Medicare Eligible and Confused by the Phone Calls and Mail?
By Cindy Thompson: Simon Insurance, Eaton, Ohio
As a sales agent, who helps and advises on Medicare coverage, I often run into clients who are overwhelmed by the amount of mail pouring into their mailboxes and the unsolicited phone calls disturbing them at various times of the day. The sudden surge in one’s popularity, based on one’s Medicare eligibility and the insurer’s desire to include you in their risk pool, make finding the right Medicare plan tricky.
When deciding about your Medicare coverage, I suggest asking yourself, “how do I buy anything of real value?” Do you enjoy the art and game of the pressure sales person who talks it up and gets you to do the head nod on “hot” points, all directing you to close the deal? Or, do you want an agent that can help you visualize being in the plan and walk you through the best, and worse case scenarios? An agent who may use the government website, https://www.medicare.gov/ for assistance and guidance to assure you of the details of your expenditures? An agent who is appointed with more than one company, that has many options, as one size does not fit all when it comes to Medicare choices? Also, do you value qualities such as integrity and honesty? (For information on how to protect yourself from predatory sales practices visit the Ohio Department of Insurance webpage: https://www.insurance.ohio.gov/Newsroom/Tips/Pages/MedicareSalesPractices.aspx. ).
Medicare permits mailing to individuals who are, or soon will be, eligible for Medicare. However, Medicare does not permit cold-calling without permission to contact. Some sales agents get permission to contact when a prospect enters personal contact info on a quoting website. Some agents get permission to contact from business reply cards. Oftentimes, prospects do not realize that permission to contact had been granted and discover their phones ringing because a form was completed and submitted. Then, there are calls without permission granted. Those calls can be reported to Medicare and/or a plan sponsor if the name and number of that person making the call had been obtained. Medicare is the compliance and oversight entity regarding the enforcement of agent conduct. https://www.medicare.gov/forms-help-and-resources/report-fraud-and-abuse/health-plans-rules/health-plan-rules.html .
What about doing business over the phone? Of course, there are obstacles when buying things over the phone. I have a colleague that once said, “buying insurance over the phone is like trying to get a haircut over the phone”. There are many visual illustrations, copay schedules, and charts that can go unseen when discussing insurance products over the phone. These can be of importance in making an informed decision about health care coverage. As a local insurance agent, I always recommend doing a face-to-face meeting, #1- to know who you are buying from so you know who to get a hold of if there are issues and questions that come up, #2- to support your local community and economy. An agent who lives and works in the community will know about how the doctors, dentists, pharmacies, and hospitals in your area work with different health plans.
With the many choices in Medicare coverage, getting back to the basics of buying, and what you value in making a purchase, should help to guide you in where you want to do business for your heath care. Finding someone you can trust, and who stays on top of the changes can be a great ally for your health care pocket book.
Cindy Thompson resides in Eaton, Ohio and works for Simon Insurance. She has been selling Medicare products for over 12 years and represents several national carriers.
Life Insurance: Let’s Just be Honest. You Don’t Want to Talk About it; But You Should
Many people do not want to talk about life insurance because it is a touchy subject. But if you have people who depend on you for their financial well-being, then obtaining a proper life insurance plan should be on the top of your to-do list. Keep in mind that life insurance isn’t for you, it’s for the ones that you love. It will give you the peace of mind that if the worst were to happen to you, those closest to you will be able to continue on towards the future you envisioned for them.
- 85% of consumers agree that most people need Life Insurance, yet only 62% say they actually have it – according to a 2013 LIMRA Life Insurance study.
- 5 million more households had life insurance coverage in 2016 than in 2010. However, 30 percent of households (nearly 40 million) still remain uninsured - according to a 2016 LIMRA Life Insurance study.
- Although more households were insured in 2016 than in 2010, the amount of coverage has declined in that same time. Across all age groups, the replacement of income rate has fallen from on average 3.5 years of income in 2010 to only 3 years of income in 2016, far lower than most industry recommendations.
- 1 in 5 households with children under the age of 18 were found to be underinsured in 2016. Of those households with no life insurance nearly three quarters of them recognize the need for protection and nearly two thirds admit they would be in immediate financial trouble if the primary wage earner died
When you have confidence in your Insurance Advisor, you have greater peace of mind knowing that your family will have the financial resources needed, even when disaster strikes. To get started on your customized solution, contact one of our Licensed Advisors, or Request a Proposal and we’ll get to work right away
Do You Have the Proper Home Insurance?
The proper home insurance can provide financial protection for any homeowner.
Comprehensive insurance provides protection for the structure of your home, the contents within it, and the liability risks of owning a home.
Every property owner faces risk. While insurance needs to be specific to the property's actual features and value, without it, the homeowner could lose their home and face financial ruin as a result of a claim or lawsuit.
