Water Damage Claims & Insurance

Courtesy of iii.org

The Wall Street Journal frequently appears fascinated by some of the goings on in Florida. The publication has often written about anomalies that seem unique (or some other not-so-favorable adjective) to the Sunshine State. We have “issues” here that just don’t seem to occur in many other places. Living here, in the midst of it all, can cause a loss of perspective. So, without any editorializing in this space, you might find this editorial on the demise of a bill to stop insurance claim abuse interesting reading. Click the link and read it through.

The challenges with assignment of benefits and water damage claims has been documented on this blog several times. Insurers have been calling attention to this problem for at least three years. The reality of allowing the abuse to continue became ever more apparent last week when Citizens Property Insurance announced its first net loss since 2005 ? of $27.1 million. Assignment of benefits is the clear cause. The clear solution now that there won’t be a legislative fix? Higher insurance premiums for Citizens’ customers, particularly in South Florida. That’s where assignment of benefits became a “unique” practice, allowing lawyers and contractors to take over a homeowner’s insurance claim and inflate the costs.

Ah, the high costs of being unique.

Tax Time & Insurance

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At tax time people are looking to find every possible deduction they can?so what about writing off your home or auto insurance premiums? The answer mostly comes down to one easy question: personal or business?

If you’re buying personal coverage for your home, car or another purpose, the Internal Revenue Service considers it a regular living expense, which isn’t any more deductible than buying toothpaste or kitty litter.

If you’re in business for yourself?even if it’s just moonlighting?the answer may be different. And if you participate in the “gig economy” (e.g. renting your home on Airbnb or driving for Uber) you also can deduct some part of those costs against your business income?as long as you’re also willing to declare the money you’re earning as income.

Deducting Your Premiums

It takes some extra effort to directly deduct either your auto or home insurance payments on your taxes. First, you’ll have to itemize and fill out an entire Form 1040, not the abbreviated 1040 A or the quickie 1040 EZ. If you typically only take the standard deduction on your taxes, you may not have enough other items to write off in order to make this worthwhile. You’ll also have to file Schedule C Profit or Loss From Business. Second, to maximize your deductions you’ll need to calculate how you’re going to claim your insurance premiums?for both auto and home deductions you have the option of using a simplified method or calculating your actual insurance expenditure.

Auto

The IRS allows for a simplified method of deducting the business use of your car or other vehicles, at 54 cents per mile. That’s designed to cover payments, fuel, repairs, depreciation, maintenance and insurance costs. To take your actual expenses, you must calculate the percentage of total car costs for the year based on the number of total miles driven vs. miles driven for business.

Home

For homeowners, the simplified home office deduction is $5 per square foot for the space that’s dedicated only to office use, up to a maximum of 300 square feet, or $1,500.

The more complicated method is to add up all your home-related expenses?mortgage payments, maintenance, property tax, insurance, utilities and so on?and then deduct the percentage of total space in the home occupied by the home office space. So, if all your home expenses for the year totaled $8,000, that 96-square-foot office in a 2,000-square-foot home would allow you to deduct $384. Of course, you’ll need to have good records of all the expenses.

Are Insurance Payments Taxable?

Insurance payouts you receive after damage to your home or an accident involving your car are generally not taxable unless you’ve come out way ahead financially. Generally, a payment to reimburse you for repairs or replacement isn’t going to be taxable unless the payment exceeds what you originally paid for the property, an unlikely situation since most things lose value over time rather than gaining it. And, if you receive dividends from a mutual insurance company, those aren’t taxable unless they total more than the insurance premiums you paid to that company during the year.

On the other hand, if there is a really big gap between what your insurer paid out and your actual financial damage, you might be able to take a deduction for the loss. Deductions on the Casualties and Thefts schedule can be written off only to the extent that they exceed 10 percent of your adjusted gross income, minus $100 and any insurance payments. Your adjusted gross income, or AGI, is your taxable income after tax credits, exemptions and deductions?the amount of money you actually pay tax on. If your household made $80,000 in 2016, and your AGI was $60,000, you’d need a loss of more than $6,100 before you could deduct a single dime. Even then, the amount is limited to the part of the loss that’s more than $6,100 so you would need to have a significant loss to be able to write anything off..

