Is Insurance A Big Fat Waste of Money?

I had a call yesterday from a gentleman that was looking to replace his business insurance. He was incensed that the premiums had gone up and was venting to me about how unfair the insurance community was and how insurance was a big scam to take his money. He has gone 30 years without a claim and all that money was wasted. He could have gone all that time without insurance and would be thousands of dollars richer.

 

As an insurance professional I do get calls from people who are frustrated and I do understand the frustration. And, the industry that I represent doesn’t always reflect compassion and clearly outline what insurance does and does not do. The confusion grows to anger especially when the insurance is mandated by government, a lender or another business that you need to do business with.

 

I used the following example to explain: I asked the caller if he had a home and he said yes. I asked him what the replacement cost value of his home was approximately and he said about $625,000. I asked him if he had a loan on the home and he said yes so I then stated that he probably had to have insurance on the home and he said yes and don’t get him started on the cost of homeowners insurance! I asked him approximately the cost of his homeowners insurance and he said $750. So I said you have been paying that premium for about how long on your home and he said 21 years. I said you have never had a claim and he said that was correct and all that premium he has paid over 20 years has just gone down the drain, in fact he could have burned the money and would have gotten the same value. So, I added, just to make sure that I understand you have paid about $750 per year for 21 years and never received any benefit from a claim? He said that was right. So, he had paid out $15,750 over 21 years (maybe a little less as the premium was lower 21 years ago).

 

Now it just so happened that our agency had a client whose home burned to the ground and was valued at $550,000. He had been with the company that insured him for less than 5 years and the insurance company paid the full replacement cost to rebuild the home and picked up the cost to haul away the debris from the ruined home and picked up the cost to build to current building code. In addition, the insurance company provided funds to find a temporary place for the client and his family to live. The total cost was about $600,000. The client was only out $1,000 for his deductible and the sum of his insurance payments to the insurance company for less than 5 years was $3,750. But if we use the example the caller had provided me then he could have paid for 21 years and $15,750. If our client was faced with paying $15,750 over 21 years to recoup $600,000 and his family’s financial health would he consider the $15,750 a fair investment? I guarantee you that he would and so would anyone else in the same situation.

 

There are two frames of mind when considering insurance: One, it’s an expense that costs me or, Two, it’s an investment in my family’s plan for developing wealth and protecting our assets. In the end I didn’t change the callers mind but it reminded me why I protect my clients and why I look to find value for them and why I prefer to work with clients who understand how insurance works for them and not against them.

Thoughts on Celebrating the 4th of July

I am frequently away from my family and recently traveled by auto to my home in Washington State over the 4^th of July. During the long car ride I had an opportunity to reflect on all the previous 4^th of July holidays in my life and as a child and then a young adult. Early on the holiday was about spending time with family and friends with huge outdoor BBQ’s and then of course the excitement of the fireworks show at night. In my memories the day was always sunny and hot, my mom would make us kids clean up and wear clean clothes, she would cook up a dish to pass and several pies and off we would go with my dad to the party! There would be other kids to play with, games to play, it was wonderful.

 

It wasn’t until later in life when I began to realize that those idyllic parties that I enjoyed as a child were bought and paid for by so many who sacrificed for our nation. The price of freedom is great and my experience and happy memories owes a debt to those who have served our nation and continue to serve today.

Now that I am older, the holiday is still special for the time that I can spend with my family but I have a greater appreciation for all the freedoms that I enjoy in this great country of ours. My wife Lisa is a wonderful cook, just like my mom we had loads of food, family to spend time with and of course the fireworks on the beach of the Pacific Ocean. It was a wonderful day and I am grateful to have had the opportunity to celebrate the 4^th of July.

Autonomous Vehicles – Insurance Science Fiction?

Ok, I have to admit…. I am a science fiction junky. I love all of it, the technology, the positive hope for the future like Star Trek and the scary parts like Aliens! So, I have been following with interest Google’s Autonomous Vehicles. In case you haven’t heard, Google has a fleet of vehicles driving around California and Nevada with no one on board but a computer.

