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Flood Insurance: What Is Your Risk Tolerance?
Many areas in the state of Indiana and across the country have experienced flooding this past winter. Six inches of moving water can cause a person to lose their balance and be swept away. Two feet of moving water can float a vehicle - including sport utility vehicles. Flooded sewers can cause enormous health hazards and flooding can destroy homes, roads, and bridges.
According to the Federal Emergency Management Agency (FEMA), there is a 26% chance of experiencing a flood during the life of a 30-year mortgage compared to a 4% chance of a fire. It can be a costly process to repair flood damage - from water and mold removal to fuel and sewage clean-up. FEMA estimates flooding causes more than $2 billion in property damage each year.
The fact that homeowners policies do not cover flooding has been highly publicized in recent years. Until 40 years ago, there was almost no flood insurance available at all. Due to the potential for catastrophic losses, most insurance companies didn't want to assume the risk of protecting homeowners.
In 1968, Congress created the National Flood Insurance Program (NFIP). This program provides insurance in approximately 20,000 communities. In exchange, these areas provide careful management of their flood risks including local funding programs for flood damage reduction and flood preparedness. The communities also receive credits from the NFIP for creating and maintaining drainage systems that help carry water away from populated areas.
Everyone is in a flood zone and can potentially experience flooding. However, if you are in a flood plain, a locale considered a special flood hazard area, you may be required by your lender or by law to have flood insurance.
FEMA recommends individuals purchase as much flood insurance as is available. Homes insured for 80% of their value, or the maximum limits available, get replacement cost coverage. That means the insurance pays the amount necessary to repair or replace the building up to the policy limits.
It is important to know there may be a 30 day waiting period. This means that if you purchase flood insurance, it won't cover a loss in progress. If you think you need flood insurance, you should purchase it right away.
You can help protect yourself and your property from flood by moving valuable items and appliances out of the basement of your home. It is also important to elevate furnaces, water heaters, and electrical panels above anticipated flood levels. It is a good idea to have your electrical outlets, switches, and light sockets above flood elevation as well. To avoid the risk of shock or electrocution, connect electrical receptacles to a ground fault interrupter circuit.
You may want to consider installing a floating floor drain plug. The float would rise and plug the drain if the drain pipe backs up. You may also be able to have a backflow valve installed to avoid sewage from backing up into your home during a flood.
Those individuals who have a fuel tank on their property may want to consider anchoring it to avoid fuel from spilling or catching fire.
It is important to be informed. Know your level of risk and be prepared to act if there is a flood. Have an emergency plan that includes evacuation and utility shut-off information.
If you are interested in discussing or purchasing flood insurance, please contact us.
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www.gibsonins.com
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This issue is sponsored by
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Protect Yourself From Identity Theft
Identity theft is the nation's fastest growing crime. Every two seconds there is another victim. In the past five years, there have been more than 25 million people victimized. There are several steps you can take to help prevent identity theft from happening to you:
- It is recommended you do not sign the back of yourcredit cards. Instead, put 'PHOTO ID REQUIRED.'
- When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the 'For' line. Instead, just put the last four numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.
- Put your work phone number on your checks instead of your home phone number. If you have a PO Box, use that instead of your home address. If you do not have a PO Box, use your work address. Never have your Social Security number printed on your checks. Put only your first and middle initials on your checks so a thief will not have your full name.
- Shred all of your mail that has sensitive information, including credit card offers stating you have been pre-approved.
- Carry only 1 or 2 credit cards. Never carry your social security card with you or give out the number unless you are applying for a job or credit.
- Photocopy the contents of your wallet, copying both sides of each license, credit card, etc. This will help ensure an accurate depiction of the contents, in addition to the account numbers and phone numbers to call in case you need to cancel them. Keep copies in a safe place so you can easily access them if needed.
- Carry a photocopy of your passport when you travel either here or abroad.
- File a police report immediately in the jurisdiction where your credit cards, etc. were stolen. This proves your diligence to credit providers, and is the first step toward an investigation.
- Report the theft to your insurance agent. Most homeowners insurance policies have assistance for this type of loss. If yours does not, you should ask about adding the coverage to assist you in the process of restoring your credit.
- Most importantly, call the three national credit reporting organizations immediately to place a fraud alert on your name if you suspect identity theft has occurred. The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit. Call the Social Security Administration fraud line. And until you can get a new license you should notify your state driver's license department that your license was stolen.