These are both fairly rare and complex situations that should be reviewed with a financial professional.

Insurance Fraud and You

Courtesy of iii.org

The cost of insurance fraud is a cost all policyholders wind up paying. Consider that fraud adds about $34 billion each year to the property/casualty insurance sector?s incurred losses in the U.S. That equates to about 10 percent of the cost of insurance. The victims of this fraud are?..everyone.

Florida CFO Jeff Atwater heads the state?s Bureau of Insurance Fraud, which consists of 117 sworn officers plus support staff. He?s been championing fraud awareness and recently published a newsletter with a story about an Orange County man who paid someone to torch his car. This person filed an insurance claim, got paid, got found out ? and got jail time. The newsletter said the arson claim cost the insurance company $10,000, and it may cost the perpetrator up to 20 years in jail.

The state has a fraud tip line: 1-800-378-0445. There is also an online form for reporting fraud. We?re in this fight against fraud together.

How to FInd a Lost Life Insurance Policy

Courtesy of iii.org

Locating life insurance documents for a deceased relative can be a daunting task?for one thing, as of this moment there are no national databases of all life insurance policies. However, with a little sleuthing, you can successfully navigate the paper trail.

Here are some strategies to help simplify your search:

1. Look for Insurance Related Documents

Search through files, bank safe deposit boxes and other storage places to see if there are any insurance related documents. Also, check address books for the names of any insurance professionals or companies?an agent or company who sold the deceased their auto or home insurance may know about the existence of a life insurance policy.

2. Contact Financial Advisors

Present or prior attorneys, accountants, investment advisors, bankers, business insurance agents/brokers and other financial professionals might have information about the deceased’s life insurance policies.

3. Review Life Insurance Applications

The application for each policy is attached to that policy. So if you can find any of the deceased’s life insurance policies, look at the application?will have a list of any other life insurance policies owned at the time of the application.

4. Contact Previous Employers

Former employers maintain records of past group policies.

5. Check Bank Books, Statements and Canceled Checks

See if any checks have been made out to life insurance companies over the years.

6. Check the Mail for a Year Following the Death of the Policyholder

Look for premium notices or dividend notices. If a policy has been paid up, there will no notice of premium payments due; however, the company may still send an annual notice regarding the status of the policy or notice of a dividend.

7. Review the Deceased’s Income Tax Returns for the Past Two Years

Look for interest income from and interest expenses paid to life insurance companies. Life insurance companies pay interest on accumulations on permanent policies and charge interest on policy loans.

8. Contact State Insurance Departments

Twenty-nine state insurance departments offer free search services to residents looking for lost policies. The National Association of Insurance Commissioners (NAIC) has a “Life Insurance Company Location System” to help you find state insurance department officials who can help to identify companies that might have written life insurance on the deceased. To access that service, go to the NAIC’s Life Insurance Company Location System.

9. Check with the State’s Unclaimed Property Office

If a life insurance company knows that an insured client has died but can’t find the beneficiary, it must turn the death benefit over to the state in which the policy was purchased as “unclaimed property.” If you know (or can guess) where the policy was bought, you can contact the state comptroller’s department to see if it has any unclaimed money from life insurance policies belonging to the deceased. A good place to start is the National Association of Unclaimed Property Administration.

10. Contact a Private Service That Will Search for “Lost Life Insurance”

Several private companies will, for a fee, contact insurance companies on your behalf to find out if the deceased was insured. This service is often provided through their websites.

11. Do You Think the Policy Might Have Been Bought in Canada?

If so, you try contacting the Canadian Life and Health Insurance Association for information.

12. Search the MIB database

As we had said, there’s no database of policy documents, but there is a database of all applications for individual life insurance processed since January 1, 1996. (nb: There is a fee for each search and many searches are not successful; a random sample of searches found only one match in every four attempts.) For more information, go to MIB’s Consumer Protection page.

Insurance Providers Given High Satisfaction Rating

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About one of every 15 U.S. homeowners insurance policyholders files a claim each year and these claimants are now giving insurers their highest ever satisfaction ratings, according to the Insurance Information Institute (I.I.I.).

