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Understanding your Insurance Deductibles

Deductibles have been an essential part of the insurance contract for many years. Understanding the role deductibles play when insuring a car or home is an important part of getting the most out of your insurance policy.

 Deductible defined

A deductible is an amount of money that you yourself are responsible for paying toward an insured loss. When a disaster strikes your home or you have a car accident, the amount of the deductible is subtracted, or “deducted,” from your claim payment.

Deductibles are the way in which a risk is shared between you, the policyholder, and your insurer. Generally speaking, the larger the deductible, the less you pay in premiums for an insurance policy.

A deductible can be either a specific dollar amount or a percentage of the total amount of insurance on a policy. The amount is established by the terms of your coverage and can be found on the declarations (or front) page of standard homeowners and auto insurance policies.  

State insurance regulations strictly dictate the way deductibles are incorporated into the language of a policy and how deductibles are implemented, and these laws can vary from state to state.

How deductibles work

For dollar amount deductibles, a specific amount would come off the top of your claim payment.

For example, if your policy states a $500 deductible, and your insurer has determined that you have an insured loss worth $10,000, you would receive a claims check for $9,500.

Percentage deductibles generally only apply to homeowners policies and are calculated based on a percentage of the home’s insured value. So if your house is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from any claim payment. In the event of the $10,000 insurance loss, you would be paid $8,000. In the event of a $25,000 loss, your claim check would be $23,000.

Note that with auto insurance or a homeowners policy, the deductible applies each time you file a claim. The one major exception to this is in Florida, where hurricane deductibles specifically are applied per season rather than for each storm.

Deductibles generally apply to property damage, not to the liability portion of homeowners or auto insurance policies. To use a homeowners policy example, a deductible would apply to property damaged in a rogue outdoor grill fire, but there would be no deductible against the liability portion of the policy if a burned guest made a medical claim or sued.

Raising your deductible can save money

One way to save money on a homeowners or auto insurance policy is to raise the deductible so, if you're shopping for insurance, ask us about the options for deductibles when comparing policies.

Increasing the dollar deductible from $200 to $500 on your auto insurance can reduce collision and comprehensive coverage premium costs. Going to a $1,000 deductible may save you even more.

Most homeowners and renters insurers offer a minimum $500 or $1,000 deductible. Raising the deductible to more than $1,000 can save on the cost of the policy.

Of course, remember that in the event of loss you'll be responsible for the deductible, so make sure that you're comfortable with the amount.

Homeowners disaster deductibles

Wind/hail and hurricanes are covered by standard homeowners insurance; flood and earthquake policies are purchased separately by homeowners. But each of these disasters has their own deductible rules. If you're in an area that's high risk for one of these natural disasters, understand how much of a deductible you'll need to pay if a catastrophe strikes. Start here, check your policies and speak with us to learn exactly how your particular deductibles work.

  • Hurricane deductibles. In hurricane prone states, special deductibles may apply for homeowners insurance claims when the cause of damage is attributable to a hurricane. Whether a hurricane deductible applies to a claim depends on the specific “trigger” selected by the insurance company. These triggers vary by state and insurer and usually apply when the National Weather Service (NWS) officially names a tropical storm, declares a hurricane watch or warning, or defines a hurricane’s intensity in terms of wind speed. Hurricane deductibles are generally higher than other homeowners policy deductibles and usually take the form of a percentage of the policy limits. In some states, policyholders have the option of paying a higher premium in return for a traditional dollar deductible; however, in high-risk coastal areas insurers may make the percentage deductible mandatory.
  • Wind/hail deductibles work in a similar way to hurricane deductibles and are most common in places that typically experience severe windstorms and hail. These include Midwestern states (like Ohio) and around Tornado Alley (which goes through Texas, Oklahoma, Kansas and Nebraska). Wind/hail deductibles are most commonly paid in percentages, typically from one to 5 percent.
  • Flood insurance offers a range of deductibles.  If you have—or are considering buying—flood insurance, make sure you understand your deductible. Flood insurance deductibles vary by state and insurance company, and are available in dollar amounts or percentages. Furthermore, you can choose one deductible for your home's structure and another for its contents (note that your mortgage company may require that your flood insurance deductible be under a certain amount, to help ensure you'll be able to pay it).
  • Earthquake insurance has percentage deductibles that are anywhere from 2 percent to 20 percent of the replacement value of your home, depending on location. Insurers in states that have higher than average risk of earthquakes (for example, Washington, Nevada and Utah), often set minimum deductibles at around 10 percent. In California, the basic California Earthquake Authority (CEA) policy includes a deductible that is 15 percent of the replacement cost of the main home structure and starting at 10 percent for additional coverages (such as on a garage or other outbuildings).

 

Dan Zeiler

dan@zeiler.com

708.597.5900 x134  

Source: www.iii.org 



POSTED OCTOBER 09, 2019 6:42 PM
Background on: Compulsory Auto/Uninsured Motorists

Overview

Virtually all states require drivers to have auto liability insurance before they can legally drive a motor vehicle. Liability insurance pays the other driver’s medical, vehicle repair and other costs when the policyholder is at fault in an accident. State laws set the minimum amounts of insurance or other financial security that drivers must pay for the harm caused by their negligence if an accident occurs. The public generally supports compulsory auto insurance and wants these laws enforced.

There are rare exceptions to compulsory auto insurance laws. New Hampshire does not have a compulsory insurance liability law. It requires that drivers demonstrate that they can provide sufficient funds in the event of an “at-fault” accident. Virginia requires motorists to have insurance or register an uninsured vehicle for a significant fee. Motorcycle insurance is compulsory in every state except Hawaii, Michigan, Montana and New Hampshire, which is not a compulsory insurance state. Minimum liability limits are the same for motorcycles as for private passenger vehicles (see chart).

