Tuesday, September 9, 2014

Homeowner's Insurance Underwriting - Part 3

The Appearance of your home and premise and why it affects your insurance.

Your home’s appearance and physical condition play a large role in underwriting insurance.  Property and premise that are not maintained have a higher risk of loss and many carriers will deny coverage based solely on the condition of the home and premise.

A roof that is in poor condition will leak and can cause major interior damage to the home. Missing or loose gutters and downspouts, and missing soffit and fascia can also allow water into the home, resulting in mold and mildew that can grow unseen until the health of the residents becomes affected.

Cracked sidewalks, stairs without proper handrails and porches or decks without solid railings can result in personal injury. Too many items in your yard, broken fencing, an old shed that needs to be torn down, are also things that can cause coverage to be denied.

Proper maintenance of your home, yard, trees and fencing indicate pride of ownership, help maintain your property value and may prevent losses. 

If the underwriter is on the fence about writing an account, pictures of a well maintained home may be enough to sway the decision.

Photo credit

Photo Credit


Put yourself in the underwriter's shoes. If you could make an exception, which  house would you be more likely to say, "Yes, I am willing to take a chance with this account." and why?

Friday, August 1, 2014

Homeowner's Insurance Underwriting - Part 2

The Location of your home and how it affects your insurance.

The General Area of the Country:

Different areas of the country are affected by man-made and natural disasters. Brush fires are a large concern in the Western United States as are mudslides and earthquakes. Tornado Alley stretches across the Midwest. The Eastern and Golf coastal areas are prone to hurricanes and storm surge. Flooding can happen anywhere, especially along rivers and lakes. High crime areas in cities, large and small. Sink holes and areas with past or present underground mining activity. These influence your premiums and even the availability of some coverages in a homeowner’s insurance policy.

Fire Protection:

Fire protection plays an important role in underwriting a home insurance policy. Most fire departments have a Fire Protection Rating of 1 (the best) – 9 (very limited protection.) These are not randomly assigned by underwriting, Insurance Services Office, Inc (ISO) is the leading provider of FPR for the United States. Many insurance companies use the ISO rating and guidelines to determine eligibility and premiums.
What are the basic guidelines in determining the FPR for your home? Is the home located inside city limits? If so, it will have the same FPR as the city fire department. Burlington IA is a 4. If the home is located outside city limits but within 5 miles of the responding fire department and there is a public fire hydrant within 1000 feet then the home receives a rating 1 FPR higher than the fire department. If the home is within 5 miles of the responding fire department but over 1000 feet from a public hydrant it would receive an 8B or 9. If it is over 5 miles from the responding fire department it would receive a 10 (no recognized public protection.)
In areas outside of city limits it is important to know who the PRIMARY responding fire department is. Make a phone call (not 911) to the nearest fire station to make sure you know the answer.
Response time is also a factor in this equation. How long does it typically take the fire department to arrive on scene from the time the first 911 call is received? If it is a volunteer fire department, the firefighters have to get to the station, get geared up and get the equipment on the road. Response time can be lengthened by 5 - 10 minutes. A fully loaded truck is not as maneuverable as a passenger vehicle so it takes longer for them to arrive on scene than road miles would indicate. What about water to fight the fire, without a hydrant nearby, water must be brought in and replenished. Fire departments are finding better ways to get more water on scene but it still needs to be hauled in, which takes manpower, equipment and time away from fighting the fire.
I mentioned Mutual Aid Agreements in the first post. Mutual Aid Agreements are quite common in our area. They provide for one or more nearby fire departments to respond to help fight fires, or cover calls that come in when the primary department is on another call. Most often the primary fire department has to request mutual aid.

Other Factors:

I have spent a lot of time on fire protection but other factors that are considered are the proximity of neighbors and the visibility of your home. If your neighbors are fairly close and can see your home, they are more likely to notice if there is unusual activity at your home when you are gone; helping protect you from theft, or smoke; indicating a possible fire.