The J.D. Power 2017 U.S. Property Claims Satisfaction Study gives U.S. home insurers a record score of 859 (on a 1,000-point scale). The industry’s cumulative score stood at 846 in 2016. Five factors are considered when assessing policyholder satisfaction: settlement; first notice of loss; estimation process; service interaction; and repair process.

“Insurers are the nation’s economic first responders and, as such, are continually working to improve how they help Americans recover their lives and businesses in the wake of tragedy and catastrophe,” said Sean Kevelighan, president and chief executive officer (CEO) of the Insurance Information Institute (I.I.I.). “This year’s J.D. Power and Associates survey results are a clear reflection that the industry’s hard work and dedication are delivering the intended results.”

These all-time high claims satisfaction scores are even more remarkable given that incurred losses and loss-adjustment expenses for U.S. property/casualty (P/C) insurers grew by 7.6 percent year-over-year when comparing the first nine months of 2016 to the first nine months of 2015, according to an analysis developed by Dr. Steven Weisbart, the I.I.I.’s chief economist.

Incurred losses reflect the dollar amount of a home insurer’s claim payout whereas a loss adjustment expense is the sum an insurer pays for investigating and settling claims, including the cost of defending a lawsuit in court.

Moreover, Dr. Weisbart noted, catastrophe-related claims through the first nine months of 2016 were already at their highest level since 2012?the year of Superstorm Sandy?and the fourth quarter of 2016 pushed those numbers even higher after insured claim payouts from October 2016’s Hurricane Matthew.

The federal government agreed that 2016 was a volatile, and costly one, estimating 15 separate weather and climate events last year caused more than $1 billion in economic losses, not all of them insured, according to the National Oceanic and Atmospheric Administration (NOAA).

“Property and casualty insurers have redoubled their efforts to improve the settlement process and fine-tune their customer interactions, efforts that have been clearly recognized and appreciated by homeowners who experienced significant losses this past year,” J.D. Power said.

The study also noted opportunities for improvement, most notably in water-related and other complex claims that take a long time to settle and that cause significant lifestyle disruption. J.D. Power noted, “Insurers that manage to get the settlement process and customer interaction equation right in these types of disruptive and often catastrophic scenarios are those that raise the bar for the industry.”

The study is based on more than 6,600 responses from homeowner’s insurance customers, and was fielded between January and November 2016.

A New Career in Insurance

Courtesy of iii.org There are more than a half-million professionals employed within the U.S. property/casualty insurance market. And, if you ask many of them how they got into the industry, most will call it a lucky break. My such stroke of luck occurred decades ago. I was working for a real estate developer, the housing market took a(nother) crash, so I needed to find work. A survey of the marketplace introduced the tremendous opportunities in the insurance field and brought me a wonderful, rewarding career. I highly recommend it!

The insurance field brings a meaningful job. This is an industry that helps protect people and their finances. Insurance makes things happen. You need it to drive a car, build a home (or rebuild one after a disaster), to leave loved ones financially secure, to borrow money to build a business ? and so on. Check out InsureMyPath for insight into the profession and a review of the types of career roles.

For a student considering a college curriculum, there are universities with a risk management and insurance curriculum throughout the U.S. Among them is the insurance program at Florida State University.

What do young professionals think of the insurance field? The view themselves as “secret saviors” because they help people rebuild after disaster. There are a lot of jobs, and room for self-development and advancement. Join us!

Distracted Driver Facts, Continued

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BACKGROUND

Cellphones play an integral role in our society. However, the convenience they offer must be judged against the hazards they pose. Their use contributes to the problem of inattentive driving, which also includes talking, eating, putting on make up and attending to children.

As many as 40 countries may restrict or prohibit the use of cellphones while driving. Countries reported to have laws related to cellphone use include Australia, Austria, Belgium, Brazil, Botswana, Chile, the Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, India, Ireland, Israel, Italy, Japan, Jordan, Kenya, Malaysia, the Netherlands, Norway, the Philippines, Poland, Portugal, Romania, Russia, Singapore, the Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, Turkmenistan, the United Kingdom and Zimbabwe. Most countries prohibit the use of hand-held phones while driving.