Laws in most states have proven ineffective in reducing the number of drivers who are uninsured. There are many reasons for this. Some drivers cannot afford insurance and some drivers with surcharges for accidents or serious traffic violations do not want to pay the high premiums that result from a poor driving record. With the estimated percentage of uninsured drivers in the United States close to 13 percent, it is costly to track down violators of compulsory insurance laws. State insurance departments and insurance companies are using new techniques to combat the uninsured motorist problem, including using electronic means to verify auto insurance quickly.

Penalties for driving without compulsory insurance include fines, which can be as high as $5,000 for a subsequent offense, to license or registration suspension or revocation. Some states can impose jail time, confiscate license plates and impound vehicles.

 State Enforcement of Compulsory Auto Insurance Laws

States may require motorists to have physical proof of valid insurance, which is usually a card issued by the insurer. They may also require motorists to provide evidence of insurance in certain situations. For example, most states require motorists to have valid evidence of insurance in their vehicles at all times and to produce it when stopped by law enforcers. Most states require motorists to produce evidence of insurance when they are involved in a crash or shortly afterward. About half of the states require evidence of insurance when a vehicle is registered.

In recent years laws were enacted that expanded insurers’ roles in verifying compliance with compulsory liability laws and aiding in their enforcement. Insurance companies often work in conjunction with state motor vehicle departments to verify insurance coverage. Most states have laws that specify that insurers must notify the motor vehicle department when a policy is cancelled or not renewed. In some states, insurers are asked to verify the existence of insurance at the time that a specific accident occurred. In other states, insurers are given lists of randomly selected auto registrations, which they are asked to match up with insurance policies that the motorists claim were in effect. Newer laws, known as computer data laws, require an insurer to submit its entire list of automobile liability policies, updated at specified intervals, to a state agency such as the motor vehicle department or to an outside vendor. The state agency or vendor can use the lists to verify registration applicants' declarations that insurance is in effect.

Computer data base systems are designed to promote compliance with the law by increasing the odds of being caught driving uninsured. Some states reported having problems administering this type of system, which in some states had a high error rate, including “mismatch” problems. Mismatch can occur when insurers and the motor vehicle or regulation department have conflicting or erroneous records that mistakenly flag policyholders for not complying with compulsory auto insurance law. Other problems with this type of system is the short-lived veracity of the data, which becomes outdated shortly after insurers report to the state.  Subsequent reconciling of state and insurer data discrepancies must be done. State departments of motor vehicles systems have become outdated. According to the Property Casualty Insurers Association of America (PCI), these database systems do not reduce uninsured motorist rates. Transactional databases encounter similar problems, along with specific errors as backlogs are created such as when existing policy cancellations do not keep up with reports of new polices.

Online verification (OLV) systems: In response to the problems with database systems which do not effectively identify and track uninsured motorists, the Insurance Industry Committee on Motor Vehicle Administration (IICMVA) has developed an industry-supported service system that would create a single online verification system. A state’s Department of Motor Vehicles or law enforcement division would use an online portal to insurer data to access real-time information about whether a motorist had insurance. The IICMVA model also established guidelines for uniformity, for example, requiring the transmission of data through Electronic Data Interchange (EDI) using a standardized format. Using this system remedies the need to exchange massive amounts of data because insurers maintain their own data.  Advantages of OLVs are that the systems provide instantaneous insurance verification which can be performed as vehicles are being registered or at traffic stops.

 Other Solutions to the Uninsured Motorist Problem

Over the years various proposals for dealing with the uninsured motorist problem have been put forward. Unsatisfied judgment funds were set up in a few states to provide a source of funds for accident victims when the at-fault party has no means of paying a judgment, but their effectiveness proved to be limited. A more effective remedy is uninsured (and underinsured) motorist coverage that provides compensation to policyholders when an at-fault motorist has no liability insurance (or insufficient amounts) or when the at-fault motorist is a hit-and-run driver. Like unsatisfied judgment funds, this program does nothing to reduce the number of uninsured motorists but it does provide a way for individual drivers to deal with the financial consequences of accidents with hit-and-run or uninsured drivers. In about 20 jurisdictions, uninsured motorist coverage is mandatory. In other states, insurers are required to offer the coverage but a driver does not have to purchase it. Only a handful of states require drivers to purchase underinsured motorist coverage.

No-fault insurance laws also provide some relief from the problem of uninsured motorists. Under no-fault auto insurance plans, accident victims can collect benefits from their own insurance companies, regardless of whether the other party has insurance coverage (see Background on: No-fault auto insurance for more information).

In response to public concerns that people who obey compulsory laws subsidize scofflaws, legislators in about a dozen states have enacted “no pay, no play” laws, which ban uninsured drivers from suing for noneconomic damages such as pain and suffering. Indiana’s law specifies that in the event of an accident resulting in bodily injury or property damage, with some exceptions, an uninsured driver may not receive noneconomic damages for pain and suffering. Missouri’s law prohibits uninsured drivers from collecting pain and suffering (noneconomic damages) from a motor vehicle accident, unless the defendant in the lawsuit operated a vehicle under the influence of alcohol or drugs or was convicted of involuntary manslaughter or second-degree assault. In Michigan uninsured drivers who are 50 percent or more at fault cannot collect noneconomic damages in the event of an auto accident. California's plan (Proposition 213) goes further by curtailing lawsuits for drunk drivers as well as for those who are uninsured. Louisiana’s law compels uninsured motorists to pay for the first $10,000 in out-of-pocket medical expenses and the first $10,000 in property damage before they can sue the other party. New Jersey's law, like California’s Proposition 213, specifies that uninsured and drunk drivers, as well as motorists who intentionally commit other crimes, may not file lawsuits for economic or noneconomic damages. These laws were upheld in New Jersey and Louisiana. A related issue was addressed in Iowa, where the governor signed a bill prohibiting motorists from collecting noneconomic damages for injuries resulting from an accident if the motorist was using the vehicle while committing a felony.

In December 2012 the Insurance Research Council (IRC) released the findings of a study, The Potential Effects of No Pay, No Play Laws, which examined the 10 states that had no pay, no play laws at the time. It concluded that adopting such a law may result in a reduction of up to 1.6 percent in a state’s percentage of uninsured drivers after controlling for changes in unemployment and insurance affordability, which have significant impacts.

