Drunk Driving Holiday Risks

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Alcohol is a major factor in traffic accidents. Based on data from the U.S. Department of Transportation, National Highway Traffic Safety Administration (NHTSA), there was an alcohol-impaired traffic fatality every 51 minutes in 2015.

Alcohol-impaired crashes are those that involve at least one driver or a motorcycle operator with a blood alcohol concentration (BAC) of 0.08 percent or above, the legal definition of drunk driving. According to NHTSA 10,265 people died in alcohol-impaired crashes in 2015, up 3.2 percent from 9,943 in 2014. In 2015 alcohol-impaired crash fatalities accounted for 29 percent of all crash fatalities.

The definition of drunk driving had been consistent throughout the United States until March 2017. All states and the District of Columbia defined impairment as driving with a BAC (blood alcohol concentration) at or above 0.08 percent. In addition, they all have zero tolerance laws prohibiting drivers under the age of 21 from drinking and driving. Generally the BAC limit in these cases is 0.02 percent. In March 2017, the governor of Utah signed a bill, effective December 30, 2018, that lowered the limit defining impaired driving for most drivers to 0.05 percent BAC, the lowest in the nation.

Anti-drunk-driving campaigns especially target drivers under the age of 21, repeat offenders and 21-to 34-year-olds, the age group that is responsible for more alcohol-related fatal crashes than any other. Young drivers are those least responsive to arguments against drunk driving, according to NHTSA.

To make sellers and servers of liquor more careful about to whom and how they serve drinks, 42 states and the District of Columbia have enacted laws or have case law holding commercial liquor servers legally liable for the damage, injuries and deaths a drunk driver causes. Thirty-nine states have enacted laws or have case law that permit social hosts who serve liquor to people who subsequently are involved in crashes to be held liable for any injury or death. (See chart below and Background.)

Recent developments

  • Latest data from the National Highway Traffic Safety Administration (NHTSA) indicates that the 10,265 alcohol-impaired fatalities in 2015 accounted for about one out of three highway deaths (29 percent) on U.S. roads. There were 9,943 such fatalities in 2014.
  • Ignition interlock systems require drivers to blow into a breathalyzer-like device to ensure the individual is sober before allowing the vehicle to start. According to a report released in January 2017 by the Johns Hopkins Bloomberg School of Public Health, traffic fatalities have declined by 7 percent in states that mandate ignition interlocks for first-time drunken-driving offenders. The researchers studied traffic fatalities for about five years before states began passing interlock laws in the late 1980s through 2013, when all states required them under some circumstances. See Background, Repeat Offenders.
  • Drunk Driving by Gender: Latest NHTSA data show that 14 percent of women drivers involved in fatal crashes in 2015 (1,761 drivers) were alcohol-impaired, only 1 percentage point lower than in 2006. In comparison, 21 percent of male drivers involved in fatal crashed were alcohol impaired in 2015, down from 24 percent in 2006.
  • Drunk Driving by Age: According to data from NHTSA, in 2015 the percentage of drivers in fatal crashes who were alcohol impaired was highest for 21 to 24 year old drivers, at 28 percent, followed by 25 to 34 year old drivers, at 27 percent, and 35 to 44 year old drivers, at 23 percent. The percentage of alcohol-impaired drivers in fatal crashes was 19 percent for 45 to 54 year olds, 16 percent of 16 to 20 year olds, 14 percent for 55 to 64 year olds, 9 percent for 65 to 74 year olds and 6 percent for drivers over the age of 74.
  • Drunk Driving by Vehicle Type: NHTSA data for 2015 show that 27 percent of motorcycle drivers involved in fatal crashes were alcohol impaired, compared with 21 percent of passenger car drivers and 20 percent of light truck drivers. Only 2 percent of large-truck drivers involved in fatal crashes in 2015 were alcohol impaired.
  • Social Host Liability: The Massachusetts Supreme Court ruled in February 2012 that social hosts could be held liable for off-premise injury to people caused by the drunk driving of a guest only if the host served alcohol or made it available. People who host “bring your own” parties are free from liability, even if the guest is underage. The court rejected an attempt by the parents of an injured 16-year-old to sue a party’s 18-year old host. The younger person suffered injuries in a crash in a car driven by someone who brought his own alcohol to the party. At issue was the fact that the driver, not the party host, supplied the liquor. Although the lawsuit contended that the host should be found negligent for allowing the driver to drink at her home, the court said that earlier rulings showed that hosts can’t be responsible for their guests’ drinking if they don’t control the supply of alcohol. Massachusetts law and court cases have held social hosts liable if they supply alcohol (See chart: STATUTES OR COURT CASES HOLDING ALCOHOLIC BEVERAGE SERVERS LIABLE).
  • Also in February 2012 the New Mexico Supreme Court said that circumstantial evidence of a driver’s intoxication was sufficient to support a jury finding that the driver was intoxicated, overruling a decision in a 2004 case. Evidence presented in the earlier trial showed that a driver who struck and killed a motorcyclist had a 0.09 percent blood alcohol content five hours after the crash. The owners of the gas station where the driver worked and consumed a number of beers bought at the gas station pleaded ignorance of the driver’s condition. The court ruled that the blood test results were enough to prove that the driver was intoxicated. The ruling holds liquor sellers responsible for liability where evidence is available under the existing dram shop law.

