2 weeks ago ·
by John Koetz ·
This flood season is forecasted to be worse than average, affecting some 128 million American Homes. Unfortunately, much of that damage is likely to be uninsured. Here are some facts:
41 million people live in higher-risk flood zones – far more than the 13 million estimated by older FEMA models.
⦁ Flooding is possible anywhere it can rain.
⦁ The average cost to repair flood damage is $40,000.
⦁ Flood risk is not fixed. ⦁ Climate change, urban development, and ⦁ failing infrastructure are making floods more common around the country.
⦁ Flood insurance policies for those in moderate- and low-risk areas are generally affordable and can prevent serious economic damage in the event of a flood.
We are usually able to provide you with a Flood Quote in seven questions or less and are just a phone call away!
(614) 443 0533
4 months ago ·
by John Koetz ·
UPDATE (April 24, 2020): Many of our carriers are now providing relief to our client’s personal auto insurance premiums.
Discounts on personal auto insurance policies provided by the following carriers:
Cincinnati Insurance – 15% discount for April May – https://www.cinfin.com/covid-19
Grange Insurance – 25% discount for April and May that was in effect at the end of March – https://www.grangeinsurance.com/coronavirus
**New business policies written in the months of April or May will also receive a 25% payback that will be prorated for the time they are in effect during this period. Grange Insurance clarifies how and when you will receive your auto payback:
How: You will receive your payback via check mailed to your billing address.
When: Most checks will be distributed in May. New customers (with April or May starts) will receive checks in June.
DOWNLOAD GRANGE FAQ PDF FILE
Progressive Insurance – 20% discount for April May – https://www.progressive.com/support/covid19/
Safeco Insurance – 15% discount for April May – https://www.safeco.com/covid-19
State Auto Insurance – 5% to 15% of entire premium for 6 months through use of telematics –https://cloud.comm.stateauto.com/COVID19customermessage
Travelers Insurance – 15% discount for April May – https://www.travelers.com/about-travelers/covid-19-coronavirus-update
Westfield Personal Auto – 15% discount for April May – https://www.westfieldinsurance.com/covid-19
The list may change as we believe all carriers will provide discounts to their policyholders based on fewer accident claims since the start of the stay at home rule.
At W.E. Davis Insurance Agency, we are very concerned about the issues surrounding the Coronavirus. Our clients’ and friends’ well-being is our most important concern. We hope you will take the advice of our elected officials and medical leaders who are directing the efforts to control the spread. Below is our interpretation of coverage under a business insurance program.
Commercial Insurance Policies and Loss of Income
Most commercial insurance programs have a Business Income coverage part. This is designed to provide protection in the event of a fire or other physical damage to an insured location and you lose income when customers cannot come in to buy your products or services. Generally, this coverage does not cover situations where your location is not physically damaged. i.e. – quarantines, people not coming for reasons beyond your control. This is a considered a “business risk” that all business owners retain. Economic downturns prompted by governmental actions cannot be foreseen by insurance companies so they can not properly price for that type of loss. Thus, it is excluded along with other types of losses like nuclear, war or military action.
Some attorneys are taking the approach that the virus itself causes property damage. If the courts agree there may still be problems trying to receive a claim check. The issue is how long will it take to fix the damage? Well, for most businesses, they would simply have to wash and disinfect the space. That generally would not take very long and most Business Income policies have a 72 hour waiting period before coverage begins. The property could be cleaned before the waiting period is up.
Also See “Does Business Income Coverage cover losses from Coronavirus?”
Where can I get Loss of Income coverage?
The only type of coverage we are aware of that might provide business income loss due to a virus is in the special event and hospitality industries. Large events / venues and hotels can purchase insurance that covers many kinds of business income loss, including illnesses. However, even these policies may contain exclusions regarding loss of income due to the “fear” of something happening.
What if someone gets the virus and becomes ill?
Health Insurance – The first thing one should do if they believe they’ve been exposed or become ill, is contact their personal physician. Of course, if it seems more serious, our hospitals are gearing up for an influx of patients so go to the ER if you believe your situation is more serious. In terms of insurance, your specific health insurance policy should cover expenses surrounding the virus. You may need to get prior approval for certain procedures, so be sure you make contact with your carrier. Testing should also be included if medically necessary. Again, check with your insurance carrier for specifics.