Home Insurance Requirements
There is no legal requirement to maintain home insurance. However, most mortgage lenders will place home insurance requirements in the contracts for any home loan. Not carrying this insurance can lead to the lender taking possession of the home, foreclosing on it, or forcing the purchase of it. Even if a home is owned outright, the value of home insurance generally pays for itself after a single claim.
What Is Property, Comprehensive Coverage?
There are various components to a home insurance policy. Each one provides specific protections for the homeowner based on a set of perils, or risks.
Take a look at the most common types of coverages that are included in these plans:
Structure insurance provides protection for the actual structure of the home, and often attached or on-property buildings like a garage.
This includes protection from risks such as fires, theft, vandalism, and storm damage. For example, if a storm occurs and lightning strikes the home causing it to catch on fire, the insurer may help cover the costs to rebuild (depending on the type of insurance policy in hand). The insurance policy may also cover the cost of living at another location while repairs are being made.
However, structural insurance does have limitations. It's limited by the amount of coverage in place. Also, some types of perils are not covered. Floods and earthquakes, for example, are common exclusions.
Most standard home insurance policies offer 10 percent of the value of the total coverage on a policy as contents coverage.
This is the amount paid to replace the items normally stored within the home if they're lost due to a covered peril. For example, if someone breaks into the home and steals a computer, the insurance policy covers that item up to the per item limit on the policy.
Contents coverage can also protect high-end valuables, such as jewelry, art, collector's items, and similar belongings if they are specifically listed on an asset you own.
Liability insurance is critical as it protects the homeowner from claims of negligence made against him or her. This is often necessary because anyone can file a claim against a property owner if someone falls and is hurt on the property, or slips on ice on the sidewalk.
Liability Insurance can also cover other incidents such as a dog biting someone visiting the home. Liability insurance often includes coverage for legal defense as well as the settlement or payment given for the claim.
Why Do I Need Home Insurance?
Without home insurance, property owners are financially responsible for these losses out-of-pocket. A significant storm, a fire, or a theft can leave the property owner without a way of replacing their items or repairing their home.
A claim of negligence from someone who falls on the property could amount to thousands of dollars paid for medical bills, lost time at work, and pain and suffering (in some cases). All of this may be avoided if the property owner maintains proper home insurance coverage.
Most insurers will customize the policy for the homeowner to meet specific needs based on the property's value, the type of contents within it, and whether or not it will cover rebuilding the home in a total loss situation.
Policies list all exclusions, providing clear information about when the policy may not apply. Without this type of financial protection, anyone could suffer significant loss if an accident or incident occurred.
The Historic 2017 Hurricane Season and Why Flood Insurance Matters
Hurricanes Harvey and Irma wreaked havoc across the Caribbean and United States this summer. Thousands were left devastated by the damage, and unfortunately, with hurricane season running through November, we may not have seen the last of these storms.
So many are dealing with the aftermath of these disasters, and many victims are also finding out they will be forced to recover without the assistance of insurance. Why is that? Only a small percentage of homes were covered by flood insurance from the National Flood Insurance Program (NFIP) — a federally-funded program that is, essentially, the only flood protection available to homeowners.
It is estimated nearly 70 percent of homes damaged by Hurricane Harvey did not have flood insurance. The homeowners policies will help them recover from wind and roof damage, but flood damage is not included.
So, it begs the question: Why isn’t a flood insurance policy a no-brainer for all?
For starters, it is estimated that 43 percent of homeowners believe their homeowners insurance covers them for flood loss. In reality, standard homeowners policies do not cover flood damage — at all.
Additional misconceptions about flood insurance include:
- Some homeowners believe if they live on higher ground, or nowhere near a coast or river, they’re immune from the devastation a flood can cause. However, that damage can happen anywhere.
- Others believe that if a big storm hits then the federal disaster aid will cover the damage. That’s rarely the case. A typical disaster grant is only around $5,000, and anything more is a low-interest loan that the homeowner must pay back.
- There is also a general lack of information. Additionally, calculating flood risks can be difficult, and many homeowners also believe they’re in a low-risk zone.
What is Flood Insurance?
Homeowners insurance does not cover damage to a home caused by flooding. You must have a separate policy to cover flood-related losses. Most flood insurance policies are written by the NFIP.
You are eligible for flood insurance if:
- You live or own a business in a high-risk area
- You live or own a business in a moderate-to-low-risk area — and possibly at a lower cost
- Your home or business has been flooded before
- Your mortgage company doesn’t require it
All properties are at some risk for flooding. The NFIP is dedicated to making property owners and renters aware of the need for flood insurance.
Homeowners can insure a home for up to $250,000 and its contents for up to $100,000. Renters can cover their belongings for up to $100,000. Non-residential property owners can insure a building and its contents for up to $500,000 each. On average, a flood insurance policy premium is roughly $700 per year.
Flood Damage vs. Water Damage
The first step after water damages your home is determining whether you have a water damage claim or a flood claim. How can you tell the difference? Let’s turn to the Federal Emergency Management Agency’s definition of a flood?
