Millennial Misconceptions of Insurance: Your First Home

First HomeThere is a short list of goals that make up what is known as the “American Dream.” Within these goals one is particularly important to demonstrate your success, buying your first home. So what happens when that dream home, condominium, or town house is part of a homeowners association (HOA)? Statistics show that one in six Americans live in a homeowners association and of those even fewer have more than the minimum limit for what is known as loss assessment coverage.

Being part of a homeowners association is a shared financial responsibility amongst you and all of your neighbors. The technical definition is coverage that pays on your behalf your share of an assessment charged against all members of a homeowners association (you and your neighbors) as a result of a covered loss. You may be asking what this means and how it would affect you. In short, the HOA has a master policy that covers incidents outside your personal unit or home. So when there is an assessment for a hurricane that rips the siding off the clubhouse, little Tommy’s friend gets hurt in the swimming pool, or a pipe burst in the community fitness center, the homeowners association’s policy will cover it up to the limit on the policy, after the deductible if applicable. This is when the loss assessment coverage kicks into place. If your dream home’s HOA doesn’t have adequate limits then you and the rest of your neighbors are on the hook to pay the excess. To quantify this point, if your HOA has $1,000,000 in coverage and there is a $1,500,000 claim, then the members would have to pay that excess $500,000 divided equally amongst them.

At this point you may be thinking to yourself- my quote machine (sorry, I mean agent) told me that I have loss assessment coverage. That is true; all homeowners policies are built in with a $1,000 limit. With that in mind let’s go back to that $500,000. If there are 20 members of the HOA you will be paying roughly $25,000 each. That coverage your agent told you about will make sure that you only have to pay $24,000.

At this point in time I will reference the late Billy Mays when I say “but wait, there’s more” and in my opinion the most disturbing aspect of this coverage. Let’s say that the community fitness center was flooded around four months before you moved in. Everything was fine and dandy when you moved but a couple weeks later you get the news that you have to pay that $25,000 when you weren’t even living in the community. The date of the occurrence that generated the assessment is not a factor as long as the assessment is made during your policy period.

Buying your first home should be a joyous occasion; thus, buying a policy online or from a company that wants to write as many policies as possible just isn’t good enough. I asked some of the personal insurance advisors what it would cost to add the maximum coverage, $50,000, to a policy. Depending on the carrier the coverage ranges from $16 to around $60 a year. In most but not all cases this additional coverage is something that you as the client need to make your agent aware of.

Therefore, it seems as though the overarching theme of these blogs is that the minimum just isn’t good enough. You don’t achieve the “American Dream” by meeting the basic requirements so why would you put your trust in a company that sees that as the best way to do business? Insurance is one thing in our society that everyone is required to have but very few understand. My goal is to educate you in this area and keep that hard earned money where it deserves to be, in your wallet. If you belong to a homeowners association or are moving into a community that has one, be sure to contact your agent and review your loss assessment coverage.

For additional information and questions contact Rue Insurance at 609-586-7474

Alec Wells

Business Development Coordinator/ Resident Millennial

What Is Coinsurance?

Coinsurance Picture

 

Coinsurance provisions found in property policies require the insured to purchase and maintain a minimum percentage of the structures total insurable value.  Policies lacking adequate limits of coverage at the time of a loss are subject to a penalty.  The insured becomes a “co-insurer” of the loss thus the term, “coinsurance.”

 

To determine if your policy includes this provision, look for a percentage, such as 80%, 90% or 100% on the property insurance policy declaration page.  This means that the limit of coverage that you have selected is at least equal to that percentage of the actual replacement value of what you are insuring.

 

Coinsurance clauses are found in many insurance policies, such as Commercial Property Policies including your building and business personal property, Scheduled Equipment Floaters, Flood and Homeowner Policies.

