Monthly Archives: July 2012

Life insurance to cover each stage of life

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Established families,
young families, single people, pre-retirees and retirees can all benefit from
life insurance policies. At some point in life, you may decide that it fulfills
your needs, and decide to buy. For those Washington folks thinking about
purchasing, consider how insurance may relate to your stage of life.

 

  • Established families may believe they do
    not need the benefits of insurance once their children become
    self-sufficient. However, many people realize that benefits for surviving
    spouses and children are available quicker from an insurer than having to
    sell family assets to survive.
  • Young families may greatly benefit from
    purchasing a life insurance policy. In the event that the breadwinners of
    the family were to pass away, the remaining family members would have
    money to continue living in the same lifestyle. Spouses left behind with
    children may have a difficult time financially without the proceeds of a
    policy.
  • Each single person may have their own
    responsibilities when it comes to financial matters. Single people may
    find they have the need for insurance because they have high levels of
    personal debt, or they offer financial assistance to a friend, brother or
    aging parents.
  • Pre-retirees and retirees may take
    comfort knowing that insurance is there to pay off large debts or
    mortgages and cover final expenses. A call to your insurance agent can
    help to answer questions about a new policy and look for an affordable
    life policy for your needs.

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Home Fire Safety

Living here on
the Olympic Peninsula one of the things we need to pay attention to is fire
safety.  We are surrounded by trees and
while our summers are great, they are also dry. We also enjoy cooking out and
life gets a little more relaxed in the summer. In winter a lot of people heat
their homes with wood and other open flame systems. When you look at the risk
factors for injury and death by fire, it may give you the feeling you are
living in a statistic.  According to theCenters for Disease Control, the groups at greatest risk of fire related
injuries and deaths reads a lot like the demography of the Peninsula. Those
groups include adults over 65, people living in rural areas, people who live in
manufactured or substandard homes and Native Americans.

This year we’ve
had a lot of national news about wildfires, particularly in the Southwest.
While Washington gets its share of forest fires, they seem less common here on
the Peninsula than in Eastern Washington. Wildfires are disastrous situations
that often make news when they begin to devour numbers of houses, but it is
day-to-day risk that we need to be most concerned about. There are about
374,000 house fires every year in the United States and these fires produce
over 12,000 injuries and more than 2600 deaths every year. Experts calculate
that the treatment of burn injuries costs over $7.5 billion a year. You can get
a good idea about steps for preventing injury and death in fires by
understanding that there are two factors that significantly raise the risk for
injury and death. These are the absence of a working smoke detector and the
consumption of alcohol. Smoking is the leading risk factor associated with
death in fires, though one suspects the real trifecta is the combination of all
three – smoking, alcohol consumption and the absence of a smoke detector.

The top causes of household fires include cooking, heating and electrical malfunction. These
three causes account for about 80% of home fires. Some care and planning can
help you reduce your risk of fire and reduce your risk of injury if a fire
occurs. With a little over 50% of fires coming about as a result of cooking,
your first step should be to exercise care while cooking. Never leave
combustible materials on a stove or cooktop and don’t leave things cooking
unattended. This applies both in the kitchen and to outdoor grilling. Next, you
need to be concerned about what happens if your prevention efforts fail. Make
sure you have a working smoke detector to help assure early detection of fires
once they start. You should also have a working fire extinguisher available to
address small fires. Finally, in the event a fire does start and gets out of
hand you need an evacuation plan for your family.

Check your risk
for electrical fires by surveying your household to identify potential
problems. These would include frayed wiring, crowded receptacles and loose
connections. Repair, replace or reconnect anything that looks like a problem.

We aren’t doing
much heating now in Western Washington, but it’s a good time to inspect
chimneys and flues to make sure everything is ready for the heating season. If
you heat with wood or use your fireplace a lot, consider having your chimney
cleaned to get rid of the creosote that can build up in chimneys and create a
fire hazard.

There are some
good tools on the Internet that can help you survey your household and set up
could prevention measures. If you have children or grandchildren in your home
you can send them to sparky.org for some kid friendly information on fire
prevention. You can even download a fire safety checklist that you can use to
score your own household for its fire safety readiness.

