Replacement Cost vs. Market Value: Why is my Dwelling Coverage so High?

One of the most common questions that we are asked in our office is “Why is my dwelling coverage so high?”  We all know that the housing market is not where it used to be. This has been the case for some time and probably isn’t changing any time soon. So why does the insurance company insure your home for more than it’s worth?

Amongst other things, home insurance is there to protect you in event that there is a complete and total loss. Regardless of whether you would purchase a new home or rebuild your home, it doesn’t change the fact that the company who is insuring your home is just that….insuring your home. They aren’t necessarily insuring you to go out and purchase another home, but rather are insuring the home that you currently live in and the coverage is determined by how much it would cost to actually rebuild your home from the ground up.

Here are a few things to keep in mind when considering the differences between Replacement Cost and Market Value:

1. The Market Value for a home generally includes the value of the land on which the home sits. The Replacement Cost of a home does not include any land values, but is only concerned with the home itself.

2. The Market Value for a home is affected by changes in the real estate market. When homes in a particular area are in high demand the Market Value of a home in that area will generally go up. In the same way, when demand for homes in a particular area is low, the Market Value of homes in that area may remain level or even go down. Replacement Cost is not affected by the real estate market but is instead affected by the fluctuations in material and labor costs to build a home. For example, if the cost of material such as lumber, concrete, drywall, and carpet are higher in a particular area, then the Replacement Cost of a home in that area will be higher than the Replacement Cost of the same home in an area where materials are less expensive.

3. The Market Value of a new home generally factors in the cost that was required to build the home new. Replacement Cost, however, is looking at the cost to re-build the home, if it were completely destroyed, using all of the same materials and construction techniques originally used to build the home. The cost to build a new home can be quite different from the cost to re-build a pre-existing home due to access issues, labor efficiencies, economies of scale, debris removal and higher price of materials that may no longer be in common use (such as lath and plaster vs. drywall).

When insuring a home, we always use the Replacement Cost of the home to determine the amount of insurance required as this is what it will cost to replace or repair the home should it be damaged or destroyed. Understanding your coverage and what it means for you is just one of the many things that we offer here at Canyon Lands Insurance. If you are interested in a free quote, please visit our website at http://www.canyonlandsagency.com or give us a call at 480-288-5900. Hope to hear from you soon!

 

Purchasing Insurance: Choosing an Agent vs. Online Insurance

These days you can buy nearly anything online, even your insurance.  Although it may seem like you are saving time and money by obtaining a policy online, it may not be so convenient later.

One of the biggest advantages of working with an agent is that they have time to sit down and talk with you, in turn allowing you to establish a one on one relationship.  Just one visit with an agent can prove to be beneficial in respect to knowing what your options are and choosing the best possible coverage that fits your needs.  In addition to this, based on your answers to a few simple questions, an agent is able to find possible discounts that you may be qualified to receive.  Purchasing insurance can sometimes be stressful and an agent can alleviate some of that stress, if not most of it just by understanding and being able to relate to you.  After all, we are human and it’s comforting to know that someone has your best interest at heart.

Ben Franklin said it best, “Time is money”. Although an online agency provides you with a phone number where they can be reached, you may not be able to speak with a live person. I’m sure that we have all experienced the downfalls of 800 numbers and the “customer service” they provide.  One could spend 30 minutes or more being looped from one automated message to the next only to reach a live person who ends up transferring you somewhere else. Being able to reach your agent by phone without having to guess which automated option to choose can save you both time and aggravation.

One final advantage to working with an agent who is local is that they can work with you in regards to your coverage.  They can adjust your limits and/or deductibles without sacrificing the important coverage that you need resulting in a policy that is tailored just for you and your pocketbook.   Online agencies give you the freedom to choose the coverage you want according to what you can afford, but an agent can recommend coverage that will protect you and your family all while keeping you within your budget.

For example, the required liability coverage amounts in the state of Arizona are 15/30/10.  Sure, you may get a huge savings up front, but will you pay for it in the end?  If you cause an accident which results in bodily injury more than $15,000 or property damage more than $10,000, you are financially responsible.  Just to give you an idea, according to the National Safety Council, the average cost of injury in a car accident is $61,600 and the average price of a new vehicle is a tad over $30,000 according to Forbes.  Saving a couple of dollars by reducing coverage could cost you thousands in the long run.