A flood is defined as a general and temporary condition of partial or complete inundation of two or more acres and two or more properties of normally dry land. Flood damage can only be caused by the following water sources:
- Overflow of inland or tidal waters
- Unusual and rapid accumulation or runoff of surface waters from any source
- Collapse of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in flood as defined above
The main difference between a water damage claim and a flood claim is that the water comes from a natural source, and two or more properties are involved. If you and your neighbors are all having water issues due to heavy rains, then you are likely dealing with a flood insurance claim.
What Is and Isn’t Covered?
Most flood insurance policies include building property and personal property coverage. Some insurable assets under these policies include, but are not limited to:
- The insured building and its foundation
- Electrical and plumbing systems
- Central air conditioning equipment, furnaces, and water heaters
- Refrigerators, stoves, and other built-in appliances
- Personal belongings such as clothing, furniture, and electronic equipment
However, not everything is covered by building property or personal property coverage, such as:
- Damage caused by moisture, mildew, or mold that could have been avoided by the property owner
- Property and belongings outside the building
- Currency, valuable papers, and metals
It doesn’t take much for damages to occur. Just a few inches of water can cost you thousands of dollars. Flood insurance can help you avoid that situation.
For additional information regarding our flood insurance policies, please contact us at your convenience.
The Case for Independent Insurance Agents Over Online Insurance
The insurance purchasing process is quite complicated. It’s easy to be confused or overwhelmed by the options and the decisions.
If you watch TV these days, there are a ton of advertisements for quick, easy, and cheap insurance. However, it’s a bit more complex than that.
With factors such as price, coverage, exclusions, bundles, and more, it’s vital to work with someone who is experienced in the business. Finding the right coverage usually involves research, but that doesn’t need to be done alone. Instead, you can choose to work with an independent insurance agent who will go over rates and coverage options from various companies to determine the right fit for you.
Here are a few reasons why it’s in your best interest to work with an independent agent, as opposed to an online company or 1-800 number promising to provide the fastest and cheapest quote around:
Independent insurance agents represent a plethora of different companies that offer a wide variety of coverage options and price points. There’s no need for you to accept only a single option from one insurance agency, and there’s no need for you to spend time filling out various online applications to get your own comparisons.
Your independent insurance agency can often find a better value for your insurance dollar than you might find on your own.
As local business owners, independent insurance agents place a strong emphasis on giving back to their communities. From sponsoring fundraisers to donating to local charities, there are plenty of ways your local agency can give back to the community. That, in turn, should make you quite confident in doing business with them.
Not only is it beneficial to work with an agency that supports the local community, but their knowledge of the neighborhood can be quite valuable, too. Many independent insurance agents are familiar with the area, and they can use that knowledge to help reduce your risks and protect your assets.
Before You Set Sail, Ensure You're Protected
The temperature is rising and the sun in shining. But before you set sail, get your motorcycle out of storage, or make big vacation plans, contact your insurance advisor to make sure you're properly protected.
We’ve gathered a list with tips and coverages for you to review to make sure you and your family are insured for the increased risks that come with outdoor and summer activities.
If your ATV is involved in an accident, you may be financially responsible for the rider's medical bills and other damages, as well as repairs to your ATV. An
ATV insurance policy can protect you from the cost of damage and litigation.
Questions to ask your agent about your ATV:
- Are there age restrictions on who may operate the ATV?
- Does my policy cover friends or family who are operating the ATV?
- Is there a discount for taking an operator safety course or for riding with a helmet?
Personal watercraft (PWC) coverage (often referred to as Boat Insurance) may cover the following:
- Bodily injury to yourself, another rider, or a swimmer injured in your path (this is arguably the most important coverage because the damage amount is unknown, but can be significant if someone is seriously injured... work with your Insurance Advisor to make absolutely certain you have enough liability coverage)
- Property damage to items such as docks, other PWCs or boats
- Guest passenger liability
- Medical payments
- Theft of your boat
The coverage on a motorcycle policy is very similar to that provided by your auto policy. There are six distinct coverage options. Some are required by law in Ohio, others can be added at your discretion (for the most part).
Tip. Ask your agent about the different discounts available on your policy. Many insurance companies have substantial discounts, for example, if you have a good driving record.
Here are a few other discounts you could qualify for:
- Have you completed a safety course? If so, make sure you have the name of the course you completed so you can tell your agent.
- Are you riding your bike all 12 months of the year? If you live in Ohio, probably not so ask about a lay-up discount.
- Do you have more than one bike? Or maybe your auto and motorcycle insurance are with the same insurance company? Ask about multi-policy discounts.
Backyard swimming pools are a great place to spend time with friends and family to beat the heat during the hot Ohio summer months. Whether you have an in-ground pool, or plan to blow up an inflatable kiddie pool this summer, it comes with great responsibility.
