As the water began to drain from New Orleans in 2005, we learned that most of the homeowners in New Orleans did not have flood insurance, since they were supposedly in “low risk” areas. The over 60% of homeowners will need to depend upon their own savings, and limited federal assistance, to rebuild New Orleans – at an uncalculated cost for homeowners and taxpayers.
Could that level of disaster, especially that level of uninsured disaster, happen in California? Less than 15% of California homeowners currently carry earthquake insurance, due to its high cost, the “can’t happen to me or my house” factor, and mortgage providers not requiring coverage. The next big quake will result in billions of uninsured damage – but is earthquake insurance really worth the high cost?
How Did We Get Here?
The state of California requires that all homeowner’s insurance providers to at least offer earthquake insurance (albeit, at a high cost). Until 1994, it was widely available – but the high damage costs of the Northridge earthquake resulted in 97% of homeowner’s insurance providers pulling out of the state the California. In response, the California Earthquake Authority was formed by the California legislator to provide earthquake insurance.
What Is the California Earthquake Authority, and How Does It Work?
The California Earthquake Authority provides two-thirds of the earthquake policies in California, sold through their member providers, like Allstate and State Farm. A homeowner purchases the policy through their regular insurance agent, but the policy is actually a CEA policy.
The CEA currently has about $7.2 billion to pay claims, which it states is enough to pay foreseeable damages (Loma Prieta in 1989 had $6 billion in total damages). If the damage claims are more than $7.2 billion, then each claim would be paid a prorated portion of their losses – unlike a regular insurance company, which promises to pay the actual damages under the insurance policy. The state of California cannot help pay the claims out of general funds.
The policies also have a high deductible – usually 15% of the value of the dwelling. In other words, your home must be damaged more than 15% of its value before the insurance starts paying. So, this insurance is not for cracks in the driveway – it is for significant structural damage to your home. The policy also pays for limited contents (starting at $5K) and loss of use (starting at $1500).
Why Is Earthquake Insurance So Expensive?
Insurance policy premiums are calculated based on probabilities – the probability that a house like yours in a neighborhood like yours will catch fire, or a driver like you will have an accident. With data from millions of homes, these probabilities can be calculated with reasonable accuracy. But, no one can reliably predict the probability that there will be an earthquake strong enough to damage your home.
And, as you can imagine, damages from an earthquake, flood, or hurricane, are widespread, over potentially thousands of square miles – instead of one or a few dozen homes, as in a fire. As such, the insurer would have to pay either zero claims, or billions of dollars of claims – too much variance to reasonably plan for or price accurately.
Are We Really At Risk Here in San Jose?
According to the USGS, there is a 62% probability that there will be an earthquake of 6.7 or greater (like the Northridge quake) in the Bay Area in the next 30 years. In my zip code (San Jose 95126), USGS calculates a 80% chance of a 6.0 earthquake and a 20% chance of a 7.0, in the next 30 years. Whether you consider that to be a high risk depends on your risk tolerance for earthquakes – I consider that a high risk of a moderate earthquake and a somewhat low risk of a terrible earthquake, over the next 30 years.
But like any issue involving real estate – it is all local. Where your home is actually located significantly affects your risk – bedrock, reclaimed land from the bay, soil type, nearby streams, actual distance from the epicenter – all can affect potential damage.
But of course, many earthquakes occur where the USGS was not even aware of a fault line – and we never know when or where it will happen, until it happens.
Should I Obtain Earthquake Insurance?
Factors to Consider:
- Could you afford to pay for the rebuilding your home from your own savings & investments?
- Can you afford to pay the high cost of insurance, indefinitely?
- Could make payments on your current mortgage and on a new loan to rebuild?
- Can you mitigate your potential losses by bolting your roof to the walls and the walls to the foundation, for example?
- What is your tolerance for the risk of an earthquake?
- What is the risks of your current home construction (type, age, foundation)?
- What are the risks of your specific location (soil type, distance to known faults)?