Insurance and Annuities

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Fixed vs. variable annuities

In a fixed annuity, the insurance company guarantees the principal and a minimum rate of interest. In other words, as long as the insurance company is financially sound, the money you have in a fixed annuity will grow and will not drop in value. The growth of the annuity’s value and/or the benefits paid may be fixed at a dollar amount or by an interest rate, or they may grow by a specified formula. The growth of the annuity’s value and/or the benefits paid does not depend directly or entirely on the performance of the investments the insurance company makes to support the annuity. Some fixed annuities credit a higher interest rate than the minimum, via a policy dividend that may be declared by the company’s board of directors, if the company’s actual investment, expense and mortality experience is more favorable than was expected. Fixed annuities are regulated by state insurance departments.

Money in a variable annuity is invested in a fund—like a mutual fund but one open only to investors in the insurance company’s variable life insurance and variable annuities. The fund has a particular investment objective, and the value of your money in a variable annuity—and the amount of money to be paid out to you—is determined by the investment performance (net of expenses) of that fund. Most variable annuities are structured to offer investors many different fund alternatives. Variable annuities are regulated by state insurance departments and the federal Securities and Exchange Commission.

Types of fixed annuities

An equity-indexed annuity is a type of fixed annuity, but looks like a hybrid. It credits a minimum rate of interest, just as a fixed annuity does, but its value is also based on the performance of a specified stock index—usually computed as a fraction of that index’s total return.

A market-value-adjusted annuity is one that combines two desirable features—the ability to select and fix the time period and interest rate over which your annuity will grow, and the flexibility to withdraw money from the annuity before the end of the time period selected. This withdrawal flexibility is achieved by adjusting the annuity’s value, up or down, to reflect the change in the interest rate “market” (that is, the general level of interest rates) from the start of the selected time period to the time of withdrawal.

Other types of annuities

All of the following types of annuities are available in fixed or variable forms.

Deferred vs. immediate annuities

A deferred annuity receives premiums and investment changes for payout at a later time. The payout might be a very long time; deferred annuities for retirement can remain in the deferred stage for decades.

An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. The time period depends on how often the income is to be paid. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought.

Lifetime vs. fixed period annuities

A fixed period annuity pays an income for a specified period of time, such as ten years. The amount that is paid doesn’t depend on the age (or continued life) of the person who buys the annuity; the payments depend instead on the amount paid into the annuity, the length of the payout period, and (if it’s a fixed annuity) an interest rate that the insurance company believes it can support for the length of the pay-out period.

A lifetime annuity provides income for the remaining life of a person (called the “annuitant”). A variation of lifetime annuities continues income until the second one of two annuitants dies. No other type of financial product can promise to do this. The amount that is paid depends on the age of the annuitant (or ages, if it’s a two-life annuity), the amount paid into the annuity, and (if it’s a fixed annuity) an interest rate that the insurance company believes it can support for the length of the expected pay-out period.