With all of the decisions that you make in life, don’t let choosing the right policy overwhelm you when you have an agent right who is right around the corner.  Make an appointment today by calling us @ 480-288-5900.  We can help you protect what matters most!

 

Why You May Need to Remodel Your Homeowners Insurance

Are you properly insured if you’re considering a remodel? (Image via google)

You have a big remodel planned this summer that includes a revamped master bedroom and bath, a new kitchen, and a small addition that will create a family room off the back of the house.  You have been dreaming about cooking in your new kitchen and waking up in your new bedroom for months.  You have all the contractors you need lined up.  Your permits are in place and you feel like you have everything taken care.  But, have you called your insurance agent?

One mistake that many homeowners make is doing major improvements to their home without consulting their insurance agent.  There are several areas where this oversight can lead to problems with your coverage while the remodeling work is underway and after it is complete.   First, you need to make sure you have the right kind and right amount of coverage to protect you during the construction.   Don’t wait until work has already started as you don’t want to find out you are underinsured when it is too late to rectify that problem.  Second, your insurance needs may change based on the outcome of the remodel.

Here are some steps you need to take to ensure you have the coverage you need to protect you during the process.

1.     Call Your Agent

It is important to do this before work starts.  There may be additional coverage you need to secure during the remodel.  If you or a family member will be doing most of the work, you may need to boost or enhance your liability coverage in the event someone is injured.  Your agent can also advise you if there are additional coverage’s you need to have in place during the project.

2.     Increase Your No Fault Medical Protection

The medical payments portion of your homeowners insurance is likely very low as the primary concern under normal circumstances is liability.  However, if you or members of your family or even other people like friends are going to be doing some of the work, you should increase this limit.  In the event someone is injured during construction, any medical bills can be submitted to the insurance company for payment.

3.     Check Out You Subcontractors

While many homeowners think to check the references of subcontractors, they don’t always think to inquire about the subcontractors insurance and bonding.  If the person doing work at your house damages your property or injures someone, you need to know that they are carrying adequate insurance to cover those losses.  If they do not, the liability may fall on you and your homeowner’s policy may not cover these kinds of claims, leaving you to pay the bill out of pocket.  Verify coverage by asking for proof of insurance from any company or individual that will be performing work on your house.  If a subcontractor is unable or unwilling to provide proof of insurance, you may want to hire someone else.

4.     Consider Additional Coverage

If you are doing a large project, you may want to purchase additional coverage like a Builder’s Risk policy.  This type of policy protects you from any damage to your house during the course of construction including damage from wind or rain, theft of materials, and vandalism.

 

Related Articles:

•  What is Builder’s Risk Insurance? (canyonlandsagency.com)
• 5 Mistakes You Might Be Making with Your Homeowner’s Policy (canyonlandsagency.com)
• 3 Life Events That Can Change Your Insurance (canyonlandsagency.com)

 

Do You Need Disability Insurance?

Are you properly insured in the event you become disabled? (image via goingslo on Flickr)

Many working Americans don’t have the right insurance in place to provide their family with the protection they need.  If you asked most people in their 30’s and 40’s what kind of insurance they need in order to protect their family, they would likely answer auto, home, and/or life insurance.  While these types of coverage do provide protection and are a necessary, they don’t cover all the bases by themselves.  In fact, people in this age group actually need another type of insurance even more than they need life insurance.  What coverage are they missing?  Disability insurance.

Most people have some kind of disability insurance through their employer but for many of us, that coverage isn’t enough to protect our family’s financial security.  The root of the problem is that people are worried about things in the wrong order.  People in this age group are aware of their own mortality and concerned about how their death would impact their families.  What they don’t realize however, is that they have a 30% chance of becoming disabled before retirement age and only a 17% chance of dying before retirement age according to the Social Security Administration.

But My Employer Provides Disability Coverage

Many people receive short term disability coverage through their employer, but if you become disabled, this coverage may not be enough. Consider this; you are the primary breadwinner for your family and become temporarily disabled, your employer offered coverage will likely only pay you 60% of your regular salary.  If your family had to get by for several months on little more than half your salary, could you do it?  This is one of the most important questions you need to answer in order to determine if you need additional disability insurance.