 

While I am disappointed that the cars don’t fly like in Back to the Future it is pretty incredible technologically that we have self driven vehicles. Now you’re probably wondering so what? What does this mean to me and why should I care?

 

The early adopters of this technology will be business. Imagine a service company that has crews delivering products or services all day long. Instead of the employees spending their time navigating the road from point to destination they can be processing invoices, preparing for the next appointment and making calls for future appointments, answering questions by phone and email and even participating in meetings by Skype.

 

It is all about productivity and for the businesses that outlay huge sums for payroll while employees drive, they will invest in this technology and lower insurance costs because the vehicles do not speed, do not tailgate, get angry or distracted.

 

Eventually, autonomous vehicles will be a standard feature and will change the way we drive and the insurance industry will need to change with it. Watch for big changes in this category in the next five years! I can’t wait!

I Love Sunshine but It Doesn’t Love Me!

OK, this next blog doesn’t really have anything to do with insurance. I worked an outdoor BBQ recently for a service club that I belong to and while I used sunscreen on my face and neck I didn’t use anything for my scalp. I keep forgetting that I don’t have as much hair as I used to. Anyway, you guessed it; I got sunburn on the top of my head! Experts say that you only need to expose yourself to continuous direct sunlight for as little as  15 minutes to put delicate skin in danger, with the hours between 10am and 4pm, and late spring and early summer time, being the riskiest.

Natural skin color is also a factor – the fairer your skin the higher the risk of suffering sun damage which, in a worst case, can cause skin cancer but also ages appearance and can be very painful.

The Centers for Disease Control and Prevention (CDC) offers the following "easy option" recommendations for sun protection:

·         Use sunscreen with sun protective factor (SPF) 15 or higher, reapplying every two hours.

·         Wear clothing to protect exposed skin.

·         Wear a hat with a wide brim to shade the face, head, ears, and neck.

·         Wear sunglasses that wrap around and block as close to 100% of the rays as possible.

·         Seek shade, especially during midday hours.

A Claim Story

I was just calculating the number of claims that I have processed over the years as an advocate for my clients and I came up with 303. I have never had an auto accident until just recently. The odds caught up with me and I was rear ended while at a stop light waiting for the light to turn green. Normally, I am in a position to help my clients and walk them through the claims process. This time, I was responsible for using what I know to help myself and I wanted to share a few things that I did that could help you when the time comes that you have an accident.

 

My accident was low speed so I wasn’t injured however you should never take for granted that you are not injured by self diagnosis. Get checked out, make certain that there was no damage caused by whiplash or trauma. I didn’t have anyone in the car with me so there were no other individuals that I needed to check on however if there was that would have been my first duty to see to their care. And, when in doubt regarding injuries call 911.

 

My next step was to check on the individual that hit me to see if he was OK. Before I stepped out of the car I took my smart phone and set it to record video. You may not have a smart phone but you more than likely have a cell phone and that cell phone takes pictures so get ready to use it. Before I stepped out of the car I checked the condition of the road around me to make sure that it was safe. One of the number one causes of secondary injuries are drivers that get out of the cars on busy streets or highways and get hit. I saw that it was safe so as I stepped out of my car I began to record where my car was located at the intersection, where the vehicle was located that hit me. I also recorded the vehicles that were lined up behind us including their license plate numbers and the vehicles across the street and their license plate numbers (I did this to have a record of other drivers in the event of a need for witnesses). I stepped to the back and recorded the damage to my vehicle and recorded the other driver telling me how sorry he was for hitting me. He said that he had only looked down for a moment and that was when he ran into the back of me. He was concerned that I was injured and he said he was truly sorry and he had insurance. I recorded the exchange between us and then suggested that we move our vehicles to the side of the road to exchange information.