With a “pure” lifetime annuity, the payments stop when the annuitant dies, even if that’s a very short time after they began. Many annuity buyers are uncomfortable at this possibility, so they add a guaranteed period—essentially a fixed period annuity—to their lifetime annuity. With this combination, if you die before the fixed period ends, the income continues to your beneficiaries until the end of that period.

Qualified vs. nonqualified annuities

A qualified annuity is one used to invest and disburse money in a tax-favored retirement plan, such as an IRA or Keogh plan or plans governed by Internal Revenue Code sections, 401(k), 403(b), or 457. Under the terms of the plan, money paid into the annuity (called “premiums” or “contributions”) is not included in taxable income for the year in which it is paid in. All other tax provisions that apply to nonqualified annuities also apply to qualified annuities.

A nonqualified annuity is one purchased separately from, or “outside of,” a tax-favored retirement plan. Investment earnings of all annuities, qualified and non-qualified, are tax-deferred until they are withdrawn; at that point they are treated as taxable income (regardless of whether they came from selling capital at a gain or from dividends).

Single premium vs. flexible premium annuities

A single premium annuity is an annuity funded by a single payment. The payment might be invested for growth for a long period of time—a single premium deferred annuity—or invested for a short time, after which payout begins—a single premium immediate annuity. Single premium annuities are often funded by rollovers or from the sale of an appreciated asset.

A flexible premium annuity is an annuity that is intended to be funded by a series of payments. Flexible premium annuities are only deferred annuities; that is, they are designed to have a significant period of payments into the annuity plus investment growth before any money is withdrawn from them.

 

Gap Insurance-What Is

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How gap insurance works

When you buy or lease a new car or truck, the vehicle starts to depreciate in value the moment it leaves the car lot. In fact, most cars lose 20 percent of their value within a year. Standard auto insurance policies cover the depreciated value of a car—in other words, a standard policy pays the current market value of the vehicle at the time of a claim.

If, when you finance the purchase of a new car and put down only a small deposit, in the early years of the vehicle’s ownership the amount of the loan may exceed the market value of the vehicle itself.

In the event of an accident in which you’ve badly damaged or totaled your car, gap insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you actually owe on it.

When you might need gap insurance

It’s a good idea to consider buying gap insurance for your new car or truck purchase if you:

  • Made less than a 20 percent down payment
  • Financed for 60 months or longer
  • Leased the vehicle (carrying gap insurance is generally required for a lease)
  • Purchased a vehicle that depreciates faster than the average
  • Rolled over negative equity from an old car loan into the new loan

Where you can get gap insurance

Your car dealer may offer to sell you gap insurance on your new vehicle. However, most car insurers also offer it, and they typically charge less than the dealer. On most auto insurance policies, including gap insurance with collision and comprehensive coverage adds only about $20 a year to the annual premium.

Crisis with Florida Insurance Rates

Courtesy of iii.org

It is a standard practice throughout the insurance world: As a convenience, a policyholder grants a third party – an auto glass repair company, a medical practitioner, a home contractor – permission to directly bill an insurer to settle a claim. That practice is called an assignment of benefits, usually known by the acronym, AOB.

In Florida, abuse of AOBs has fueled an insurance crisis. The state’s legal environment has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file tens of thousands of lawsuits against insurance companies that deny or dispute the claims. This mini-industry has cost consumers billions of dollars as they are forced to pay higher premiums to cover needless repairs and excessive legal fees. And consumers often do not even know that their claims are driving these cost increases.

The abuse therefore acts somewhat like a hidden tax on consumers, helping to increase what are already some of the highest insurance premiums in the country.

This report discusses how AOB abuse works, how and why it is spreading, and how it is contributing to higher insurance costs for Florida consumers.

Please click on the file name below to view the white paper in PDF format. You will need Adobe Acrobat Reader to view the file.

Download aobfl_wp_121118.pdf

You can download Adobe Acrobat Reader, free of charge, from the Adobe website (https://www.adobe.com/products/acrobat/readstep.html).