A Homeowners policy is NOT designed to provide coverage for most commercial, farm or business activities on your premise. There is limited business property coverage and generally no liability coverage provided. Many carriers limit the number of acres they will extend coverage for. NEVER assume you have coverage for these without consulting your insurance agent. Depending on the exposure you may be able to endorse your policy to provide coverage. Or you may need to secure a commercial or farm policy to cover these exposures.

Trampolines and pools: Personally, I would kill for a pool in my backyard. But I also have a lot of trees so rather than spending most of my time skimming, I have no pool. But, if I did decide to have one, I would have to make sure to abide by my city ordinances, make sure my insurance carrier was aware of it and that it would pass the underwriting guidelines.  Some carriers require you to sign an exclusion - meaning they provide NO LIABILITY/ MEDICAL or PROPERTY DAMAGE, you may become liable for resulting from ownership/care, custody or control of a pool or trampoline. Some carriers have certain guidelines that must be met – fencing, alarms, locks etc. before they will accept your application or continue your coverage. Other carriers will decline your application or non-renew your coverage if the item(s) do not meet underwriting guidelines or are not removed and/or you sign an agreement to not replace them.  Consult with your agent BEFORE you buy a trampoline or pool.


Ponds and creeks are often found on rural acreages in our area, while they are not generally a reason for a policy to be declined, the carrier should be informed that they are there. 

Wednesday, July 16, 2014

Homeowner’s Insurance Underwriting - Part One

Insurance underwriting is all about risk – many factors go into the premiums carriers charge besides how much coverage is provided and what deductible is selected.

The Home and any Other Structures:

Facts:

Original Year of Construction. What type of construction is it? What is the total square footage? Is it a high value home - generally over $750,000? 

Updates:

When were the major systems updated (completely replaced) – roof, electrical including the breaker box, plumbing, HVAC?  Has the electrical service into the home been replaced – is at least 100 amps? 

Other Considerations:

Have there been any losses in the last 5 years?
Are all buildings used only for personal use?

Location:

Property located in high risk areas may not be eligible with many carriers. Natural disasters aside, what do underwriters look at:

Fire Protection: 

How far is the property from the first responding fire department? How long would it take for the fire department to arrive, and is there access to an adequate water supply. What firefighting equipment do they have – pumpers, ladder trucks, tankers, etc.  Is there a Mutual Aid Agreement? Is the department manned by paid staff or volunteers?

Other Considerations:

How far away are the closest neighbors? Can they see your home?
How many acres are included/do you own. Is there any farming or business/commercial use of/on the land? Any swimming pools, trampolines, ponds, creeks or other hazards?

Appearance of the property:

Underwriters consider the overall appearance of the property. 

Maintenance, upkeep, and general housekeeping of the outside and interior premises are indicators of physical hazards that the insurer may not want to accept or hint to broader problems with a prospective insured.
Personal inspection and photos help relay a true picture of the risk. Consideration of moral and morale hazards, or lack thereof, can be supported through the use of photos.
Poor maintenance of a property will often make the property ineligible for coverage with many carriers and the owner will have to seek coverage with a high risk carrier, resulting in higher premiums and possibly less comprehensive coverage.

Your History:

Previous Insurance Experiences:

Have you had previous insurance – some carriers require previous homeowner’s insurance – either having lived with your parents or a renter’s insurance policy for first time home buyers. Have you had any losses at other locations in the last 5 years? 

Personal Information:

What is your credit score/history? 
Have you been convicted of insurance fraud and or a felony? 
Are you a public figure?

Pets and unusual exposures:

Do you own or are you planning on acquiring any exotic pets or a dog with a bite history or breed with aggressive tendencies; i.e., Pit-bull, Chow, Akita, Rottweiler, Doberman, Husky, Malamute, Wolf or mixture with any of these breeds (this is only a partial list of breeds that may be ineligible.)

Do you have a home-based business?

