Your home – it keeps you warm in the winter, cool in the summer and dry all year around; it can also help protect you even when you are not at home. Your homeowner’s insurance policy is an asset that not only protects your home and its contents but helps defend you even away from home. Your Washington homeowners policy has two major parts. Property insurance covers the structure of your home and its contents for fire, theft and other perils; personal liability covers damage to others caused by you, your family or your property – including medical expenses for those injured. Pretty simple really, if there is a theft in your home and your brand new laptop is stolen, the theft is covered under your property insurance; if your neighbor trips on the loose board on your porch you are defended by your liability insurance. What many people do not realize is that your homeowners insurance attaches to you as well as your home and when you are away from home, your insurance comes with you. The liability part of your homeowners insurance may provide coverage in the event you or a member of your family injures someone while you are on vacation. Perhaps you hit a horrible drive that hooks off the golf course and straight through the windshield of a car parked near the course; you may be covered under your homeowners policy for the repairs. The medical and liability portion of your homeowners policy may cover you if your errant golf drive hits a person not a parked car or if your normally cheerful canine companion decides to nip on someone’s ankle at the amusement park. Property coverage can be quite extensive and cover many property loss situations away from home. If your laptop is stolen from your rental car while you are on vacation, you can look to your home insurance for recovery – but remember if it is your business laptop, it may not a covered item. Virtually anything that you own or purchase can be covered for loss or theft up to the policy limits subject to the same deductibles and policy limits just as they would at home. If your luggage is lost by the airlines or valuable jewelry disappears from your hotel room, you may be able to recover under your homeowners policy. It is a versatile tool that helps protect not just your home, but you as the homeowner.
Are you a teenage driver or do you have one in your house? There are over 200,000,000 licensed drivers in the United States today and about 6% of them are teens. As a group, they are more likely than other age groups to be involved in a fatal accident and more likely to get a traffic citation, except possibly for those 75 years and older. Car crashes are the leading cause of death for those in the age group from 16 to 21 years old. Some of this may be due to inexperience, but there are certainly other factors involved in the high proportion of teen deaths in motor vehicle accidents. Authorities like the National Highway Safety Transportation Authority (NHTSA) suggest that psychological and behavioral factors such as impulsivity, peer pressure and thrill seeking behavior may lead to the association with speeding, reckless driving and alcohol and drug use while driving that is a frequent cause of accidents. NHTSA studies have also shown new drivers are easily distracted and that teens are more likely to engage in risky behavior when in a group. It is not just fatalities that are of concern; national studies show that one speeding ticket results in an increase in insurance costs of $900 over the course of a three year period. So, teens and their parents need to be concerned not only about their physical health but their financial health as well.
There is no shortage of advice for teens about driving but it can boil down to some very quick observations:
- Don’t drink or take drugs and drive; don’t get into a car with people who are drinking or taking drugs.
- Don’t drive distracted; that is no texting, talking on cell phones while driving or other in car activities.
- Buckle up. If you have heard some nonsense about ending up in a creek upside down and drowning because you couldn’t get out of the safety belt, forget about it. It almost never happens.
- Be careful when there’s a group in the car. Whether old or young, none of us is as distracted alone as we are in a group having fun – and
- Watch your speed.
There are certainly other tips that may be helpful, like exercising care when driving in the dark or extreme weather but by and large if you observe the big five above, you will have a better chance of becoming a senior driver someday.
If you are the parent of a teen and feel that you need some help monitoring your teen’s driving habits, you may want to enlist the help of some technological aids. There are a variety of smart phone apps designed to help reduce distractions while your teen is driving and keep their passengers safer on the road. While technology is advancing all the time, at Homer Smith Insurance we believe there really is no substitute for the teen learning good, safe driving habits along with close parental supervision.
In addition to the safety benefits of responsible driving, teens will get the best auto insurance rates if they: 1) Maintain good grades, typically at least a B average; 2) Keep a clean driving record, free of accidents and violations and; 3) Take an approved driver’s education course.