Sleep & Insurance

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I came across this from Swiss Re around 2 a.m., which helps explain why it caught my (sleepy) eye:

Consider these two facts: Firstly, two out of three man-made losses worldwide are due to human failure. Based on Swiss Re’s sigma research, this would mean that people trigger a loss volume of around USD 3 billion per year.

Secondly, life insurance generated premiums of USD 2.6 trillion in 2017. These two facts are linked because tired people make more errors and insomniacs are at a greater risk of dying earlier than would otherwise be the case.

That’s right – the insurance angle on sleep.

The lack of sleep is associated with increased rates of heart attacks, strokes, obesity and other diseases. Sleeping less can also contribute to the development of Alzheimer’s. And recent research found that chronic sleep restriction increases risk seeking behaviour.

If these trends change the loss patterns in property and casualty or mortality rates, this could have a multi-billion dollar impact on the insurance industry in the long run.

The lack of sleep has caused some high profile accidents, the most notable in my world being a New Jersey Transit train that in 2016 crashed into Hoboken terminal because the engineer, suffering from sleep apnea, zoned out at a crucial moment. One woman died, dozens were injured.

Swiss Re posits that society, ever accelerating, robs us of ever more sleep. The less we sleep, the woozier we become. And the more errors we make. (Our bodies wear out faster too, becoming susceptible to the maladies Swiss Re mentions above.)

A good dose of resilience helps here. New York area railroads are installing (by federal mandate) positive train control systems, which automatically stop trains in any sort of peril, including that of a tired engineer. The illustration above describes how the system works.

As for my own struggles – an e-book of white text on black background, and perhaps a cup of chamomile tea.

Cyberrisks, What’s the Risk?

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A lawyer once warned me during a seminar that I should never, ever send an email – ever. “Get on a phone instead,” he counseled. (I assume he hadn’t watched The Wire.)

Impossible to follow as his advice was, it stuck with me because he was right, in a way. If there’s anything we should’ve learned after all the data breaches these past few years, it’s that nothing about our online lives is safe from prying eyes. Not Social Security numbers. Not medical records. And definitely not our social media activity.

People know the risks. The good news is that many American consumers are aware that their connected lives are incredibly vulnerable. According to a recent Insurance Information Institute and J.D. Power 2018 Consumer Cyber Insurance and Security Spotlight SurveySM, almost seven out of 10 connected technology owners (69 percent) are not comfortable sharing personal information on social media such as Facebook and Instagram.

But behavior is slow to change. The bad news is that only about a third changed the way they used social media or connected technology after learning about recent data abuses and breaches.

And it’s even more alarming that fully 85 percent of surveyed connected technology owners either don’t have cyberrisk insurance or don’t know if they do.

Education and insurance are important. Just like in real life (wear a helmet, everybody!), leading a safe online life starts with education about the risks involved. That education includes learning how insurance can help. Insurers are in a unique position to spearhead these education efforts – people will often turn to their insurance company after they’ve suffered losses from a data breach.

But consumers first need to learn about the cyber insurance options out there that can help immensely after a hack. For that to happen, insurers need to demonstrate to consumers the relatively inexpensive and valuable coverage that is available to protect them.

The alternative is for all of us to go back to sending letters by snail mail – or, if a certain lawyer is to be believed, never writing anything down at all.

Do You Need Boating Insurance?

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Insurance can provide limited coverage for property damage for small boats such as canoes and small sail boats or small power boats with less than 25 mile per hour horse power under a homeowners or renters insurance policy. Coverage is usually about $1,000 or 10 percent of the home’s insured value and generally includes the boat, motor and trailer combined. Liability coverage is typically not included?but it can be added as an endorsement to a homeowners policy. Check with your insurance representative to find out if your boat is covered and what the limits are.

Larger and faster boats such as yachts, and personal watercraft such as jet skis and wave runners require a separate boat insurance policy. The size, type and value of the craft and the water in which you use it factor into how much you will pay for insurance coverage.