Low-cost auto policies are designed for drivers who cannot afford regularly priced auto policies or who have little or no assets to protect. New Jersey's Basic Policy offers $15,000 in personal injury protection, up to $250,000 in medical benefits for catastrophic injuries and $5,000 property damage liability. Policyholders have the option to buy $10,000 bodily injury liability coverage but they cannot buy uninsured, underinsured or collision and comprehensive coverage. The newer Dollar-A-Day policy provides emergency medical care coverage immediately after an accident and $10,000 death benefits but no coverage for liability.

California's program for low-income drivers is administered by the California Assigned Risk Program. Every auto insurer doing business in the state must take their “fair share” of applicants. The program was originally set up in 1999 for drivers in Los Angeles and San Francisco counties. By the end of 2007, low-cost auto policies had become available to all drivers in the state. In 2012, premiums were lowered statewide resulting from a decrease in crashes and damage in 2011 caused by policyholders.

Only drivers over age 19 with good driving records and low incomes (up to 250 percent of the poverty level) are eligible. Applicants must have motor vehicles valued at $25,000 or less. Rates are set in each county so that premiums are sufficient to cover losses and expenses in each county. The policy provides up to $10,000 in liability coverage for one person involved in an accident and up to $20,000 for more than one person. It also includes payment options, allowing a 15 percent deposit and six monthly installments, optional $10,000/$20,000 uninsured motorist bodily injury coverage and $1,000 medical payments coverage. At the end of 2018, the program had almost 20,000 active policies.

Proponents in favor of granting undocumented immigrants drivers licenses say that the requirement would promote safety and responsibility by ensuring drivers have passed a driving exam and have insurance, as is generally required for licenses, and would ensure that more complete data is available to officials checking drivers license databases for information on an individual driver, such as place of residence or driving record. Opponents say the licenses create a security risk by potentially providing illegal immigrants with ease of access to secure buildings and other privileges.

Thirteen states and the District of Columbia have laws granting driving privileges to undocumented drivers. According to the National Conference of State Legislatures, five of these states (California, Colorado, Connecticut, Hawaii and Maryland and in December 2019, New York ) allow the issuance of drivers licenses to those who do not have lawful status or a Social Security number if specified documentation is produced. The District of Columbia offers a limited drivers license. Two additional states (New Mexico and Washington) accept tax identification numbers or other proof of residence in lieu of a Social Security number, for the purpose of obtaining a drivers license. Four states issue a drivers privilege card (Delaware, Nevada, Utah and Vermont).  Utah’s drivers privilege card is valid for one year. Illinois issues a temporary visitor’s driving license.  The type of required documents necessary for obtaining driving privileges varies by state.  For example, in some states tax returns or a tax identification number are required. Three states expressly prohibit the use of the license or privilege card for identification purposes. Oregon’s drivers license law for undocumented immigrants was suspended by voter referendum. New York’s law was enacted in June 2019 and becomes effective in December. Besides allowing undocumented immigrants to use foreign documents such as passports to establish their identities when applying for a drivers license, the license will include a stamp that specifies that it cannot be used for federal purposes.

By early 2018, the California Department of Motor Vehicles had issued about 1 million driver licenses to undocumented applicants. Providing undocumented drivers with licenses appears to have a limited positive effect on accidents in California. A 2017 study published in Proceedings of the National Academy of Sciences found that after the California law went into effect, the likelihood of hit and run accidents was reduced. The law seems to have no effect on the number of accidents or on the rate of fatal accidents.

Historic Perspective

In 1927 Massachusetts became the first state to require the purchase of auto liability insurance. Since then 48 states and the District of Columbia have followed suit. Such laws usually have the support of the public despite the fact that compliance with such laws is generally poor and enforcement activities are costly. Compulsory auto insurance laws do nothing to protect drivers involved in accidents with drivers of stolen vehicles or drivers from one of the two states where insurance is not compulsory, drivers of unregistered vehicles, the insurance dodger who cancels a policy immediately after receiving a proof-of-insurance certificate and the hit-and-run driver.

Compulsory auto liability insurance is not necessarily the most effective solution. A 1994 study by the National Association of Independent Insurers (now known as PCI) found that New Hampshire, a state that does not have compulsory insurance laws, had a smaller percentage of uninsured drivers than the nearby states of Rhode Island, Vermont and Connecticut. Only 10 other states had fewer uninsured drivers. New Hampshire also had the lowest percentage of uninsured drivers—9.5 percent—of all the states without compulsory laws.

Affordability influences decisions about whether to purchase auto insurance. Risk Information, Inc. found that the 1995 Insurance Research Council (IRC) uninsured motorist rates by state, when compared with average personal auto insurance expenditures from the NAIC, points to cost, along with enforcement and culture, as factors in decisions not to buy compulsory coverage. For instance, some states such as New Jersey, New York and Louisiana have high insurance costs, especially when measured against median family income, yet their uninsured motorist rates were 12 percent or less at the time of the study. On the other hand, Alabama had an uninsured rate of 28 percent even though coverage cost much less there.

Cost of Uninsured Motorist Coverage

The price of uninsured motorist coverage varies considerably from state to state, depending in part on the percentage of drivers who are uninsured. The price is also influenced by whether the amount available to pay claims can be increased by "stacking," a practice that works to the benefit of people who own more than one insured vehicle. In states where stacking is not specifically prohibited, liability limits under the uninsured motorist coverage may be multiplied by the number of cars insured under a single policy or may be added together where multiple vehicles are insured under different policies. Thus, in a three-car family, where uninsured motorist liability limits are $20,000, in a state that does not prohibit stacking, the amount available to pay a claim in an accident with an uninsured driver would be $60,000. Because stacking drives up the cost of auto insurance, about half of the states prohibit stacking, according to the Property Casualty Insurers Association of America. However, some states, such as Missouri and Pennsylvania have upheld stacking provisions. 