 

Example:

Value of the building is: $500,000
Coinsurance: 90%
Limit Purchased: $300,000
Deductible: $500
Amount of Loss: $100,000

 

Step (1):  $500,000 x 90% = $450,000 (minimum amount of insurance you should have to meet coinsurance requirement.)

Step (2):  $300,000/$450,000 =.67

Step (3):  $100,000 x.67=$67,000

Step (4):  $67,000 less deductible $500 = $66,500 (amount the carrier will pay for loss.)

 

It is important to review the values on your policy and take into consideration the construction of the property as well as today’s construction costs.  We can assist you in performing estimates for the replacement of your property.  We can review the results compared to your present property insurance limits to ensure you choose the correct limits and that you are properly and comfortably insured to value.

 

Questions?   Please contact your Rue Insurance service representative at 1-800-272-4RUE.

Why Do I Need Insurance?

Why do i need insurance

I was traveling to work and heard on the radio that the reason for the bumper to bumper traffic on 287 was a fatal auto accident where a man was killed. I can’t count the number of times I have heard similar reports on my morning commute. The traffic reporter talked about the accident with the same tone and cadence he used reporting the time it would take to get through the Holland Tunnel to New York City. It was another day traveling in New Jersey, however this morning the story just grabbed by attention.

 

I’m certain when this man left his house he kissed his wife and kids goodbye not knowing that this was his last goodbye. He was on his way to work just like me and probably didn’t give a thought about what he was going to face.   You may have heard the phrase “Your life can change in just one moment.” and this man’s did. But it also changed for his family. What is going to happen to them?

 

After saving money for many years my wife and I bought our first home. I love to joke around saying that now I have a part of the “American Dream”…a mortgage payment. I spent a lot of money fixing and upgrading the house. This is now the place I call home. It’s where I lay my head to sleep; it’s where my children are going to grow up. What happens if a natural event like a hurricane comes and destroys this home and all that I own is gone?

 

I witnessed my son being born which was a miracle; because our doctors told us we had the slimmest of chances getting pregnant even with modern technology.  Now that he is here, what do I need to do to protect his financial future?

 

These life changing events can be financially supported or protected by insurance. Sure there may be government or bank requirements for you to buy an insurance policy on your car or home, but that should not be the sole reason driving your need for financial protection.

 

If you are concerned about protecting that which is most valuable to you then buying an auto policy, homeowner’s policy, personal umbrella policy, renter’s policy, or life insurance policy becomes a line of defense in case the unexpected happens to you.

 

I don’t know if the man who died in the car accident, mentioned earlier was at fault, but if he was, his wife would be facing a large lawsuit from the people he hurt. An auto policy combined with a personal umbrella policy could offer her financial protection from the lawsuits. When accidents are big it’s virtually guaranteed to result in someone being sued.

 

With my home I had to make sure that I provided adequate coverage for my house and personal belongings; it’s my largest asset. The bank required that I carry enough to cover the loan, but the value to rebuild the house was much larger. I couldn’t afford to pay the difference out of my own pocket. Especially as my loan value decreases and the cost to replace my house increases in the years ahead.

 

With the birth of my son I had to make sure I had life insurance in place so in case my life is cut short he and my wife have adequate funds to live on afterwards.

 

There are many stories that explain why one should buy insurance, but the bottom line is insurance is there to protect you when risk of financial loss is the greatest. No one can predict the future. We may have an idea of what we want to do in life but accidents happen. The routine and pace of life can change in a moment.

 

What we pride ourselves on at Rue Insurance is helping our clients find out what their greatest financial risk is and working out a plan to pay for that (buying an insurance policy) or talking about ways to avoid or minimize their exposure (Personal Risk Management)

 

The way we approach insurance is not something you are going to find on a website by clicking a bunch of buttons. We want to engage in a conversation that empowers individuals to be ready for the future.

 

In the weeks and months ahead you will read stories in this blog about insurance and other topics of risk management.  You can also join the conversation on our Facebook or LinkedIn pages.