Supporters of restrictions on driving while using a cellphone say that the distractions associated with cellphone use while driving are far greater than other distractions. Conversations using a cellphone demand greater continuous concentration, which diverts the driver’s eyes from the road and his mind from driving. Opponents of cellphone restrictions say drivers should be educated about the effects of all driver distractions. They also say that existing laws that regulate driving should be more strictly enforced.

Earlier Studies: Over the past decade numerous studies have been conducted on driver inattention, in particular focusing on the use of cellphones. Below is a summary of some these studies.

Motorists who use cellphones while driving are four times as likely to get into crashes serious enough to injure themselves, according to a study of drivers in Perth, Australia, conducted by the Insurance Institute for Highway Safety. The results, published in July 2005, suggest that banning hand-held phone use will not necessarily improve safety if drivers simply switch to hand-free phones. The study found that injury crash risk didn’t vary with type of phone.

Many studies have shown that using hand-held cellphones while driving can constitute a hazardous distraction. However, the theory that hands-free sets are safer has been challenged by the findings of several studies. A study from researchers at the University of Utah, published in the summer 2006 issue of Human Factors, the quarterly journal of the Human Factors and Ergonomics Society, concludes that talking on a cellphone while driving is as dangerous as driving drunk, even if the phone is a hands-free model. An earlier study by researchers at the university found that motorists who talked on hands-free cellphones were 18 percent slower in braking and took 17 percent longer to regain the speed they lost when they braked.

A September 2004 study from the National Highway Traffic Safety Administration (NHTSA) found that drivers using hand-free cellphones had to redial calls 40 percent of the time, compared with 18 percent for drivers using hand-held sets, suggesting that hands-free sets may provide drivers with a false sense of ease.

A study released in April 2006 found that almost 80 percent of crashes and 65 percent of near-crashes involved some form of driver inattention within three seconds of the event. The study, The 100-Car Naturalistic Driving Study, conducted by the Virginia Tech Transportation Institute and the NHTSA, broke new ground. (Earlier research found that driver inattention was responsible for 25 to 30 percent of crashes.) The newer study found that the most common distraction is the use of cellphones, followed by drowsiness. However, cellphone use is far less likely to be the cause of a crash or near-miss than other distractions, according to the study. For example, while reaching for a moving object such as a falling cup increased the risk of a crash or near-crash by nine times, talking or listening on a hand-held cellphone only increased the risk by 1.3 times.

Employer and Manufacturer Liability: Although only a handful of high-profile cases have gone to court, employers are still concerned that they might be held liable for accidents caused by their employees while driving and conducting work-related conversations on cellphones. Under the doctrine of vicarious responsibility, employers may be held legally accountable for the negligent acts of employees committed in the course of employment. Employers may also be found negligent if they fail to put in place a policy for the safe use of cellphones. In response, many companies have established cellphone usage policies. Some allow employees to conduct business over the phone as long as they pull over to the side of the road or into a parking lot. Others have completely banned the use of all wireless devices.

In an article published in the June 2003 edition of the North Dakota Law Review, attorney Jordan Michael proposed a theory of cellphone manufacturer liability for auto accidents if they fail to warn users of the dangers of driving and talking on the phone at the same time. The theory holds that maker liability would be similar to the liability of employers who encourage or demand cellphone use on the road. Holding manufacturers liable would cover all persons who drive and use cellphones for personal calls. Michael notes that some car rental agencies have already placed warnings on embedded cellphones in their cars.

Distracted Driving On The Rise

Courtesy of iii.org

  • Activities that take drivers? attention off the road, including talking or texting on mobile devices, eating, conversing with passengers and other distractions, are a major safety threat.
  • In 2014, 3,179 people died in distraction-affected crashes, based on National Highway Traffic Safety Administration (NHTSA) criteria.
  • The number of state legislatures passing measures that address the problem of driver distractions continues to rise. Fourteen states and the District of Columbia ban the use of hand-held cellphones while driving; 46 states and the District of Columbia have banned the practice of texting while driving.
  • A 2012 Consumer Reports survey found that 71 percent of respondents cut back on texting, talking on a handheld phone or using a smartphone while driving in the previous year. Over 50 percent of them said they were influenced to change their behavior because of state laws, up from 44 percent in a survey conducted in 2011.