Automobile Financial Responsibility Limits By State

(As of September 2019)

State Insurance required Minimum liability limits (1) Alabama BI & PD liability 25/50/25 Alaska BI & PD liability 50/100/25 Arizona BI & PD liability 25/50/15 (2) Arkansas BI & PD liability, PIP 25/50/25 California  BI & PD liability 15/30/5 (3) Colorado BI & PD liability 25/50/15 Connecticut BI & PD liability, UM, UIM 25/50/25 Delaware BI & PD liability, PIP 25/50/10 D.C. BI & PD liability, UM 25/50/10 Florida PD liability, PIP 10/20/10 (4) Georgia BI & PD liability 25/50/25 Hawaii BI & PD liability, PIP 20/40/10 Idaho BI & PD liability 25/50/15 Illinois BI & PD liability, UM, UIM 25/50/20 Indiana BI & PD liability 25/50/25 Iowa BI & PD liability 20/40/15 Kansas BI & PD liability, PIP 25/50/25 Kentucky BI & PD liability, PIP, UM, UIM 25/50/25 (4) Louisiana BI & PD liability 15/30/25 Maine BI & PD liability, UM, UIM, Medpay 50/100/25 (5) Maryland BI & PD Liability, PIP, UM, UIM 30/60/15 Massachusetts BI & PD liability, PIP 20/40/5 Michigan BI & PD liability, PIP 20/40/10 Minnesota BI & PD liability, PIP, UM, UIM 30/60/10 Mississippi BI & PD liability 25/50/25 Missouri BI & PD liability, UM 25/50/25 Montana BI & PD liability 25/50/20 Nebraska BI & PD liability, UM, UIM 25/50/25 Nevada BI & PD liability 25/50/20 New Hampshire FR only 25/50/25 New Jersey BI & PD liability, PIP, UM, UIM 15/30/5 (6) New Mexico BI & PD liability 25/50/10 New York BI & PD liability, PIP, UM, UIM 25/50/10 (7) North Carolina BI & PD liability, UM, UIM 30/60/25 North Dakota BI & PD liability, PIP, UM, UIM 25/50/25 Ohio BI & PD liability 25/50/25 Oklahoma BI & PD liability 25/50/25 Oregon BI & PD liability, PIP, UM, UIM  25/50/20 Pennsylvania BI & PD liability, PIP 15/30/5 Rhode Island BI & PD liability 25/50/25 South Carolina BI & PD liability, UM 25/50/25 South Dakota BI & PD liability, UM, UIM 25/50/25 Tennessee BI & PD liability 25/50/15 (4) Texas BI & PD liability, PIP 30/60/25 Utah BI & PD liability, PIP 25/65/15 (4) Vermont BI & PD liability, UM, UIM 25/50/10 Virginia BI & PD liability (7), UM, UIM 25/50/20 Washington BI & PD liability 25/50/10 West Virginia BI & PD liability, UM, UIM 25/50/25 Wisconsin BI & PD liability, UM, Medpay 25/50/10 Wyoming BI & PD liability 25/50/20

(1) The first two numbers refer to bodily injury (BI) liability limits and the third number to property damage (PD) liability. For example, 20/40/10 means coverage up to $40,000 for all persons injured in an accident, subject to a limit of $20,000 for one individual, and $10,000 coverage for property damage.
(2) Effective July 1, 2020.
(3) Low-cost policy limits for low-income drivers in the California Automobile Assigned Risk Plan are 10/20/3.
(4) Instead of policy limits, policyholders can satisfy the requirement with a combined single limit policy. Amounts vary by state.
(5) In addition, policyholders must carry coverage for medical payments. Amounts vary by state.
(6) Basic policy (optional) limits are 10/10/5. Uninsured and underinsured motorist coverage not available under the basic policy but uninsured and underinsured motorist coverage is required under the standard policy. Special Automobile Insurance Policy available for certain drivers which only covers emergency treatment and a $10,000 death benefit.
(7) In addition, policyholders must have 50/100 for wrongful death coverage.
(8) Compulsory to buy insurance or pay an uninsured motorists vehicle (UMV) fee to the state department of motor vehicles.

Note: State laws regarding mandatory requirements for uninsured and underinsured motorists vary. State departments of insurance should be consulted to determine whether these coverages are compulsory.

Source: American Property Casualty Insurers Association; state departments of insurance.

The chart above provides a state-by-state overview of minimum auto liability limits and the insurance required by state law. Coverages that may be rejected by the policyholder, either in writing or verbally (i.e., are not mandatory) have been excluded.

Estimated Percentage Of Uninsured Motorists By State, 2015 (1)

State Uninsured Rank (2) State Uninsured Rank (2) Alabama 18.4% 6 Montana 9.9% 33 Alaska 15.4 11 Nebraska 6.8 46 Arizona 12.0 24 Nevada 10.6 29 Arkansas 16.6 9 New Hampshire 9.9 35 California 15.2 12 New Jersey 14.9 14 Colorado 13.3 19 New Mexico 20.8 3 Connecticut 9.4 36 New York 6.1 50 Delaware 11.4 28 North Carolina 6.5 48 D.C. 15.6 10 North Dakota 6.8 45 Florida (3) 26.7 1 Ohio 12.4 22 Georgia 12.0 25 Oklahoma 10.5 31 Hawaii 10.6 30 Oregon 12.7 21 Idaho 8.2 40 Pennsylvania 7.6 43 Illinois 13.7 18 Rhode Island 15.2 13 Indiana 16.7 8 South Carolina 9.4 37 Iowa 8.7 38 South Dakota 7.7 42 Kansas 7.2 44 Tennessee 20.0 5 Kentucky 11.5 26 Texas 14.1 16 Louisiana 13.0 20 Utah 8.2 39 Maine 4.5 51 Vermont 6.8 47 Maryland 12.4 23 Virginia 9.9 34 Massachusetts 6.2 49 Washington 17.4 7 Michigan 20.3 4 West Virginia 10.1 32 Minnesota 11.5 27 Wisconsin 14.3 15 Mississippi 23.7 2 Wyoming 7.8 41 Missouri 14.0 17      

(1) Percentage of uninsured drivers, as measured by the ratio of uninsured motorists (UM) claims to bodily injury (BI) claim frequencies.
(2) Rank calculated from unrounded data.
(3) In Florida, compulsory auto laws apply to personal injury protection (PIP) and physical damage, but not to third-party bodily injury coverage.