Workers Compensation – If an employee believes they became ill at work, Workers Compensation could respond. You should turn in a Workers Compensation claim to be sure, but the issue will be where the employee was exposed and if not at work, Workers Compensation would not apply.
General Liability – If a member of the public (like a client) gets ill from the virus and believes they were exposed at your business, they may try to sue you to collect for damages. If this happens, General Liability insurance might respond. However, these policies all contain a Pollution exclusion and the carrier may consider a virus/bacteria as a pollutant. Other policies might be even more specific and name “virus” as an exclusion.
Professional and Errors and Omissions Liability – If you are a professional (Doctor, Nurse, Accountant, Lawyer, Architect, Engineer or even Insurance Agent) you should have this type of coverage to protect your professional activities. Doctors and Nurses need Malpractice coverage for improper treatment or mistakes in care while the other types of professions need coverage for their advice and counsel. If a lawsuit alleges improper advice that led to a financial loss, coverage might respond. However, there are many exclusions and most exclude the release of Pollutants. (See General Liability above)
Directors and Officers Liability – D&O liability protects an organization from lawsuits that allege improper decisions made by the board that cause financial loss. However, most D&O policies exclude Bodily Injury so it is unlikely these policies would respond to suits alleging illness caused by a virus. The allegation is important so it is impossible to have a general statement regarding coverage for D&O claims.
We are happy to review your specific policy with you to go over the coverage you have. If you believe you have a covered claim, the only way to be sure whether your insurance provides or excludes coverage, is to turn in a loss. We are happy to help you through the process. In addition, we attach an article that provides more details about the specific types of coverage under commercial property insurance and how it might respond to a claim made regarding the Coronavirus.
We wish you the very best in these difficult times.
Click here to learn more about COMMERCIAL PROPERTY INSURANCE COVERAGE and CORONAVIRUS.
Disclaimer – The W.E. Davis Insurance Agency, Inc. is an Independent Insurance Agency serving their client’s insurance and risk management needs in Ohio and throughout the mid-west. This article is designed to provide basic information and is not providing legal advice. Please consult your insurance agent and/or attorney in determining whether or not to file an insurance claim.
4 months ago ·
by John Koetz ·
Our agency, like most throughout the country are being asked essentially the same question, “Is there coverage in the business income policy for business closure or slow down as a result of the coronavirus?”
Unfortunately, the short simple answer is, no, there is no coverage. The longer answer is a bit more complicated, even though the ultimate answer is the same – no coverage.
In this short piece, three business income coverages are reviewed:
- The business income coverage itself;
- The additional coverage for civil authority; and
- Dependent property coverage.
We will begin with the insuring agreement from the business income coverage. The form reads:
We will pay for the actual loss of Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration”. The “suspension” must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit Of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss.
Within this insuring agreement, there are three key coverage triggers to consider, “suspension of…operations,” “direct physical loss or damage” and “covered cause of loss.” Let’s review each trigger.
Suspension of operations. Given the local, state or federal requirements, this condition may apply as the business may be shut down by a regulatory authority. As of this writing, California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont and Washington have all shut down restaurants and bars. The debate may be the necessity, but government made it necessary. So, regardless of the abuse of power and intrusion into our lives by the government, this requirement is met.
Direct physical loss or damage: Here is the first question that causes a bit of problem for whether coverage exists. Does or can a virus cause physical damage?
Physical or property damage as understood and applied in the courts requires physical harm generally evidenced by changes in the physical characteristics that require repair.
Consider an invisible virus on any property or even in the property, does the presence of a virus on a surface or in the air change the physical characteristics such that repair is required? Given the everyday application and meaning of those terms, no, the virus does not result in property damage.
So, there is no property damage as required by the form, and without property damage, business income coverage does not respond.
Covered Cause of Loss: Even if the presence of a virus can be “forced” by the courts to be considered property damage; is the mere presence of the virus a covered cause of loss? This is a longer discussion than the other two triggers discussed above; let’s detail this trigger.
Is a Virus a Covered Cause of Loss
Is the presence of the virus a covered cause of loss? Of course, whether it’s a covered cause of loss or not matters only if presence of the virus can cause property damage according to the courts.