 

If you want to talk to us directly, give us a call at 609-586-7474 or click here to start a one-on-one conversation to answer that question of: Why do I need insurance?

 

 

Scott Harrigan, CIC, CRM

 

Why Does Your Business Need Insurance?

Insurance

It doesn’t make a difference if your company is virtual, out of your home, on the road, or in a leased building. There is going to be a time in your company’s operation when you will face one or more of the following:

 

  1. An auto accident
  2. Someone gets hurt while working for you
  3. Your work injures another person
  4. You fire someone and they are not happy
  5. Your property is damaged
  6. Money or inventory goes missing

 

Your business needs someone with deep pockets to take on the financial risks that your business faces from lawsuits, accidents, and injuries. Just to illustrate the complexity of financial risks that a business could face, consider this “short” list of insurance coverages that a business could buy:

 

  1. Accident Health
  2. Auto
  3. Builders Risk Insurance
  4. Business Income & Extra Expense
  5. Commercial Crime
  6. Computer Coverage
  7. Computer Fraud Coverage
  8. Contractors Equipment Coverage
  9. Directors & Officers Liability
  10. Disability Insurance
  11. Earthquake Coverage
  12. Employee Benefit Liability Coverage
  13. Employee Dishonesty Coverage
  14. Employers Liability
  15. Employment Practices Liability
  16. Environmental Liability
  17. Fiduciary Liability
  18. Flood Coverage
  19. Forgery or Alteration Coverage
  20. Funds Transfer Fraud Coverage
  21. General Liability Coverage
  22. Hired & Non-Owned Auto Liability Coverage
  23. Installation Floater
  24. Life Insurance for Buy / Sell Agreements
  25. Liquor Liability
  26. Network Security / Privacy Liability (Also known as Cyber Insurance)
  27. Professional Liability or Errors & Omissions Insurance
  28. Property Coverage
  29. Stop Gap Coverage
  30. Systems Breakdown Coverage
  31. Transportation Coverage
  32. Umbrella or Excess Liability
  33. USL&H Coverage
  34. Workers Compensation

 

Not every insurance product listed above is needed for every business. It serves to illustrate the complexity of exposure to financial loss that a business could face. The bigger question is what degree of risk to financial loss does a business have which drives the need to purchase these types of insurance products?

When you are dealing with an independent agent like Rue Insurance, it would be wise to sit down and talk at length about your company and how it operates. If you get a quote online from a website that asks some basic questions about your business we have a term for that – “Buyer Beware.”

Websites designed to provide you a quote online rely on a “One Size Fits All” approach to selling insurance. But the reality is every business is different. Coverage customized to meet the financial risks that each individual business faces is paramount.

Expecting the Unexpected – Natural Disasters

Are you ready for that isolated event or unexpected natural disaster that could cause a serious disruption in your business? Natural Disasters

While all disasters pose a serious threat, sometimes it’s the ones we least expect that cause the most damage.

Specifically, non-weather related disasters including burst pipes, theft, chemical spills, arson, pest infestation and more can have a serious impact on your organization.

With isolated incidents, your operations could suffer from:

  • A power outage
  • Lack of phone and Internet access
  • A possible reduction in available staff
  • An inability to retrieve and back up data
  • An inability to process payments
  • Limited to no office access

All of these result in an inability to serve your community in their time of need.

The very definition of ‘isolated incident’ means that it is unlikely to happen again, but when it comes to disaster recovery, nothing could be further from the truth. It’s just as important to prepare for isolated events as it is to prepare for predicted natural disasters.

Isolated incidents will catch organizations off guard, so preparing in advance will help get your systems back online and your doors open as quickly as possible. The following “10 Steps to Preparedness” will help you recover quickly and efficiently from an isolated event.