THE TOPIC

Increased reliance on electronic devices has led to a rise in their use by drivers, jeopardizing the safety of vehicle occupants and pedestrians. There are two dangers associated with driving and the use of electronic devices. First, drivers must take their eyes off the road and hands off the wheel to manipulate the devices when dialing, texting and surfing the Web. Second, people can become so absorbed in their conversations and other uses that their ability to concentrate on the act of driving is severely impaired. Since the first law was passed in New York in 2001 banning hand-held cellphone use while driving, there has been debate as to the exact nature and degree of hazard. The latest research shows that using a cellphone when driving is just one of many types of distracted driving that may lead to crashes and near crashes.

RECENT DEVELOPMENTS

  • Statistics: 2014: The National Highway Traffic Safety Administration (NHTSA) says that distracted driving was reported in crashes that killed 3,179 people in 2014. These fatalities accounted for 10 percent of all traffic crash fatalities in 2014.
  • NHTSA reports that there were an estimated 2,955 distraction-affected fatal crashes in 2014. An estimated 431,000 people were injured in distraction-affected crashes in 2014, up 1.7 percent from 2013.
  • In 2014, there were 2,955 distraction-affected fatal crashes, accounting for 10 percent of all fatal crashes in the nation, 18 percent of injury crashes and 16 percent of all police-reported motor vehicle crashes.
  • There were 385 crashes in 2014 that were reported to have involved the use of cell phones as a distraction. Cell phones were reported as a distraction for 13 percent of all distracted drivers in fatal crashes.
  • In 2014, 404 people died in fatal crashes that involved the use of cellphones or other cellphone-related activities as distractions.
  • Research: The following is a summary of some recent research on the issue of distracted driving.
  • A Highway Loss Data Institute (HLDI) analysis released in October 2014 found that although state bans on hand-held phone use by drivers have lowered phone use behind the wheel, they have not produced a similar drop in crashes. The study involved looking at the findings of National Highway Traffic Safety Administration programs conducted from April 2010 to April 2011 in Hartford, Connecticut, and Syracuse, New York, aimed at reducing talking or texting on hand-held phones. Both states ban hand-held phone use and texting. At the end of the program, researchers found that the number of drivers observed using a hand-held cellphone fell 57 percent in Hartford and 32 percent in Syracuse. HLDI analysts then compared collision claims in the counties where the cities are located–Syracuse (Onondaga County) and Hartford (Hartford County)–with the comparison counties of Albany County, New York, and Fairfield County, Connecticut, and the rest of New York and Connecticut for the period of January 1, 2009 through October 31, 2011. The analysis found no corresponding reduction in crashes reported to insurers from the program counties relative to the comparison counties. HLDI provides possible reasons for the bans’ lack of effect on accidents, including the possibility that drivers may have been distracted by something else or that drivers may have switched to hands-free calling and still may have been distracted by their conversations.
  • The analysis confirms some of the results of an earlier HLDI study, released in September 2010, that found that texting bans may not reduce crash rates. The study looked at collision claims patterns in four states?California, Louisiana, Minnesota and Washington?before and after text bans went into effect. Collisions went up slightly in all the states, except Washington, where the change was statistically insignificant. Adrian Lund, president of HLDI and the Insurance Institute for Highway Safety, said that the findings “call into question the way policymakers are trying to address the problem of distracted driving crashes. They’re focusing on a single manifestation of distracted driving and banning it. This ignores the endless sources of distraction and relies on banning one source or another to solve the whole problem.”
  • The Centers for Disease Control and Prevention latest Youth Risk Behavior Surveillance Survey, released in June 2014, shows that about 41.4 percent of high school students reported that they texted or emailed from behind the wheel at least once during the previous 30 days. The highest rate of texting or emailing while driving, 61.3 percent, was among teens in South Dakota. The lowest rate, 32.3 percent, was among teens in Massachusetts. The survey is conducted every two years, but this year was the first time the 13,000 participants were asked about texting and emailing while driving.
  • In May 2014 the National Highway Traffic Safety Administration released a study, “The Economic and Society Impact of Motor Vehicle Crashes, 2010,” which focuses on behavioral factors that contributed to 32,999 highway fatalities and 3.9 million injuries in the U.S. in 2010. The study found that those crashes cost $277 billion in economic losses and $594 billion in societal harm, for a total of $871 billion that year. A breakdown of the figures for economic losses show crashes involving distracted driving accounted for 17 percent ($46 billion).