For physical loss or damage, coverage includes the hull, machinery, fittings, furnishings and permanently attached equipment as part of either an actual cash value policy or on an agreed amount value basis. These policies also provide broader liability protection than a homeowners policy. But there are distinct differences between the two types of policies.

Actual Cash Value policies pay for replacement costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the vessel’s approximate market value. Partial losses are settled by taking the total cost of the repair less a percentage for depreciation.

Agreed Amount Value basis policies mean that you and your insurer have agreed on the value of your vessel and in the event of a total loss you will be paid that amount. Agreed Amount Value policies also replace old items for new in the event of a partial loss, without any deduction for depreciation.

Physical damage exclusions might include normal wear and tear, damage from insects, mold, animals (such as sharks), zebra mussels, defective machinery or machinery damage.

Boat insurance also covers:

  • Bodily injury?for injuries caused to another person
  • Property damage?for damage caused to someone else’s property
  • Guest passenger liability?for any legal expenses incurred by someone using the boat with the owner’s permission
  • Medical payments?for injuries to the boat owner and other passengers
  • Theft

Most companies offer liability limits that start at $15,000 and can be increased to $300,000. Typical policies include deductibles of $250 for property damage, $500 for theft and $1000 for medical payments. Higher limits may be available. Additional coverage can be purchased for trailers and other accessories. Boat owners may also consider purchasing an umbrella liability policy which will provide additional protection for their boat, home and car.

Boaters should also inquire about special equipment kept on the boat, such as fishing gear, to make sure it is covered and verify that towing coverage is included in the policy.

Boat owners should also inquire about discounts for the following:

  • Diesel powered craft, which are less hazardous than gasoline powered boats as they are less likely to explode
  • Coast Guard approved fire extinguishers
  • Ship-to-shore radios
  • Two years of claims-free experience
  • Multi-policies with the same insurer, such as a car, home or umbrella policy
  • Safety education courses, such as those offered by the Coast Guard Auxiliary, U.S. Power Squadrons, or the American Red Cross.

Boat Safety

There are thousands of recreational boating accidents per year. Contributing factors to these accidents include traveling too fast for water or weather conditions, driving under the influence of drugs or alcohol, failing to follow boating rules and regulations, carelessness and inexperience.

To prevent boating accidents, we offer these safety suggestions:

Care and protection of vessel

  1. Check weather forecasts before heading out.
  2. Let someone know where you’re going and when you expect to return.
  3. Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
  4. Carry one or more fire extinguishers, matched to the size and type of boat. Keep them readily accessible and in condition for immediate use.
  5. Equip the vessel with required navigation lights and with a whistle, horn or bell.
  6. Consider additional safety devices, such as a paddle or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio.

Care and protection of crew and guests

  1. Make sure that every person on board the boat wears a life-jacket.
  2. Know and obey marine traffic laws, the “Rules-of-the-Road.” Learn various distress signals.
  3. Keep an alert lookout for other watercraft, swimmers, floating debris and shallow waters.
  4. Pay attention to loading. Don’t overload; distribute the load evenly; don’t stand up or shift weight suddenly in a small boat; and don’t permit riding on the bow, seatbacks or gunwales.
  5. Don’t operate a boat while under the influence of alcohol or drugs.

Skippers can obtain free advice and boating-safety courses from the U.S. Coast Guard Auxiliary. Upon request, the auxiliary will conduct a Courtesy Marine Examination (CME) on your boat, checking electrical and safety equipment and fuel hoses. Boats meeting safety standards are awarded the CME decal “Seal of Safety.”

Insurance Considerations of Airbnb

Courtesy of iii.org

Before you consider renting out your home, your guest room—or even your couch—first contact your insurance professional so you fully understand the financial risks and can take the proper precautions. Here’s some general information to jumpstart your insurance conversation.

If you are considering renting out your home, your guest room or even your couch your first step should be to contact your insurance professional. Peer-to-peer home sharing opportunities such as Airbnb can be a great way to bring in extra money and are increasingly popular; however, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Peer-to-peer home rental

Peer-to-peer home sharing opportunities such as Airbnb are increasingly popular and can be a great way to bring in extra money. However, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Standard homeowners and renters insurance policies are designed for personal risks, not commercial risks. Some insurers now offer a home-sharing liability insurance policy that can be purchased on a month-to-month basis, but there may be exclusions and limitations, so read the policy carefully. If you plan to rent out all or part of your home on a regular basis, many companies will consider this a business use and you may need to purchase a business policy—specifically either a hotel or a bed-and-breakfast policy.

