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September 7, 2010
Most leases make the tenant responsible for most any damage to the building.
An agent recently asked the Virtual University: “How does a tenant protect himself against the building owner (or the owner’s carrier) who is seeking to recoup the cost of reconstruction to the building in excess of the Fire Damage Legal limit, assuming the tenant was legally liable for damage caused by fire? Do I interpret correctly that an umbrella will exclude excess coverage under the property CCC exclusion? Is the only alternative to increase the Fire Damage Legal under the primary policy to a limit equal to the replacement cost of the building? Or is the exclusion commonly deleted from an umbrella?”
The bottom line is that CGL FDLL coverage just doesn’t cut it anymore with regard to lease provisions. There was a time when most leases made, at worst, the tenant responsible only for fire damage to a rented building, just as rental car companies used to make renters responsible only for collision damage to a rented vehicle.
Times have changed. Today, most leases make the tenant responsible for most any damage to the building, just as rental car contracts make renters responsible for most any loss to the vehicle. And, just as more rental car companies now sell Loss Damage Waivers rather than Collision Damage Waivers, agents should look to sell coverages other than FDLL to address the exposures of tenants responsible for building damage.
In addition, tenants (and landlords) should seek to include mutual waivers of subrogation in the lease agreement. According to the VU faculty, here are the steps to insure a leased property, starting with the most proper technique:
- The landlord should insure the building and pass the expense along to the tenant. Building owners should now entrust an insurance or risk management program to the tenant.
- The tenant should procure direct property insurance and include the interest of the landlord. The superiority of this method compared to the next one is that it doesn’t require that the tenant be legally liable (many, if not most, leases no longer require this either).
- The tenant should use the Legal Liability Coverage Form CP 00 40 to insured the property. This form includes not only Fire Legal Liability, but also driving a tenant’s vehicle through a wall, water damage, etc. Limits need to be adequate to address leased property values, loss of rents, etc.
- The tenant may rely on the CGL’s Fire Damage Legal Liability coverage, including the appropriate increased limit. Realize that this is essentially a single-peril coverage for a peril that is increasingly the cause of a minority of claims.
Another VU faculty member suggests:
- Require that the landlord maintain insurance on the property.
- Require mutual waivers of subrogation.
- Require mutual release for all damages for which insurance is maintained or is required to be maintained, including any self-insured portion (deductibles, SIRs, coinsurance penalties, inadequacy of insurance, etc.).
- Carve out the exposure within any indemnification.
Bill Wilson (bill.wilson@iiaba.net)is the director of the Big “I” Virtual University, an online learning center for agents and brokers.
September 2, 2010
Please call one of the following numbers:
800-841-5241 AIC
800-367-3743 Erie Insurance
800-788-9488 Fidelity National
877-445-5826 Harford Mutual
800-922-4050 Hagerty
800-274-4499 Progressive
800-332-3226 Safeco Insurance
800-327-3636 The Hartford
800-252-4633 Travelers Insurance
800-356-6663 Travelers Flood
September 1, 2010
Trusted Choice® agents offer consumer safety tips as massive storm churns toward Eastern Seaboard.
ALEXANDRIA, Va., Sept. 1, 2010 – Severe weather from Hurricane Earl is headed toward the East Coast of the United States. Dangerous weather leaves behind paths of destruction and experts say harsh conditions from this storm are likely from the Carolinas to New England. The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) and Trusted Choice® advise consumers to avert disaster by taking safety precautions that will help protect them and their possessions this season and any time of year.
Trusted Choice® independent insurance agents and spokespeople are available to offer the following tips for hurricane safety and explain how to:
Have a disaster evacuation plan in place. Find out how you and your neighbors would be informed about an imminent disaster. Ask if evacuation routes have been established. Contact your city’s or town’s planning and emergency assistance organizations. Make sure everyone in your household knows what to do and where to go in a disaster.
- Assemble a disaster supplies kit and heed weather warnings. This kit should include first-aid supplies, non-perishable food, battery-powered flashlights and radio, bottled water and blankets.
- Inventory your belongings. Keep a list and/or videotaped inventory of your valuables in a safe place, along with insurance policies and other important documents.
- Make a utilities checklist. Be sure adults in the household know how to turn off gas, water and other utilities if necessary.
- Review your homeowners insurance coverage. Check annually to make sure you are fully protected in weather-related disaster.
- Survey the area around your home. Remove dead branches from trees in or near your yard. Bring pets inside, move cars into garages, and secure windows, awnings, and lawn furniture. Driving wind or hail can cause severe damage to these items.
- Watch for flash floods. Never walk or drive through fast moving water. Flash floods can develop so fast and move so swiftly, they can sweep cars away.
- After a severe storm, report downed utility wires and stay out of damaged buildings and areas.