There is a specific exclusion within the policy that may apply in addition to a mandatory exclusionary endorsement. Let’s look at both exclusions.
Within ISO’s business income policy written on a special cause of loss form, the following is excluded:
- Discharge, dispersal, seepage, migration, release or escape of “pollutants” unless the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the “specified causes of loss”.
A “pollutant” is defined in the form to mean: “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” A contaminate, particularly a biological “contaminant,” is defined as a contamination of food or environment with microorganisms such as bacteria, VIRUSES, fungi or parasites.
Based on the policy wording and the applicable meaning of “contaminant,” the unendorsed policy excludes coverage for the presence of a virus via the pollution exclusion. But even this isn’t going to stop some attorneys from grasping at straws and any possibility of coverage. On March 16, the first business income suit was filed in Louisiana (Cajun Conti, LLC et al DBA Oceana Grill v. Certain Underwriters at Lloyd’s (and others including the governor and state)).
But even if the virus is considered property damage AND the pollution exclusion is ignored, how long will the “damage” be present?
- Surface can be disinfected in one day.
- If not taken care of and disinfected by the owner – according to recent scientific research, the virus can live for only a short time:
- Up to four hours in the air depending on the consistency (mist vs. droplets); and
- One to three days on surfaces – depending on the surface
Most Business Income policies have a 72-hour “deductible” or waiting period; so unless the waiting period has been reduced by endorsement (CP 15 56), there won’t be qualifying property damage after a maximum of three days for there to be a qualifying loss. But what about recontamination? Every new contamination is a new event and a new waiting period begins.
If the pollution exclusion is ignored, there is a mandatory endorsement attached to ISO property policies that removes all doubts, the CP 01 40. ISO Released the CP 01 40-Exclusion of Loss Due to Virus or Bacteria in 2006 as a mandatory endorsement to specifically exclude loss resulting from a Virus or bacteria.
ISO stated in the initial filing that the presence of viruses was NEVER intended to be covered due to the pollution exclusion, but they anticipated that some would torture the policy. The CP 01 40 was introduced to negate “efforts to expand coverage and to create sources of recovery for such losses, contrary to policy intent.” (ISO wording in the release.)
Business Income Result
So, what’s the result? There is no business income coverage.
- There is no property damage – thus there is no coverage.
- If courts disagree about property damage AND ignore the pollution exclusion, what is the period of damage? According to scientist, a maximum of three days without human intervention. (Remember, there is generally a 72-hour deductible.)
- If CP 01 40 attached, there is no question that there is no coverage.
Ultimately and overall, there is no Business Income Coverage.
Let’s go to the policy and look at the wording in regard to civil authority (slightly abridged):
- Civil Authority
In this Additional Coverage, Civil Authority, the described premises are premises to which this Coverage Form applies, as shown in the Declarations.
When a Covered Cause of Loss causes damage to property other than property at the described premises, we will pay for the actual loss of Business Income you sustain…caused by action of civil authority that prohibits access to the described premises, provided that both of the following apply:
(1) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than one mile from the damaged property; and
(2) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.
Civil Authority Coverage for Business Income will begin 72 hours after the time of the first action of civil authority that prohibits access to the described premises and will apply for a period of up to four consecutive weeks from the date on which such coverage began and will end:
(1) Four consecutive weeks after the date of that action; or
(2) When your Civil Authority Coverage for Business Income ends;
whichever is later.
What are the requirements for there to be coverage? Some look very familiar:
- There must be a covered “cause of loss.” The damage, if there is any, is excluded by either the pollution exclusion or the CP 01 40.
- Access to the area must be prohibited by the civil authority. You can still get into the area you just can’t go into the building (maybe).
- The property damage must have occurred within 1 mile of insured’s premises.
- The civil authority must prohibit access due to dangerous physical conditions. Is it the property or the people that might lead to a civil authority decree? This is a biological condition not a physical condition.
- There is a 72-Hour “deductible.”
What is the result of these requirements? There is likely no coverage.
Dependent Property Coverage
Before we look at the coverage, let’s first define what qualifies as a dependent property. Dependent properties eligible for coverage in the business income form include:
- Buyers (ISO terminology – Recipient Locations);
- Suppliers (ISO – Contributing Locations);
- Providers (ISO – Manufacturing Locations); and
- Drivers (ISO – Leader Locations).