  • Drowsiness is a type of distracted driving that causes more than 100,000 motor vehicle crashes a year, resulting in 40,000 injuries and 1,550 deaths, according to the National Highway Traffic Safety Administration. A 2010 AAA Traffic Safety Foundation survey found that one in four drivers have struggled to stay awake while driving. An estimated 17 percent of fatal crashes, 13 percent of crashes resulting in hospitalization and 7 percent of all crashes requiring a tow, involve a drowsy driver, according to the AAA. Driver fatigue is of particular concern regarding operators of large trucks. In 2010 fatigue was a factor in 34 percent of fatal collisions involving drivers of large trucks, according to the U.S. Department of Transportation.
  • A survey conducted by the Consumer Reports National Research Center published in the June 2013 issue of Consumer Report found that state laws that ban the use of a handheld cellphones or texting while driving in many states are effective. The December 2012 survey of 1,003 people found that 71 percent of respondents had stopped or cut back on texting, talking on a handheld phone or using a smartphone while driving in the previous year. Over 50 percent of them said they were influenced to change their behavior because of state laws, up from 44 percent in a survey conducted in 2011. The survey also found that about 25 percent of drivers were unsure of their own state’s laws.
  • In March 2013 a survey was published in the latest Morbidity and Mortality Weekly Report that confirms that confirmed that the problem of distracted driving is not improving. The survey looked at both U.S. drivers and drivers in seven European countries. The study found that almost seven in 10 American drivers ages 18 to 64 said they had talked on their phones while behind the wheel in the past 30 days, and about three in 10 said they had sent text messages. The practice of driving and using cellphones appears to be far less common in the European nations surveyed. In the U.K., for example, which has strict laws regarding cellphone use while driving, only 21 percent of drivers admitted to having used a cellphone.
  • State and Federal Initiatives: In 2011 the National Transportation Safety Board (NTSB) recommended that all states prohibit drivers from using cellphones, the first federal agency to call for a complete ban on telephone conversations from behind the wheel. Although the NTSB has no enforcement authority as the federal government’s leading advocate for safety, its recommendations are influential in Congress and the White House.
  • The number of state legislatures debating measures that address the problem of cellphone use while driving and other driver distractions continues to rise. As of December 2015, most states have passed laws to address the problem of using a cellphone while driving. Fourteen states?California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, New Hampshire, New Jersey, New York, Oregon, Vermont, Washington state, West Virginia?and the District of Columbia had laws on the books banning the use of hand-held cellphones while driving, according to the Insurance Institute of Highway Safety. Almost all of the laws have “primary enforcement” provisions, meaning a motorist may be ticketed for using a hand-held cellphone while driving without any other traffic offense taking place, according to the Insurance Institute for Highway Safety.
  • Also as of December 2015, 46 states and the District of Columbia banned the practice of texting with a cellphone while driving. Most of these laws have primary enforcement provisions. The Utah law, passed in May 2009, is the toughest in the nation. Offenders convicted of causing an accident that injures or kills someone while texting behind the wheel face up to 15 years in prison. The law does not consider a crash caused by a multitasking driver as an accident but rather as an inherently reckless act, like drunk driving.
  • New Technology: A number of cellphone companies are considering developing technology that will prevent people from receiving calls and texting while driving. The technology is intended to limit dangerous distractions by temporarily interrupting service so that people do not answer their phones when they are behind the wheel. One carrier has already introduced a service that automatically disables rings and alerts and sends calls to voice mail when phones are in a moving car. Some safety advocates said that it is unclear whether consumers would avail themselves of the technologies or whether the technologies would be effective.
  • Insurance Coverage: Most mobile cellular service providers offer insurance for loss, theft, accidental damage and out of warranty malfunctions for a monthly fee. A report by iGR Research in May 2012 found that about 27 percent of respondents in a survey of over 1,000 U.S. consumers said they currently carry insurance on their devices.
  • Court Decisions: In May 2012 a Nueces County, Texas, jury, awarded over $22 million to a woman who suffered a spinal injury when her car was hit by a Coca-Cola employee who was talking on her cellphone. The award included more than $11.5 million for lost wages, medical expenses and pain and suffering as well as $10 million in punitive damages against Coca-Cola. The defendant was on a business call, using a hands-free cellphone. Plaintiffs’ lawyers argued that Coca-Cola was aware of studies that show that the danger of cellphone use is not limited to handheld devices, but continued to back a hands-free cellphone use policy for its employees. The case at issue is Chatman-Wilson v. Cabral.

