CONSIDER BUYING EARTHQUAKE INSURANCE

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Images of desperation and despair continue to pour out of Haiti in the wake of its devastating earthquake last month, killing over 200,000 people and directly impacting over 3 million of its people. This earthquake also serves to remind Americans of their exposure to this peril as well. Records dating back to 1900 reveal that earthquakes have occurred in all 50 states and caused damage in 39 of these states. The Federal Emergency Management Agency (FEMA) released a major study in 2000 indicating that U.S. earthquake losses over time could average $4.4 billion a year.

So the following question naturally arises: what is your exposure to an earthquake? Research indicates that residents in California, Oregon, and Washington are most at-risk. However, parts of Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee are also quite exposed to earthquakes. The New Madrid Seismic Zone runs under these states and, though it occurred long ago, gave rise to one of the largest magnitude earthquakes to ever hit the United States.

If you live in any of these states, you should ascertain your proximity to an earthquake fault zone. California residents can determine their exposure by visiting the State of California's Department of Conservation Web site, which provides a list of affected cities and counties. For other state-specific information, visit the U.S. Geological Survey Web site.

Most homeowners policies specifically exclude earthquake losses, just as they do flood losses. Therefore, if you live near an earthquake seismic zone, consider purchasing a separate earthquake policy or an earthquake endorsement attached to your homeowners policy. In addition, the following are some steps to take that will reduce your chances of injury or property damage resulting from an earthquake.

• Verify that operational fire extinguishers are strategically located on each floor of your home. 
• Anchor tall furniture, refrigerators, water heaters, and bookcases securely to the walls. 
• Utilize flexible connectors for gas supply to gas-fueled appliances. 
• Keep beds away from glass or any hanging object that might fall. 
• Verify that your home's roof and chimney are well-maintained, with proper support. 
• Apply safety film to windows and glass doors. 
• Add anchor bolts or steel plates between the home and its foundation. 
• For older homes, work with a civil engineer or city building department to verify that your home is up to code for the earthquake peril. 
• Communicate to family members an emergency meeting place should your family get separated during an earthquake. 

If you are in your home when an earthquake occurs, stay inside and move away from windows, skylights, doors, and objects that might fall. Crawl under a sturdy item such as a large table or desk.  Stay where you are until the shaking stops.

SMALL BUSINESSES: DON'T LET BUSINESS RISK SHARE YOUR HOME!

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The diversification of the U.S. economy over the past generation has meant that millions of Americans have started their own businesses. Americans still chase the dream of being their own boss by starting their own business—and the trend may pick up during the economic slump of 2009 because of hiring slowdowns and spikes in corporate layoffs.

Small businesses are the biggest driver of job growth, generating 60 to 80 percent of net new jobs annually over the last decade, according to the U.S. Department of Commerce. Small firms employ half of U.S. workers.

And the sole proprietor is alive and well: In 2005, there were six million firms with employees but a whopping 20.4 million firms who had no employees other than the owner, according to the Small Business Administration.

Of all small businesses, 52 percent are home-based. That means millions of Americans are earning their business income where they live. But business owner beware: Don’t expect homeowners insurance to cover business risks.

Business insurance offers protection from liability and property risks. Often these coverages are combined into a package policy called a BOP or business owner’s policy. Millions of small and mid-sized business owners purchase or renew their BOP every year.

Typically, a BOP includes the following coverages:
Property insurance for buildings and contents of the business. Home-based business might not need coverage for their property, since it’s already insured against risks of fire, lightning and windstorm. But if there are additional risks to the structure because of the presence of business operations, those won’t necessarily be covered by homeowners insurance. Your Trusted Choice® insurance agent can help determine if a special endorsement or a separate policy are most appropriate.

Home-based businesses might not have adequate coverage through homeowners insurance because homeowners policies often have “sublimits” restricting coverage for business property. For instance, the homeowners policy may cover business property, but typically only up to $2,500 while it is “on premises” and up to $500 while the property is “off premises.”

One example of inadequate coverage was a home-based retail cosmetics/personal care business that kept $20,000 of inventory in a garage that caught fire. The inventory was covered only up to the sublimits of the homeowners policy. Another instance: Coverage would be limited to the “off premises” limit of $500 if a laptop computer valued at $1,500 that is stolen while the business owner has it away from home.

Property insurance for buildings and contents of the business. Home-based businesses might not need coverage for their property, since it’s already insured against risks of fire, lightning and windstorm.

If there are additional structures on a residential property where the homeowner operates a business, those won’t necessarily be covered by homeowners insurance. For example, a detached garage that serves as a small-engine repair shop would not be covered by homeowners insurance; that business owner would need a policy endorsement to gain coverage.

Business interruption insurance. This protects against loss of income resulting from a fire or other covered event that disrupts the business. This coverage can also include the extra costs a business shoulders while it works from a temporary location. A fire in a home can be double trouble for a home-based business.

Liability insurance. This protects the small business for legal responsibility for the damage it causes to other people or entities. Liability insurance is usually priced according to the risk of the industry in which the business operates. A business that manufactures toys, for example, faces different risks than a consulting firm. Liability insurance shields a business and its employees if they cause bodily injury or property damage.

Not included in a BOP are professional liability coverage, automobile insurance, workers compensation, medical insurance and disability insurance. All can be covered with separate policies.

Check with your Trusted Choice®  insurance agent about what type of insurance protection a small business—especially a home-based business—warrants.

WHEN YOU CAN'T COME HOME: WHAT DOES "LOSS OF USE" COVERAGE ACTUALLY COVER?

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’s 2009 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

REDUCE YOUR EXPOSURE TO WILDFIRES

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The major wildfires in Southern California in August and September have burned over 150,000 acres, destroyed dozens of homes, and caused residents to flee from over 10,000 homes. Indeed, wildfires are one of the most destructive natural forces known to mankind. While sometimes caused by lightning, nine out of ten wildfires are human-caused. A wildfire can be defined as any unwanted and unplanned fire burning in forest, shrub, or grass. According to the National Interagency Fire Center, there were over 80,000 wildfires in the United States in 2008. These fires burned an estimated 5.2 million acres.

If you live in a wildfire-prone area, the following are some tips for you to mitigate the risks of suffering a wildfire loss.

• If you are building a house or planning to replace a roof, consider noncombustible or fire-resistant roofing materials, such as Class A asphalt shingles, metal, cement, and concrete products, or terra-cotta tiles. These types of roofs are less susceptible to burning embers from a wildfire.
• Remove any dead branches, leaves, and any other vegetation from your roof and gutters.
• Remove any dry brush from your yard and stack firewood at least 20 or 25 feet from your home.
• Create a "fuel-break" -- driveways, gravel walkways, or lawns.
• Prevent sparks from entering your home by covering vents with wire mesh no larger than 1/8-inch. Cover skylights and chimney outlets with nonflammable screening materials.
• Use tempered glass in your windows since this material withstands high temperatures from wildfires better than regular plate or double pane glass.
• Make trellises of nonflammable metal.
• Avoid certain exterior siding materials, such as vinyl, which soften and melt easily under high temperatures. Instead, siding materials such as stucco or masonry should be selected, since these resist heat better.