Let’s review the language from one of the four endorsements:
- We will pay for the actual loss of Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration”. The “suspension” must be caused by direct physical loss of or damage to “dependent property” at the premises described in the Schedule caused by or resulting from a Covered Cause of Loss.
Note the common requirements found in this language. There must be direct physical loss or damage and the damage must be from a covered cause of loss. Given the similarities, how does this coverage respond? Applying the same reasoning as that found in the other two sections, there is no coverage.
The Moral of the Story
In the business income policy, with or without the CP 01 40, there is no coverage – unless:
- Courts ignore the meaning and reality of property damage;
- Courts ignore the pollution exclusion (in the absence of the CP 01 40); or
- Governmental authorities intervene.
Even if coverage is found – there is generally a 72-hour deductible. The virus doesn’t live in the air on surfaces beyond that amount of time.
Here is the final reality, is it the property or the people that is the problem? Is this a biological issue or a property damage issue? The commercial property policy is not designed to cover biological issues, it is for property issues.
To end this article, given the policy wording and requirements, there is no coverage for a business income loss resulting from the coronavirus.
However, if you want to make a claim, we will gladly do it and let the carrier make the final determination. Please call our office if you wish to take this approach.
See More Coronavirus Frequently Asked Questions Here…
(Most of the text from this article was written by Christopher J. Boggs on behalf of the Independent Insurance Agents Association of America.)
1 year ago ·
by John Koetz ·
Comments Off on Planning key to successful home renovation
Home improvement projects seem to have no season. While many big outdoor projects happen in spring and summer, homeowners may find the best time to work on a renovation project is when contractors are available or materials are less expensive. In fact, if your project is not weather-dependent, you might get a better deal at some other time of year.
No matter when you plan your next home project, our bloggers have tips that can ease your mind.
DO IT YOURSELF OR HIRE IT OUT?
One of the first questions you may consider is whether to do the work yourself or hire a contractor. The internet is full of videos showing step by step how to complete almost any task. If you have the skills, you might get just what you want by doing it yourself. But if you’re short on time, you might be willing to pay for the services of a professional craftsman. Some projects also bring significant safety risks. If you don’t know the territory, you’re probably safer hiring out the work. Our blogger goes into detail about what to look for in a contractor.
Home improvement: Contractor vs. do-it-yourself
FOR THE DIY OPTION
If you already decided to tackle a project yourself, there are some things you can do to make sure you get the best results. Preparation is key, but you also need to pay attention to items that could pose a safety hazard or cause unwanted damage. One of our bloggers is an accomplished DIYer and speaks from experience on things to do … and things to avoid.
4 steps to avoid common DIY mistakes
DIY HOME SECURITY SYSTEMS
One upgrade on many home improvement lists is the home security system. With all the Wi-Fi technology that’s available, many systems no longer require drilling holes and fishing wires through walls. Because of this, homeowners are attempting projects themselves. What should you consider when planning a home security system? There are pros and cons to all the available devices, and even whether you SHOULD do it yourself or hire a home security consultant. Our blog offers food for thought.
Is a DIY security system right for you?
BASIC POWER TOOL SAFETY
Most home DIY projects require some sort of tool. You can assume that most homeowners have basic hand tools, but falling costs mean electric, gas-powered and air-powered tools are no longer out of reach of most homeowners. And for highly specialized tasks, you can affordably rent the specialized tools to get the job done. Whether you own or rent, make sure you use power tools safely.
7 tips for using power tools safely at home
AND DON’T FORGET INSURANCE
And remember that home improvement projects do just that: Improve your home. After all your diligent work – whether you do it yourself or hire a professional – be aware that the improvement can increase the value of your home. In case of a loss, you don’t want to be caught underinsured. Whenever you plan a renovation, touch base with your insurance agent to make sure your policy keeps up.
Remodeling, renovation can affect home’s value
2 years ago ·
by John Koetz ·
Comments Off on Tips to protect taxpayers from ID theft
Tax return identity theft has reached such epidemic proportions that it tops the list of the IRS’s Dirty Dozen Tax Scams. Here are tips the IRS wants you to know about identity theft so you can avoid becoming the victim.
- Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2018-39)
- Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2018-40)
- Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in the Security Summit partnership with the states and the tax industry, has made major improvements in detecting tax return related identity theft during the last two years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number. (IR-2018-42)
- Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuating refund fraud, identity theft and other scams that hurt taxpayers. (IR-2018-45)
- Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2018-47)
Identity theft is scary and expensive for both individuals and businesses, but there are ways to protect yourself. Refer to the Taxpayer Guide to Identity Theft or the IRS Identity Theft Protection page on the IRS website, and then ask your independent insurance agent for more information about data compromise and identity theft coverage.
This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article. Neither The Cincinnati Insurance Company nor its affiliates or representatives offer tax or legal advice. Consult with your tax adviser or attorney about your specific situation. Contact your local, independent insurance agent for coverage advice and policy service.
2 years ago ·
by John Koetz ·
The high cost of living in California’s Bay Area is legendary. And with the construction industry facing a number of challenges — including the need to rebuild after horrific wildfires — that’s set to only rise.
Developers are having trouble getting their projects finished — or even started, reports CBS affiliate KPIX. One construction foreman told the station he’s four to five weeks behind schedule on his site.
A nationwide survey released this week by Autodesk and the Associated General Contractors of America shows the scope of the problem. Some 80 percent of construction companies say they’re having a hard time filling hourly craft positions. Those include bricklayers, installers, pipelayers and carpenters. And more than half of companies are having trouble filling salaried positions, like project managers, engineers and architects.
“This is about money — they want to make a living,” said construction worker Jimmy Ramerez.
Contractors aren’t expecting relief anytime soon. Nearly half of employers in California say it will become even harder to hire over the next 12 months.
On top of the already-tight labor market, the Bay Area is also contending with natural disasters. Last year, wildfires in neighboring counties destroyed more than 5,000 structures. This year’s fires are on record as the largest in California’s history.
In the North Bay, construction workers are being paid top dollar to help repair fire-ravaged communities, which pulls more people away from the Bay Area.
“They’re poaching our guys and offering more money per hour to go and work for them,” the foreman said. “They’re leaving us high and dry.”
Materials costs, driven up partly by tariffs, are also part of the squeeze. Developer Eric Tau said he has seen an increase of 10 percent to 15 percent in costs — about triple the jump he had expected. “It’s something we have never seen in all of our 15 to 20 years in construction development,” he said.
© 2018 CBS Interactive Inc.. All Rights Reserved.
2 years ago ·
by John Koetz ·
By Laura Pennington
October 12, 2018
In the wake of California wildfires allegations that State Farm purposefully underinsured homes at the time that the original insurance policy was issued and then again following a disaster loss claim have begun to surface.
The specific disaster that prompted this State Farm class action lawsuit was the wildfires that began in Northern California in the fall of 2017, ultimately leading to a two-week evacuation from the burn areas. Nearly 9,000 structures were destroyed through those fires.
The State Farm insurance class action says that many of these homeowners returned back to their houses to discover that they’d lost everything, but that these same people suffered additional losses in filing an insurance claim when it was discovered that their properties were undervalued.
The plaintiffs in the lawsuit against State Farm argue that most of those consumers were not able to rebuild their homes or restore their property and that some people have received a payout amount so limited that they couldn’t pay off their mortgage.
The State Farm class action seeks to hold the insurance carrier responsible for engaging in unfair business practices that harmed consumers.
The plaintiffs allege that the carrier uses policies with replacement caps that could not address the underinsured nature of those policies.
According to the plaintiffs in the State Farm insurance class action lawsuit, the combination of these practices has made it impossible for people who suffered losses due to natural disasters to recover anything close to what they expected or needed.
The State Farm insurance class action also argues on behalf of the plaintiffs that the insurance carrier conspired with a company called Insurance Services Office Inc. and related organizations for the process of conducting underwriting real estate valuations and construction estimates.
The plaintiffs claim that this has led to an illegal monopoly due to the use of a software program that calculates what claimants are owed post-disaster.
The class action lawsuit against State Farm says that none of those estimating companies are licensed as general contractors or real estate professionals and that this collusion has damaged the lives of policyholders.
The State Farm insurance class action lawsuit says that the use of a calculator based on zip codes was used to determine property values and that this calculator produced highly variable results.