Are You Covered in the Case of a Natural Disaster?

Courtesy of iii.org. Homeowners and businesses in California’s Butte, Sutter and Yuba counties who have flood insurance will be covered if the Lake Oroville Dam’s auxiliary spillway fails, according to the Insurance Information Institute (I.I.I.). Revised forecasts call for about 10 inches of rain heading to the area according to the LA Times.

Roughly 50,047 single- and multi-family residential homes could be damaged with an estimated reconstruction cost value of $13.3 billion if the Oroville Dam in California were to fail completely, according to new data analysis from CoreLogic that included the six primary counties in that area.

“The potential for flooding poses a significant threat to life and property in these northern California counties and forced the evacuation of almost 200,000 of residents,” said Janet Ruiz, the I.I.I.’s California Representative. “Standard homeowners, renters and business insurance policies do not cover flood-caused damage. A separate flood insurance policy is needed.” Lake Oroville Dam is in Butte County.

Flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and a few private insurance companies. NFIP policies have a 30-day waiting period before the coverage is activated. Excess flood insurance policies are also available from some private insurers if additional coverage is needed above and beyond the basic FEMA NFIP policy. To learn more about flood insurance, visit the FloodSmart.gov.

If your home or business is near a river, lake, stream, creek, dam or other body of water, the I.I.I. recommends taking these three steps in order to assess your property’s flood risks.

  • Contact your insurance professional. Take the time to ask questions and be sure you understand all of your insurance options. It will help you make informed decisions about your insurance coverage.
  • Prepare an emergency plan. The I.I.I.’s free mobile app, Know Your Plan, makes it easy to be ready when disaster strikes. Preparedness information is also available from FEMA’s Ready.gov and the National Oceanic and Atmospheric Administration’s (NOAA) Weather Ready Nation.
  • Conduct a home inventory. Documenting your belongings will help you buy the right amount, and type, of insurance. A home inventory also makes claim filing easier and can be used to document financial losses when filing tax returns or applying for post-disaster financial assistance. Using the I.I.I.’s Know Your Stuff app will ensure you have an updated home inventory, accessible anywhere, any time.

Insurance & Wildfires Part 2

PART2

Courtesy of iii.org.

Condo Insurance

Q. There is damage to my kitchen cabinets and my clothes as well as the roof and elevator of the building. Just who is responsible?

A. Usually, your own condominium insurance policy provides coverage for your personal possessions, structural improvements to your apartment and additional living expenses.

There is also a “master policy” provided by the condo/co-op board which covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways.

Sometimes the association is responsible for insuring the individual condo or co-op units, as they were originally built, including standard fixtures. The individual owner, in this case, is only responsible for alterations to the original structure of the apartment, like remodeling the kitchen or putting in a new bathtub. Sometimes this may include not only improvements you make, but also those made by previous owners.

In other situations, the condo association is responsible only for insuring the bare walls, floor and ceiling. The owner must insure kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures etc. Your association’s bylaws and/or property lease will determine who is responsible for what.