Some items on the list are pretty common sense, but why does an Underwriter care what the house construction is? I asked one of my underwriters why his company would not write a log home – MOST homeowner’s policies are written on a replacement cost basis. Two homes each valued @ $300,000 have exterior damage from a grass fire…. on a house with vinyl siding, they replace the damaged siding or worse-case scenario have to reside the whole house. On the log home, they have to rebuild the whole house because there is no way to replace just a few logs.  So instead of a $10,000 claim the owner of the log home has a $300,000 claim.

Future blogs will look at these in more depth.

Wednesday, April 30, 2014

Premise and Dog Liability - Does Posting a Warning Sign Protect Me?

SIGNS, SIGNS, EVERYWHERE THERE ARE SIGNS!


Garage Sales, Tag Sales, Yard Sales, no matter how you refer to them, the season is upon us!  Most of us have a “few too many things”; outgrown/outdated clothes and things we no longer want or use and the opportunity to make a buck and have the items gone is the perfect reason to plan your sale.


There are household’s that run continuous yard sales around here, so the argument could be presented that it is a business rather than a “personal” venture. If this situation applies, I advise you to consult with your insurance agent to determine if you need and can purchase coverage for a “home business.”



As people are preparing to hold a sale, we often take calls about posting “Not Responsible For Accidents” and “Beware of Dog” signs. "Are they a good or bad idea?  Do they “really” absolve me of liability?"

Personally, my thought has always been – You invited these people onto your property when you placed the ads and/or put the sign out by the street – good luck trying to get out of a lawsuit if someone trips over your cracked sidewalk or the extension cord you have stretched out to the calculator and gets badly injured. As for Sneakers nipping a patron - that Beware of Dog sign – isn’t worth the paper it is printed on. 

BUT... is that fact or fiction?


In 2009 the Iowa Supreme Court (Koenig v. Koenig, 766 N.W.2d 635, 645-646) adopted a multi-factor approach for determining whether a land owner would be liable for injuries on his property:
"We impose upon owners and occupiers (of land) only the duty to exercise reasonable care in the maintenance of their premises for the protection of lawful visitors. Among the factors to be considered in evaluating whether a landowner or occupier has exercised reasonable care for the protection of lawful visitors will be: (1) the foreseeability or possibility of harm; (2) the purpose for which the entrant entered the premises; (3) the time, manner, and circumstances under which the entrant entered the premises; (4) the use to which the premises are put or are expected to be put; (5) the reasonableness of the inspection, repair, or warning; (6) the opportunity and ease of repair or correction or giving of the warning; and (7) the burden on the land occupier and/or community in terms of inconvenience or cost in providing adequate protection."

This does not mean that visitors get a free pass;  Property owners/occupiers are not "absolute" insurers or guarantors. Visitors are to exercise reasonable care to observe and avoid dangerous conditions. Some situations will excuse visitors from noticing a dangerous condition, if the property owner is responsible for distracting the visitor's attention to possible dangers by drawing the visitor’s attention to other items such as goods for sale.

The Iowa law of comparative fault applies to premises liability claims. Therefore, a visitor who is injured by an unsafe property condition who is partly responsible for his injuries may have his right to collect damages reduced or barred.

The law will hold the property owner responsible for premises liability if they were aware of the dangerous condition and did nothing to correct it.  They can also be liable if it was obvious that the owner should have known about a potential hazard and did not take steps to prevent injury. 

I was not able to find anything specific to “Not Responsible For Accidents” signs being posted, but after my research I still feel the best thing would be to make sure the area being used for the sale is made as safe as possible and that it is clearly defined so people don’t decide to “wander around.”  If you feel the need for signs – post them.


In Iowa, the owner of a dog is liable for all damages done by the dog ….   See Iowa Code Section 351.28. There is no “Free Bite” rule. Posting a Beware of Dog sign is NOT going to absolve you of liability.
My advice, keep your dog inside your home, in its kennel and away from all  patrons. Even the cutest, most even tempered dog can get frightened by a flash of light, a strong smell or even a shrill voice and nip.

If you are a renter, these same rules apply to you. While your landlord is normally responsible for the maintenance of the property, when you invite people onto the property you may be assuming some liability.