Folks out here on the Olympic Peninsula have been close to the land for a long time. A lot of this area’s history has been tied up with the timber industry as well as fishing. Sometimes we forget that there has also been a strong agricultural presence. The Dungeness Valley in Sequim, for example, grew potatoes wheat, oats, peas and apples for shipping to ports around Puget Sound. There was also a large crop of hops which supplied the Port Townsend breweries and the thirsty sailors who frequented them. The Egg and I, a book about rural Jefferson County in the 1930s highlighted a mixed agriculture economy that appears to be coming back.
The local food movement has really taken hold here. OlyCAP and other community organizations worked together to sponsor a conference on food security on the Olympic Peninsula back in 2007. That seemed to get a lot of people working together to help support area organic farmers and just introduce a bunch of people to each other. In the past few years area farmers markets have grown like never before with active markets in Port Angeles, Sequim and Port Townsend. Nash Huber of Nash’s Organic Produce was in the running for a national award as an organic farmer a few years back. Many of the local farmers have demonstrated tremendous community spirit in contributing excess produce to local food banks and allowing community groups to glean remaining produce from their fields and orchards after the harvest. Community support runs both ways.
Both Clallam County and Jefferson County have a growing farm population and with expanding outlets that include the farmers markets, area restaurants and “farm share” Community Supported Agriculture (CSA) programs, individual farmers have a chance to make a difference. A lot of the new farming is organic as well, responding to a renewed public interest in healthy food. In Clallam County, Nash’s Organic Produce has been a leader in organic food production for years and their farm stand offers items not only from their farm, but other items from local producers. Jefferson County has a number of organic producers with farmers like John Gunning at Collingswood Farms and the folks at Midori farms actually producing in or near the Port Townsend “urban” environment. The organic food movement is supportive of all kinds of growers. Sequim is famous for its lavender and there are many organic lavender producers there. Every summer in July many lavender farms are open to the public during the Sequim Lavender Festival — pictured above, Homer and Cynthia of Homer Smith Insurance visited Graysmarsh Farm this past July,
Growing organic food – or even organic lavender – starts with organic seed and the Organic Seed Alliance has been quietly going about its business of educating farmers about the benefits of organic seed and advocating for organic production since 2003. Their offices are in Port Townsend and their reach is literally worldwide.
Each of these farms and organizations is pretty small when considered alone, but taken together they put the Olympic Peninsula in the front ranks of the local food and organic movement. They make us all think a little bit more about the importance of supporting each other in our community.
There have been
more than 2000 federal disaster declarations since the year 1953, that’s an
average of 34 every year. The year 2011 set a new record with 99 federal disasters declared. A federal disaster is declared under the provisions of theStafford Act. The act requires that the
governor of the state makes a request through the federal government and that
the declaration itself is made by the President of the United States. It is not
only states that can make a request, other entities such as the District of
Columbia, Puerto Rico and American Samoa, among others may also request a
federal disaster declaration.
Once a federal
disaster is declared, the disaster area becomes eligible for a number of
federal supports; a federal disaster presumes that the extent of damage and
devastation is beyond the capability for a local area or a state to provide an
August 29 marks
the anniversary of one of the largest federal disasters in history, Hurricane Katrina made landfall as a Category 4 hurricane striking the New Orleans, Louisiana
area. The storm was devastating to New Orleans and surrounding areas of
Louisiana, Mississippi and Alabama. Katrina caused 1836 deaths and flooded 80%
of New Orleans destroying many homes, small buildings and businesses. Four hundred thousand people lost their jobs
as a result of the disaster; donations from U.S. citizens to help those caught
up in the disaster approached $600 million, but help poured in from everywhere,
with donations even from countries like Bangladesh and Sri Lanka. Refugees from the disaster were spread out
across the states, even as far as Washington State and the Olympic Peninsula.