Source: Insurance Research Council.

Estimated Percentage Of Uninsured Motorists, 1992-2015 (1)

Year Percent Year Percent Year Percent 1992 15.6% 2000 13.4% 2008 14.3% 1993 16.0 2001 14.2 2009 13.8 1994 15.1 2002 14.5 2010 12.3 1995 14.2 2003 14.9 2011 12.3 1996 13.8 2004 14.6 2012 12.6 1997 13.2 2005 14.6 2013 12.7 1998 13.0 2006 14.3 2014 13.0 1999 12.8 2007 13.8 2015 13.0

(1) Percentage of uninsured drivers, as measured by the ratio of uninsured motorists (UM) claims to bodily injury (BI) claim frequencies.

Source: Insurance Research Council.

 

 

Dan Zeiler

dan@zeiler.com

708.597.5900 x134 

Source: www.iii.org 

 

 



POSTED OCTOBER 09, 2019 5:00 AM
Top Seven Mistakes Business Owners Make Filing Insurance Claims

In the chaos that follows a disaster, mistakes can be made that may delay insurance reimbursement, or mean your insurance won't pay at all. Long delays can be deadly for a business trying to bounce back and get the doors open again.

Here are the top seven mistakes business owners make in filing insurance claims:

1. Not contacting your insurer immediately. Many people make the mistake of cleaning up damage before an insurance representative visits the business. This creates confusion about how bad things really were, and you may find that labor you did or paid for is disallowed if it preceded an insurer's inspection. In a disaster situation, many insurers have a quick-response team that will come out to survey the situation.

2. Not documenting the damage. Often, repairs must begin immediately to prevent additional damage, or equipment must be moved to a new location. If so, be sure to photograph the original scene to document how it was before you started your cleanup effort. Also take photos of any repairs you make.

3. Not keeping damaged goods. If your business cleanup includes removal of items such as water-damaged merchandise, flooring or insulation, keep it all, even if it has to pile up in the parking lot. The damaged materials are all evidence of the impact of the disaster on your business.

4. Not appealing your insurer's lowball estimate. Your insurer will give you a damage estimate after surveying your business. If you think it's too low, you can appeal. Hire your own adjuster to do a second estimate. Usually, an impartial, third-party mediator will then be employed to make a final decision on the payment amount.

5. Not reading your policy. It's a common myth that if you have insurance for a building, you must have coverage for flooding, earthquakes and all other possible calamities. But often, it's not true. In earthquake-prone states, for instance, this coverage often must be obtained on a separate policy or rider, and flood insurance is only offered through the National Flood Insurance Program. Don't waste time submitting claims to your private insurance policy if it won't cover you for the disaster you've just suffered.

6. Counting on FEMA for quick help. If your business is in a federally declared disaster area, federal aid will be available. It might provide homeowners with temporary shelter and eventual money to rebuild. But for a business owner, your private insurance will be your best chance at receiving money fast enough to reopen before all your customers drift away.

7. Not preparing ahead of time. Obviously, the aftermath of a disaster goes more smoothly if you are ready to swing into action when trouble hits. Start with reviewing your policy to make sure you have adequate coverage. Then be prepared. Do you know where your insurance policy is kept? Is it handy, where you could grab it if you had to leave suddenly? Is an extra copy in a safe deposit box where it would be safe from flooding or fire? Do you have our number programmed into your phone? It'll prevent delays if you have your information handy.

Dan Zeiler

dan@zeiler.com

708.597.5900 x134 

 

Source: https://www.entrepreneur.com/article/220214

 



POSTED SEPTEMBER 25, 2019 5:00 AM
Reducing Risks to your Business Vehicles

Whether you own or lease a single business car or an entire fleet of commercial vehicles, you’ll need to purchase commercial auto insurance. We can help you weigh your risks and evaluate coverage options.

But even with insurance in place, you’ll want to take steps to prevent accidents and protect your employees and vehicles. Your business can reduce the chance of an accident by establishing and enforcing the following practices and policies.

Hard and Fast Driving Rules:

When it comes to the safety of employees and the protection of your vehicles, you should set certain firm driving rules that must be followed at all times, including:

  • Mandatory seat belt use - Nearly every state has a seat belt law. Seat belt use helps prevent deaths and limit the severity of injuries in vehicle accidents. There is no reasonable excuse for not using a seat belt.
  • Zero tolerance for intoxicants - Even one alcoholic beverage can impair a driver’s reaction time. Employees should never drink or use other intoxicants prior to using business vehicles.
  • No cellphone use - Distracted driving is a leading cause of accidents. Prohibit employees from taking calls or texting while driving.

Other rules may be more flexible, but you should consider instituting policies and adhering to the following practices yourself as appropriate:

  • Limit non-business use of vehicles - While some employees use the same car for work and personal use, generally limit business vehicle use to work-related travel.
  • Slow down - Scheduling should allow sufficient travel time between meetings and assignments. Do not create such a frantic pace of work that employees are encouraged to speed. In addition to reducing the risk of accidents, driving the speed limit also will help control fuel costs.
  • Lock and secure vehicles - Employees should always lock vehicles when on the job. Whenever possible, vehicles should be parked in secure, well-lighted areas.