  1. Assess your risk—both internally and externally.  Create a list of incidents that could potentially happen or may have happened to another organization either in your area or elsewhere, and conduct scenario planning sessions with your emergency management team around those incidents.
  2. Assess your critical functions.  Make a similar list of your operation’s most critical functions. Then next to each one, write the maximum amount of time the organization can be run without that service. For any functions that you would prefer not to go down at all, put a zero. For each function, discuss your recovery options for keeping it up and running during a disaster or quickly and efficiently bringing it back online after a forced shutdown.
  3. Prepare your supply chain.  Query your vendors and partners about their emergency recovery plans. Be sure to provide your key vendors with remote contact information for their primary contacts. 
  4. Create an emergency management plan.  Your emergency management plan is a roadmap that your employees can follow during and immediately after any disaster.
  5. Back up your data.  There are three priorities to consider when backing up your data: Access, Redundancy and Security.
  6. Create a crisis communication plan.  To ensure that the emergency management team, as well as all employees, are able to communicate with each other, have two or three alternate communication methods in place. 
  7. Assemble an emergency kit or ‘go’ bag.  A go bag is an emergency kit that is ready to be used at all times. Its purpose is to help minimize the impact of a disaster and should include items you would need to run your operations if you had to vacate your office or if your facility was without power, water, internet, etc. 
  8. Review your insurance coverage.  Your organization is constantly growing and evolving and it is not the same as it was a year ago. Review your insurance policy annually to make sure all of your employees and physical assets are adequately covered. 
  9. Plan for an alternate location.  Often, a disaster or event will result in the inability to reopen an office or facility, and organizations may have to consider an alternate location.
  10. Test your plan.  Testing is a critical component of continuity planning. Through testing, you will be able to determine what will work and what needs adjusting, and you can spotlight and fill in any gaps in your plan.

 

For more information or how to prepare for a disaster, click here www.rueinsurance.com to contact one of our advisors.

Millennial Misconceptions of Insurance: Ridesharing

Ridesharing

As of today I will no longer be using any ridesharing service. This decision isn’t a result of poor customer service, negative publicity, or that I was a passenger during an accident. The reason is simple; I refuse to continue to put these drivers, who are just trying to make a living, at risk. We as millennials continue to live under the misconception that large businesses have our best interests in mind. Unfortunately, some companies don’t see us as students paying off loans or someone just starting a family, they look at us as a wallet in a pocket with green pieces of paper or plastic.

Recently, a colleague of mine was reviewing the lease for his 2015 Honda Accord and brought to my attention one sentence regarding the Terms of Use of the vehicle. It read as follows, “I will not use or allow the Vehicle to be used illegally, improperly, or to transport goods or people for pay.” The penalties for violating this clause might result in the following: termination of the lease and possession of the vehicle and repossession of the vehicle by the leasing company. Ridesharing continues to be a hot topic around the country for reasons such as, employee classifications, area specific regulations, and whether or not this “livery” service will be covered by your personal auto insurance.

The personal auto policy is designed to provide coverage while the insured party is driving for leisure, personal reasons, or when commuting to and from work. In fact, many policies specifically exclude coverage for accidents that occur while the driver is driving a passenger for pay. Due to this exclusion and the growing popularity of services such as, Uber and Lyft, in some states major insurance carriers are beginning to release endorsements to extend coverage for ridesharing activities. The developments have been widely praised and publicized, but what are those extensions adding on to your policy?

The answer is quite startling and inspired the entirety of this blog. Recently ISO, Insurance Service Office, is releasing two optional endorsements, available in fall 2015, for transportation network companies, they cover Phase 1 and 2 of the ridesharing experience. Phase 1 is when a driver logs on to the app but hasn’t matched with a passenger. Phase 2 is when a passenger match is made and accepted. There is no coverage in a personal auto policy for Phase 3, which is when there is a passenger in the vehicle, even if these ridesharing endorsements are added. This misconception can result in those already tough to obtain green pieces of paper being further depleted.