If you are doing the renting

If you are the one using a peer-to-peer network to rent a space from someone else, check your own homeowners or renters insurance policy. In most cases, if your personal possessions are stolen or damaged off-premises, you can simply file a claim with your own insurer. And if you accidentally injure someone, you should also be financially protected.

Occasional home rental

There may be times when a major event in an area—the Super Bowl, say, or a graduation at a major university—depletes local hotel space. In these cases, it’s fairly common for people to rent out their home or part of it for the extra cash it brings in.

Many insurance companies take this situation into account when creating a homeowners or renters policy and, with sufficient advance notice, will extend your coverage to the renter on a one-time basis. Other insurance companies may require the purchase of an endorsement to the policy to provide broader coverage for the renters in your home.

In both cases, be sure to let your insurance company know ahead of time, so you can be prepared.

10 Reasons to Review Your Coverage

Courtesy of iii.org

Coverage needs change as circumstances in our lives change; an annual insurance review will ensure you have the proper coverage for your needs and budget.


Our insurance needs change as circumstances in our lives change, which is why we recommend doing an annual insurance review. When you’re reviewing your insurance coverage, these ten questions can help you figure out whether you may need to talk to your insurance professional about making a change to your coverage.

1. Have you gotten married or divorced?

If you have gotten married, you may qualify for a discount on your auto insurance. Couples may bring two cars into the relationship and two different auto insurance companies, so take the opportunity to review your existing coverage and see which company offers the best combination of price and service.

If you are merging two households, you may need to update your homeowners insurance. And you may want to consider increasing your insurance for any new valuables received, such as wedding gifts, and for jewelry, such as wedding and engagement rings.

After getting married, it is important to review your life insurance needs. If one spouse is not working, he or she might be dependent on the working spouse’s income; if so, reviewing life and disability insurance coverage is prudent. The spouse who is not working outside the home should also consider having a separate life insurance policy because, in the event of premature death, the services he or she provides for the household would need to be replaced, and that could prove costly to the surviving spouse. Moreover, even if both spouses are working, couples often make financial commitments based on both incomes so the loss of one spouse’s income due to death or disability could be financially devastating without adequate insurance.

In the other hand, if you got divorced over the past year, you will probably no longer be sharing a car with your former spouse and have likely moved to a different residence. If this is the case, you should inform your insurer as you will need to set up separate auto and homeowners policies.

2. Have you had a baby?

If you have recently added a child to your family, whether by birth or adoption, it is important to review your life insurance and disability income protection.

If you are planning for your life insurance to match your survivors’ expenses after your death, the new child will no doubt add to those expenses, requiring more life insurance to keep your family secure. If you plan to save for your child’s college education, life insurance can assure completion of that plan. And if you keep your current life insurance policy, don’t forget to update the beneficiary designations to include the new child.

3. Did your teenager get a drivers license?

It is generally cheaper to add your teenagers to your auto insurance policy than for them to purchase their own. If they are going to be driving their own car, consider insuring it with your company so you can get a multi-car discount. And choose the car carefully—the type of car a young person drives can dramatically affect the price of insurance. You and your teens should choose a car that is easy to drive and would offer protection in the event of a crash.

Also, encourage your kids to get good grades and to take a driver training course. Most companies will give discounts for getting at least a “B” average in school and for taking recognized driving courses.

If your teenagers move at least 100 miles from home—for example, to go to college—you can get a discount for the time they are not around to drive the car (assuming they leave the car at home).

4. Have you switched jobs or experienced a significant change in your income?

If you had life and disability insurance through your former employer, and your new employer does not provide equivalent protection, you can replace the “lost” coverage with individual policies.

