Insurance Blog

Courtesy of iii.org

Natural disasters (such as a flood, earthquake, hurricane or tornado) sometimes invite another type of disaster: “Storm Chasers” who try to profit from others’ unfortunate circumstances. These profiteers take many forms – from workers posing as qualified contractors to “volunteers” trying to help only themselves to lawyers and public adjusters offering to take over your claim. If you start having second thoughts about anyone who has offered assistance after disaster strikes, here are some tips to get you back on course:

• Never feel pressured to make a decision.
  While the need to recover quickly is understandable, do not succumb to a high-pressure sales pitch. If you’ve signed an agreement or contract, remember the Federal Trade Commission has rules protecting consumers that allow you to cancel a contract up until midnight of the third business day after entering into it. This applies to door-to-door sales contracts for more than $25, as well as sale contracts for more than $25 made at any place other than a seller’s usual place of business. Additionally, states have similar rules to help consumers having second thoughts on the contracts they’ve signed.
• Think carefully about signing over your claim to an outsider.
  This may sound like a good idea, since it appears to free you from handling the details of disaster recovery. However, what often happens when a third-party (which can be a contractor or public adjuster) takes over your claim is that you lose control of it and repair costs may be greatly inflated, delayed or not in compliance with building codes. The desire to get the job done right the first time makes a good case for the homeowner to stay involved in the process.
• Always deal with a licensed, insured contractor for both temporary and permanent repairs.
  Be certain to have a pro handle your job. Unlicensed individuals may actually cause more damage to your property. And, if they are injured on your property, they may hold you liable if they do not have their own insurance. You can request to see their license and verify it with state or county officials. Unlicensed contractors can be reported to your state’s licensing board. Keep receipts for temporary repairs, as your insurer will reimburse you for these expenses.
• Know that your insurer is an on-call advisor to help you through every step of the claims process.
  Home and business insurance policies comes with claims services, so consult your insurer as soon as possible after disaster strikes. Disaster claims are handled based on the severity of damage, so those most impacted get priority. That is why it is important to provide an accurate preliminary account of the damage when you make the initial call to your insurer. Also, be sure to mention any circumstances that may necessitate expedited claims handling, such as special needs situations. Contact the department of insurance in your state if you have complaints.
• Report the scam to local police and your state insurance department.
  These scams can happen to anyone, so don’t hesitate to contact authorities. Many states also have consumer affairs departments to assist you in answering questions, protecting your interests and filing charges, if necessary.

Additional Resources

• Federal Trade Commission – Scam Alerts consumer.ftc.gov/scam-alerts
• Federal Bureau of Investigation – Common Fraud Schemes fbi.gov/scams-safety/fraud
• gov – Consumer Frauds and Scams www.usa.gov/topics/consumer/scams-fraud.shtml
• Better Business Bureau – Scam Stopper bbb.org/council/bbb-scam-stopper/

Courtesy of iii.org

The start of what may be an “above-normal” 2020 Atlantic hurricane season is a month away and homeowners, renters, and business owners are advised to prepare now.

“As much as we are living today with the unimaginable impact of COVID-19, we must remind residents along the Atlantic and Gulf coasts to remember it takes only one hurricane or tropical storm to ravage communities and to shatter lives,” said Sean Kevelighan, CEO, Triple-I. “We encourage residents to take a moment to ensure you have adequate financial protection for your property and possessions while also taking steps to make your home or business is more resilient to wind and water. Since we are all needing to stay home more, it’s even more important to make ourselves more resilient to natural catastrophes like hurricanes.”

The Atlantic hurricane season begins on June 1 and continues through Nov. 30.

Review Your Insurance Coverage
Make sure you have the right type – and amount – of property insurance. The Triple-I recommends you conduct an annual insurance review of your policy(ies) with your insurance professional.

Standard homeowners insurance covers the structure of your house for disasters such as hurricanes and windstorms, along with a host of other disasters. It is important to understand the elements that might affect your insurance payout after a hurricane and adjust your policies accordingly.

At the very least, review the declarations page of your policy. This one-page information sheet offers details on how much coverage you have, your deductibles and insights into how a claim will be paid.

“You should ask your insurance professional if you have the right amount of insurance coverage to rebuild or repair your home, to replace its contents, and to cover temporary living expenses if your property is uninhabitable,” Kevelighan said. “You should also ask about flood insurance, which is separate and additional to traditional homeowners and small business insurance. Ninety percent of natural disasters involve flooding.”