But I Work for Myself

If you are self-employed, that picture may be bleaker.  Would your business be able to survive without you for several months?  Would it continue to pay you the money you need to take care of your family?  Those who own their own business and who work for themselves must have some kind of safety net in place to protect themselves in the event of a disabling event.  Even if you have money in reserves to help cover your personal income, you may not have thought about how the business will continue if you cannot function in the same role you are in right now.  Understanding how this kind of event will impact you personally and your business is the key to determining how much disability coverage you need in order to have the protection you need in place.

Short vs. Long Term Coverage

Additionally, even if your short term coverage is in place and seems adequate, you may not be protected if you become disabled for a longer term or even for life.  There are two different kinds of disability coverage, short term and long term.  Short term coverage generally covers qualifying disabilities for a period that is generally less than one year and may be tied to the amount of time you have been with the company.  If you remain disabled after the timeframe covered by the short term policy, you will need a long term disability policy in order to continue receiving benefits.

Because disability insurance policies can be complex with many restrictions and a wide range of options, you should work with an insurance professional to find the right policy to provide the coverage you need to protect your financial future.

Related Articles:

• 4 Common Insurance Mistakes 20 Somethings Make (canyonlandsagency.com)
• What Kind of Insurance Do I Need for my Business? (canyonlandsagency.com)
• 4 Reasons You Need Umbrella Coverage (canyonlandsagency.com)

 

7 Things Business Owners Need to Know About BOP Coverage

What kind of insurance is right for your business? Image via Grand Velas Riviera Maya on Flickr

Business owner’s policies, which are also called BOPs, can be a great fit to cover the insurance needs of many small businesses. This type of policy combines commercial general liability coverage and property coverage into a single packaged product that is generally more affordable than purchasing these coverage’s as separate policies.  Small businesses that are in the market for insurance coverage should look at whether there is a BOP available that meets their needs.

Here are 7 things business owners need to know about BOP coverage.

1.     Packaged Coverage Can Save You Money

By combining several standard coverage’s required by small businesses into a packaged product, insurers can offer that coverage at a lower price.  As long as the limits and coverage’s offered in a specific insurer’s BOP product meet your needs, this can make getting the insurance your company needs at a price that fits within your budget.

2.     Provides Business Interruption Protection

The one coverage that is frequently included in a BOP package is business continuity coverage.  This type of insurance is often overlooked but it is one of the most important kinds of insurance for small business owners.  Business interruption coverage pays you a specific amount if your business cannot be operated which can make the difference between being able to rebuild after a disaster and having to file bankruptcy.

3.     Often Excludes Professional Liability Coverage

Although BOP coverage generally provides the kinds of insurance small businesses need, one area that is not usually included isprofessional liability coverage.  This means that any business that has professional liability exposure will need to purchase that coverage in addition to BOP.

4.     Tailored to Small Businesses

BOP policies are generally only available to companies that have less than 100 employees and bring in less than $1M in annual revenue.  If your company is larger than that it may not qualify for BOP coverage and buying the specific individual policies your company needs will be more cost effective.

5.     BOP Property Coverage Will Pay to Replace Property

Most BOPs provide protection against the loss or damage of property and will cover the cost of replacing the business property.  This is an important detail to confirm with your insurance agent as the difference between replacement value and actual value can be significant.  Replacement value ensures you will have the resources to replace any lost or damaged property.

6.     Offers Protection Against Libel, Slander, and False Advertising

BOP coverage will protect your business against claims of libel, slander, and false advertising in addition to shielding the business from liability for bodily injury and property damage.  This can not only save the company money in the event there is a groundless claim filed, but can also save the company in the event there is a successful claim.

7.     Lower Premium Usually Means Less Flexibility

One thing many business owners do not like about BOP insurance is the lack of flexibility these kinds of policies provide.  Business owner’s need to realize that there is a trade-off when they select BOP coverage.  Because the product is standardized and therefore easier for the company to sell and service, it is offered at a lower cost.  However, in order to maintain that standardization, BOPs don’t usually allow for any customizations or deviations from the base product.  If the BOP you are looking at doesn’t provide exactly what you need, you may need to purchase additional coverage which must be factored into your overall cost/benefit analysis.

A business owner’s policy (BOP) might be the perfect fit for your small business insurance needs.  Make sure you understand exactly what is and what is not covered and if needed, secure additional coverage to fill in any gaps.  By leveraging the cost savings provided by BOP coverage, businesses can ensure they have the protection they need at a price they can afford.