Medicare Signed into Law, 1965

July 30 is a
big day in American insurance history; the day President Lyndon B. Johnson signed
the Medicare health insurance program for elderly Americans, into law.  At that point in our history it was the
closest the U.S had come to National Health Insurance.  It wasn’t easy getting there. 

For years, groups,
parties and presidents had been advocating for some form of coverage for health
care in the U.S without success.  As
early as 1915, Progressive groups were trying to put together national health
insurance programs.  The draft
legislation was initially supported by the American Medical Association and
opposed by organized labor who believed it would undercut the benefits they
were negotiating for union members and by the insurance industry because it
contained a burial provision which compete directly with their products.  It died completely during the First World War
when opponents were successful in associating it with the German national
insurance scheme. 

Harry Truman proposed a national health insurance plan to be run by the federal government in 1945.
It was designed as a plan that would be optional but open to all Americans and would
cover the cost of medical expenses and give provide cash balance to replace
wages lost due to illness or injury.  The
proposal predated the McCarthy era by a few years, but concerns about Communism
were widespread at the time and opponents characterized the plan as
“socialized medicine” and called Truman White House staffers
“followers of the Moscow party line”. 
As the Korean War heated up and fears of communism grew, Truman’s plans
died in congressional committee. 

Even as Truman’s
large scale national health insurance plan was failing, an alternate plan was
being born out of the Social Security Administration.  Social Security had been designed as a
program to support the elderly, but rising health care cost were consuming the
benefits – and this was the late 1940’s. 
Representatives from social security argued that a system of health
insurance for the elderly was necessary because workers were no longer covered
by employer based plans.  The idea was
supported by a number of studies that identified and quantified the problem and
by the late 50’s a package designed for social security beneficiaries was
making its way in Congress.  It was also meeting
substantial resistance. 

The first
bill to get close to consideration was the Forand Bill which would have created
a Medicare like program.  Those in opposition
included the America Medical Association, the National Chamber of Commerce, the
National Association of Manufacturers, the Health Insurance Association of
America, the Pharmaceutical Manufacturers’ Association, and the American Farm
Bureau Federation and plenty more. 
Republicans opposed it generally and evidently Eisenhower was prepared
to veto it if it passed.  The Forand Bill
died but made enough headway to create some serious further efforts.  The Kerr-Mills Bill that evolved out of the
concerns addressed by Forand was a program
of medical vendor payments to be provided through state-run public assistance
programs for
the “medically
indigent.” was passed in 1960.

While this
was the first crack in the wall, it was not what the backers of a national health
insurance program for seniors wanted. 
John Kennedy made “Medicare” a part of his campaign for the
presidency.  The battle over Medicare
continued for four years after Kennedy’s election with the AMA and other groups
fighting for and against.  The final
passage of Medicare came in a rush early in the Johnson administration.  Johnson’s huge plurality in the 1964
elections had pulled along a democratic majority and the first national health
insurance program in the United States was passed in early July 1965. The Medicare
program that provides hospital and medical insurance for Americans age 65 or
older, was signed into law as an amendment to the Social Security Act of 1935.
Some 19 million people enrolled in Medicare when it went into effect in 1966.  In 2011 Washington insurance included 983,167
Medicare enrollees and the U. S. Total was 47,672,971enrollees.

The
bill-signing ceremony, took place July 30, 1965 at the Truman Library in
Independence, Missouri.  At the
ceremony, former President Harry S. Truman enrolled as Medicare’s first
beneficiary and received the first Medicare card. Johnson made this effort to
recognize Truman who had long been an advocate of national health insurance.  

Furnishing your new apartment

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Are you about to rent your first apartment in Washington? Moving out of
home for the first time is usually fun, exciting, and a little bit scary. If
you are feeling a little overwhelmed by the amount of stuff you need to live as
a grown up, try these tips for furnishing your new apartment. After buying new
furnishings, be sure to contact your insurance agent for advice on a suitable
renters’ insurance policy.

  • Each apartment unit is different and some
    come fully furnished, while others have no furnishings. Even fully
    furnished units usually only offer the basics, and you probably want to
    add your own things to make it comfortable.
  • Consider shopping for a new bed that fits
    in the bedroom easily.  Leave room
    for a dresser, nightstand and lamp. Of course, you need to pick up sheets,
    blankets and a bedspread.
  • Pick up an assortment of pots and pans
    for cooking. You can often get pans, dishes and silverware reasonably
    priced, with little wear, at garage sales. Consider asking relatives for
    items they no longer want.
  • Check out used furniture stores to find
    great buys for couches, sofa tables, end tables and chairs for the living room.