Flood insurance, which is a separate policy from your property coverage, is offered through FEMA’s National Flood Insurance Program (NFIP) and several private insurers.

Another common exclusion from a standard homeowners policy is sewer backup (also not covered by flood insurance). Backed up sewers can cause thousands of dollars of damage to floors, electrical systems, walls, furniture and other belongings. Sewer backup insurance is especially beneficial in hurricane-prone areas.

Protect Your Vehicles

Comprehensive auto, which is an optional coverage, protects your vehicle against theft and damage caused by an incident other than a collision, including fire, flood, vandalism, hail, falling rocks or trees, and other hazards.

Make Sure Your Possessions are Adequately Protected
Imagine the cost of repurchasing all your furniture, clothing and other personal possessions after a hurricane. Whether you have homeowners insurance or renters insurance, your policy provides protection against loss or damage due to a hurricane.
Creating an inventory of your belongings and their value will make it easy to see if you are sufficiently insured for either replacement cost or cash value of the items. When you create a photo or video catalog of your home’s possessions, it will also help expedite the insurance claims process if you sustain damage from a storm.

Make Your Property More Resilient
Invest in items that will harden your property against wind damage, such as a wind-rated garage door and storm shutters. Triple-I also recommends you have your roof inspected annually by a licensed and bonded contractor to make sure it will hold up to high winds and torrential rains.

Other hurricane season preparation tips from Triple-I include:

• Preparing a hurricane emergency kit with a minimum two-week supply of essential items such as non-perishable food, drinking water and medications for every family member.
• Creating an evacuation plan well before the first storm warnings are issued.

Courtesy of iii.org

There’s a road in my town that’s widely regarded as a speed trap. We all know drivers who say they were unfairly stopped and ticketed on it. I’ve never been and, come to think of it, neither has anyone I talk to about it. Maybe it’s because we live in town and “everyone knows” about the trap.

Cyber is a relatively new, evolving risk. Insurers manage their exposures, in part, by setting coverage limits and excluding events they don’t want to insure.

Sure, people get ticketed. The road is straight and wide, and I guess some feel they should be able to drive faster than the clearly posted speed limit. Or maybe they think the “real” limit is somewhat north of the number posted.

Is that really a “speed trap”?

I think of this road when I hear people say they don’t buy cyber insurance because “everyone knows” cyber claims don’t get paid.

Poster child for “cyber” denial

The example on everyone’s lips when this topic comes up is Mondelez International, the food and beverage giant hit by the NotPetya ransomware attack in 2017. Mondelez incurred losses exceeding $100 million, and its insurer denied coverage based on a war exclusion.

The irony? The policy in question covered property, not cyber. One can argue – as Mondelez does in a lawsuit – that the war exclusion is being unfairly applied, but businesses aren’t ceasing to buy property insurance on account of it!

Cyber claims data are hard to come by, but for nine years NetDiligence has published a Cyber Claims Study analyzing paid claims. The 2019 study looks at more than 2,000 such claims aggregated in over 20 ways, including types and amounts of losses, incident causes, data types exposed, business sectors affected, revenue size of claimants, and financial impact.

Verisk, whose cyber products help insurers write coverage based on their policyholders’ risk characteristics, doesn’t publish claims data but aggregates and incorporates them into its analytics.

NetDiligence publishes an annual Cyber Claims Study. Verisk aggregates and incorporates claims data into its analytics. Why do so many believe cyber claims don’t get paid?

Why the perception/reality gap?

Cyber is a relatively new, evolving risk. Insurers manage their exposures, in part, by setting coverage limits and excluding events they don’t want to insure. Indeed, in a recent survey by J.D. Power and the Insurance Information Institute, small-business owners named “too many exclusions” among the top reasons they don’t buy cyber coverage.

Claims are often denied because of exclusions policyholders might not have known about or understood. Some insurers, for example, include “failure to follow” exclusions for claims arising from inadequate security standards.

Everyone’s responsibility

If insurers want businesses to buy cyber policies and not be hit with unpleasant surprises at claims time, they need to be aggressively transparent about what’s included and excluded. Relegating this to fine print is not a good strategy.

Brokers and agents need to educate themselves about their clients’ needs and be fastidious in aligning coverage recommendations with those needs.

And insurance buyers – those with most at stake – need to understand cyber perils and insurance. For example, insurers require a cyber hygiene self-assessment from applicants. If, after an incident, that assessment proves inaccurate – say, if encryption practices were misrepresented – coverage can be denied.

Insurance isn’t a replacement for cyber diligence. But it can complement it as part of a well-planned risk management program.