Related Articles:

• Business Owners Policy (businessinsurancenow.com)
• Buying Insurance (sea.gov)
• Protect Your Business with BOP Insurance (entrepreneur.com)

 

3 Life Events That Can Change Your Insurance

Are you properly insured after a major life-changing event? Image via cheesy42 on Flickr

Many people don’t realize that different life events can have an impact on their insurance needs as well as their insurance premiums.  You might think that turning 25 will bring your auto insurance down or realize that getting married means you need to combine your coverage into a single policy, but there are many other ways that major life events can impact your insurance.   A survey conducted by Trusted Choice and reported in Insurance Journal found that more than 30 million U.S. households have insurance policies and/or coverage that don’t fit their current needs.

Here are 3 of the major life events that can change what kind of insurance you need, how much insurance you need, or how much your insurance costs.

1.     Getting Married

When you tie the knot, your insurance needs and costs can change in a couple different areas.  First, your car insurance rates may go down because you are married and combining policies may qualify you for a multi-car discount.  If you are purchasing a house, you will need a new homeowner’s policy.  If you are moving in together but renting, you will want to combine your renter’s insurance and make sure the coverage limits of the policy are enough to replace both of your possessions.  Regardless of whether you are a renter or a homeowner, you may want to make sure your property replacement coverage will cover your wedding rings.  Finally, now that you are married, your life insurance needs may be drastically different and should be reviewed.  Even if you have enough insurance, you will likely need to make beneficiary changes at a minimum.  Talk to your insurance agent to make sure the coverage you have is the coverage you need and that you aren’t paying more for it than you should be.

2.     Getting Divorced or Becoming Widowed

A change in marital status can mean that you need to make changes to your insurance coverage.  Going from two cars to one, moving to a smaller house, selling valuables, and splitting assets can all result in the need for less coverage and lower limits.  This can be a big cost savings for you that you may not think of during such a difficult time.  You will also want to change any beneficiaries on life insurance or other policy payouts.

3.     Having Children

Becoming a parent for the first time or the last time is a big change and it can mean you need to make changes to your insurance coverage.  According to a life insurance fact sheet put out by LIMRA, almost 70% of U.S. Households with children under 18 would be in jeopardy and destabilized financially if the primary bread winner died.    If you have added a new family member by birth or adoption, it is a good idea to sit down with your insurance agent and make sure you have enough life insurance coverage to meet the needs of your family and that beneficiaries are designated properly.  You may also want to review your auto and home insurance policies to ensure that coverage limits are adequate for your larger family.

While these are 3 of the major life events that can affect your insurance costs and needs, there are several other events that should trigger a review of your policies with your agent.  If you have a new teenage driver, buy a vacation home, have a significant change in income, buy or inherit valuable property, or as you get ready to retire, sitting down with your agent can make sure you and the ones you love are protected.
Related Articles:

• 7 Things That Affect Your Car Insurance Rates (canyonlandsinsurance.com)
• How Much Life Insurance Do You Need? (canyonlandsagency.com)
• How a Home Inventory Helps Protect You (canyonlandsagency.com)

 

Insurance 101: Insuring Recreational Vehicles

Is your vacation insured properly? Read more to learn about RV Insurance (image via _escalade328s_ on Flickr)

The summer season is fast approaching and if you are planning to head out on the open road for a family RV adventure, make sure you take a couple minutes to ensure you have the insurance coverage you need before you leave.  Many people share the common misconception that adding their RV to their auto policy provides them with adequate protection during their trip.  While your auto policy may offer some of the coverage you need, it won’t protect you completely which is why it makes more sense to invest in an RV insurance policy.  Buying a separate policy ensures you have all the coverage you need to keep your trip on track and protect yourself while you are on the road.

What is the Difference between Auto Insurance and RV Insurance?

The primary differences between auto coverage and RV coverage result from the primary differences between your car and your RV.  An RV is more than just an RV; it is a house on wheels.  This means you need more coverage than you have on your car in order to cover potential losses that you are open to with an RV that you wouldn’t be with a car.