Are the Costs Worth It?
Let’s assume that you have a home that would cost $250K to rebuild, you will own the home for the next 30 years, and your earthquake premiums are $1200 per year. Over the next 30 years, that would be a total of $36,000 in premiums (assuming your premiums do not increase, to simplify calculations).
Instead of purchasing insurance, you invest the premiums in a diversified mutual fund. With an 8% annual return, you would have $135,000 (pre-tax) in year 30.* But of course, you only have that total in year 30, not in year one – meaning that if the earthquake happens tomorrow, you don’t have the money.
The deductible is another big turn off for many homeowners. The insurance pays only for large structural damage, not broken dishes or cracked driveways – meaning that it is less likely you will use it. However, be aware that you will not need to come up with the cash for the deductible – you may either opt to not undertake those repair or rebuilding costs, or you can apply for an SBA loan to pay for the deductible (assuming a federal disaster area is declared).
Why Not Just Get Federal Aid, or “Walk Away” and Let the Bank Have the Property?
The federal government would probably provide access to SBA loans, if the area is declared a federal disaster area (no small business required). However, the $200K maximum SBA loan may not be enough to rebuild your home – and, it is a loan that you need to pay back (in addition to your current mortgage).
If you have refinanced your mortgage, you have a recourse mortgage – which means that not only can the bank foreclose on the property in case of non-payment, the bank can also come after your personal assets and future income in case of non-payment. So you cannot just walk away, especially if you have a good income and some personal assets. The bank may help out by deferring payments for a few months, but you still must pay back the loan.
We have earthquake insurance on our home. Our home was not yet built in the 1906 earthquake (so who knows if it would stand), it is 75+ years old and is not bolted to the foundation, and we have a refinanced mortgage. For my family, the insurance premiums are worth peace of mind in case of a major earthquake disaster. That’s exactly what insurance is for – the “you never know.”
*calculations ignore inflation
Insurance Agency Lead Scoring
Many insurance agencies have not yet formalized their lead scoring system. This is a worthwhile endeavor for all agencies, and one which should be revisited every year, while tracking the return on investment of their marketing programs.
What is lead scoring? It is a methodology used to rank prospects against a scale, and then assign a value to determine interest level and distribution. For example, let’s say a trucking insurance lead appointment arrives at your agency. This lead is with an owner of 15 power units, they use company drivers, and they are unhappy with their carrier. Perhaps your lead scoring system falls on a 1 to 10 scale, and this lead is scored an 8. What might receive a higher score? And what types of leads are outside of profile, and what score would they receive? Perhaps prospects need to score an 8 to appear on your producer scorecards.
Is the lead distributed to producers by territory? Does your lead handling process vary by type of lead, product or prospect? For example, are commercial leads separated by large and small business, by industry or product? Are benefit leads parsed by groups over and under 50? And does your agency have a tracking system in place to determine how many leads showed for the appointment, moved into the pipeline, received quotes and ultimately convert into new business?
Salespeople, sales managers, producers and other business people often refer to prospects in vague terms such as: new, warm, hot, cold, likely, qualified, etc. These terms do little to better understand a sales pipeline or convey likelihood of purchase to other members of the team. Agencies can consider creating a simple prospect scorecard to resolve this issue and quantify their lead scoring. Formalizing lead scoring offers benefits such as:
- Helps Producers create ideal attributes to form a buyer persona
- Creates a simple numeric system to leverage your buyer persona
- Assigns numeric values to rank your best prospects
- Creates a simple qualification acronym to determine likelihood to close
What should be included in a prospect scorecard?
Use a prospect scorecard to quantify your approach to pipeline building. Some attributes of your ideal client might include revenue, growth rate, client type (business or consumer) and market niche. For example, are you targeting companies with $5m to $10m in revenue? Are your best prospects fast-growing firms, trucking companies, manufacturers or consumers?
If you’re selling to consumers, are they high net worth, middle-income, millennials or senior citizens? Are your prospects in a specific niche market such as banking, insurance, biotech, consulting, education, etc.? Create a scorecard with your ideal attributes and a customized qualification abbreviation to help you determine if you’re selling to an in-profile prospect.
Insurance agencies and brokers seeking to get to the next level with their insurance marketing and lead generation, but lacking the internal resources to achieve their marketing goals, can reach out to a proficient insurance agency marketing firm.
Auto Insurance With Full Coverage at Cheap Rates:
Some insurance companies may title themselves as providers of very cheap car insurance no deposit or cheap auto insurance for full coverage. But, what they do here is, that they provide insurance policy covering only the bare minimum necessities that can simply help one to be termed as a legal driver, i.e. their schemes only provide the basic physical injury and property damage liability coverage at cheap rates.
Hence, instead of going for a cheap car insurance, one must look for policies that provide quality coverage plans along with affordable rates that can help in the long run.
Is it possible to lower Insurance Premiums?
The answer to this question is a big ‘yes’. Getting quality coverage doesn’t really mean that one has to pay premiums that are out of one’s capacity to earn. There are several ways one can lower their insurance premiums and enjoy cheap auto insurance full coverage. Here are a few simple ways to pay low premiums for quality coverage:
• Choose a wise billing plan: One should look for insurance companies that provide convenient billing schemes, like monthly, quarterly, annually or semi-annually so that the shopper can choose a plan fitting his/her needs and eventually pay at the time when he/she is comfortable.
• Be careful in selecting a coverage plan: One can pay low premiums by deducting one or the other type of coverage from their policy depending upon their needs. For instance, if one drives an old car with great mileage, then one can prefer to remove comprehensive or collision coverage from their policy and reduce the premiums to be paid.
• The type of car: The type of car one opts to drive has a direct impact on one’s car insurance rates. Expensive cars are costly to insure and hence their premiums will be more. It should also be noted that the car’s age can also affect the premiums. Older the car one drives, fewer the premiums one has to pay.
• Clean driving history: If the driving record is clean, i.e. without any tickets or accidents, then the driver can avail discounts on the premiums and enjoy cheap auto insurance with full coverage.
• Avoid joint policies: If the driver opts for a joint policy package, then the car insurance rate will automatically increase, especially if the other person is a teenager. Teen drivers are prone to more accidents and hence, they are liable to pay the highest premiums. Thus, it is advisable to avoid this type of policy to lower premiums.
• Deductible price: One can enjoy significantly lower premiums if one opts for higher deductibles. While this will increase the chances of paying out of one’s own pockets in risky situations, but the premium to be paid on whole will reduce for sure.
By taking care of all the above key factors, one can easily save on their premiums and enjoy the benefits of cheap auto insurance for full coverage.
With all this said, many drivers who own classic cars might still have their doubts uncovered. Owning a classic car is not similar to that of other motorists. So here’s a detailed description of the type of benefits, owners of classic cars can avail and at the same time enjoy cheap car insurance full coverage, like the rest of the automobile owners.
Cheap Insurance Rates for Classic Cars:
When the company talks about coverage for classic cars, here is a list of cars the insurance company is probably talking about:
• Morris Marina
• Alfa-Romeo cars
• Ford Cortina
• Vauxhall VX220
• Hillman Imp
• Austin Seven
One should be clear of the fact that not all insurance companies can provide affordable coverage for all of the above classic cars. There are a very few insurance companies that provide coverage for all classic cars, including the cars that are just about 5 years old.
If one decides to opt for quality over quantity to insure such classic cars, the following are the benefits one can enjoy:
• Coverage for true value: While looking for cheap car insurance near me, one should opt for an insurance company that will provide agreed value cover for the car’s true value rather than just paying off the market value.
• Discounts on Limited Mileage drives: Insurance companies that provide quality coverage will not only offer discounts on limited mileage drives but also insure classic cars that are driven more often.