To quantify the amount of drivers who do not have coverage the following research was conducted:

  • Only 8% nationwide of rideshare participants indicated they had obtained the ridesharing endorsement [1]
  • One major ridesharing company listed their active drivers, in December 2014, at 162,037, doubling every 6 months. [2]
  • Based on the above statistic it can be safely assumed that as of July 2015, the company currently has approximately 324,074 drivers

 

With this information I discovered that of the 324,074 drivers for the ridesharing giant, only 25,925 are adequately covered at the time of an accident and only when driving to pick up a passenger. Thus, in a typical personal auto policy no coverage whatsoever is provided while a passenger is in the vehicle. The ridesharing company is responsible for your personal auto insurance as soon as the passenger gets in your car. [3] If you are a driver for a ridesharing company and have concerns about your insurance or contracts, contact your insurance agent or ridesharing company today because unfortunately bad things do happen to good people.

As millennials we must address our misconceptions and realize that convenience isn’t always convenient. As the most informed generation in history with all the information we could possibly imagine just a click away, why settle for the bare minimum? Therefore, a question arises as ridesharing becomes and continues to be a staple for our generation and may seem like an attractive method for making a quick buck, but before you turn on that app, think to yourself, is it worth it?

For more information regarding your personal auto insurance policies please contact Rue Insurance at (609) 586-7474

 

Alec Wells

Business Development Coordinator/ Resident Millennial

NJ Home Improvement Contractor Consumer Law

New Jersey Home Improvement Contractor Consumer Law Registration Requirements 

Home ImprovementNo Home Improvement Contractor shall offer to perform, or engage, or attempt to engage in the business of making or selling residential home improvements unless registered with the Division of Consumer Affairs. Violators of the Contractors’ Registration Act are subject to civil penalties of up to $10,000 for the first violation, and up to $20,000 for subsequent violations.

 Contractors must do the following:

Prominently display the Registration Number beginning with “HIC reg.#” on the following:

  • Within contractors place of business;
  • In all advertisements (including direct mailings, lawn signs, posters etc.);
  • On business documents, contracts and correspondence with consumers; and
  • On all commercial vehicles.
  • The word “LICENSE” should not be used!
  • Prominently display your original registration certificate or a duplicate registration certificate issued by the Division of Consumer Affairs at each place of business.

All home improvement contracts in excess of $500, and all changes in the terms and conditions of the contract, shall be in writing, and shall include, but not limited to:

  • The legal name, business address, and registration number of the contractor, and the legal name and business address of any sales representatives who negotiated the contract;
  • A copy of the certificate of general liability insurance for a minimum of $500,000 per occurrence and the telephone number of the insurance company issuing the certificate;
  • Description of work to be performed and principal products and materials to be used or installed;
  • Statement of any guarantee or warranty with respect to any product, material, labor or service made by the contractor;
  • Description of any mortgage or security interest to be taken in connection with the financing or sale of the home improvement;
  • Total price (including finance charges);
  • Signatures of all parties involved;
  • Start and completion dates or time frames;
  • The Division of Consumer Affairs’ toll-free telephone number: 1-800-242-5846

Bill Rue Jr Appears on Master Your Finances radio broadcast

Recently our President, Bill Rue Jr., appeared on The Master Your Finances broadcast where he talked about the history and trends in homeowners and auto insurance. You can hear the broadcast via your smart phone or computer at:  http://rockwebsystems.com/1077Thebronc/MYF_071915.mp3

Want to know more about this radio show? Check out their Facebook page https://www.facebook.com/masteryourfinances

Millennial Misconceptions of Insurance: Changing Your Thinking

Change Your ThinkingTo be honest, four years ago when I was beginning my freshman year of college the last industry I thought I was going to end up in was Insurance. While progressing through my college years, I heard of insurance internships and how my peers in those internships spent their summer calling everyone they knew to buy life insurance. Needless to say when I got offered an internship at an insurance agency I was skeptical. The last thing I wanted to do was call and ask my family and friends for favors. I had the same misconception that most millennials have and over the past year I have come to understand that insurance is so much more than life insurance, let alone a cute mascot or catchy jingle.