Employee focused practices to reduce vehicle risk:

  • Know your employees - Before hiring employees to drive company vehicles, check their driving record with the motor vehicle department for past infractions. Limit or ban driving by employees with a history of accidents or moving violations. Employees should also be required to report any accidents they have while not working. In addition, recognize that some personality traits - such as a bad temper - can raise the risk of auto accidents.
  • Provide training - Employees who regularly drive work vehicles - or are taking on a new assignment requiring vehicle use - should be provided with drivers training. This course may just be a refresher for some, but it should cover key safety practices such as following distances and proper backing techniques.
  • Recognize safe drivers - For businesses in which driving is central - such as a florist or a moving company - establish a program to recognize and reward safe drivers. You may also want to reward a department or the whole company for accident-free periods.

Responding to an Accident:

The above practices and policies can help minimize the risk to your business vehicles, but they cannot entirely prevent accidents from happening. If a business vehicle is involved in an accident, you’ll want to help your employee-driver respond appropriately and proceed with filing an insurance claim. The following practices and steps will help your business and the involved employee recover and get back to work.

  • Establish procedures in the event of an accident - Employees using company vehicles should be trained what to do if an accident occurs. This includes not leaving the scene of an accident, contacting the police, and collecting information (license plate numbers, contact information, insurance information, etc.) from the affected parties and any witnesses. The accident should also be reported to appropriate personnel at work. Consider using the incident as an opportunity to educate all employees who drive company vehicles about what to do if they are involved in an accident.
  • Contact us and file a claim with your insurer - As soon as possible, contact us to report the accident and begin the claims filing process. It’s especially important to work immediately with us if anyone has been injured in the accident. Follow the guidance in a timely manner, such as getting estimates for repairs.

Remember too, that auto insurance claims are not limited to accidents. You may also need to file a claim if your vehicle is vandalized, stolen or damaged from an event other than an accident, such as fire or severe weather.

Dan Zeiler

dan@zeiler.com

708.597.5900 x134 



POSTED SEPTEMBER 18, 2019 5:00 AM
Building Ordinance and Law Coverage

To understand the need for Ordinance and Law coverage we first need to look at the insurance agreement.  

The important parts to consider include:

  1. Coverage is provided for direct physical lose to tangible property. 
  2. And two the loss settlement provision will provide reimbursement for like kind and quality

So if your building is struck by lighting and catches fire - there is direct physical loss to property - and policy will respond replacing what was damaged. But what about your local building code requirements? Does your building meet all the current cores?

Some considerations that may need to be made include:

  • Fire Suppression Sprinkler System
  • ADA compliant features which can include elevators, handicap bathrooms and ramps
  • And with our green energy push many improvements in insulation or R-values requirements have been changed.

These improvements can add over 25% to the reconstruction cost of a building. And, many communities have a building codes requiring that a building that has been damaged to a specified extent (typically 50 percent) must be completely demolished and rebuilt in accordance with the current codes.

  • An unendorsed property insurance policy will not pay to rebuild the portion of your building that was not damaged.
  • It also will not pay the cost to demolish that undamaged portion of the building.

So what is needed?   A Building Ordinance and Law Coverage endorsement.

There are three basic parts.

  1. Coverage for the undamaged portion of the building that needs to be torn down
  2. Increase cost of construction limit for the required building improvements
  3. Demolition cost reimbursement for the portion of your building being torn down -  that was not damaged.

There are other considerations that need to be made and I’m available should you have any questions.

Dan

dan@zeiler.com

708.597.5900 x134



POSTED SEPTEMBER 11, 2019 3:24 PM
Illinois Auto Insurance and GAP Coverage
Illinois Auto Insurance and Guaranteed Auto Protection "GAP Insurance".

When purchasing or leasing a new car it is important to make sure that you have the proper insurance.  One option that needs to be considered is Guaranteed Auto Protection - GAP Insurance.  GAP Insurance covers the difference between what you owe on your vehicle and what the insurance company may pay for a totaled or stolen vehicle.  Watch this video for a quick summary of this coverage option.

 

 

 



POSTED SEPTEMBER 11, 2019 3:06 PM
Pekin Insurance: 6 Common Misconceptions About Workers Compensation Insurance

6 Common Misconceptions About Workers Compensation Insurance

Overview:

As a business owner, you don’t like Workers Compensation commercials unless you’re the lawyer paying for them. These advertisements start with an injured worker expressing worries about getting hurt on the job. Then, a lawyer cuts in and vows to fight for more money in a settlement. “Isn’t Workers Compensation supposed to prevent lawsuits?” you think. Read on to learn the ins and outs of this essential coverage as we address 6 common misconceptions about Workers Compensation.

What Workers Compensation Insurance Does

In the event of a work-related illness, injury, or death, Workers Compensation typically covers the following expenses for employees:

  • Medical bills
  • Lost wages
  • Funeral costs

Workers Compensation can only be claimed when the employee or surviving dependents release the employer from all legal claims. In this way, Workers Compensation acts like a settlement that clears the employer of wrongdoing and offers financial aid to the employee or dependents.

Though that explanation seems simple enough, the following are Workers Compensation misconceptions to give you a clearer idea of how this coverage works.

Misconception 1: "I'm not required to have Workers Compensation." 

Some states require you to carry Workers Compensation coverage if you have more than one employee, while others push that limit up to four employees.   Some states have exemptions for the following types of workers:

  • Seasonal workers
  • Leased or loaned employees
  • Farmers and agricultural workers
  • Domestic workers like housekeepers and caregivers

Mandatory coverage amounts vary, too. Figure out your requirements by checking your state’s laws and working with us. 

Misconception 2: Workers Compensation Only Applies to “High Risk” Jobs

Don’t ignore Workers Compensation just because you’re not in the construction industry. Even when your employees work in cubicles, you have to account for the following conditions that cause slips, trips, and falls:

  • Slick surfaces
  • Uneven or cracking sidewalks
  • Potholes in the parking lot
  • Spills and other messes

According to the National Safety Council, there were over 239,000 falls in 2016 (the most recent year with available data) spread across multiple industries, including retail, government, education, transportation, and more.