You keep significantly more property in your RV than you do in your car, some of which can be valuable like laptops, televisions, and other equipment.  When your house on wheels is parked at a campsite, the area around it can be considered your “yard” which makes you liable for things that happen there.  There isn’t really a situation where your car could be thought to have its own yard.  If your RV is damaged while you are on the road, you will need somewhere else to stay just like you would if your house was damaged.

If you are traveling with only your auto policy, the loss of your property, your liability for the campsite, and the expenses related to staying somewhere other than the RV won’t likely be covered which means you will be paying out of pocket.  That might break your vacation budget and force you to cut your trip short.

Common RV Coverage’s

There are several different types of RV coverage available from most insurers, although they may call the coverage by a different name.  Here are the most common coverage types:

• Bodily Injury – Covers you if there is an accident where you are liable for someone else’s injuries including medical bills, lost wages, and other legal obligations relating to the injury.
• Uninsured/Underinsured Motorist—Covers the cost of repairs when you are involved in an accident and the driver at fault doesn’t have insurance or doesn’t have enough insurance to cover your losses.
• Property Damage— Covers the repair or replacement of damage done by you or your RV to other people’s property
• Comprehensive – Covers damage or losses to your RV and/or personal property from all covered threats except collision.  This includes things like theft, vandalism, and weather.
• Collision – Covers the cost of repair or replacement of the RV and all components if it is damaged in a collision.
• Vacation Liability— Covers your liability for bodily injury and property damage while on a vacation site or camp site.
• Towing & Labor—Covers the cost of towing by a tow truck capable of handling the RV.
• Roadside Assistance—Covers the cost of roadside assistance when you break down or run out of gas.
• Emergency Expense – Covers your costs to live outside the RV in the event it is damaged and needs to be repaired.  Generally includes lodging, meals, and travel.
• Personal Effects Replacement Cost – Covers the expanded personal property you are likely to have in the RV against loss or damage.
• Full Timer’s Package – Provides a package of coverage’s that usually includes liability, coverage specific to when the RV is parked and being used as a residence.

Purchasing RV insurance protects you no matter what comes your way and gives you the peace of mind to sit back, relax, and enjoy your vacation.

Related Articles:

• RV FAQ’s and Tips (changingears.com)
• RV Insurance (progressive.com)
• The Advantages of RV Insurance (insureme.com)

 

Medicare 101: The Basics

Which Medicare coverage is right for you? Image via Old Shoe Woman on Flickr

There is no way to sugar coat it; Medicare can be mindboggling.  For people moving to Medicare from private insurance, switching over can be a frustrating time because you have a lot of questions and aren’t sure where to get the answers.  If you are used to the relatively straightforward private insurance company plans offered through employers, navigating the many parts of Medicare is often the first obstacle you have to overcome.  With so many parts and a late enrollment penalty hanging over your head, it’s hard to know what you need, which parts to choose, and who you need to work with to get all the parts and pieces in place before you run out of time.

To ease the adjustment, here is a basic breakdown of the different parts of Medicare, what each part covers, and how they work in conjunction with each other to provide the health insurance coverage you need.  For more information, you can visit the Medicare website or talk to your insurance agent.

1.     First Things First

Let’s review what Medicare is and who is eligible for it.  The Medicare program provides health insurance for people in specific situations and is funded by the Federal Government.  In order to qualify for Medicare, you must be either 65 years old or older, under 65 with a specific disability, or any age with end-stage renal disease.

2.     Medicare Part A: When You Need to Go to the Hospital

Medicare Part A is part of your base Medicare coverage.  It pays for your medical expenses when you are admitted to a hospital and receive inpatient care.  Additionally, it may provide some coverage or assistance in paying for a skilled nursing facility, hospice care, and some of your home health care needs.  If you qualify for Medicare, Part A is automatically part of your coverage unless you opt for Part C below.

3.     Medicare Part B: When You Need Medical Care Outside the Hospital

Medicare Part B is also part of your base Medicare coverage and it pays for your medical expenses outside of the circumstances covered by Part A.  If you need to see a doctor, have an outpatient procedure at the hospital, or other eligible expenses, Part B pays for 80% of the cost after you meet your Part B deductible.  Preventative care and care associated with managing long term illnesses are also covered by Part B but are generally covered at 100%.  Unlike Medicare Part A, there is a monthly premium that must be paid for Part B coverage.