about $71 billion in insured losses and replaced hurricane Andrew as the
largest insurance loss from a natural disaster in US history. There were other disasters as well and that
helped the year 2005 become the most expensive year in history for American
Insurance companies. The 2005 hurricane set records for the number of storms – actually, more storms then there were
names for. Meteorologists had to add six Greek names to fill out the list of
storms. Counting losses from hurricanes Katrina, Dennis, Wilma, and Rita as
well as other storms and disasters, insurance losses in 2005 ran about $117
billion. A report from Towers Perrin
noted that insurers writing any property coverage in the southeastern U.S. and
most reinsurers across the globe had losses stemming from Katrina.
storms take a huge human and financial toll not only on the people that they
affect directly, but on the nation as a whole. In addition to the amounts spent
to help those affected by Hurricane Katrina at the time, something over $14
billion has been spent to strengthen the levee system that protects the New
Orleans area. Ironically, as this blog is published, August 29, Hurricane Isaac
is headed toward New Orleans to test that levee system. Let’s all hope it
A major area of concern at this time of year is the fast rate at which a car can heat up to an unbearable temperature. Every year you are likely to see a national news item about a child who has died after being left alone in a car on a warm day. In fact, our country has averaged 37 child deaths a year from heat exposure in vehicles since 1998. Even though our weather on the Olympic Peninsula is less extreme than in some parts of the country, that does not mean it couldn’t happen here. We may assume that because a day seems relatively cool out, that our kids and pets are safe locked in the car – think again. Even at 73°, on a sunny day the temperature inside a car can reach 120° in 30 minutes; on a 90° day that figure can rise to 160°.
The state of Washington is one of 19 states in the country that has a law that specifically addresses leaving a child unattended in a motor vehicle. It is a misdemeanor offense to leave any child under 16 unattended in a motor vehicle with the engine running. While this doesn’t really address the question of heat exposure, it’s a good start and a reminder to exercise care.
Those most at risk for heat related problems are kids and dogs — both for similar reasons. Kids, particularly infants and young children, are not in the position to cool themselves by opening windows or taking off clothes. Dogs cool their bodies through their paw pads and through their tongues by panting. When the heat in a closed vehicle goes up there is little opportunity for the body to cool. It takes surprisingly little time for damage to be done.
So far as children are concerned, the standing rule ought to be never leave a child alone in a parked car. Animals are different problems because they may not be welcome everywhere you are going. It may involve selecting a restaurant with a drive-through rather than taking a few minutes out to sit inside. If you have to leave an animal unattended, be sure to crack a few windows to help slow any heat buildup and park in the shade if possible. These aren’t fail-safe remedies, but they may help.
It may be difficult to consider getting yourself involved in someone else’s business. However, when you see a closed car and a child or an animal in distress, there really is not much time to act. Calling 911 or animal control is an appropriate response to what is potentially a very dangerous situation.
There is not usually a lot in the news about auto insurance, but occasionally there is an exception. A couple of years ago, magazines and newspapers were active with reports that a British insurer had settled a claim with “Mr. Bean”, actor Rowan Atkinson, to rebuild his rare McLaren F1 after a crash in 2011. The sum for the repair job on this carbon fiber specialty car was a cool $1.4 million; not mentioned was any part of the settlement that might have gone to repairing the shoulder damage he suffered in the crash.
While the settlement and repair may seem a little mind numbing, it is a great illustration of the value of this sort of specialty insurance for car collectors and – by extension – any collectors of valuable items. Obviously, the coverage is capable of high limits for collision damage, but it is also worthwhile noting that Washington auto insurance comprehensive and liability coverage can be correspondingly higher which may be of considerable benefit to a high net worth driver. Policies can also be written for an “agreed value” coverage which may be very important when dealing with rare collector items where “replacement value” may be determined by the next auction. Another potential benefit – important for Mr. Bean’s McLaren – is a provision to restore the car to its pre-accident condition and authenticity. For a classic or collector car this can be very involved and accounted for the fact the McLaren restoration took over a year.
