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The Answer Is An Umbrella Policy
A peaceful and calm spring evening quickly turns to chaos and panic. You only walked away from the stove for a few moments, but when you return it is too late. Your apartment is on fire - which quickly spreads to other adjoining apartments. The damages and injuries exceed $2.7 million in lawsuits. Your renter's policy only has $500,000 coverage for liability. What will you do?
While driving your golf cart on the course you neglect to see the young caddy who walked out from the trees after retrieving another golfer's golf ball. The collision leaves the young man paralyzed. The result? $3.6 million is awarded to the injured victim. You have only $300,000 in liability coverage on your home policy. Where will you get the extra $2.1 million?
While driving your SUV home you miss a stop sign and broadside a van full of little leaguers. The result is 3 seriously injured children, one paralyzed child and multiple broken bones to others. You have liability limits of $500,000, but the lawsuits total $4.7 million. How will the payments be made?
In all three scenarios the answer is an umbrella policy. This low-cost insurance policy picks up where liability coverage under your home and/or auto policy stops. Most umbrella policies provide additional limits of $1 million to $5 million (some offer even higher limits) above the limits of the existing liability on your home and/or auto policy, giving you additional coverage if you are sued for damages suffered as a result of an accident involving a car, boat, property, etc.
We live in a society where lawsuits are filed quickly and everyone is a potential target. By not having an umbrella, a person puts their assets (homes, autos, property, investments, wages, etc.) at risk. If you are interested in this important and relatively inexpensive coverage, please contact our office.
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www.gibsonins.com
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This issue is sponsored by
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Is Your Dog Sinking Its Teeth Into Your Insurance Costs?
Man's best friend is sinking its teeth into homeowners' insurance costs. Dog bites account for one-third of all homeowners insurance liability claims, costing $356.2 million in 2007, up 10.5 percent from the previous year, according to the Insurance Information Institute.
We recommend our clients have an umbrella liability policy, which becomes even more important if you are a dog owner. The personal liability coverage available through a standard homeowners policy may not be enough. The umbrella policy protects against personal liabilities-such as dog bites-that could impact a substantial portion of a homeowner's assets.
What can you do to reduce the chances of a dog biting? The following steps are recommended by the Center for Disease Control when getting a dog:
- Consult with a professional (e.g. veterinarian, animal behaviorist, or responsible breeder) to learn about suitable breeds of dogs for a household and neighborhood.
- Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home with an infant or toddler.
- Be sensitive to cues that a child is fearful or apprehensive about a dog and, if so, delay acquiring a dog. Never leave infants or young children alone with ANY dog.
- Have the dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are NOT neutered.
- Socialize the dog so that it knows how to act with other people and animals.
- Discourage children from disturbing a dog that is eating or sleeping.
- Play non-aggressive games with the dog such as "go fetch." Playing aggressive games like "tug-of-war" can encourage inappropriate behavior.
- Avoid exposing the dog to new situations where its response may be unknown.
- Never approach a strange dog and always avoid eye contact with a dog that appears threatening.
- Immediately seek professional advice if the dog develops aggressive or undesirable behaviors.
Most dogs are friendly, but even normally docile dogs may bite when they are frightened or when protecting their puppies, owners, or food. Ultimately, the responsibility for properly training and controlling a dog rests with the owner.
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Homeowners' Policies Do Not Cover Flood
With the onset of natural disasters in recent years, we hear about flood damage quite a bit. In January 2006, the U.S. Geological Survey  estimated that floods cause billions of dollars in property damage each year. Once again there has been serious flooding in the Midwest. In June 2008, almost 4000 homes were evacuated in Cedar Rapids, Iowa, and water took over the downtown area with water up to the top of the stop signs. In Wisconsin, an embankment of a man made lake collapsed. As the water evacuated the lake, the current destroyed part of a highway and carried away several homes. In each of these situations, the total damage won't be calculated until the water has subsided.
Many of the individuals with damage to their homes don't have flood insurance. They may believe that they have coverage on their homeowners' policies, but homeowners' policies do not cover flood damage. Flood coverage must be obtained by purchasing a separate flood insurance policy.