Let your insurance company know that you have a pool, since it will increase your liability risk. Also, be sure to ask if your homeowner’s policy specifies any safety guidelines you are required to follow, such as installing a certain height fence or locked gate for example.
For some of us, renting our summer fun is the way to go. But rentals also carry their own set of insurance risks and exposures.
Most standard personal auto policies don’t provide coverage for damage to a rented motor home. While liability coverage for personal use might be provided, considering the size of a motor home and the potential damage they can cause, the liability limits on your personal auto policy may be not be enough.
Car rental companies offer optional insurance coverage called Collision Damage Waiver to protect you from financial responsibility should the vehicle be stolen or damaged while under your control. Personal liability, bodily injury, and property damage would still be covered under your personal auto policy.
Typically, your homeowners insurance will follow you, protecting you even while you're not at home. Off-premises' coverage means your belongings are covered anywhere in the world.
If you're staying at a hotel and your belongings are stolen, your homeowners policy can provide coverage. But, the exact coverage depends on your policy. In addition to your deductible, items will typically have a limit on things like jewelry. If you're traveling with high-priced items, it's a good idea to get separate insurance coverage for these items.
Contact your agent or insurance company to find out what's covered under your policy.
One of the most important policies that will cover many of your summer activities is an Umbrella Insurance policy.
- Do you have a backyard playground or a trampoline that all the neighbor kids will be playing on?
- What about a garage sale to get rid of all those items that have been accumulating in your house for months?
- Do you own a pet and have you considered the consequences if it bit someone?
- What about coverage for damages resulting from boating or recreational vehicles, sports or vacation activities or rental houses and investment properties.
Here's Why Cyber Insurance Is Important
The WannaCry Ransome frenzy further proves by businesses need to have a cyber insurance policy in place. Prior to this, cybersecurity was an issue widely ignored by the general public, government, and businesses.
Since this has happened, many organizations are revisitng their position on cyber security. That is because this attack proves that no business or organization, regardless of size, is safe from cyber attacks.
What is WannaCry?
The WannaCry ransomware that some are referring to as the largest global cyber attack in history, quickly spread to universities, hospitals and businesses across 150 countries in just a few short days.
It left many trying to determine if they should pay the ransom to regain access to their own files, or rely on their backups to avoid giving in to the attackers. Some people are saying that the same attackers are behind the disasterous Sony Data Breach a few years ago.
This form of ransomware locked users out of their computers by exploiting a vulnerability in outdated versions of Microsoft Windows. It then demanded money from users who wanted to regain control of their data.
Once it infected one computer, it could spread to every computer in that network within seconds.
After the initial discovery of the WannaCry ransomware, Microsoft issued a warning to the U.S. government concerning its data-storing practices.
How can individuals and small businesses protect their data?
In today’s technology driven world, there is no guarantee in preventing a cyber attack. Every organization is vulnerable, as you can see with the high profile companies who were victims of the WannaCry attack (i.e. FedEx).
However, there are some actions that an organization should take to protect its data, including:
- Make sure you have backups. Your backups should be on a separate source or a cloud storage service, as any servers, hard drives or other backup sources connected to a network will probably be infected, too. At least one backup should also be stored in a different physical location.
- Keep browsers, plug-ins and operating systems up-to-date. When you see the update requests, make sure you do as they say. You can also purchase an additional layer of protection with anti-virus software programs.
- Urge everyone to be extremely cautious with spam. Never download unknown files or click on unknown links.
Cyber Liability Insurance
Cyber Liability Insurance typically reimburses the costs you incur in the event of a data or information breach. There are many variations among policies and premium costs for cyber security insurance in Ohio, but two distinct risk categories can be determined and this is a good place to start: first-party and third-party liability.
Our agency can help you protect your business. Call or contact us today to learn more.
Coinsurance – Don’t Get Hurt by What You Don’t Know
1-800 numbers and online quotes are great if you know exactly what you want and need. But, when you dive into the details after a claim occurs, usually you're met with disappointment in terms of what the insurance company is willing to offer you for your claim. An agent can make sure this doesn’t happen.
Coinsurance is one of the most confusing and misunderstood concepts in the insurance world. Even the term “coinsurance” has multiple definitions within the industry.
For example, coinsurance for health insurance is drastically different (and arguably easier to understand) than coinsurance in the property & casualty insurance market.
To add another layer of meaning—and complication—a coinsurance clause can appear an all types of policies, from homeowners to commercial property to business income and more. The use and impact, however, of coinsurance varies greatly within each policy type.
Coinsurance – What’s the Best Move?
An agent always hopes their insureds read and understand their insurance policies, but we’re realistic—we know your idea of a relaxing evening doesn’t involve reading half a trees worth of paper on coverages and rates.
If you did take on the endeavor, you’d be greeted by a complex legal document outlining several policyholder (this is you) responsibilities, one of which is coinsurance.