We, the “Millennials”, have access to more information than any generation before us. So why do we think that insurance is this commodity that can be fully grasped in fifteen minutes or less? It’s quite simple; it’s what we have been trained to think by entertaining advertisements that teach you little to nothing about what you’re buying. There is a reason that insurance has been around since King Hammurabi’s Code of ancient Babylonia, and I can assure you it isn’t to save time. Although much has changed in the past 3000 years the general concept of insurance has not. The technical definition of insurance is the transfer of the possibility of a loss (risk) to a third party, who then spreads that risk to many individuals.

So here I am, a 22 year old, in an industry dominated by employees in their mid to late fifties. My goal is simple, to educate my peers and debunk the negative stereotypes that come along with insurance. It is not something that can be overlooked and there are reasons why every aspect of life involves insurance, commercial or personal. When I explain my interest in insurance to friends, they all have the same puzzled look: Why are you so passionate about insurance? The answer is effortless and one that requires a little bit of a demonstration.

I pick up two pieces of printer paper, both costing an average of $0.00598 to produce. Because one has ink on it that happens to be an insurance policy covering a business, it’s actually worth $500,000. I go on to tell them that in the event of a loss in which you are covered that half a cent can protect not only you, but your future and those who depend on you.

Unfortunately in an industry where price is viewed as the determining factor this isn’t always the case. Those fifteen minutes I talked about earlier can leave them exposed to risks that quote machines don’t want to educate them on or give them the option to add to a policy. When they experience a loss, the lack of coverage that saved them time and money could result in that $500,000 policy being nothing more than a $0.00598 piece of plain white printer paper.

When it comes to insurance, obtaining the bare minimum just isn’t good enough. This “commodity” is growing ever more prominent in our lives with the introduction of Obamacare. Thus, education is the key to not making a mistake that could impact you financially for the rest of your life. My goal is not to lecture you or tell you what to buy, but to prepare you and change your thinking when it comes to this little thing we call insurance. Through this blog series I will examine the most common misconceptions that millennials have and hopefully teach you something that will help you in the future.

 

Alec Wells

Business Development Coordinator/ Resident Millennial

Jason Pierre-Paul’s Fireworks Injury and You

public fireworks

Fans of the NY Giants were surprised to hear this past weekend defensive end Jason Pierre-Paul suffered injuries from playing with fireworks. Reports are now coming in stating that the injuries were not as severe as originally thought. But it remains to see how this will impact his ability to play this season or his career. I hope and pray for his speedy recovery.

But what does this injury say to ordinary people like you and me? The answer is simple. It doesn’t make a difference if you are a professional athlete or if you are a guy sitting at a desk typing away at a keyboard all day, playing with fireworks has its risks and they can be deadly or life changing.

For example:

In the State of Maine a man who was drinking set off a firework on his head which killed him.

In Texas a woman received second and third degree burns when a pyrotechnic device ignited under her. Another Texan man injured his hand when a firework exploded in his hand.

In Boston two children (ages 5 and 9) suffered injuries from fireworks. One child received severe burns the other suffered hand injury and may face possible amputation.

In the three examples I just cited 2 of them are in states were fireworks are legal. One even happened when Paramedics were nearby monitoring the event.

Even professionals who run fireworks displays have a mishap from time to time. Take for instance the accident this past weekend in Avon, Colorado. According to the US Consumer Product Safety Commission 2013 Annual Report the percentage of the total injuries from professionally run fireworks displays is a meager 4%

The bottom line is this; fireworks are imbedded in the American psyche and even with laws that make them illegal, like in New Jersey, people still use them. Extreme caution should be taken on how they are used and if at best left to the professionals.