There may be some restrictions on policies that can actually make a classic or collectible car less costly to insure than the family car. Typical restrictions can include:
•Limits on how many miles you drive the car each year,
•Restrictions on how the car is stored (e.g., in a secured garage)
•Restrictions on who can drive the car – either named individuals or driving record restrictions
•Assurance the car will not be used for participation in any racing or speed contest or be used on a race track, test track, or any other course.
The designation of “collectible” cars is always in a state of change. Cars over 25 years old have generally been viewed as “antique” but even newer, limited production cars can be considered for coverage. Certainly Mr. Bean’s McLaren fits the exotic and collectible bill. For any limited use vehicle, it may be worthwhile checking to see if collectible coverage would be cheaper and more effective for your personal needs.
Finally, if you are curious about why a company might consider settling an insurance collision claim for $1.4 the answer can likely be found in the agreed value coverage and the knowledge that the last McLaren F1 sold on the open market fetched a bit over $5 million — and as of January 2015 Rowan Atkinson’s repaired, twice-crashed McLaren F1 was up for sale for $12 million.
No matter what the value of your collectible, antique, or everyday-use car, Homer Smith Insurance would be happy to provide a quote for you to insure it. Visit our website at www.homersmith.com or call one of our knowledgeable agents at 888-433-0031.
Seeing the reports in the paper that the Library here received a $500,000 challenge grant from the National Endowment for the Humanities reminds us that the Port Townsend Library is on a roll – for the last hundred years. The Library was actually founded in 1898 as the Port Townsend Library Association and opened in a second-floor room of the Central School with a small collection of books donated by the founders. Within a year it had almost 700 books and a circulation of nearly 2,000. By January of 1903, the association had purchased a lot on Lawrence Street for $400, intending to build a library and by January of 1907 the association and the city had begun talking with the Carnegie Foundation. The foundation was providing funding for community libraries throughout the United States that met a standard of public support. The foundation required the town receiving funding not only demonstrate the need for a public library, but provide the building site, and promise 10 percent of the cost of the library’s construction annually to support its operation.
The Port Townsend Library Association had a site for the library and could demonstrate the need, so citizens petitioned the City Council for financial support. In April 1911 the City Council passed a resolution to create and support a free library. It was a good thing, too, since that same month, according to the Morning Leader, the school district served notice on the library that it had to move out of the school. Circulation more than doubled in that first year May B. Smith, the Librarian, reported to the City Council and the number of registered borrowers went from 97 to over 500.
Plans for a new library building were submitted to the Carnegie Foundation, and in the fall of 1912 the foundation agreed to give $12,500 to the City of Port Townsend to erect a public library building on the condition that the city continue the monetary pledge for maintenance and salaries. The grand opening was held Oct. 14, 1913, with a citywide celebration.
The Library evidently served citizens locally with distinction during the first half of the 20th century. It cooperated with local school officials during the depression to increase time for students to complete homework at the library. New collections were developed for young children and expanded reference materials were made possible through funding by the Ladies Auxiliary of the American Legion and the Parent-Teachers Association. In 1934, at the height of the depression, the library raised enough money to remain open following budget cuts, winning a special levy by a nearly four-to-one margin. In the 1940s, the library added story hours for young children.
In 1987 a group of residents formed a Diamond Jubilee Campaign to renovate and expand the library which had become too small and was physically deteriorating. City residents – by then numbering 7,000 – raised $800,000 for the expansion, and in June 1990 a renovated and expanded Carnegie library was opened.
Growth in the town has us on the verge of expanding the Carnegie again, but this time the historical nature of the library and its success in serving the people of Port Townsend is attracting a wider audience. The NEH grant is only one of the honors the PT Library has received. It has also received a “Star” award from the Library Journal for the second year in a row – one of only five libraries in the state to be awarded and it is perennially among the leaders in the state for circulation in its size category.
Truly, as the Port Townsend Public Library continues into its second century it remains on a roll and there’s more news to come.