Using common sense and taking the time to find bargains really pays off
when furnishing a new apartment. For those in Washington in need of renters’
coverage, call our office for affordable quotes on this type of coverage.

*

 

Do You Play Auto Roulette?

Statistics can be
interesting, some are fun like your favorite baseball player’s batting average
or the winning percentage of your football team; other statistics can be a
little scary. One statistic that may fall in this latter category is the number
of uninsured motorists on the road. The folks who track this statistic estimate
that, nationally, about 16% of drivers are without insurance. The numbers vary
by state of course with Alabama and Mississippi topping 25% of drivers without
insurance; Maine and Vermont are at the low-end with 4% and 6% of uninsured
drivers, respectively. In Washington estimates are close to the national
average at 16%.

To put this
statistic in perspective, you can think about driving down the road and seeing
six cars coming toward you from the other direction. If you know that you have
insurance, it is a good bet that one of the six people driving toward you does
not.

There are
requirements for insurance in the state of Washington and there are stiff fines
for not carrying insurance. Nevertheless, some people do not purchase insurance
and short of finding them in a traffic stop, the state does not have a
mechanism for determining who does not have insurance.

We know a lot about uninsured motorists. For example, we know that they cause about 14% of
motor vehicle accidents. We also know they pay over $850 million in tickets
received for not having insurance. They are more likely to be male than female;
62% of uninsured motorists are male. There are likely to be young, with 22% of
uninsured motorists between 18 and 24 years of age. Uninsured motorists tend to
be less well-educated, 45% have a high school education or less. They are also
likely to be less well-off; nearly 1/3 of uninsured motorists earn less than
$20,000 a year and the car they are driving is likely to be 15 or more years
old. When asked why they do not have insurance, 21% say they can’t afford it
and 20% say it’s too expensive. Probably none of these numbers is particularly
comforting if you were hit by an uninsured motorist and hoping for compensation
for your car or yourself.

A few states
require that motorists purchase uninsured motorist coverage. Other states,
California for example, require that uninsured motorist coverage is included in
every basic policy and must be specifically declined to avoid purchasing it. In
Washington state uninsured motorist coverage is an optional coverage. If you
have read this far, you are probably ready to check your Washington auto insurance policy to make sure you have uninsured motorist coverage. If you
don’t, give us a call at Homer Smith Insurance and we will help you correct
that oversight.

Oh, and if you
are the person driving down the road without your Washington required auto
insurance, please be aware that those six people driving toward you would
really appreciate it if you purchased a policy.

Travel Insurance: Part II: Taking Care of Yourself

In the first part
of this series we talked about trip interruption insurance as a means of
protecting your financial investment in a trip or vacation. We mentioned in
that blog that there was another component of travel insurance that addressed
your health and safety, and, incidentally, your financial safety, while
traveling. This is the medical and evacuation services coverage that is
associated with travel insurance. It is possible to purchase medical and
evacuation services coverage as a standalone product but it is frequently
bundled with trip interruption and cancellation insurance as a comprehensive
coverage. As a bundled product, this may be called a vacation travel plan, trip
insurance or travel insurance. As a traveler, you need to be aware of the
different components and know which components you are getting. A package plan
that contains trip cancellation, medical coverage and evacuation services will
be more expensive than either component alone.

Why would you
consider a travel insurance product that only contained medical coverage andevacuation coverage? Well, that depends a lot on why you are traveling. If you
are a business traveler and know that you will be traveling even if delayed,
you may not need to invest in trip cancellation.  There are very good reasons though to invest
in medical coverage and evacuation coverage.

The world is
getting a little smaller every day and medical care is improving to the point
that you can find quality medical care almost anywhere. However, while you may
find a U.S. trained general practitioner in Timbuktu, you will also find their
services are probably not covered by your U.S.-based insurance company. They
certainly will not be covered if you are on Medicare or through a Washingtoninsurance plan. Trip medical insurance will protect your pocketbook and
sometimes your life if you are ill or injured in a foreign country. Without
this coverage and the support it provides, you could be presented with a large
bill when checking out of the hospital. 
Travel insurance services often will also give you access to a U.S-based
physician who can help monitor your treatment to assure it meets at least a
minimum standard of care.