A recent national survey by Trusted Choice® and the Big “I” found that most Americans are not fully prepared in the event of a natural disaster. Of all survey respondents, less than 22% said they felt they are fully prepared in case of a disaster. More than half of respondents (51%) admitted they are only somewhat prepared, and more than a fifth of households (22.7%) reported that they were not prepared at all.
For additional survey results and tips on hurricanes, flooding and disaster preparedness planning, click HERE.
To interview a national spokesperson or a local Trusted Choice® insurance agent in another area, contact Sue Nester (susan.nester@iiaba.net) Big “I” broadcast media director at (703) 706-5448. Print journalists should contact Margarita Tapia (margarita.tapia@iiaba.net) Big “I” director of public affairs at (703) 706-5473.
Trusted Choice® educates consumers about the benefits of using independent agents and brokers for their insurance needs: choice of companies, customized policies and advocacy support. Trusted Choice® is the consumer marketing identity for approximately 10,000 independent insurance agencies and brokerage firms and 54 leading insurance companies. For more information, go to www.TrustedChoice.com.
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.
June 29, 2010
Until this past winter the Mid Atlantic region had been very fortunate to have experienced very stable weather for the last three or four years. Homeowners’ rates have been stable and in many cases have declined. That trend is changing ever so slightly. We have seen some small increases this year and expect that trend to accelerate in the next several years. The Mid West has experienced poor loss experience for the last several years now; the region had a terrible winter and several large hail storms this spring.
Check out the link below for an article that appeared several years ago when rates were on the rise. The article contains some helpful hints on how you may save money on your homeowners’ coverage. Also I would encourage you to check out www.mccartin.com and let us provide you with a homeowners quote from Erie Insurance; Erie has one of the premier homeowner’s products on the market with very competitive prices.
Read More About Kiplinger’s Personal Finance
May 28, 2010
Memorial Day weekend has arrived! Please drive safely and arrive alive.
Spend a few extra minutes before you leave town to secure your home. Below you will find a few additional tips that may give your home a lived in look while you are away. Your vacation should be an opportunity to relax and enjoy some time off. Enjoy your Memorial Day weekend.
* ASK A NEIGHBOR TO CHECK ON YOUR HOUSE AND GET YOUR MAIL OR ARRANGE FOR HOUSE SITTER. BE SURE TO LEAVE A PHONE NUMBER WITH SOMEONE OF WHERE YOU CAN BE REACHED ON VACATION.
* HAVE SOMEONE MOW YOUR LAWN.
* STOP NEWSPAPER DELIVERY OR HAVE SOMEONE GET THE PAPER.
* NOTIFY THE POLICE IF YOU PLAN TO BE AWAY FOR AN EXTENDED PERIOD OF TIME.
* DO NOT HIDE A HOUSE KEY OUTSIDE — BURGLARS KNOW WHERE TO LOOK.
* CONSIDER INVESTING IN AN ALARM SYSTEM.
Source: Pennsylvania Association of Mutual Insurance Companies
May 24, 2010
Memorial Day weekend is the unofficial start of the summer vacation season. Spend a few extra minutes before you leave town to secure your home. Below you will find a few tips that may give your home a lived in look while you are away. Your vacation should be an opportunity to relax and enjoy some time off. I will post some more tips next week. Enjoy your Memorial Day weekend.
* USE TIMERS TO TURN LIGHTS AND A RADIO ON AND OFF AT APPROPRIATE TIMES, BOTH DAY AND NIGHT. TUNING INTO “TALK” RADIO STATIONS HELPS TO GIVE THE IMPRESSION THAT SOMEONE IS AT HOME.
* LEAVE SHADES, BLINDS AND DRAPES IN THE SAME POSITION THAT YOU WOULD IF YOU WERE HOME.
* LOCK ALL DOORS AND WINDOWS, PAYING PARTICULAR ATTENTION TO THE BASEMENT, GARAGE, ATTIC AND SLIDING GLASS DOORS.
* TURN OFF THE WATER, GAS AND ANY ELECTRIC FOR APPLIANCES THAT WON’T BE NEEDED WHILE YOU ARE AWAY.
* MAKE SURE THE MESSAGE ON YOUR ANSWERING MACHINE DOES NOT INDICATE THAT YOU ARE ON VACATION.
Source: Pennsylvania Association of Mutual Insurance Companies
April 21, 2010
For our current and future flood insurance clients, you can rest easy in knowing that coverage is again available for now.
Expired National Flood Insurance Program Temporarily Extended Again
Program expired on March 28.
WASHINGTON, D.C., April 16, 2010 —The Independent Insurance Agents & Brokers of America (the Big “I”) today commented on the latest short term extension, until May 31, 2010, of several programs including the National Flood Insurance Program (NFIP).