Licensed, bonded and insured is a phrase you see pretty often in advertising. Licensing pretty much everyone understands. In this state, like most others, many occupations have licensing requirements; in Washington State hundreds of occupations and professions from Accountants to X-Ray Technicians must be licensed and all licensing has some standard that must be met. Insurance is also a pretty well understood concept. We have it for our cars, our homes and various other areas in life we want to protect from financial risk so we know what it looks like; bonding, not so much. Bonds are intended to be a form of guarantee and they protect the entity (person or organization) that requires the bond, not the purchaser. The entity requiring the bond may be the state – in the case of an auto dealer surety bond – or a homeowner who hires a construction company in the case of a payment bond. The bond is not insurance and a premium paid for a surety bond is actually a fee for the guarantee itself; it is not designed to cover potential losses. What does the guarantee mean? If a claim arises under a bond, the bonding company will pay against the claim and then recover the amount paid from the purchaser of the bond. Therefore, purchasing a bond generally means assuring the bonding company of the good character and financial stability of the purchaser – they want to know the bond will be repaid. And that is the benefit to you as a consumer; the assurance that the bondholder is willing and able to put their reputation and financial security behind their promise to do something. There are many bond types. Auto dealer surety bonds are a form of occupational bond designed to guarantee to the state that an auto dealer will operate according to state laws and regulations. A dealer who was sued for tampering with an odometer, for example, could find they have broken state law. If there were a claim against their bond stemming from that, the bond issuer would pay the claim and recover the funds paid (up to the bond amount) from the bond purchaser. Performance bonds of various kinds offer specific assurances about work to be performed: construction or contract bonds are issued to protect the project owner by ensuring the fulfillment of a contract; maintenance or warranty bonds ensure a contractor will provide quality materials and workmanship and provides protection against defects in work for a project owner and site improvement bonds are often required by a government agency to protect public property from any losses associated with a private project. A site improvement bond offers assurance a developer will restore any public property damaged or changed during a project. One form of bond of interest to the consumer is the payment bond which assures that labor and subcontractors will be paid. Bonds are sold under the assumption they will never be used, unlike insurance which assumes there is a level of risk that an event will occur. That is why character, financial history and current financial history are so important in seeking and pricing bonds. People with a history of defaulting on a bond payment are very unlikely to successfully purchase another bond. In many cases, the bond issuer may even ask for collateral to assure the ability to repay. Whether or not collateral is taken, privately owned companies will likely be required to provide the personal indemnity of the business owners as well as company indemnity. Rates for bonds are determined by the amount of the bond and through an assessment of an individual’s or business financial history, credit, and amount in liquid assets. Insurance rates look backward to assess risk; bond premiums look forward to the ability to repay. The reason for this is that bonding involves a guarantee of future performance and the bond issuer becomes the financial guarantor of that performance. Let one of our business insurance specialists discuss the importance of various insurance coverages and bonds for your business. Call 888-433-0031 or visit the business insurance or bonds pages of the Homer Smith Insurance website at www.homersmith.com.
We have written previously about the partnerships between the federal government and the private sector in complex insurance settings. One is the National Flood Insurance Program which is a public – private partnership between the federal government represented by FEMA and almost 90 private insurance companies. The partnership works to offer flood insurance to property owners and renters in communities that are part of the National Flood Insurance Program. The Terrorism Risk Insurance Act enacted after 9-11 also cast the government in the role of partner with private insurers. Both of these programs deal with managing a phenomenon called collateral risk –the occurrence of simultaneous losses from a single common event. Natural disasters like wildfires, floods, tornadoes and earthquakes can produce collateral risk.
The Federal Crop Insurance Program is another example of a public-private insurance partnership and an experiment in managing collateral risk. The Crop Insurance Program is managed through the USDA’s Risk Management Agency working with private insurers who do the underwriting and independent agents who sell the insurance. Crop insurance is the oldest of these programs having its origins in the Dust Bowl and the Great Depression. It began as a limited experimental program in the USDA that covered major crops in their main areas of production and it was operated strictly as a federal program. The reason for creating a crop insurance program was to provide relief in an environment where localized disasters – like droughts – created pressure for declarations of emergencies and applications for federal assistance. In short, it was an effort to manage risk at a national level.