The State Farm class action lawsuit says that State Farm also protects themselves from liability following a disaster or a claim due to the use of the software that uses manufactured housing data.
Many of the plaintiffs say that they were never interviewed specifically regarding their dwellings when the insurance carrier put together the policy amounts for their homes using the software program, but that what they were offered under the policy post-disaster came in well below an actual construction estimate.
The plaintiffs are seeking injunctive relief, an order compelling State Farm to provide better training to adjusters and agents, punitive damages, and actual damages.
The plaintiffs are represented by Julia Donoho of Policyholder Pros.
The State Farm Insurance Class Action Lawsuit is Brian and Alison Sheahan, et al. v. State Farm General Insurance Company Inc., et al., Case No. 3:18-cv-06186, in the U.S. District Court for the Northern District of California.
2 years ago ·
by John Koetz ·
SANTA ROSA, Calif. – Construction crews have already put up the frame on Cheri Sharp’s new house, but she still questions whether rebuilding was the right choice after California’s most destructive wildfire took her old home in wine country nearly a year ago.
She has had to dip into retirement savings to cover a $300,000 shortfall in her homeowner’s insurance coverage.
“We just kind of thought we were taken care of,” Sharp, 54, said about her insurance policy. “If I had to do it over again, I’d probably change my mind and move.”
The wind-whipped wildfire that tore through Northern California in October 2017, killing 22 people and destroying more than 5,500 structures, left many people in Sharp’s position: underinsured and having to scramble for money to build a new home on their property.
Santa Rosa was the hardest-hit city, with entire neighborhoods burned to ashes. But as of late August, only nine of nearly 2,700 single-family homes lost here had been rebuilt, according to figures from the city’s permitting office. Another 520 or so were under construction.
Many homeowners say they’re locked in negotiations with insurance companies for additional money to cover the cost of building a home at the edge of the San Francisco Bay Area, where a technology boom has sent home prices skyrocketing. That, coupled with competition among neighbors for construction crews and materials, has left many homeowners hundreds of thousands of dollars in the red.
For Santa Rosa native Alex Apons, 34, the insurance shortfall on his home in the tidy Coffey Park neighborhood was $200,000. He and his wife wanted to stay because they had a baby on the way and both have deep family roots in the area. They used every insurance dollar they received to pay off the mortgage of their 4-year-old home that burned. There was nothing left for a down payment on construction.
“We had to drain our bank account,” said Apons, now father to a 5-month-old boy, Etienne. “After everything is built, we’re looking at a monthly payment on that loan that’s $1,000 more than what our mortgage was before.”
Other fire victims are still torn by indecision that has kept them from committing to a rebuild — do they stay and bear the costs or start over elsewhere?
“The idea of leaving California is very hard, but on the other hand, I don’t know if I can recover from all the trauma of it without removing myself from all the stimuli,” said Katherine Gaynor, 67, also a former Coffey Park resident.
Besides the Santa Rosa blaze, several other major wildfires the same month took out thousands of homes elsewhere in Sonoma County and in neighboring Napa County. As of April, nearly two-thirds of those fire victims wanted to rebuild, but most had yet to settle insurance claims for their property and belongings, according to a survey by United Policyholders, a San Francisco-based nonprofit that helps people understand their insurance policies. Two-thirds of respondents reported being underinsured by an average of $317,000.
Insurance industry experts warn that many Californians whose homes have been destroyed in this year’s wildfires also will discover their policies won’t cover the cost of a new home, leading to similar rebuilding delays. So far in 2018, wildfires have scorched about 1,000 square miles in parts of Shasta, Trinity, Mendocino, Lake, Colusa and Glenn. More than 1,200 homes have been destroyed, and nine people have died.
Insurance companies value homes using factors including their size, purchase price and the price of homes around them. Few homeowners update their policies annually to keep up with inflation, labor and material costs and home upgrades that increase the home’s value. Insurance companies want to keep premiums low to compete with rivals and attract customers.
When Apons’ wife, Heather, called their insurance company this month to request a new homeowners’ insurance quote, the agent provided a figure that would pay them $340,000 less than the current price tag to reconstruct their house. The agent said better coverage would raise their premium considerably, she recalled.
“I’m like, ‘I don’t care. I don’t ever want to be underinsured again,'” she said.