Scared yet? Don’t be—we’re here to help.
What is coinsurance?
Coinsurance may be a familiar topic to you, especially in terms of health insurance. It’s used as a means of sharing risk between insured and insurer, with the goal of lowering the cost of the insured’s monthly premium.
For example, your health insurance plan contains a 20% coinsurance clause, meaning the company pays 80% of your copay (bill) and you (the insured) pay the 20% that remains. If you were billed $1,000 by your doctor, the insurance company would pay $800, and you’d be responsible for the remaining $200. Makes sense, right?
Now it’s time to turn that simple definition on its head by looking at coinsurance for homeowners, commercial property, and business insurance. If you have a policy that insures a piece of property, you can usually expect it to include a coinsurance clause. These types of policies are standard building, business personal property, and even homeowner policies.
Ready for one more curveball? In the property and casualty world, coinsurance has yet another function and meaning.
Technically speaking, the International Risk Management Institute considers coinsurance to be:
"A property insurance provision that penalizes the insured's loss recovery if the limit of insurance purchased by the insured is not at least equal to a specified percentage (commonly 80 percent) of the value of the insured property. The coinsurance provision specifies that the insured will recover no more than the following: the amount of the loss multiplied by the ratio of the amount of insurance purchased (the limit of insurance) to the amount of insurance required (the value of the property on the date of loss multiplied by the coinsurance percentage), less the deductible."
Clear as mud, no?
Let’s break it down: if you don’t have adequate insurance coverage on whatever it is you’re insuring, your policy’s coinsurance clause allows your insurance company to penalize you by reducing the amount you can earn if you receive a claim payment.
If your policy declarations page has a percentage (i.e. 80%, 90% or 100%) listed next to the limits for your building, personal property, or business interruption, then that policy contains a coinsurance clause. What does that mean? Basically, you have made a promise to your insurance company that your coverage limits are at least equal to the specified percentage of the cost of replacing whatever it is you’re insuring (your actual replacement value).
Usually, the required amount of insurance must be equal to 80% of the replacement value of the property, but in some cases, that percentage can be as high as 100%. It may seem that paying to insure 100% of actual replacement value is better than paying for 80%, the truth is actually the opposite.
If you select 100% coinsurance you've effectively promised the insurance company that the replacement value you selected is 100% accurate. You’ve left yourself no room for adjustments.
Therefore, it's vital to report property values annually to make sure your policy stays updated and accurate, and that it reflects inflation and other increases in cost.
Avoid Costly Penalties: Learn How to Calculate Coinsurance
Put simply, the coinsurance provision in a property policy requires the policyholder to carry a limit of insurance equal to a specified percentage of the property’s value. This ensures the policyholder will receive full payment at the time of a loss. The following real-life example should help.
Coinsurance will never increase the payment on a property claim—it can only reduce the settlement, or in the best-case scenario, not impact the claim settlement amount at all.
Let’s use the following assumptions for illustration purposes:
- Your building has a value of $1,000,000
- The policy you have covering this building has an 80% coinsurance clause.
Based on those assumptions, you must insure your building for at least $800,000 to avoid a coinsurance penalty at time of loss.
If there's a claim, the following formula is used to determine recovery:
Value of the property x Coinsurance percentage = Minimum insurance amount required
Here’s where that simple formula gets a bit more complicated: this formula is based on the property’s replacement value at the time of loss. If the replacement amount is less than the coinsurance percentage, a penalty is applied. This penalty reduces the claim payment.
Let’s make another assumption. Instead of insuring your building for $800,000, you decided that $600,000 is adequate coverage. Now you have a fire that causes $200,000 in damages. Since you have $600,000 of coverage and the claim is only for $200,000 worth of damages, you’re covered, right?
Property claims are calculated by dividing the amount of insurance purchased by the amount that should have been purchased (based on the coinsurance percentage selected). In this case, you purchased $600,000 worth of coverage when you should have purchased $800,000. To determine what the policyholder will receive in the event of a claim, this factor (75 percent) is multiplied by the amount of the loss ($200,000 x .75 = $150,000). When all is said and done, purchasing $600,000 worth of coverage when you should have purchased $800,000 results in you receiving only $150,000 (less any deductible) as your payment—for a $200,000 claim. Now you’re $50,000 short on funds needed for full repairs.
Additional examples of coinsurance in action
Scenario 1: Coinsurance requirement IS NOT satisfied
Facts at the time of the loss:
- Total limit of insurance = $51,100
- Coinsurance amount = 80%
- Deductible amount = $1,000
- $20,000 claim to replace the roof and siding due to hail damage
We'll go through each of the steps to determine the final claim settlement amount.
The insurance contract states that the insurance company first determines the replacement value of the property at the time the of the loss. In this example, the property value was $149,000.
Next, multiply the value of the property (determined in step 1) by the coinsurance percentage listed in the policy:
$149,000 x 80% = $119,200.