• Laid-up policy: Always prefer insurance companies that will provide full coverage and accept claims for both accident and theft risks for classic cars.
• Discounts on club memberships: While insuring classic cars one can avail discounts up to as high as 15% on memberships to different classic car owners clubs or other specific memberships like jaguar enthusiasts club.
• Car kit insurance: It is better to opt for insurance companies that provide car kit insurances.
• Coverage for modifications: Classic car insurance should also cover charges for modifications made to the car.
• Other special coverage: Quality coverage plans might also include special covers like wedding hire cover or track/rally cover. These are not very common but can be included upon request of the car owners.
If one is choosing to buy cheap auto insurance online, then all of the above factors or benefits must be kept in mind to avail the best possible policy. One can, however; leave one or more of the above benefits solely depending on one’s interests and needs. But it is highly recommended and advantageous as well, to have all of the above benefits while choosing for classic car insurance.
On a general note, one should understand the fact that it is definitely possible to enjoy the benefits of cheap auto insurance for full coverage, provided that the quality should not be compromised so that one will be safe from unexpected charges in the long run.
Group Fitness Instructor Liability Insurance
Many people rarely consider the need for professional group fitness instructor liability insurance. It makes sense, however, that in our litigious society precautions should be taken to ensure that those who choose to earn their living as a fitness instructor are protected against legal damages, whether the charges are warranted or not. Most insurance companies will cover actual fitness facilities as well as their employees up to a certain limit and under certain conditions; however it may be only the lowest coverage possible with certain exclusions and conditions. If you are an independent fitness instructor, or even working full time for a fitness facility, it is vital that you consider protecting yourself with a group fitness instructor liability insurance policy.
What is Group Fitness Instructor Liability Insurance?
Group fitness instructor liability insurance protects physical fitness instructors against damages incurred or legal actions brought about by claimants as a result of the instructor’s training duties.
Common reasons for litigation against instructors include:
o Muscle injuries
o Joint injuries
o Back injuries
o Broken bones
o Bruised bones
Most group fitness instructor liability insurance policies will cover the common causes or hazards that can occur during training and result in the losses mentioned above. Common claims include:
o Injury as a result of poor supervision
o Injury as a result of poor training technique and education
o Injury as a result of overtraining
o Injury as a result of lack of adequate stretching or cool down periods
People can also claim mental damages, stress, or humiliation. For this reason it is extremely important that your group fitness instructor liability insurance policy gives you the most specific and comprehensive coverage possible. Although certain endorsements (additional coverage) may add to the total premium that you pay each year, in the end it will be well worth it. Too many frivolous lawsuits are settled in favor of the plaintiff to warrant gambling with your coverage amounts and limits.
Limits of Coverage
As for the limits of coverage, most insurance companies will offer a basic policy with an aggregate limit of $500,000, $1,000,000 or $2,000,000. They may also have a per occurrence limit that is significantly less than the total policy limit. It is important to understand this distinction because if your policy limit is $1,000,000 but your per occurrence limit is only $100,000, this means you are responsible for paying any monies owed to the other party that exceed the $100,000 limit. For example, if the judgment against you is $150,000 and the per occurrence limit is $100,000, you will be responsible for paying the remaining $50,000 out of pocket. If you do not have the $50,000 in cash or savings immediately available for payment, wage garnishment and even asset liquidation can occur.
When considering a group fitness instructor liability insurance policy, remember that it is always best to be over insured and not need it than to be underinsured and end up with a large debt that you will have to end paying for the rest of your life.
Insurance For Truck Drivers – The Coverage You Need
First, truckers, tractors, and trailers, are insured as commercial equipment and not automatically afforded the coverage extensions of a personal auto policy. Electronics, loading equipment, load securing equipment, rental reimbursement and personal property are insured differently and are not automatically covered.