If you live in a high risk area for flood and have a mortgage provided through a federally regulated or insured lender, you are required to have flood insurance. However, according to the Federal Emergency Management Agency (FEMA), less than 9% of individuals in the high risk areas of the hardest hit states in the Midwest have flood coverage. In addition, FEMA reports that almost 25% of flood claims come from areas that are not considered high risk. You may not consider yourself at risk for flood if you don't live near water, but everyone lives in a flood zone and can potentially experience flooding.
Some communities in the Midwest are experiencing more hardship than others after the recent storms. They will not be able to draw relief from the National Flood Insurance Program (NFIP) which was established in 1968 to provide a program for property owners to purchase flood insurance. Residents in communities that did not apply to the NFIP are not eligible for insurance through this program. Those homeowners would need to find flood coverage through excess or surplus markets which can be quite expensive. If residents don't already have insurance in place for their properties, this current disaster will not be covered.
Lack of insurance coverage by residents could cause a huge strain on the various states involved. The government may find it challenging to assist homeowners without flood insurance. President Bush's federal disaster declaration will provide the states with reimbursement assistance for food, water, and sandbags, but it doesn't provide aid for individuals.
In some communities, FEMA is assessing damage to determine if residents without insurance qualify to receive financial assistance. However, this assistance would be less than $30,000 for each individual. A home is one of the largest investments we will make in our lifetime. If a home has to be rebuilt, this financial assistance generally won't come close to covering the full cost, leaving homeowners with extremely hard choices.
It seems that natural disasters are unavoidable. We certainly have no control over weather. However, we can take steps to protect ourselves.
Please call us today to discuss flood insurance and find out if your community is part of the NFIP by going online to www.fema.gov/fema/csb.shtm. You can also find out through FEMA what actions are necessary to get your community involved in this program.
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Insurance Advisor: Questions & Answers
Q I AM VERY BUSY AND USUALLY GO A FEW MILES OVER THE POSTED SPEED LIMIT. IS THIS DANGEROUS?
A Yes! Excessive speed reduces the time available to avoid crashes and increases their severity when they occur. The National Highway Transportation Safety Administration reports that excessive speed is a contributing factor in one of every twelve crashes and one of every three vehicle deaths. Another study shows the fatality rate increases significantly at higher speeds; from 20 percent at 50 mph, to 50 percent at 60 mph, and to nearly 100 percent for speeds of 70 mph or more.
While speeding is a problem among all age groups, young drivers tend to speed more than older drivers. Approximately 37 percent of fatal crashes involving drivers under the age of 20 are speed-related. At all ages, male drivers are more likely than female drivers to be involved in speed-related crashes. When driving, allow plenty of time to r
Q OUR SON'S FRIEND WAS RECENTLY THE VICTIM OF THEFT IN HIS COLLEGE DORM ROOM. WHAT SHOULD WE DO TO AVOID THIS SITUATION WITH OUR CHILD?
A Theft is the number one crime on college campuses. Computers, televisions, portable CD players, stereos, bicycles, and other expensive necessities for college life are items that can be easily stolen. Here are some simple tips: Have an accurate list of possessions your child takes to college, write down the item, original cost, date purchased, and, if new, keep the receipt
Next, have your child take extra precautions and follow this advice: always lock your doors, even if you are only going down the hall; leave expensive jewelry at home; engrave electronic items; and don't leave belongings unattended. It is a good idea to check with us to determine if your policy contains any coverage limitations on these items while they are away at college with your child.
Q WE RECENTLY COMPLETED OUR ESTATE PLANNING AND DECIDED TO DEED OUR HOME TO A LIVING TRUST. DOES THIS MAKE A DIFFERENCE ON OUR HOMEOWNERS POLICY?
A Yes! When deeding your home in a living trust it creates a substantial coverage discrepancy within your homeowners policy - not just for liability but also to the personal property coverage. If a living trust is not listed on the policy it could be held liable for a loss and may not have protection from a claim. This scenario would also apply if your vehicles were titled to a trust. The trust must be listed on your policies because without recognizing ownership the coverage becomes restricted. Should you have any questions regarding a trust, please contact our office.
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