There is also the
problem of identifying that quality medical care or other specialty help if you
are in a foreign country and by yourself. 
Travel insurance packages generally include an assistance component that
allows you to call for help from wherever you are.  Trained operators in the U.S. are available
to offer assistance in a wide variety of situations.  These may be minor medical situations – “can
you tell me the names of safe and effective diarrhea medications in Sri Lanka?”  They may also be more serious concerns such
as, “Can you give me the name of an English speaking attorney?  I’m in jail here in Turkey accused of drug
trafficking.”  The travel assistance
component of a travel insurance offering may not always be able to solve your
problem, but it is an ally in times of need. 

The big dollar
reason for purchasing a travel insurance policy though is medical evacuation
services.  Travel events requiring
medical evacuation are both rare and expensive. 
If you are unfortunate enough to have a serious medical event in Asia,
for example, the cost of an emergency evacuation to the U. S. can easily exceed
$100,000.  Air ambulances are not cheap
forms of transportation.

Unlike trip
cancellation insurance, medical and evacuation coverage is not on the basis of
named perils – virtually any illness or injury can be covered, with typical
exclusions for pre-existing conditions and excludable causes like participation
in dangerous activities.  Even
pre-existing illnesses and dangerous activities such as diving can be covered
if they are disclosed to the insurer. 

The important
things to avoid in the medical and evacuation component of travel insurance
include policy language that limits your options – exclusion of pre-existing
conditions without the ability to obtain a waiver or evacuation services that
specify “to the closest appropriate care” rather than “to the destination you
choose” or “home hospital.” 

The good news is
that serious medical events during travel are pretty rare and the costs of
travel medical and evacuation coverage reflect the low probability of their
occurrence.  However, costs of this
insurance will rise in proportion to the length of your trip. 

Travel Insurance: Part I Insuring your Trip

It may seem out
of place to be talking about trip and travel insurance in the summer on the
Olympic Peninsula.  We have our best
weather now, there are festivals and activities from Brinnon to Forks and generally
it is the best time of year for us locals to settle in and watch everyone come
to us.  However, on those odd rainy days
between now and the end of September when your mind starts wondering about what
warm and dry place you might like to head to on vacation, you will want to be
fully armed with information about how to manage your risks associated with
travel.  In particular, if you are an
early bird and like to get your trip lined up months before you go, you need to
weigh whether you will invest in travel insurance and if so, what type. 

Travel insurance
is a generic name for insurance that offers risk management for two classes of events

  1. 1.  Assurance that your financial investment in a
    trip is protected and
  2. 2. Assurance that
    if a medical event occurs on your trip your health and your financial
    well-being are protected. 

These two
assurances can be purchased separately, or in various combinations of
both.  They are typically sold directly
by travel insurance companies, through travel agents or credit card companies,
not through Washington insurance agencies. 
Today, we will look at the first type of insurance –Trip Protection or
Trip Cancellation Insurance.  In another
blog we will look at the medical aspects of travel insurance.

Trip protection
is attractive to prospective travelers because it offers protection against a
variety of unforeseen events that could cause loss of the financial investment
in the trip.  The policy benefit is
generally limited to the total cost of the trip and provides reimbursement in
the event some named peril prevents, shortens or devalues the trip.  Named perils include things like an accident
or illness in you or a close relative that prevents or interrupts a trip, or
severe weather, like a hurricane, that prevents the trip from occurring.  Pro-rated compensation is also available for
trips that are interrupted or curtailed and compensation is provided for trip
related events like lost, stolen or delayed luggage.  Some policies will even compensate the
policyholder if the hotel or airline where you made non-refundable payments
goes bankrupt.

There are good
reasons to consider purchasing trip protection insurance.  If you are purchasing a vacation package,
such as a cruise, you are likely required to make significant prepayments.  These payments are at risk if you cannot take
the trip and partially at risk if you must cut your trip short.  Other circumstances may force termination of
a planned vacation – bad weather or, these days, bad people, may prevent
continuation of a trip.  Trip protection
insurance mitigates the financial risks associated with these events.  You should consider your own situation.  For example how long will you be
exposed?  If you are buying a vacation
package for tomorrow, you may not be concerned about the possibility of
illness; if the trip is a month away, it could be a different story. 