Damage to your credit and bank account can happen VERY fast. If you alert the credit organizations, most fraud can be stopped quickly. Below are numbers for you to have on hand if you suspect you are the victim of identity theft:
- Equifax: 1-800-525-6285
- Experian (formerly TRW): 1-888-397-3742
- Trans Union: 1-800-680-7289
- Social Security Administration (fraud line): 1-800-269-0271
- Find and record the number of your state driver's license department.
If you haven't already, contact our office to add an Identity Theft endorsement to your homeowners policy to help with the costs associated with restoring your identity should you become a victim of identity theft.
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Financial Rationale For Long-Term Care Planning
The economic impact of long-term care is a significant issue. We recommend you explore the lifetime financial impact of a care event with and without insurance: would you be better off self-funding the risk and investing the premium to create a personal fund for future care or mitigating some part of the risk with long-term care insurance (LTCI)?
It is important to recognize that long-term care (LTC) is more than nursing home care. Personal care services associated with dementia or physical limitations due to declining health typically involve a continuum of care.
Analysis should first address the impact of a care event on a surviving spouse, family, and legacy planning. The next step is to determine whether insurance makes financial sense. If so, what mix of benefits, premium, and co-pays provides the best value and meets your risk tolerance and financial objectives?
The planning process should also look at the probability of needing care, for how long, and the current cost of appropriate care if needed today.
It is difficult to comprehend how a four-year care event, which now costs several hundred dollars daily, can have a million-dollar or more impact on an estate, but it can. High net worth individuals are often advised to self-fund this risk. When understanding the financial impact on estate assets and the value of mitigating this risk, many make the insurance choice. For more information contact Gloria Niemier, CLU at 574-245-3514.
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Insurance Advisor: Questions & Answers
Q IS MY NEW BOAT COVERED UNDER MY HOMEOWNERS POLICY?
A Most standard homeowners policies provide limited coverage  for physical damage to a boat, including trailers, equipment, motors, and furnishings up to $1,000. Depending on the length and type of engine, liability coverage may not extend to boating activities.
Since a standard homeowners policy is so limited, in most cases, it would be in your best interest to have the boat added by an endorsement to your homeowners policy or purchase a separate watercraft policy. In order to make sure you have the best protection, it would be best to consult with your personal insurance specialist to discuss coverage options available.
Q WHAT IS 'INSURANCE SCORING'?
A Many people believe their insurance score is their credit score. It is not. An insurance score is a compilation of other external financial factors in conjunction with a credit score. Insurance scores are combined with driving records, coverage limits, property values, loss and accident histories, and other rating factors to determine the actual rate for a specific risk.
How an insurance score effects your policy varies with each individual insurance company. The consumer credit information used in the insurance scoring process is kept strictly confidential and is only used to determine the rate to charge for insurance. While even we do not see the information used to determine your insurance score, the insurance companies are willing to provide the information directly to you as the consumer.
Should you have questions regarding your insurance score, please contact your personal insurance specialist so they may direct you to the proper resource.
Q I DON'T HAVE MANY ASSETS. DO I REALLY NEED PERSONAL UMBRELLA INSURANCE?
 A Don't wait until it's too late to find out. Jury awards and out-of-court settlements routinely run into hundreds of thousands or even millions of dollars. Add this to the cost of legal fees and the expense becomes staggering. An unexpected catastrophe could result in a large judgment against you. Without adequate protection, your current assets could be placed in serious jeopardy.
A personal umbrella policy could protect you against excess liability judgments for loss, injury, or even death caused by negligent acts. It is designed to provide liability protection over and above the insurance policies you currently have and protect your assets as well as your future earnings. Please contact our office to add this valuable protection to your personal insurance program.
Q I JUST BOUGHT A NEW PIECE OF JEWELRY. IS IT COVERED UNDER MY HOMEOWNERS POLICY?
A While your homeowners policy provides coverage for your personal property, certain categories of property are subject to "special limits of liability" much smaller than the overall personal property limit. One of these categories is jewelry, which is typically limited to $1500 for losses caused by theft and often mysterious disappearance.
There is frequently a need to increase this limit which can be done by an endorsement to your homeowners policy or a separate personal articles policy. There are many advantages to purchasing this additional coverage; no policy deductible applies, coverage is on an "open" perils basis, and the property is not subject to the personal property limitation - it is an additional amount of insurance.
Typically, a current appraisal showing the description and value is needed. It is also recommended you update your appraisals every few years to make sure the value remains accurate. Due to recent fluctuating silver, gold, and platinum prices, you may be insuring your jewelry pieces well below the replacement value. If you would like to add jewelry to your policy or increase the values, please contact us.
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