Now we divide the limit of insurance shown in the policy ($51,100) by the figure determined in step 2:
$51,100 ÷ $119,200 = 42.9%.
Multiply the total amount of the claim by the percentage determined in step 3:
$20,000 x 42.9% = $8,580.
Subtract the deductible amount from the amount determined in step 4:
$8,580 - $1,000 = $7,580.
If the property is severely underinsured at the time of loss—policy coverage amounts do not meet the coinsurance requirement—claim payments can be drastically reduced.
What appeared to be a straightforward $20,000 loss for which the policyholder should have been reimbursed $19,000 ($20,000 less the $1,000 deductible), instead ended up being an expensive claim for which the policyholder was reimbursed by less than half of the cost of damages (only $7,580).
The difference of $11,420 is the penalty amount incurred for carrying inadequate limits of coverage that are do not represent the actual replacement cost.
Scenario 2: Coinsurance requirement IS satisfied
Facts at the time of the loss:
- Total limit of insurance = $290,000
- Coinsurance amount = 90%
- Deductible amount = $1,000
- $20,000 claim to replace and repair the damage
The insurance contract states that the insurance company first determines the replacement value of the property at the time of the loss. In this example, the property had a value of $300,000.
The next step is to multiply the value of the property (determined in step 1) by the coinsurance percentage listed in the policy:
$300,000 x 90% = $270,000.
We see now that the amount of coverage in place ($290,000) exceeds the minimum amount required ($270,000). Therefore, the coinsurance requirement has been met. This time, the coinsurance provision of the policy has no impact on the final claim settlement amount—the best case scenario when applying the coinsurance provision.
Since the building coverage limit meets the minimum amount of insurance required by the coinsurance clause, the amount due to be paid out in the event of a claim is not affected. The amount payable based on replacement cost is $19,000 ($20,000 claim less the $1,000 deductible).
Why do policies have the coinsurance provision?
Contrary to popular belief, the coinsurance provision does not exist to punish policyholders or give insurance companies a loophole that allows them to pay less than the full value of a claim. Coinsurance is really used to encourage the insured to carry an appropriate amount of insurance in relation to their property’s value, especially on replacement cost policies.
If policyholders try to save premium dollars by insuring their property for less than the specified coinsurance percentage of their property, they effectively become coinsurers for any loss. This means they choose to share financial responsibility for recovering the loss.
Insurance rates are based on a number of assumptions, perhaps the most significant being projected losses. A second significant assumption insurance companies make when determining rates is that every insured will select enough insurance—dollar-wise—to cover the entire value of an insured property.
However, some insureds will figure that most losses are small and that a “total loss” rarely occurs. They’re not wrong—statistics prove this to be true. These insureds choose to insure the property for less than its value. As a result, the insurance company receives less premium than is expected.
The problem? When a major or total loss does occur, there isn’t enough premium reserved to reimburse the insured for the full amount of the claim.
So, when an insurance company requires insureds to insure to a certain value, the companies are actually making provisions to distinguish between people who do insure to the full value versus those who insure at a lower amount. Those who insure to full value are rewarded with a full payout, and those who don’t are penalized.
The insurance company’s reasoning? If you’re willing to insure for less than full value, you're choosing to share in the losses. Each policy sets a coinsurance percentage, frequently 80, that is the basis for loss sharing. If the insured maintains insurance to the required percent, no loss sharing is necessary.
On a broader scale, coinsurance is critical because statistics show that if less than 80% of the replacement value is covered, insurance companies would not collect enough premium to pay all the claims that clients are due when a disaster strikes.
Think of it this way, you go out to dinner with a large group of friends, but there is only one bill for the entire group. Everyone agrees to contribute their fair share to cover the charges. If only some people contribute their share of the bill, there won’t be enough money to pay for the dinner. Insurance operates the same way.
Insurance companies estimate what their claims and expenses will be in the short-term and using this information, calculate the amount insured’s need to pay to cover the claims and expenses necessary to keep the insurance company in business. If some of the insureds don’t buy a sufficient amount of coverage, the necessary amount of money to cover all claims that might arise won’t be there when the time comes.
What’s the Coinsurance Penalty Solution?
Never insure your property at an amount less than coinsurance requirement. In fact, there’s no reason not to insure the property at its full replacement value—the additional premium required is usually negligible.
Too often, agents try to gain clients and cut policy costs by reducing the coverage offered. It may not be a big deal, and chances are clients may even be comfortable with the lower coverage limits the agent is recommending. After all, aren’t they the expert? However, in the event of a claim, those small savings can severely impact your coverage.
Talk with your insurance advisor about your options. The coinsurance details found in the “Conditions” section of your policy may seem like harmless “fine print”. But in this case, the fine print is critical; if you don’t understand what its saying, ask your advisor to explain it to you.