You should also
shop around a bit.  There are many
companies and plans to choose from and policies may differ in the named perils
they cover as well as in their willingness to waive pre-existing conditions or
offer other coverage.  If you are headed
toward the Bahamas during hurricane season, you would want to make sure your
policy listed cancellation due to hurricane as named peril. 

If you are
planning the trip of a lifetime, take a few extra minutes to think about your
travel insurance needs.  The costs are
likely to be in the area of 5% of your travel costs but well worth it when Aunt
Tillie’s untimely demise in a baking accident threatens to turn your dream
vacation into a nightmare. 

In our next blog, we
will look at the health and emergency components of travel insurance.

Washington Title Insurance

If you own a home
or are in the process of purchasing one, you have almost certainly purchased
Title Insurance.  There is also a very
good chance that you don’t know the name of your title insurance company or
that you have had any contact with them after closing on your home.  When you purchase real estate, the seller is
usually required to present the buyer with a clear and valid title to the
property at closing.  If the purchase
will have a mortgage, the lender will require not only evidence of a valid
title but a title insurance policy purchased by the buyer to protect the
lenders interest. 

Title insurance
is an odd form of insurance in that it does not protect against future events,
it provides protection against the consequences of undisclosed events that
occurred in the past; specifically, it protects against discrepancies or
defects in ownership rights to a property. 
Title insurers in the United States search public records to determine
who owns the title and what other interests exist.  So what protection do you get for your
premium dollar?  Protection against
errors or defects in a title that have not yet been disclosed, such as:

  • Liens for unpaid
    property taxes, homeowner or condominium association dues, construction or repair
    costs, or debts like child support and court judgments. 
  • Easements giving
    access to adjoining owners, public utilities, or others. 
  • Undisclosed
    interests of former co-owners, like spouses or heirs, who may not have
    participated in the sale. 
  • The results of
    fraud or forgery in the ownership history before the sale. 
  • Clerical errors
    like misspelled names or incorrectly transcribed legal descriptions.

There isn’t a law
requiring anyone to obtain title insurance, but a property owner who does not
have title insurance runs the risk that a title defect could reduce, or even
destroy a property’s value.  For this
reason lenders require a buyer to purchase title insurance to cover any
transfer of real property.  Typically it
is not sold by Washington insurance agents, but referrals are made to title
insurance companies by real estate agents, lenders or other “middlemen.”   However, it is possible to shop for title
insurance on your own and it is not legal for any party to require you to use a
particular title insurance company.

 In the event
problems are found with a property title, the defect has to be cleared before
the property can be legally transferred to a new owner. In a lawsuit over
ownership of the property because the title search was faulty, the title
insurer pays the legal fees and any settlement amount. Title insurance is a
one-time premium and the premium costs include the costs of title searches to
minimize the risks of problems. 

 There are two
classes of title insurance – lender’s coverage and owner’s coverage.  In Washington, home sellers generally
purchase “owner’s coverage” for their buyers, and buyers purchase “lender’s
coverage” for their lenders.  The
Lenders’ policy does not cover the owner’s interest in the property.  While the initial policy limit is the amount
of the mortgage, the limit decreases each year, and disappears when the loan
balance is paid off.  The Owner’s Policy
protects the owner’s interest for the full purchase price of the property and
the policy limit is the purchase price. The one-time premium is paid at the
time of the closing and coverage is in effect as long as the insured or heirs
retain an interest in the property. 
In the event of
refinancing, a new lender’s title insurance policy will be required; the
owner’s policy will not require a new issue.  

Business Auto Coverage

If you are a
business person and you use automobiles or other vehicles in your business, you
need to consider obtaining business auto coverage. For small businesses it may
be possible for a business owner to use their personal auto coverage to cover
business risks, but be sure to talk this over with your Washington autoinsurance agent so you understand the risk. 
Your carrier should be advised you will use your vehicle in business;
otherwise you could face an unfortunate surprise if a claim is denied. If you
own company vehicles that are used by employees, or your employees use their
own vehicles, you definitely need commercial auto insurance.