In the case of an income increase, you may have taken on additional financial commitments that your survivors will depend on. Make sure to review your life and disability insurance to ensure it is adequate to maintain those commitments.

If your income decreased, you may want to cut your life insurance premiums. Term life insurance is a good option, as the premium rates are very reasonable. And if you already have two or more policies you might be able to replace both with a single policy at a lower rate because you may reach a “milestone” amount of insurance. (For example, at many life insurance companies, $500,000 of insurance costs less than $450,000 because of the milestone discount.) But don’t drop existing life insurance until after you have a new policy in place.

5. Have you done extensive renovations on your home?

If you have made major improvements to your home, such as adding a new room, enclosing a porch or expanding a kitchen or bathroom, you risk being underinsured if you don’t report the changes to your insurance company. An increase in the value of the structure of the home may require an increase to your homeowners insurance coverage limits.

And don’t overlook new structures outside of your home. If you built a gazebo, a new shed for your tools or installed a pool or hot tub, you should speak to your insurance professional.

If, as part of a renovation, you purchase furniture, exercise equipment or electronics, you may need to increase the amount of insurance you have on your personal possessions. Keep receipts and add any new items to your home inventory.

6. Have you decided to buy a second home?

If you are searching for a vacation home or a second home you might retire to, make sure you research the availability and cost of homeowners insurance before you commit to the purchase.

The very factors that make a vacation home seem ideal, whether it is a waterfront property or a mountain retreat, can often introduce risks that make it costly and difficult to insure, such as proximity to the coast and the likelihood that it will be vacant for long periods of time.

In the event you have already bought a vacation home, don’t skimp on the insurance. The risk of theft or disaster is just as significant, if not more so, in a second home as in your primary residence.

If your new property is close to the water, be sure to ask about flood insurance. Damage to your home or belongings resulting from flood is not covered under standard homeowners insurance policies. Flood insurance is available from the National Flood Insurance Program (NFIP), as well as some private insurers, and is generally sold though private agents and brokers. You can ask your insurance professional whether your home is at risk for flood, or enter your address on the NFIP website to find out whether your home is in a flood zone. If you have a very valuable home, some homeowners insurers offer excess flood coverage over and above that provided by the NFIP policies.

7. Have you acquired any new valuables such as jewelry, electronic equipment, fine art, antiques?

A standard homeowners policy offers only limited coverage for highly valuable items. If you have made purchases or received gifts that exceed these limits, you should consider supplementing your policy with a floater or endorsement, a separate policy that provides additional insurance for your valuables and covers them for perils not included in your policy, such as accidental loss. Before purchasing a floater, the items covered must be professionally appraised. Keep receipts and add the new items to your home inventory.

8. Have you signed a lease on a house or apartment?

If you are renting a home, your landlord is responsible for insuring the structure of the building, but not for insuring your possessions—that is up to you. If you want to be covered against losses from theft and catastrophes such as fire, lightning and windstorm damage, renters insurance is a good investment. Like homeowners insurance, renters insurance includes liability, which covers your responsibility to other people injured at your home, or elsewhere, by you and pays legal defense costs if you are taken to court.

Regardless of whether you are a renter or an owner, you will have the following options when it comes to insuring your possessions:

  • Actual cash value pays to replace your home or possessions minus a deduction for depreciation.
  • Replacement cost pays the cost of rebuilding or repairing your home or replacing your possessions without a deduction for depreciation.

Think carefully about what your financial position would be in the aftermath of a disaster, and make sure you have the type of policy that is right for you.

9. Have you joined a carpool?

If you are a frequent carpool driver, whether it is to work, or ferrying kids to school and other activities, your liability insurance should reflect the increased risk of additional passengers in the automobile. Check with your insurance professional to make sure your coverage is adequate.

10. Have you retired?

If you commuted regularly to your job, in retirement your mileage has likely plummeted. If so, you should report it to your auto insurer as it could significantly lower the cost of your auto insurance premiums. Furthermore, drivers over the age of 50-55 may get a discount, depending on the insurance company.

What is Business Interruption Insurance?

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Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.

A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

  1. Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
  2. Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
  3. The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.

Extra expense insurance

Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance.