Archive for the ‘coverages’ Tag

UM: Benefits Beyond Medical Bills   Leave a comment

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At the break in a class I overheard a student say, “My husband is in the military, so we don’t need uninsured motorist (UM) coverage.” The same comment could be said by someone who had PIP coverage, auto medical payments coverage, health insurance, disability insurance, Medicare, or even workers’ compensation coverage.

Clearly, the benefits provided by the military, PIP, auto medical payments, disability insurance, and workers’ compensation can be substantial. Even as good as those benefits are, however, there are expenses not covered under those policies that would be covered by UM. Remember, UM pays what the insured is legally entitled to recover from the at-fault party. Often, monetary damages awarded by a court include things that none of the earlier referenced policies (or military benefits) will cover.

Let’s take a look at this issue by way of example and see what the benefits of UM coverage are, beyond just reimbursement for medical bills.

Suppose Bill is involved in a hit-and-run auto accident and is seriously hurt by the at-fault party. He is protected by a personal auto policy (PAP) with $50,000 of PIP (he increased the $10,000 basic limit to this higher amount after seeing the small additional premium charge) and $5,000 of auto medical payments coverage. His auto policy includes $250,000 of UM coverage and his personal umbrella includes $1 million of UM. Bill has no disability income policy. Additionally, he is covered by a health insurance policy provided by his employer.

As a result of the accident the following expenses and losses were incurred by Bill:

  • $75,000 for prior medical bills.
  • $175,000 for future medical bills.
  • $20,000 for prior lost wages.
  • $300,000 for future lost wages.
  • $1,000 for a wheelchair since Bill is unable to walk now.
  • $10,000 for future wheelchairs.
  • $30,000 for a special van to transport Bill and his wheel chair.
  • $90,000 for future vans.
  • $20,000 to retrofit the house to accommodate the wheel chair.
  • $25,000 for a yard service for Bill’s remaining life expectancy, since he is unable to cut the yard now.
  • $100,000 for future pain and suffering.
  • $100,000 for the loss of “family comfort” with his wife.
  • $100,000 for the loss of the ability to coach youth softball.
  • $200,000 for future loss of the enjoyment of life.

Looking at the insurance that Bill has (disregarding the UM for now) what is seen is that the PIP and auto medical payments coverage are quickly exhausted. Bill can fall back on his health insurance, but keep in mind that he will likely incur a deductible plus a co-pay each year. Once Bill’s PIP is exhausted, his wage-loss protection is gone and with no disability income policy he is “up the creek.”

Suppose, however, that the accident happened to be work related and thus covered by worker’s compensation. In such case, Bill’s medical expenses would be fully covered, subject to the provisions of the workers’ compensation law. Bill’s lost wages would be paid, typically (in Florida) at 66.67 percent of his wages. The time period for which workers’ compensation will respond for lost wages varies from two years to a lifetime, depending on the type of disability. Remember, too, wage loss benefits are subject to a maximum per week, which in Florida is around $850 per week. The wage loss benefits paid to Bill by workers’ compensation would not fully replace his salary.

With or without workers’ compensation coverage, consider the monies awarded to Bill for which he has no coverage, except under UM. The excess medical expenses, lost wages, wheelchair, van, house modifications, yard service, pain and suffering, loss of family comfort, and all the other damages listed above would be covered by UM.

Of course UM isn’t always an inexpensive coverage, but when the cost is compared to what most folks spend on cable TV, cellular service, a country club membership, or eating out for dinner twice a month, the cost for UM is probably the lowest listed.

Even if someone is in the military, is retired, and/or has “a lot of other insurance,” the protection provided by uninsured motorist coverage is very valuable. Don’t be so quick to reject this valuable coverage.

” Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Courtesy of FAIA, Authored by David Thompson, CPCU, AAI, API 

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The Art of Coverage: Collectibles Insurance vs. Traditional Homeowners Policy   Leave a comment

stamp vase 1918 coin

The chances are good that you are a collector of something. So what makes something a collectible or when do you need to “Schedule” your personal belongings. The simple answer is: it depends.