4.     Medicare Part C: aka Medicare Advantage Plans

Medicare Part C encompasses both Part A and Part B and offers Medicare recipients another option for health insurance.  A Medicare Advantage Plan is run by a private insurance company and functions like the HMO or PPO you likely had through your employer prior to switching to Medicare.   If you choose Medicare Part C, any hospital stays, medical treatments, preventative care, hospice, skilled nursing, or home health care would be covered under the Medicare Advantage Plan you select.  In addition to those Part A and B services, a Medicare Advantage Plan may also cover other costs including prescription drugs.  Medicare Advantage plans have a monthly premium that you must pay.  If you choose Medicare Part C, you do not need Part A or Part B and depending on the plan you choose, you may not need Part D either.

5.     Medicare Part D: Prescription Drug Coverage

Medicare Part D is an optional coverage offered by private insurance companies that have been approved by Medicare to offer coverage for prescription medication.  If you have Medicare Parts A and B, you will more than likely want to purchase a Medicare Part D plan to help cover the cost of any medication.  If you have a Medicare Advantage Plan that doesn’t offer the prescription drug coverage you need, you may want to find out if a Medicare Part D plan could help save money on your prescription drugs.  Part D requires you to pay a monthly premium and has an annual limit.

6.     Medicare Supplemental Insurance: Medigap

This is an extra policy you can purchase to help cover your out of pocket expenses and things that are not covered by Medicare.  If you purchase a Medicare Advantage program, you are not eligible for Medigap coverage as it only applies to those with traditional (Parts A, B, and maybe D) Medicare coverage.  Although there are 12 different types of Medigap coverage offered, each type provides the same coverage regardless of which insurance company you purchase it from.  You will need to pay an additional premium each month if you decide to purchase Medigap coverage.

The complexities of Medicare may seem overwhelming, but once you understand what each part covers and how the different combinations work together to cover your health care costs, you can make the right decision for you.
Related Articles:

• Medicare Eligibility Tool (medicare.gov)
• Medicare Preventive Visits (medicare.gov)

 

3 Things You Probably Think Your Homeowner’s Policy Covers That May Not Be Covered

Does your insurance cover you in the event of a flood? Image via freefotouk on Flickr

The majority of homeowner’s policies written today provide three types of coverage: damage to or loss of your house, damage to or loss of your possessions, and protection from liability claims.  These standard coverages protect you from losses resulting from most natural causes including fire, wind storms which includes hurricanes and tornados, lightning, hail, and the weight of ice and snow.  It also covers losses that are not caused by Mother Nature like riots, civil unrest, aircraft collision or other falling objects, theft, and vandalism.  The personal liability coverage included in most standard policies is enough to protect against small to medium sized liabilityclaims against you.

Most homeowner’s policies are fairly comprehensive in the type of protection they provide, which leads many homeowner’s to assume that any loss to their house or property and any lawsuit against them will be covered by the insurance company.  However, a quick review of the list of natural disasters above makes it clear that this is a bad assumption since floods and earthquakes are not covered by a standard policy.

The best way to make sure you know exactly what your policy covers and what it does not, is to read your policy from cover to cover.  If you find anything that you thought was covered that is not, you may be able to increase your coverage by adding a rider or extension to your existing policy or by purchasing an additional policy.

Here are some of the most common types of extra coverage homeowners add to their policies.

1.     Scheduled Items

One of the misconceptions about property replacement under a homeowner’s policy is that there are no limits on individual items. You assume that if everything you own is worth less than your policy limit, everything will be covered and replaced.  However, most policies include specific limits on high value items like jewelry, furs, expensive collections, and even computer equipment.  If the value of your property in one of the specified areas is higher than the limit listed in your policy, you need to add a higher limit or schedule those items for additional coverage.

2.     Special Coverage for Specific Threats

As mentioned above, there are two specific natural threats that are almost always excluded from a standard homeowner’s policy, floodsand earthquakes.

If you live in a flood zone, you will need to secure flood insurance from the National Flood Insurance Program separately from your standard homeowner’s policy.