Why Your Insurance Agent is Your Ally
We've barely scratched the surface of the complex world of insurance, but since understanding the coinsurance provision is one of the major pitfalls we discover most often when working with new clients, this was a good place to start.
No one wants to overspend for insurance coverage, but the right insurance protection is invaluable to the success of your business, or the ability for your family to recover after a catastrophic loss. Without it, you're one claim away from closing your doors or having your personal finances ruined.
Where to find the Best Insurance for a Landscaping Company in Ohio
Recently, the Ohio landscape insurance requirements have transformed. Liability insurance for businesses that hold a pesticide license must include coverage of damage done to properties that was under the business’ care. These changes made it so that businesses no longer have the right kind of landscaping insurance. There are only a few insurance agencies in Ohio who offer the coverage that is now required.
Now finding the right landscaping insurance in Ohio can be problematic. Even if the insurance companies offers the kind of coverage they need, many still do not have the correct policy. With these changes, we recommend that landscaping business owners seek the assistance of an independent insurance agent.
Why go to an independent insurance agent?
Independent insurance agents do not have the pressure from their employers to sell policies of a specific insurance company. They have more freedom to keep their clients best interest in mind. Having an agent who can take the time to ensure you get all your questions answered, can make a huge difference. An independent agent can also have a thorough look at your business to help you tailor the policy to better fit your needs.
Let an independent agent ease the burden of navigating these changes. Let them figure out what needs to change in your current insurance policy. They will look at your complete business insurance plan. They will advocate for you by using a specialized and personalized approach. As a small business owner you must wear many hats. Let an agent give you the information you need so you can make the best decision for your company, quickly and efficiently.
If you are looking for insurance for a landscaping company, then an independent insurance agent from Simon Insurance Agency can provide you with a solution that fits your needs. To us, it’s about the people, not the policies. This simple principle has resulted in thousands of clients throughout Ohio who have chosen Simon Insurance Agency as their independent agent. We would love for all our clients to have enthusiasm and confidence in the personalized care and service that we provided for them. Give us a call today and let us help you improve your landscaping insurance needs.
How Cyber Liability Insurance Can Save Your Small Business
As a small business owner, you already know liability insurance is a must. What about Cyber Liability Insurance? In the event of property damage or bodily injury, standard liability insurance will have you covered. It will no cover your business, however, in the event of a cyber attack.
The Cost of a Cyber Attack
No matter how large or small your company, no one is immune from a cyber hacking attack. Hackmageddon routinely publishes a list of recent high-profile attacks. Between January 1st and 15th, 2017, for example, there were 37 major attacks including attacks on a number of universities, a human rights commission, a cancer agency, Google, Netflix, a prominent tech forum, numerous government offices, the list goes on (Hackmageddon). And yet, many attacks are smaller in scale but still cause a tremendous amount of damage. Sometimes the attacker's identity is uncovered, but at other times information is stolen, money is lost, and reputations are tarnished without the attacker being known.
First Party vs. Third Party Liability
First Party Liability is when your information or your business' information is breached. It might look like a virus or malware that has your damaged internal IT systems. Third Party Liability is an event in which client information is compromised (i.e. Netflix user database hack compromises individual account information).
A recent study concluded that 72% of data breaches actually occur in small to mid-size companies with an average $5 million dollar cost for the data breach (Ohio CPA). This is why data breach insurance is important for businesses of all sizes.
Types of Cyber Liability Claims
Laptop and Device Theft
Small businesses in Ohio make Cyber Liability claims all the time. A classic example of something simple yet consequential is a stolen business laptop. Significant business information and data is often stored on business laptops. If a rogue employee or burglar were to steal a business laptop, he or she could do a lot of damage.
The unleashing of a skyware virus might not be meant for the business, however, if an employee were to open an infected email on a work computer, a hacker could be sent screenshots of every email that comes through the office.
You may have heard stories about a local woman who lives near a medical office dumpster diving to fish for social security numbers found in patients' medical records. This can result in huge government fines for the medical offices affected. This is just one of many examples of the kinds of risks that would be covered by cyber liability insurance.
What Does Cyber Liability Insurance Cover?
As the capabilities of hackers grow, cyber liability insurance in Ohio is changing rapidly. It is a relatively new form of insurance but it has skyrocketed in recent years. There is not, however, one standard policy. Cyber insurance is incredibly complex, so it is essential to know the details of the policies offered. You will typically be reimbursed for data breaches, but the reimbursements differ greatly in amount.
Independent agents can help. He or she can be a very valuable resource when considering cyber insurance options. It is essential to properly assess cyber risks, set up cyber security standards, evaluate what a data breach might cost customers, match exposure to cyber coverage, and know how to implement a cyber response plan.
Am I Overpaying my Ohio Life Insurance Company?