Some of the most commonly collected items include fine art, sports memorabilia, wine, rare books, stamps and coins, antique rugs and tapestries, musical instruments, action figures, dolls, toys, auto and movie memorabilia, and guns.

Large private collections generally have proper risk management in place including fine-art insurance that covers the full value of the items. But many smaller collections (those valued below $1 million) tend to be insured under a traditional homeowners policy or have no insurance at all. If these collectors face a devastating event resulting in damage, they may discover too late that their coverage is not sufficient to address their financial losses.

In simple terms, the process of insuring collections of fine art and collectibles under a traditional homeowners policy tends to be time-consuming and difficult while possibly yielding lower limits and less expansive coverage when compared to obtaining coverage with a fine art and collectible insurance policy. The comparisons below address specific differences between the two types of policies.

Appraisals – Homeowners policies generally require appraisals for collections or individual items valued over $2000 as part of the underwriting process. Many collectibles insurance policies do not require appraisals at the time of application.

Deductibles – Zero-dollar deductibles are the standard for collectibles insurance policies with some offering additional deductible options. Homeowners policies may offer zero-deductible policies, but it is not as common.

Limits – The limit on fine art and collectibles coverage generally ranges from $500 to $2000 for a homeowners policy without the addition of a floater or rider. Even with an added floater or rider, homeowners policies tend to limit the level of exposure. A collectibles policy may offer coverage up to $1 million or more.

Coverage – One of the most important coverage differences between a homeowners policy and collectibles policy is the valuation of covered items. Homeowners policies tend to insure for actual cash value while collectibles policies insure the full collectible value of items in the collection. This distinction alone can reflect a startling difference in potential claims payments in the event of a loss. Homeowners policies generally cover named perils only, exclude coverage for items during transit, limit coverage on items stored away from the home to as little as 10 to 15 percent, and extend coverage to newly acquired items for only 30 days. By contrast, collectibles policies typically include all risk coverage and provide coverage for items in transit, items stored away from the home (such as in an office or storage facility), and newly acquired items for up to 90 days. Some collectibles policies may offer additional coverage benefits such as discounts for monitored fire and burglar alarms or items kept in a UL-rated safe.

Claims – In today’s insurance market, filing a claim against a homeowners policy may leave an insured vulnerable to premium increases at renewal or the possibility of non-renewal. With a separate collectibles policy, claims do not affect homeowner premiums or loss history. In addition, companies that offer collectibles insurance may have claims adjusters with a high level of expertise in this area. Adjusters with this specialized knowledge are better able to determine the value of unique or rare items, which should expedite the claims process and lead to a better outcome for the insured.

A detailed comparison of the benefits and limitations of standard homeowners insurance versus collectibles insurance demonstrates that specialty coverage can be very advantageous for even a small collector.

Standard homeowners policies have limitations for most common items such as Firearms, Jewelry, Furs, Silverware, Precious and Semi-precious stones, Money, Gold, Silver, Coin or Stamp collections etc. Anything that has a special value such as an oriental rug (worth more than an area rug you may purchase as a home improvement store), anything that is “one of a kind” that can’t be replaced by going to a local department store, a collection of things such a porcelain figurines, fine art, breakable art such as a vase or statue. These are things that may need to be insured by a personal articles policy. Sometimes referred to as “scheduling”, this is a policy that insures specific items at a specific value determined by an appraisal or other means of valuation.

If your $10,000 Persian rug is damaged but not insured for $10,000, it is a rug and can be replaced for about $150 at Home Depot. A 1938- 3 legged Buffalo nickel may appraise for several thousand dollars depending on the grade, but if it is not insured for that value, you guessed it, it’s just a nickel worth 5 cents. Sentimental value is dear to us and nothing can replace sentimental value but Grandma’s old wedding ring could be worth a few hundred dollars or a million bucks. Every insurance policy has limitations, exclusions and provisions that you may need to comply with before you are properly insured. Please contact Lee County Insurance Agency for additional information about insuring your valuables.

“Our blogs are for general education and information only and may not represent your unique needs. Coverages will vary. Please contact your insurance agent to verify your specific policy terms and conditions.”