When it comes to earthquakes, many homeowners’ don’t feel they need extra coverage because it is unlikely that an earthquake would damage their home.  This is especially true if they live outside of the most seismically active states, Alaska, Hawaii, and California.  If you think it will never happen to you, consider this.  There were 43,458 earthquakes in the U.S. between 2001 and 2011 according to theUnited States Geological Survey (USGS).  Even if you take out the quakes in the three states above, roughly 90% based on earthquake data for the last 40 years, 4,348 quakes remain.  This equates to more than one quake for each day of the 10 year timeframe from 2001 to 2011.   If you believe that earthquakes never happen where you live, you may want to take a look at the stats; there are only 8 states that have not experienced a single earthquake since 1974.

3.     Umbrella Coverage

Umbrella coverage is a separate policy that goes over your homeowner’s policy and provides an extra layer of protection in the event of a substantial loss.  For homeowners, this type of coverage can protect your assets, including your house, if someone sues you.  There is a limit, indicated in your policy, on how much your homeowner’s policy will pay out for personal liability losses.  If someone is hurt or killed on your property and you are found liable, that standard limit may not be enough to cover any judgment or settlement resulting from a lawsuit.  This type of coverage is one of the most important things you can add to your existing homeowner’s policy because of the broad protection it provides.

Related Articles:

• Homeowners Insurance 101 (thisoldhouse.com)
• Flood Insurance: What’s Covered (floodsmart.gov)

 

Worker’s Comp 101: 6 Common Employer Questions

Is your small business properly insured? Image via Flickr

For small business employers, understanding the ins and outs of Workers Compensation coverage and the accompanying legal requirements can be overwhelming.  Here are some of the most common questions asked by employers about Arizona Workers Compensation Insurance.

1.     How does Workers Compensation insurance help my employees?

This type of coverage protects employees who are injured on the job and ensures they will receive compensation for lost wages, payment of related medical expenses, and in some cases, monetary awards for disability and damages.  It is no fault insurance, which means payments are made regardless of who was responsible for causing the accident, injury, or illness.   Workers Compensation insurance also provides death benefits for the survivors of an employee who is killed on the job.

2.     What does Workers Compensation insurance do for me as a business owner?

While the primary intent of Workers Compensation coverage is to protect employees, it also offers some protection for companies and business owners.  If an employee is injured on the job, everything to do with that injury is handled under the Workers Compensation policy.  This means there is no need for litigation between the employee and the company and businesses don’t have to worry about or plan for the potential of huge legal fees associated with litigation.

3.     Who is required to carry Workers Compensation insurance in Arizona?

According to the Industrial Commission of Arizona, the agency responsible for the administration and enforcement of any state law that pertains to the health and safety of employees, all employers in the state are required to secure Workers Compensation coverage for their employees under Arizona Law.  The details of the law and how it is administered and enforced can be found in Article 18, Section 8 of theArizona State Constitution, Chapter 6 of Title 23 of the Arizona Revised Statutes, and the Workers’ Compensation Practice and Procedurerules outlined in the Arizona Administrative Code.

4.     If I am the only person who works for my company, do I need Workers Compensation coverage?

Sole proprietors are not required to carry Workers Compensation coverage for themselves.  However, it may not be a bad idea to cover yourself if you have an occupation that is inherently dangerous or carries a higher than normal probability of injury.

5.     What happens if I don’t have Workers Compensation coverage and an employee is injured on the job?

If one of your employees is injured on the job and you do not have the required Workers Compensation coverage, what happens next is up to the employee.  The employee can file a claim with the Industrial Commission of Arizona (ICA).  If the claim is accepted by the ICA, the state will process the claim and pay for the medical expenses and lost wages that would normally have been covered by the Workers Compensation insurance policy.  The state will then charge your company the full amount of benefits paid out to the employee plus a penalty that is equal to 10% of the amount paid out or $1,000, whichever is greater.  The other option is a civil suit.  Because you don’t have the protections provided by a Workers Compensation policy, the employee can choose to file a civil suit against the company to recover damages.  The employee’s injury is the only requirement in this type of filing to prove the negligence of the employer.

6.     Are there any penalties for not having Workers Compensation insurance if none of my employees ever file a claim with the state?

According to the ICA, the state can fine your company the same $1,000 penalty for failing to carry the required coverage regardless of whether or not a claim is filed.  If your company is found not to have insurance again within the same 5 year timeframe, the fine increases to $5,000 for the second finding and $10,000 for the third.

Related Articles:

• Resources for Employers (ica.state.az.us)
• Arizona Workers Compensation Practice and Procedure (azsos.gov)