Commercial Auto Liability is pretty straight forward. If a trucker has ICC Authority, a filing for proof of financial responsibility will be given to the Feds. Filings are what keeps a trucker compliant with federal (ICC) authority requirements. Uninsured / Under Insured Motorist is also helpful for a trucker that has been injured by a vehicle with out insurance. Medical payments are useful when some one is injured in and on your truck.
Cargo insurance covers the truckers’ responsibility for others goods he is hauling. There are 3 different forms or policies: Named Perils and Theft which is narrow in coverage, Broad Form which adds certain coverage to the basic form and All Risk coverage which offers coverage for all causes unless excluded by language in the policy. Regardless of the form, There are certain coverages a trucker would need. Truckers should buy cargo coverage equal to the highest value of goods they haul. Some policies have a co-insurance clause that can limit coverage limits if you are hauling a higher value load than the limit insured on your policy.
1) A refrigerated carrier would need Reefer Malfunction or Reefer Breakdown coverage to cover the damage from freezing or spoilage incurred if his reefer unit breaks down. Remember to find out if the policy covers a mistake in setting the temperature control device. Most reefer policies only cover in case of a unit breakdown or malfunction.
2) A flat bed carrier should have a wetness coverage or endorsement in the event his load is damaged from rain or snow. Most policies have a tarpaulin endorsement that limits coverage to loads that are properly covered. Sometimes a tarp can be damaged or blow loose due to no fault of the trucker resulting in damage to the load that may not be covered unless wetness coverage is added. Coverage for tarps, chains and binders is also desired to replace stolen or damaged binding equipment that are not other wise covered.
3) A dry van carrier would be advised to make sure that shifting of a load is covered. In this type of operation, larger and longer trailers are used and load securing equipment can fail. These instances are rare but do happen.
Every trucker should have earned freight coverage on his cargo policy. This coverage pays for lost revenue when he is not able to deliver his load due to a covered loss. Disposal and cleanup coverage for a loss should be at least $10, 000.
Physical Damage coverage is generally to repair the tractor and trailer in case of a covered loss. This coverage is insured on a stated value. The value set for the equipment is the truckers responsibility. The insurance company will pay a loss based on equipment of like quality. That means market value. So the trucker should make sure his values are accurate. Remember you will pay a deductible for each unit unless your policy has a combined deductible endorsement. Also towing is only for a covered loss not disablement or breakdown. Many policies pay losses and include towing and storage limits in the stated amount of the vehicle, so if you have a loss and a big tow or storage bill, the policy limit may not cover all your loss. Towing coverage can and should be purchased in addition to physical damage. Make sure your towing policy covers disablement and roadside service.
Electronics like cell phones, televisions and radios are generally not covered unless you buy additional coverage. Your personal property is also not covered unless specifically covered in the policy but may be covered by your home owners insurance. Rental reimbursement is also not automatically covered.
I’ve insured truckers for many years and know the emotional attachment to their trucks can be very strong, but the insurance companies see them as a piece of equipment used to generate revenue. Therefore, the older they are and more miles they have, the less money they are worth. Also betterment issues come into play. Tractors run many more miles than automobiles and have a longer life. The average tractor travels between 115, 000-135, 000 miles a year. Some insurance companies take this into consideration when replacing an engine or suspension part after a wreck. If the part life is expected to be 500, 000 miles and you have a wreck at 250, 000 miles some insurance companies will only pay half of the replacement value of the part because half of the parts expected life has been used. If an agent does not know how his insurance company handles this upfront, there may be hell to pay.
General Liability is for incidental liability exposure not covered by the commercial auto policy. This is a good coverage for auto haulers who may drive vehicles to a location after they are unloaded from a trailer. Also a trucker that uses his own forklift to load and unload cargo.
Workers Compensation is required for injury to truckers or their employees. Occupational Accident is a low cost alternative with certain coverage advantages and disadvantages. It is always best to see a Truck Insurance Specialist to explain all these coverages and to get advise on particular types of trucking risks.
For more info about me and truck related issues, see the links below.