Life Insurance is the best way to insure that most important people in your life are protected from having to take on the responsibility of your debt, your funeral expenses, your mortgage or other such burdens. In other words, Life insurance is a smart choice for most individuals who have dependents or loved ones that would be financially-impacted if you passed away unexpectedly. If you have children it can ensure that their college expenses are paid for, or your partner has income to live on for a year while they put their life back together. In other words, it's hard to deny the benefits of life insurance coverage.
Most often we have found people are still asking themselves, "how much life insurance should I get?", “Am I overpaying?” or “What can you do to lower your premiums?”
3 Tips to Avoid Overpaying Life Insurance in Ohio
To make navigating your life insurance needs, here are a few practical basics that affect your rates and that's worth looking at to see if what you're paying is reasonable.
Maintain good health and healthy habits
Similar to health insurance, life insurance risk factors include the level of health you maintain. Insurers spend a lot of time trying to get this risk factor right. You will have to get a medical exam as part of getting life insurance, and this exam looks for a variety of factors such as obesity, mental health, high cholesterol, your family’s health history etc. Of course, many of these health risks are out of your hands, but there are some that you do have control over. One example is smoking. If you're a smoker, one of the main ways in which you can lower your premiums for life insurance is by quitting your smoking habit.
Maintain a good driving record
Your driving record does affect not only your car insurance rates but also your life insurance premiums. Life insurance companies focus on calculating risk. Anything in your life that raises your risk will raise your premium. Like most, if you're planning ahead to get the most affordable life insurance, you must be smart about your lifestyle choices. Not only is your driving record a factor, your credit history is also considered when life insurance companies work up your cost of coverage. Take a look at your overall risk profile and see if there are any areas in which you can improve.
Avoid unnecessary or out of date riders
If you aren’t sure, a rider is something you add on to your policy to provide additional benefits. One example of this is a disability rider that allows you to collect regular income from the insurance company if you become totally disabled and cannot work. Certain riders are very good to have, but others may not be necessary and are worth looking over again. Some riders may also be out of date or no longer necessary because of changes to the basic policy, or to your life circumstances.
It's a smart idea to check in with your life insurance advisor to go over your current policy, and to be sure you stay updated on any changes. Make it a habit to have these periodical meetings and you will feel more reassured.
Choosing the right insurance company is very important. Hill & Hamilton is dedicated to putting our clients first and this starts by providing you with the information that's meaningful for you. We have put together a useful guide that tells you what you need to know about life insurance. Download the comprehensive free ebook about Life Insurance below. If you have any questions, please contact us directly!
Wedding Planners beware: No business insurance could affect your income
Wedding Planner’s understand even with the most careful planning and attention to detail, situations arise that are completely out of your control.
But it's your job to make sure your clients focus on their big day, while you sweat the details and work to anticipate any mishaps that could occur.
Since there is no way you can predict everything, and sometimes bad things just happen.
One step you can take now is to protect your business from any fallout of these unforeseen events by putting the right insurance policies in place.
But buyer beware...
At a time when you need insurance the most, a one-size fits all insurance plan could end up costing thousands, or even millions of dollars.
The fact is, many small business owners think all insurance is the same. They purchase an 'off-the-shelf' policy because it appears to have all the coverages they need, it's cheap, and most of all, it's easy.
But not all small business is the same, or even the same as every other wedding planning? Do you have unique services that set you apart? Do you offer benefits to your clients that many others don't?
Unless your business is exactly the same as every other small business, you shouldn't expect an insurance policy that's exactly the same. You deserve a policy that's as unique as you and your business... and quite frankly, you should accept nothing less.
That’s why it’s important to work with your independent Insurance Advisor who can help you determine your risks, what types of coverage will fit your specific business needs, and how to accomplish all of this within your budget.
What are your business risks?
For wedding planning risks are everywhere, and those risks could be devastating to your financial well-being. Some of the risks that you may be familiar with include:
- Slips and Falls
- Auto Accidents
- Identity Theft and access to customer information
- Weather Events (like ice, hail, or snow)
- Vender Issues (i.e. the company who is setting up all the place settings is a no show)
And this list only scratches the surface... most wedding planners face additional risks or threats to their business that need to be thoroughly considered and addressed before a loss ever occurs.
What types of insurance should you have?
Commercial Property Insurance
In Ohio weather is hugely unpredictable; we’ve had our share of catastrophes from hail events to the aftermath of hurricanes that made their way through The Buckeye State leaving a path of wreckage.
When fire, theft, wind, hail, lightning or other disasters strike your business, you need to be prepared for what you can control (essentially, how can you respond to help mitigate further damage), and have a plan in place to recover financially from those risks that you can’t control.
A Commercial Property Insurance policy will cover the building you're located in, as well as the contents of your building, including light fixtures, office equipment, furniture, computers and more.
For example, a circuit breaker malfunctions and starts an electrical fire. The fire spreads through the entire building, burning your possessions and the building entirely.
A Commercial Property policy would cover the damages to the building, as well as the replacement cost of the damaged contents.