If you have unit assessment coverage, if will reimburse you for your share of an assessment charged to all unit owners as a result of windstorm damage. For instance, if there is windstorm damage in the lobby, all the unit owners are charged the cost of repairing the loss.

Business Insurance

Q. Will my business be covered for property damage?

A. The typical business owner’s policy covers damage due to wind, wind-driven rain and fire. So if your business has been damaged or destroyed by one of these perils, your insurance company will pay to have your business repaired or rebuilt. Flood damage is usually excluded or very limited unless you have purchased flood coverage from the NFIP or a private insurer.

Q. My business is shut down. Will my insurance cover lost revenue? If so, for how long?

A. Business income, or business interruption, insurance (BI) covers the profits a business would have earned, based on its own financial records, had the disaster not occurred. The policy covers additional operating expenses incurred as a result of the disaster such as the extra expense of operating out of a temporary location, even though business activities have come to a temporary halt.

Reimbursement under business interruption insurance is usually triggered by some kind of damage to the property where the business is conducted and only when the damage is the result of a covered peril such as fire. Evacuation orders do NOT trigger BI coverage. Acts of “civil authority” which preclude a business from reopening can trigger business interruption coverage if the declaration was the result of a covered peril. Generally, there is a deductible either in a flat dollar amount or a waiting time. If it is a waiting time, it is typically 24 to 72 hours, meaning that payments do not begin until the business has been disrupted for one to three days.

Most business interruption forms do not include coverage for perils such as emergency evacuation by civil authority or a major utility disruption, unless they were added by endorsement. Typically, when business interruption insurance is purchased, the timeframe for coverage is a year. The overall cost of BI is determined by the amount of coverage required during the period specified.

Q. How am I going to be able to rebuild my business and afford the cost of keeping the business going at another location?

A. If you have business income coverage, it will reimburse you for lost profits and continue fixed expenses during the time that the business must stay closed while the premises are being restored. If you have ordinance or law coverage it will help pay for the extra costs of tearing down the structure and rebuilding it.

Q. I’ve had so many extra expenses beyond my normal operating expenses. What am I going to do?

A. If you have extra expense insurance, it will reimburse your company for what it spends, over and above normal operating expenses, to relocate to avoid having to shut down during the restoration period. As with business income insurance, the price of extra expense insurance varies with the industry and the likelihood of disaster-related damage.

Life Insurance

Q. My wife was killed in the fires. There are so many expenses. Who is going to take care of my children when I go to work? A. Life insurance benefits can be used for any purpose, including paying funeral expenses and child care costs.

Q. I’ve been paying for years for life insurance that has a cash value. Can I borrow that cash value or surrender the contract to get at that money? Who can help me with this? A. Borrowing and policy surrender are available. Borrowing would be the preferred choice because the death benefit stays in effect (minus the amount borrowed), but this is a loan that must eventually be repaid. If repayment is unlikely, they’re probably better off surrendering the policy for the cash. Ideally, they should discuss this with the agent who sold them the policy, or with someone in the life insurer’s customer service division, to place this option in context with other cash-raising options.

Other Questions

Q. I don’t have a copy of my policy, a home inventory or any documentation. What should I do?

A. Contact your insurance professional as soon as you are able. Your insurance company may send you a claim form known as a “proof of loss form” to complete. Or an adjuster may visit your home first. (An adjuster is a person professionally trained to assess the damage.) In either case, the more information you have about your damaged possessions—a description of the item, approximate date of purchase and what it would cost to replace or repair—the faster your claim generally can be settled.

Q. Will I need to obtain estimates for the repairs or will the adjuster do this for me?

A. Ask your insurance agent professional about requirements.

Q. Is there a time limit for filing a claim?

A. Insurance policies general place a time limit on filing claims which vary from state to state and company to company. Check with your insurer to see what the time limits are.

Q. What can I do if I am having trouble settling my claim?

A. If you are dissatisfied with how your insurance company is handling your claim, you have several options: talk to the agent or company representative who sold you the policy and let the agent know you are dissatisfied; contact the company claims manager and provide a written explanation of your problem with copies of supporting documentation; contact your state insurance department; consider mediation if you cannot reach an agreement with the company directly.