 

Once we were safely off the side of the road I took his driver’s license and his insurance ID card and I photographed them with my phone. I also took a photo of the front of his vehicle where it hit mine and license plate number. Why did I do that rather than write down the information? Because immediately after an accident your body surges with adrenalin and you are more prone to make mistakes in taking down information. A picture takes all the information at once and does not make mistakes. Take multiple photos to make certain that they all come out. I collected the other driver’s phone number and confirmed that his address was the same as what was on his insurance ID card.

 

Depending on the severity of the accident you should call 911 to report the accident. In the community where I was hit the police department does not respond to non-injury accidents and expects those involved to trade insurance and license information and allow the insurance companies to sort out damages and repairs. When in doubt, call 911 and report the accident.

 

Once I had arrived home I took detailed photos of the damage to my car. If there is any doubt at all as to who is at fault I would have immediately called my insurance carrier and reported the damage. In this case I was at a complete stop waiting for a light to change when I was hit so I rightly expected the other drivers insurance to pay for my loss. Do not wait several days to call in the claim, do it now while everything in your memory is fresh.

 

I uploaded the video and the photos to my computer and printed the driver’s license, insurance card and photo of the Ford Explorer that clearly showed the license plate. If you can’t transfer files from your phone to your computer you can still email them to yourself.

 

I called in the claim to the other driver’s insurance company and provided them with the information regarding the accident. It is important that you do not take out your frustration on the clerk or adjuster taking your information. They are only doing their job and it won’t help to be angry or threaten them. Also, it is not necessary to tell anyone that you have the whole incident on video, that is only for you to use if things go wrong.

 

Ultimately, the other driver’s insurance company was honorable and took care of the repair to my car. It was my right to go to the body shop of my choice and most states forbid an insurance company from requiring you to use a body shop that they recommend. The insurance company paid for a rental car so I could continue to go about my life during the repairs and you should always inquire about this. In the event that the accident is questionable as to who was the primary cause they can decline to cover a rental car and then it would be up to your own insurance company and only if you carry rental car coverage.

 

My car was repaired and returned to me and all worked out. I never had to use my video or detailed photos however if there had been a problem I would have provided all the data and video to my insurance agent to support my claim.

 

The moral of this story is to stay calm after an accident, deal with any injuries first and then record the accident completely before you move the vehicle unless remaining where you are could risk further injury and property damage. This applies to any accident whether it is a trip and fall, storm damage or a collision, record the accident to protect yourself and then put your agent to work to help you to return your life and property to pre-accident condition.

 

Be Prepared - Emergency Planning For Business

I spend a lot of time discussing potential disasters at home and the steps that you can take to protect yourself but what about losses at work with potentially even more serious consequences, not just because of the number of people affected but also because some companies have additional hazards that could create emergencies.

In addition to the risk to human life, there's the threat to the continuity of your business and the livelihood of your employees – and you!

Think you're ready for it? Try out this simple 10-point test from the Institute for Business and Home Safety: http://tinyurl.com/IBHS-test

Hmmm. Just as I thought – but if I was wrong, well, go to the top of the class! Check out the IBHS site, disastersafety.org while you're there. You'll find some good tips on various hazard risks and programs dealing with them. I have a lot more information to share in the coming weeks so check back!

In Dealing With Emergencies Go To The Experts

In several previous blogs I have discussed what to do and how to insure for potential loss. Today I would like to point you to two organizations that understand disaster, loss and recovery. We all know their names but did you know they have terrific websites and resources available for planning for emergencies?

When it comes to dealing with emergencies and disasters, The American Red Cross really knows their stuff. So, if you have Internet access, check out that organization's online presentation, for information on preparing for emergencies and disasters. Find it here: http://tinyurl.com/rc-ready

 

Another well known organization is FEMA, the Federal Emergency Management Agency. They produce a wide range of publications and guidance for dealing with all kinds of disasters, including incidents for which I simply didn't have the space to cover here – such as chemical alerts, landslides and tsunamis, as well as valuable advice on recovery and rebuilding after a disaster. Their website is www.fema.gov

I know that reviewing both of these websites won’t be as fun as playing “angry birds’ or checking Facebook but knowing where to look for support and information in advance of a loss is a great way to be prepared.