The program as it is known today took shape in 1980 with the passage of the Federal Crop Insurance Act and evolved through the creation of the Risk Management Agency in 1994 as a means of administering the program. Much of the impetus for the evolution of the law and the agency appears to have been the regular calls for disaster assistance to farmers following crop related events like drought and hailstorms. Today, the Risk Management Agency administers the program and 17 insurers participate as underwriters. The federal government provides a reinsurance capacity which puts the American taxpayer on the hook for catastrophic losses but they also participate in the profits; in most years there is an underwriting surplus.
Like other programs designed to respond to these collateral risk events there are supporters and detractors. Detractors cite the huge, and potentially ballooning, costs of the program which is projected to reach about$16 billion this year following severe drought in many areas of the south and Midwest. Supporters of the program note that without it, may farmers would be put out of business by seasonal losses leaving our national food security in peril.
Historically, it appears true the program has best served large corporate farms. It is only recently that programs have been developed to support small farmers and organic growers like those we find here on Washington’s Olympic Peninsula. The problem for organic growers has been that reimbursement rates did not take into account the increase in value of an organic crop which significantly affected the value of the coverage. New programs are being developed to address that which allows high reimbursement rates. Fruit growers, another Washington interest, are also not wholeheartedly in support of the program. Not all crops are covered and there are bureaucratic hurdles to jump in order to create a successful application.
Although there are a number of groups that would like to see reform or elimination of the program it has proven resistant to change by congress and remains a favorite among many farmers, particularly those involved in large farms and commodities.
In 2006, an Insurance Research Council poll found that less than half of renters have a renter’s insurance policy; over 95 percent of homeowners had homeowners insurance. The percentage of renters carrying renter’s insurance may have declined since then; a new survey commissioned by an online service found only 34 percent of American renters have renter’s insurance.
Perhaps the recession has made some people more willing to accept the risk of loss rather than the certainty of a premium. This may not be a good choice these days. Independently, surveys by several insurance companies have shown that renter’s, on average, have a substantial exposure. A study by USAA insurance suggests the average renter has more than $20,000 in possessions and a similar study by Allstate puts the total higher – at around $30,000.
There may be several reasons why people don’t buy Washington renters insurance. One reason may be the mistaken belief that their landlord’s insurance policy will cover their belongings in the event of a fire or theft. Typically, that is not the case – a landlord is not generally responsible for the renter’s belongings and landlords are now increasingly even requiring tenants to buy their own renters insurance policy. Another reason is the presumption that renter’s coverage is expensive. This is born out through survey data that found 60 percent of respondents believed renter’s insurance would cost $250 a year or more; 21 percent guessed it would cost over $1,000. In fact, renter’s insurance is very affordable and while it varies by state and by company, the Independent Insurance Agents & Brokers of America (IIAB), estimate the average cost for renter’s insurance is about $12 per month for $30,000 worth of property coverage and $100,000 of liability coverage.
There are really good reasons to consider renter’s insurance. The most important could be liability coverage – a visitor is injured in your home or their property is damaged or stolen. Your renter’s insurance can help protect you in the event of a claim or suit. If you have a theft, fire or other damage (excepting flood or earthquake damage), damage to your possessions should be covered. It can also help in catastrophic situations like fire by providing support for an alternative living situation. Renter’s insurance may even cover losses outside your home – like someone stealing your laptop while you’re out and about.
Before purchasing a Washington renter’s insurance policy, do a careful home inventory. Go room to room and photograph and document the value of each item in the room. This will allow you to see exactly how much coverage you will need, and don’t be surprised if the value of what you own is higher than your gross estimate. Finally, if you have high end items – fine art, antiques, jewelry or computers – make sure you can get adequate coverage. If you are insuring through Homer Smith Insurance, we can help you with this.