A few weeks ago, the Senate left town for the Easter recess without voting on extending the NFIP, thereby resulting in the program’s expiration. The House had previously approved, by unanimous consent, a $9 billion measure containing one-month extensions of several programs including unemployment insurance, COBRA subsidies for health benefits and flood insurance. Senate leaders of both parties hoped to have their chamber approve the same bill before the Easter break, but Sens. Tom Coburn (R-Okla.) and Jim Bunning (R-Ky.) objected to the House bill saying it was not funded. A similar scenario occurred in early March.
“It is alarming that the NFIP was allowed to expire, causing so much confusion and potentially leaving desperate homeowners and small businesses unprotected for more than two weeks,” says Robert Rusbuldt, Big “I” president and CEO. “The Big ‘I’ is greatly concerned that these short expiration periods, coupled with the uncertainty of temporary extensions, will negatively impact the market.”
In theory, the NFIP will now return to normal operations and, since the extension is also retroactive, then any new policy applications or renewals that were signed and submitted during the hiatus will be effective from the date of application (or in the case of waiting periods, the waiting period will start from the date of application).
“This series of temporary extensions, last minute actions and service lapses during such a delicate period in our economy is of great concern to our agents, homeowners and small businesses,” says Charles Symington, Big “I” senior vice president of government affairs. “Though we are grateful that Congress extended this program, we are increasingly frustrated by these repeated one-month extensions and the periods of expiration that sometimes result from them. The National Flood Insurance Program is meant to provide some level of stability and protection for homeowners and businesses against dangerously unpredictable and costly flooding events, not to be an unpredictable ‘here one minute-gone the next’ program subject to monthly congressional action. The Big ‘I’ strongly urges Congress to pass a long term extension of this critical program.”
In the 110th Congress, the Flood Insurance Reform and Modernization (FIRM) Act of 2007 made progress in the House and Senate. The legislation would have extended the program for five years and made significant and needed reforms to help put the program on sound financial footing. This summer, similar legislation was introduced in the House of Representatives.
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.
December 14, 2009
Your homeowner’s insurance policy will pay to repair damage to your home caused by a fire, windstorm or other covered cause of loss. But when you and your family incur expenses for moving out while repairs are made, who picks up the tab?
An often-overlooked but essential function of your homeowner’s policy is “additional living expenses” (also called “loss of use” or “Part D”) coverage. Additional living expenses coverage will pay the necessary increase in living expenses required to maintain your family’s current standard of living while the house is being repaired. Examples of expenses typically covered include the cost of hotel, food bills in excess of normal grocery/restaurant bills, cooking supplies and the cost of moving property into storage.
The good news is that payment for these expenses usually does not stop if the policy expires. Rather, they will continue to pay until the limit is used up, the home is repaired to a habitable state, or you permanently relocate.
The bad news is that many homeowners erroneously believe that the policy covers 100 percent of additional living expenses until the home is habitable. Realistically, very few policies do this. In most cases, home insurance companies place a limit or cap on loss-of use payments. For example, many homeowner policies will only offer loss-of-use coverage as a percentage of the limit of insurance carried on the dwelling; 20 percent is common. Others may specify a flat dollar amount.
Usually, a covered loss must occur for any insurance dollars to be paid for additional living expenses. The one exception is if your home is not accessible due to civil authority or government mandate triggered by nearby damage. For example, in 2009, wildfires in California triggered mandatory evacuations that prevented tens of thousands of homeowners from going home. If homes in close proximity to yours are burning, there’s a chance the government will close roads and/or prevent you from entering your property even though it has not yet suffered a direct loss. In this situation, additional living expense payments are often limited to two weeks.
Homeowners who receive additional income by renting a portion of their home should also pay close attention to the Part D limit. This limit also applies to replacing lost rental income while the damaged house is being repaired.
Here’s the important question: How do you know if your policy’s Part D limit is
sufficient? The trouble is that important factors are variable. For example, how do you know how long you will be out of your house? Building codes and permits cause rebuilding efforts to proceed slowly in many parts of the country. Calling a local building contractor to gain some idea is a good start but there is no exact prediction.
Further, how do you know what expenses you will incur? According to Hotels.com’s2009 hotel price index, the average hotel room in the U.S. costs $115 per night! Add this and other expenses to a lengthy, unpredictable repair schedule and the possibility of eclipsing your Part D policy limit before your home is habitable could become a serious problem.
The last thing you want to hear is that your loss-of-use coverage has run out before you can go home. Fortunately, your Trusted Choice® insurance agent understands this exposure and can help you weigh your options, including those that may increase your loss-of-use coverage limit. For a thorough review of your homeowner’s policy, call your Trusted Choice® agent today.
source: TrustedChoice.com, November 2009
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