Misconception 3: Workers Compensation Only Covers Catastrophic Injuries

You might think Workers Compensation only covers severe injuries like broken bones, muscle tears, and sprains.  However, Workers Compensation also covers:

  • Chronic injuries that form over time
  • Illnesses that develop as a result of the work environment
  • Psychological or emotional damages (depending on the state)

Misconception 4: Workers Compensation Covers All Injuries 

We realize this is the exact opposite of Misconception 3, but employees aren’t automatically eligible for Workers Compensation when they're hurt on the job. Those rights may be denied if the employee is injured:

  • From self-inflicted wounds on the job or as a result of a fight they started.
  • While committing a crime.
  • While not "on the job" or not engaging in work-related activities. 
  • While violating a company policy.
  • As a result of intoxication or drug use.

Misconception 5: Workers Compensation Only Applies to Company Property  

Workers Compensation applies to both on and off the job locations, like when an employee:

  • Gets injured in a car accident on a business trip.
  • Suffers an injury on the way to pick up take-out food for the office.
  • Falls down the stairs at a business social event (unless alcohol played a role in the accident).

Don’t forget to cover employees who work from home. In a Pennsylvania Workers Compensation case, the court ruled in favor of a remote worker who hurt her neck after falling down the stairs.

Misconception 6: "My Employees Would Never Sue Me"

Think back to that workers compensation commercial we described earlier in this blog post. Some business owners roll their eyes at advertisements like that and think, “Well, it’ll never happen to me.”  Until it does. Here’s a scenario to show you how a civil suit could’ve been prevented with Workers Compensation.

Violet is the accounting manager at an IT consulting firm. She’s known the owner, Rob, for 10 years. They consider each other friends.

On a normal weekday, Violet heads to work. She arrives at the firm, and her foot slips into a pothole as she steps out of her car. Violet lunges forward. When she reaches out to break her fall, her right wrist snaps up at an awkward angle. Her head bounces off the open car door, and she can’t stand up. 

Thankfully, a coworker sees the accident and calls an ambulance. After Violet gets to the hospital, an x-ray reveals a clear break in her wrist. The doctor also diagnoses Violet with a concussion and insists that she take time away from work to heal.

When Violet calls Rob and tells him about the injuries, he sounds nervous. He says the business doesn’t carry Workers Compensation, so he expects Violet to cover the medical bills through her health insurance or with her own funds. 

This scenario ends with Violet successfully suing the IT firm and Rob receiving a stiff fine for not carrying Workers Compensation.

Dan Zeiler

dan@zeiler.com

708.597.5900 x134 

 

 



POSTED SEPTEMBER 11, 2019 5:00 AM
10 of the Best Staff Recognition Ideas That Inspire Productivity

Effective staff recognition ideas have the potential to completely change your company's culture - for the better. 

staff-recognition-ideas
Take a long, hard look around your organization. Do you see your employees:
  • Struggling to complete work in a timely fashion?
  • Running low on creative ideas or inspiration?
  • Asking for more benefits
  • Quitting their jobs in record numbers?

If so, there's a good chance your employees feel undervalued and it's time to start brainstorming staff recognition ideas. Studies have revealed that 79% of people who quit their jobs cite "lack of appreciation" as their primary reason for hitting the road.

In addition to helping you keep your staff, appreciation also increases productivity. Many of the same studies about employee satisfaction also point to the fact that recognition from a manager is the number one inspiration for employees to produce great work. Nothing else - promotions, higher pay, or autonomy - even come close.

Frequent recognition is associated with meaning at work. Those recognized within the last month are 29% more likely to agree with the statement, "The work we do at my organization has meaning and purpose to me," compared to those who have never been recognized.

So, what are you doing to make sure your workers know how much you value them as not just employees, but as people? Whether you're already making an effort or have a long way to go, create a plan for recognizing your staff regularly - and stick to it.

Boost Morale (and Profits) with these staff recognition ideas:

1. Make it public.
It's necessary and wonderful to recognize your staff within the walls of your organization, but consider posting certain achievements on your company's social media pages. Not every single event is going to warrant a post, but if you have a few employees that go above and beyond, figure out a way to appropriately honor them on social media.

Bonus: Their family and friends will likely comment or share, giving your company more visibility.

2. Personalize presents.
Some general gifts, like a Visa gift card, will almost always work, but go the extra mile to make things a little more personal. When a new hire is filling out their paperwork, include a questionnaire to discover their favorite things. Find out what size shirt they wear, if they have any pets, dream vacations, or favorite restaurants. Then, when they go above and beyond and you want to recognize the achievement, you already know exactly what they like.


3. Put a stamp on it.
It's nice to write a thank you email when an employee does something great - but don't you want to be better than nice? Never underestimate the power of a handwritten thank you note sent to their home via snail mail. It shows you went the extra mile to express your appreciation (and everyone loves getting mail). 


4. Get employees in on the action.
Create a culture of appreciation by encouraging your employees to recognize their coworkers. In weekly department meetings, have everyone go around the table and say how one of their coworkers excelled that week. Or, have them stand up at the monthly company meeting and call out a couple of coworkers who had a big success. The goal is to get your employees looking for good behavior instead of focusing on the negative.


5. Free food.
Never underestimate the power of free eats - it's one of those simple staff recognition ideas that can go a long way. Stock your kitchen with complimentary beverages and snacks to keep employees fueled throughout the day.


6. Celebrate work anniversaries.
Employees are most likely to quit at the one-year mark, and there's a spike in voluntary turnover for each anniversary after that. So, for every year they stick with you, don't be shy about celebrating the fact that they're still there and you appreciate the commitment. 


7. Annual employee appreciation day.
Once a year, have a fun employee appreciation day. What you do will depend on the size of your organization and what your employees enjoy, but the point is that you're taking an entire day to stop and say, "Hey, we all appreciate you."


8. Monthly lunches.
Give each department a budget to have lunch. It doesn't have to be anything complicated - but the point is that once a month, teams can get together, stop for a minute, and enjoy lunch. 