Business auto
coverage can handle a variety of operations including delivering food or products,
transporting products to wholesalers, retailers or consumers, transporting
people and carrying things on behalf of people. 
The coverage is flexible and can be bought as a separate policy or as
part of a package of coverage that may also protect buildings and business
property. A business auto package offers protection for physical damage through
collision and comprehensive insurance coverage and liability insurance that
includes bodily injury and property damage. 

Many othercoverages can be added to your commercial car insurance policy. These include
medical payments, towing and labor, rental reimbursement, and auto loan or
lease gap coverage. These can be added to your business car insurance policy
based on your tolerance for risk and your ability to self-insure some losses.

Since these
policies are intended to go beyond the personal auto policy to extend coverage
to employees there are some areas you might assume are covered, but may not
be.  A business auto policy will
typically exclude coverage for any losses that should be handled by Workers
Compensation, Disability Benefits or Unemployment Compensation Law, for
example.  This would include Injury to
one employee caused by another employee. 
It also will not cover losses or damages to other people’s property that
is in your care or custody or that you have assumed by contract.  That is, you cannot execute a contract that
obligates your insurer.  Otherwise,
general exclusions apply such as losses related to racing, demolition or
stunts, Nuclear Hazard or any type of War or Military Action.

In Washington, if
your vehicles require a commercial license, you also need to pay attention to
Washington liability limits and make certain you have sufficient insurance
coverage to be in compliance with the law or that you post a suitable bond as
evidence of financial responsibility. 
Minimum coverages are defined in Washington law for common carriers of
household goods, common carriers, passenger carriers and solid waste
collection.  

Between minimum
coverage amounts, optional coverages and the level of protection afforded by a
personal auto policy, you want to make sure to get it right.  Drive on over to Homer Smith Insurance and
talk over your situation with a Washington insurance professional. You won’t
regret the trip.  

Insurance and Your Credit

Everywhere you
turn people are advising you to watch your credit scores.  They affect your rates on an auto loan; they
affect the rate you will be offered on a home loan, a line of credit and even
on a credit card.  What many people don’t
realize is that they may also affect your insurance rates. 

As the banking
and credit industries have gotten more sophisticated and have become linked
even closer to insurance companies, the “credit-based insurance score” has
become a widely used underwriting tool.  
Credit-based scores have joined other objective sources of information
like motor vehicle reports and home inspections.  While credit-based scoring was once
controversial, it has gained public acceptance and even passed muster throughthe Federal Trade Commission.

Banks and other
lenders have used credit history in their lending process for a long time.  It is more recently that statistical
techniques, the huge amount of data that has been amassed relative to credit
and insurance claims and the shrinking of the distance between insurance and
the financial world have combined to reveal a relationship between credit
history and claims activity.  The
techniques to develop a credit based score are proprietary to individual
companies, but the principals are the same. 
Certain components of a person’s credit history can be predictive of
that persons insurance claims experience. A credit-based score is developed
from information such as amount of debt, number of credit cards held, pattern
of payments, defaults, and so forth. 
Credit-based scores are used to help decide the acceptability of
applicants and to set premiums for new or existing clients.

There were
serious concerns about the use of these scores as they related to other
underwriting practices from the past – such as redlining areas of high risk and
charging everyone in that area a higher premium.  The concern was that minority groups might be
unfairly penalized.  After an extensive
investigation, the Federal Trade Commission found:

* Credit scores
did a good job of predicting the number of claims consumers file and the total
cost of claims.

* Use of scores
can result in benefits for consumers –those with better credit scores. .

* Scores are
distributed differently among racial and ethnic groups, so these differences
are likely to have an effect on the premiums that these groups pay, on average,
however, it is the scores themselves, not being part of an ethnic or racial group
that is predictive. 

The FTC concluded
the use of credit based scoring was likely to make the price of insurance
better match the risk of loss that consumers pose. Therefore, higher-risk
consumers would pay higher premiums and lower-risk consumers would pay lower
premiums.

Just like a loan
from a bank, you can get information from a Washington insurance agent or
insurer if you have been affected by a credit-based score.  You can also get information on how to be
sure that your credit history is accurate. Ask an insurance professional to
help you with questions on how your credit may be affecting your insurability.