a BOP and a home business endorsement or separate policy fails to meet your needs, your agent will probably have to build a special commercial package policy to handle your business. Commercial lines agents have both the expertise to design the appropriate coverage and access to the markets that offer policies for your sales business.
In part one of this article, we discussed what coverage issues must be considered when running a sales office out of a home. Besides the protection previously mentioned, you will need workers compensation coverage for any employees, even part-timers, and, if you deliver anything or if your vehicle is larger than a car, van or small pickup, you may need commercial automobile insurance. Another reason for buying a commercial auto policy is if any auto is corporately owned.
Professional Offices
Regarding doctors,
attorneys, architects or similar occupations, whether your home office is your
only office or simply a satellite office, you will need to work with an
insurance agent who is familiar with the coverages that are appropriate
for professionals.
BOPs are suitable for
most professional offices and can cover buildings, personal property, loss of
business income, extra expenses incurred to operate the business (after a fire
or other covered cause of loss), premises liability and medical payments.
Consult with your agent
or your professional association(s) for professional liability and errors and
omissions coverage.
COPYRIGHT: Insurance Publishing Plus, Inc. 2016
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.
Boating season can bring out the best in Kentucky residents, especially those residing around Fisherville, KY. At TruePoint Insurance, we understand the water life and enjoy it with our clients. While we all enjoy days and afternoons out on the water, we also want you to remember three tips to stay safe while out on the water.
Keep Your Life Jacket On
It is not uncommon to travel the Kentucky waters and catch boaters riding without their life jackets. In the event of an accident, the riders could potentially be thrown from the boat. With a life jacket, they will surface to the water and be able to breathe while getting to safety.
Keep the Crowding Minimal
Each boat comes with a weight limit and a capacity amount based upon its size. A common issue that happens with boaters in Kentucky is overloading the boat with either people, supplies, or both, causing it to flip from the stress it is under. If you are planning to use your boat for fishing and hauling equipment, make sure sure that you do not carry too many people out with you.
Leave the Alcohol Onshore
While you are operating your boat, you should not be drinking. The pressure and influence to drink while operating the boat are limited if it never comes onto the boat with your passengers. Leave the alcohol onshore and stock your boat instead with fresh bottled water and sports drinks to keep everyone hydrated while enjoying the water.
Top it Off with Boat Insurance
One of the best ways to secure your boat, however, is to have boat insurance should you find yourself in an accident while out on the water. If you live in the vicinity of Fisherville, KY, call our agents at TruePoint Insurance for more information on our policy offerings.
This
article briefly discusses how a personal auto policy responds to exchange students.
Please be sure to read its companion article, “Exchange Students –
Homeowners Coverage.”
First,
make sure that the exchange student is permitted to drive under the rules of
the exchange student program. If program rules allow driving, contact your
motor vehicle department to make sure that your student has a valid driver’s
license.
Will the exchange student drive your car?
The typical auto policy extends its coverage to any person having your permission to drive a covered vehicle. Your liability coverage will protect the exchange student against damage or injury that he or she causes to others. Coverage to the damage done to your vehicle is also available when you have the appropriate physical damage insurance. Of course, the coverage is subject to your policy’s insurance limits, deductibles, and other provisions.
Medical
payments coverage will apply to the exchange student who is injured in an
accident while occupying or driving your car with your permission. If you
expressly forbid the exchange student to drive your vehicle and the student
disregards your wishes, you may not have insurance coverage if an accident
occurs. Any questions regarding an exchange student’s vehicle use need to be
carefully considered; especially since you will want to avoid having to deal
with uncovered auto losses.
Be very
careful regarding any minor-aged exchange student who is considering buying a
car, truck, motorcycle, RV, boat, moped, scooter or any other vehicle. An
exchange student’s temporary residence status makes it very difficult to get
proper coverage. Student vehicle owners who cause an accident could experience
some complex legal problems. If faced with an exchange student who owns a
vehicle, it is important to get any available assistance from the exchange
student program, including their legal counsel. You should seek your own
qualified legal help to make sure that your interests are protected. The safest
course would be to avoid an exchange student situation that includes an owned
vehicle.
Please check with a qualified insurance professional to thoroughly discuss your coverage needs.
COPYRIGHT: Insurance Publishing Plus, Inc. 2017
All rights reserved. Production or distribution, whether in whole
or in part, in any form of media or language; and no matter what country, state
or territory, is expressly forbidden without written consent of Insurance
Publishing Plus, Inc.
Businesses price their products to cover the costs of production as well as their labor, sales marketing, and other major expenses. Prices also reflect some post-sales costs such as handling repairs or replacements under warranty. At one time many industries used a pricing strategy for their products that failed to reflect their true costs. A once-popular assumption was that lower prices would promote increased sales and the higher sales volume would make up the cost difference. The strategy wasn’t successful. It hasn’t worked for the auto industry, the computer industry or the insurance industry.
The problems of the
insurance industry became apparent within the turn of the century and were
drastically exasperated by several natural and financial catastrophes. Events
such as terrorist attacks, hurricanes, housing market and banking meltdowns all
substantially affected the insurance industry. The insurance industry’s
attempts to gradually correct their pricing had to be sped up; substantially!
Why are insurance premiums so high?
For much of the 21st
Century, insurance companies have had to handle many more claims being
presented many years after their policies have expired. In the case of
pollution, asbestos and employment practices; the industry is being asked to
handle losses that policies weren’t designed to even cover.
Well, what can a
business owner do to minimize their high insurance cost? Before considering
sacrificing the amount of protection a business carries just to save money,
consider alternatives. Some other solutions would be:
1. Review your coverage:
a. Take a close look at your insurance. Could you increase the
deductibles to lower your premium?
b. Are you carrying physical damage coverage on commercial
vehicles that aren’t worth it?
c. Are you insuring items you could replace out of pocket? Are
there pieces of equipment that are insured when they could be replaced from
operating funds without submitting a claim?
2. Review your exposures:
a. Could you reduce the premium by installing an alarm system or
fire protection system? Would these premium savings offset the cost of the
system?
b. Could you implement safety programs that would reduce the cost
or make the insurance company more interested in providing coverage? For
example: driver safety programs, back to work programs, safety training in
proper use of equipment and job functions.
3. Identify your insurance goals:
a. Do you need an insurance company that can provide loss control
services?
b. Do you need an insurance company that can provide claim-handling
services for your Workers Compensation insurance?
c. Do you need an insurance company that will allow you to make
payments by phone or on-line 24/7?
Shopping and price are
not the only issues in insurance. What you don’t know can cost you more in the
long run than you could ever save in premiums. Discuss your situation with an
insurance professional and make the choice that works for you.
COPYRIGHT: Insurance Publishing Plus, Inc. 2016
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.
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