When you have questions about your policy coverage, you should never hesitate to call your agent. Most agents understand that insurance can be complicated and encourage their clients to call with questions. If you are not comfortable calling your agent, it might be time to find a new agent - CALL us!! 





Monday, April 28, 2014

Your Home Insurance and a Fallen Tree

This is the sight that greeted me a couple of weeks ago as I was getting ready to head out to do some grocery shopping. One of our Mulberry trees decided to give it up - its roots just could not hold in the soil on the edge of the ravine.

We take a few calls every year about how fallen trees are or are not covered by a homeowner's insurance policy. 

What is your best guess in this situation?? Would my insurance cover having this tree removed?

Looking out my front door!!!




The GENERAL rule is that the tree has to have caused some damage to a covered structure for the homeowners policy to kick in.  NOPE - no structure damage, it didn't even pull down the power line; in fact we didn't even hear it fall!! Remember the flat line winds last year - took out the top of one of our biggest trees and numerous limbs on it's neighbor on its way down. It made a big mess and  took us all day to clean it up and since (THANKFULLY) it did not damage our house, there was no coverage from our home insurance. So yes, even insurance people have with the same policy coverage!

HOWEVER:
It is blocking access to our home - even our Yaris wouldn't fit under it!! So yes, I could have called in a tree surgeon, had them cut it up, paid my deductible and called my insurance company on Monday.  

Instead - we borrowed our neighbor's chainsaw and spent a few hours cleaning it up ourselves. Mind you,  I am NOT promoting an inexperienced person run out and beg, borrow or buy a chainsaw and begin cutting away on a fallen tree - my husband has been cutting trees for a lot of years and has a lot of respect for the odd twists and pops a branch can take.


Thursday, April 3, 2014

How Much Life Insurance Do I Need?


There are three categories you need to consider when trying to determine the minimum amount of life insurance death benefit you and /or your spouse need: YOUR INCOME, YOUR EXPENSES, YOUR ASSETS.
 
 YOUR INCOME

What is the annual income your family would need to maintain their current standard of living?

(60% - 70% of total income is usually required.)

Keep in mind, additional money needed to pay for someone else to do the things you do to help care for your family – group health insurance, take children to appointments and other activities; household maintenance – laundry, cooking, cleaning, mow the lawn, etc.
A spouse that stays home and provides for the everyday needs of the family may not provide “income” but how much would it cost to hire a full time, live-in caregiver?

Other annual income (Social Security, Spouse income, etc.) your family would receive?

How many years do you want to provide this income?

YOUR EXPENSES

Estimate your Final Expenses – funeral, medical expenses, etc.

Outstanding debt including your mortgage, credit cards and other loans.

Total college expenses for your children.

                (Average based on the 2009-2010 The College Board:

Private College $156,112, Public in State $77,522, Public out of State $123,664)

YOUR ASSETS

Savings, investments, etc.

(Money markets, CD’s, Stocks, bonds mutual funds, etc.)

Retirement savings accounts

                (IRA’s, 401(k)s, pension and profit sharing plans)

Current Amount of Life Insurance

(include group insurance as well as individually owned insurance)

 

You can find many life insurance needs calculators on the Internet – look for one that has built in inflation and cost of living adjustments.

Once you have an idea of the amount of coverage you need, contact your life insurance agent to review your coverage and find the best options to meet your needs and your budget.

Friday, March 14, 2014

Life Insurance: the very basics.


What is Life Insurance:

Life Insurance is an insurance policy that pays the beneficiary money (death benefit) after the insured dies.

There are two basic types of Life Insurance: Term Life and Whole Life. Over the years insurance carriers have introduced modified policies - Universal Life, Indexed Life, etc. This is not meant to be a comprehensive tutorial, I am sticking to the basics.

Why should I buy life insurance?

Keep this in mind;  Life Insurance is not purchased for benefit of the insured, it is purchased to provide financial assistance and security for your loved ones after you die.
To pay for funeral and end of life medical expenses
To pay off debt
To provide money to raise children/ provide for their education
To pay estate taxes
Guarantee Insurability
Etc.