After massive fires across Southern California over the past decade, the state Department of Insurance found that insurance companies often understated replacement costs to potential customers and omitted or misrepresented fees for permitting, architects, labor and zoning, California Insurance Commissioner Dave Jones said.
A false sense of security is common among the insured because most rely on insurance companies for details, said Amy Bach, executive director of United Policyholders, an advocacy group for insurance consumers.
“If anything, people suspect they’re over-insured,” she said.
Bach said out-of-town insurance adjusters often fail to properly value homes in the San Francisco area. In Sonoma County, property values increase about 10 percent every year, according to Pacific Union Real Estate, a leading real estate group in the region.
Jim Whittle, chief counsel for trade group the American Insurance Association, said it’s up to consumers to make sure they have enough insurance. After mass catastrophes, “there’s almost always going to be situations where people don’t have quite what they wanted or expected,” Whittle said.
Sharp and her husband, Paul, held hands on a recent morning as they surveyed construction of their new home on the Santa Rosa property where they raised their kids, held backyard parties and enjoyed the sunset. They know their use of retirement savings to fund the project will make it harder to live comfortably and travel as they age.
Said Cheri Sharp: “Our life from here on out is very different going into our retirement years.”
© 2018 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
2 years ago ·
by John Koetz ·
It’s almost that time of year when children look forward to trick-or-treating, dressing up in costumes, decorating and obtaining more candy than they can possibly eat. As fun as it is, Halloween is also a deceptively dangerous night, and preparations for a safe and enjoyable celebration should begin long before Halloween night.
SELECTING A COSTUME
Select a costume that doesn’t risk slips, trips or falls. Costumes should not drag on the ground.
Wear comfortable shoes for walking. As tempting as it may be to wear shoes themed with the costume – high heels for Cinderella come to mind – they can be unsafe for youngsters to navigate.
Choose a bright costume that motorists can see.
2 years ago ·
by John Koetz ·
By John W. Koetz, CIC, CPCU
The new craze is rental scooters. Have you seen them yet? There are two companies, Bird and Lime, with scooters sitting on the sidewalks of larger cities and wait till you also see the crazy way some people drive them. So what happens if you rent a scooter and run into a pedestrian while driving it? Or even worse, you cause an accident by riding in the street forcing a car to swerve to avoid you and they hit a pedestrian.
Where will you find liability coverage when you get sued for $1,000,000
for causing someone’s injuries while driving a rental scooter?
Your car insurance will not cover you! – Most personal auto policies exclude “Any motorized vehicle having fewer than four wheels, except for a motorcycle …”
Your homeowner insurance will not cover you! – Most homeowner policies exclude “motor vehicles” which are defined as self-propelled land vehicles, arising out of the use of the motor vehicle rented to an insured. However, they cover “’Motor vehicles’ designed for recreational use off public roads …” The rental folks state you must drive the scooters on the street so most companies would exclude this.
Your personal umbrella insurance may not cover you! – Every personal umbrella policy can be a little different so be sure to check with your carrier. But in general, umbrellas follow the home and auto policies they are meant to provide excess coverage for. Many do “drop down” and provide primary coverage for certain situations. However, the ones we have reviewed exclude coverage for “Recreational motor vehicles” (this includes scooters) unless they are specifically listed on the umbrella policy.
LIME and BIRD will not cover you! – So you say, “I’m sure these big companies will protect me if something goes wrong.” WRONG! Both Lime and Bird Rental Agreements (yes they have a detailed rental contract you agree to when you sign up online) have waivers that say they are NOT responsible for ANYTHING that happens while you are driving their scooters.
To make matters worse, they also make you responsible for any claims made against them including paying for their attorney fees! (see end of article for language)
So what should you do when you’re tired of walking or just curious and want to rent a scooter?
Call UBER or Lyft! At least these companies provide some liability protection. OR think twice about what could happen and DON’T RENT THE SCOOTER! Yes they are fun, but so is enjoying the money in your bank accounts that will stay there because you didn’t take a 10 minute joy ride that cost you your life savings. Sorry to be a party pooper… More to come on scooters.
(John Koetz is an independent insurance agent with the W.E. Davis Insurance Agency located in Columbus, Ohio and lives in the Short North, a popular tourist destination in downtown Columbus.)