9. Trophy time.
A little healthy competition can make work more fun for employees. Create some type of trophy that gets passed around monthly to someone who goes above and beyond. Make a big deal about presenting the award, and maybe give that person a special parking space for the month. 


10. Celebrate birthdays.
Everyone has one day a year that is all for them, so why not make them feel a little special? How you celebrate birthdays will depend on the size of your organization, but it could be as simple as a group card or a small cake. 


Not sure if any or all of these staff recognition ideas will motivate or resonate with your employees? Ask them. The simple act of soliciting ideas and feedback for recognition preferences is a cleverly disguised way to show your employees you appreciate them and value their input.

 

Dan Zeiler

dan@zeiler.com

708.597.5900 x134 

 

 



POSTED SEPTEMBER 11, 2019 5:00 AM
Zeiler Insurance Customer Spotlight: Quality Pasta Company

We would like to introduce you to Quality Pasta Company's newest product in their line of pastas, Muscle Mac™

Mac & Cheese with more than twice the protein per serving than any other national brand. Muscle Mac™ combines high protein pasta with real cheese for a healthy and satisfying meal that’s perfect for anyone looking to add more protein to their diet. Free of synthetic dyes and colors - and made with only wholesome, quality ingredients for dishes that are nutritious and delicious!

The combined ingredients in Muscle Mac™ deliver 20 grams of protein per serving.  No other national Mac & Cheese brand can say that!  Get 42% of your recommended daily protein* with Muscle Mac™ Mac & Cheese.

Quality Pasta Company has a passion for giving your family delicious and nutritious dishes you’ll be happy to serve, any day of the week. It’s their commitment to making better products - with great-tasting recipes, the finest ingredients and simple preparations everyone will love. Better for you - with natural ingredients. Better value - with lower prices and higher quality than national brand equivalents. Plus, they are based right here in the USA, with all of their products made fresh at their Pennsylvania plant - in the heart of the Monongahela Valley.

Click Here for where to purchase.

For more information visit Quality Pasta Company.

We love to spotlight our clients on TheZ. Feel free to contact us for more detail. 

 



POSTED SEPTEMBER 11, 2019 5:00 AM
Know the pros and cons of hosting on Airbnb.

Maybe you’ve read a few Airbnb success stories. You know, the ones where someone rakes in six figures after putting space up for rent online? All of us have bills to pay, so we understand why you’d want to bring in extra income. Have you done the research and asked yourself if you really should put your house on Airbnb, though?

Continue reading to discover benefits, legalities, tax implications, and insurance complications that come with hosting a property on Airbnb.

How Airbnb Works

Airbnb is like the Uber of the hospitality industry. Both companies profit from a growing share economy where personal property is used to drive business profits.

Airbnb’s online platform allows hosts to rent rooms and sometimes entire houses to guests. If you’re wondering how Airbnb makes money from this setup, they collect a commission from the host and a service fee from the guest.

Airbnb doesn’t own the real estate being rented, so they’re not responsible for taxes, maintenance, or any other costs related to those properties. That’s a smart way for them to save and make money!
 

The Benefits of Renting Out Your Space

Do you have a rental home or vacation property that’s going unused? Through Airbnb, you can offer lodging to anyone visiting your area.

If you’re comfortable with renting out space in your own home or apartment, you can offer a spare room. No matter how you go about it, Airbnb gives you a chance to bring in extra money.

Airbnb invites its users to leave feedback about each experience, which is public information. This open forum is designed to keep guests and hosts accountable.
 

Following Hosting Standards

As a host, you would have to follow Airbnb’s policies.

Here are Airbnb’s basic requirements for hosts:

  • Provide essential amenities (toilet paper, soap, linens).
  • Reply to reservation requests and booking inquiries within 24 hours.
  • Accept reservation requests whenever you’re available.
  • Avoid cancellations.
  • Maintain a high rating. 

About Those Legalities

Before you rush to put your property on Airbnb, make sure you know the short-term rental laws in your city and state (or the city and state of your vacation home).

As an example, Las Vegas has strict short-term rental regulations, which means Airbnb hosts in this city must follow these rules:

  • Only primary residents who occupy properties are allowed to receive permits for short-term rentals.
  • Airbnb rentals must be at least 660 feet away from each other.
  • Hosts are obligated to collect taxes from guests and deliver them to the city.
  • Short-term rentals have a maximum limit of 3 bedrooms.

Much to Airbnb’s dismay, short-term rental owners in Las Vegas must:

  • Carry $500,000 of liability insurance.
  • Renew their rental permit every six months.
  • Be on the premises when someone is renting a property.

Los Angeles, New York City, San Francisco, and Santa Monica are other cities with strict short-term rental laws.

Your Airbnb Income Is Generally Taxed

After you work out Airbnb’s legalities, you have to figure taxes into the equation. In most cases, you have to report the majority of the income earned on short-term rentals.

You’ll probably pay taxes and have very little (if any) of the Airbnb income qualify for write-offs, but you should consult your accountant or financial advisor for more details.

The Insurance Gets Tricky

Depending on how long your guests stay, you might need to register your rental as a business and get separate insurance.

Damage caused by guests and injuries sustained by guests might not be covered by a homeowners policy. If your Airbnb property isn't registered as a business, you won't be able to cover it through a business policy.

You’ll run into similar issues if you’re an Airbnb host who lives in an apartment. You might convince your landlord to let you earn some extra money by renting out a spare room. If your Airbnb guest causes property damage or steals from you, most renters policies won’t pay for the damage or replace the stolen items.

Property Management Isn’t a Cakewalk 

Managing a property isn't easy. If you're going to offer a rental year-round, you’ll have to stay on top of communication, amenities, and much more.

As you decide whether or not to list a property on Airbnb, make a list of pros and cons. Consider your buying-selling position, taxes, and even possible real estate agent costs if you might sell.

 

Dan Zeiler

dan@zeiler.com

708.597.5900 x134 


 



POSTED AUGUST 21, 2019 7:38 PM

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