What is Term Life Insurance:

Term Life Insurance is like renting an apartment - you sign a lease - during the term of the lease as long as you pay the "rent" you get to "live in the apartment" - when the lease is up, the landlord can increase the rent and if you don't like it you move on...
Here is an example: you purchase a 20 yr $100,000 death benefit policy for $550 a year - as long as you pay the premium (rent) the insurance company (landlord) agrees to pay your beneficiary $100,000 after you die (apartment.) At the end of 20 years the insurance company (landlord) can increase the premium (rent), if you don't want to pay the premium the policy ends (you move.)
Term Life is often used as a temporary needs insurance. The kids will be gone in 20 years so you only need the death benefit until they are out on their own, the house will be paid for in 30 years, etc.

What is Whole Life Insurance:

Whole Life Insurance is like purchasing a home - you take out a mortgage and make your payments for the life of the mortgage and when the mortgage is paid off, you own your home.
Here is an example: you purchase a $100,000 death benefit policy for $1500 a year. You make all of your payments and at the end of the mortgage term you still have $100,000 death benefit.
Whole Life is often considered "permanent" insurance because it is designed to cover the whole life of the insured.

So which is better - it really does depend on YOU, your needs and your budget.

Life Insurance is not one size fits all - as your life changes your needs change. Talk to your insurance agent, most agents love to help their clients be better educated and make informed choices on their insurance coverages. 

Thursday, January 23, 2014

Snow days

With the windchill at -27 this morning I really did not want to venture out this morning but Chanel 6 KQWC's question of the day - "How will you be spending your day off of school?" got me to thinking about how I used to spend snow days "back in the day" on the farm.

We would bundle up in our snowmobile suits, boots, gloves and face masks and head outside for one or several of the following activities, in no particular order:

1. Building a sled run - we would pack snow on the porch steps and down the sidewalk running into the front yard and then pour water on it to make it really slick so we could sled all the way through the yard down to the road.
2. Building multilevel snow forts and tunnels connecting them in the snow drifts and then chasing each other through them and snowball fights and jumping off of the machine shed or hog house roof onto the snowdrifts.
3. Dad and Mom would pull us on a toboggan or the mini fiberglass boat with "the Bomb" through the pony pasture and the fields around the house. "The Bomb" was an old, green 4 door sedan, I think it was a 4 on the tree - we called it "The Bomb" because we thought it was going to blow up anytime.
4. Riding snowmobiles and often pulling someone on said toboggan or boat.
5. Playing in the haymow - building forts and tunnels with the bales and playing hide and seek or some other made up game that involved crawling through the tunnels and popping into and and out of the numerous escape holes to keep from getting caught.

Sometimes we would just hangout in the house - playing army with Loren's plastic soldiers, building them forts with bricks; the precursor to Legos, Lincoln Logs and empty wooden spools (the kind sewing thread used to come on.) We also played board games and cards - my favorite was War! We might each do our own thing - I'd play Johnny West and/or Barbie or read.

So how did you send your snow days?

Monday, January 20, 2014

Technology and the aging (cluttered) mind

I haven't posted a new blog in several months - not because I was SO busy, but because I couldn't get into Blogger.  I would log into my work Google account and try to get into Blogger - and it would tell me you don't have a blog - do you have another Google account?? I'm like, no.... and would get so frustrated that I would want to spit, so I would give up for a week and say try again later. Somehow, I have more than one Google account for work, I am certain it was user error since I had no idea what I was doing when I set "it" up - and I found out today that I have my computer set to automatically update my IE version - and Blogger/Google doesn't like IE11...  I have tons of patience and a wide/long stubborn streak - I will EVENTUALLY figure things out.

I wrote down which account got me here on a post it note & it is stuck to my monitor. Eventually, after a bit of research, I will delete the "bad" accounts and I think I will try to get back to IE9 since the upgrade to 10 & now 11 have been creating numerous issues - what is compatibility mode? Maybe I can convince one of my kids to do it for me..