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August 2012

Defense Costs

Personal Umbrella

When Dogs Attack

Business Insurance

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this issue

In May 2012, the U.S. Department of Transportation (USDOT) released data showing that drivers who have used technology that allows vehicles to communicate with each other are in favor of the benefits of this technology. The research, using Wi-Fi-like technology, supports its effectiveness demonstrates and demonstrates that it is able to prevent car crashes. The USDOT conducted its research at six driver acceptance clinics across the country and gathered feedback from 688 drivers who participated in the vehicle-to-vehicle communication tests.

The driver clinics, composing first phase of the Connected Vehicle Safety Pilot Program, were completed over the past year to gather information on how drivers would interact with the technology. More than 80 percent of participants strongly agreed that they would like to have vehicle-to-vehicle safety features on their personal vehicle. In addition, more than 90 percent of the participants believed that a number of specific features of the connected vehicle technology would improve driving in the real world including features alerting drivers about cars approaching an intersection, warning drivers of possible forward collisions, and notifying drivers of cars changing lanes or moving into the driver's blind spot.

“Safety is our top priority, and we are always looking for ways that innovative technology can be harnessed to improve driver safety," said Transportation Secretary Ray LaHood. "Connected vehicle technology offers tremendous promise – for improving safety, reducing traffic jams and increasing fuel efficiency. It's encouraging to see that most drivers agree and want this technology in their cars."

The National Highway Traffic Safety Administration and the Research and Innovative Technology Administration (RITA) will launch the second phase of the Connected Vehicle program this year. Approximately 3,000 vehicles will be used to test crash-avoidance technologies. RITA Acting Administrator, Gregory D. Winfree, said, “Intelligent Transportation Systems are the future of driver, roadway and vehicle safety. The body of research going on across the country today shows that the life-saving potential for safety technologies that enable communications between vehicles and the roadway infrastructure is too great to ignore.”

Connected Vehicle Technology

What happens to our online accounts and the information that they hold after we die? With nearly 240 million internet users in the United States,managing our online assets has become an important matter. People store photographs, calendars, and important personal information online. Most people are unaware that they should protect these digital assets in their wills. Most websites have their own rules and regulations regarding what happens to personal account information upon a user’s death. For instance, Twitter will retire a user’s account and provide an archive of their tweets if

Protecting Digital Estates

continued on page 2

their account is not set to private. Facebook will memorialize an account for notes of remembrance. If you want must make a request. Some sites may require a legal representative to provide a copy of a death certificate.

States, recognizing this as a growing problem, struggle to develop a uniform way of dealing with this issue. Only five states - Oklahoma, Idaho, Rhode Island, Indiana and Connecticut- have created laws governing digital asset management after death.

According to a paper published by the Ohio Bar Association, “the present laws protecting digital assets simply do not do enough to address the need to protect digital assets at the time of death or incapacity. The public must begin taking care to assure that the important remembrances, business assets and other information they have put online is available to their heirs in the manner they choose.”

Make a list of every online account that you have. State your wishes clearly about how you want each of those accounts handled. Name someone you trust as a digital executor. That person will be responsible for carrying out your wishes as detailed in your list. While many websites have policies involving death of the user, it is easiest to access accounts with username and password. Usernames and passwords should be kept separately from the list of online accounts. Upon death, both should be provided to your digital executor.

Digital Estates continued from page 1

Auto and homeowner policies provide adequate liability coverage for most people. Having a large liability loss that could exceed your limits is, at best, unpredictable. People purchase umbrella coverage to afford greater protection for their personal assets. Umbrellas provide an extra layer of protection over and above that provided in the auto and homeowner policies.

Consider the family who has worked hard, purchased a house, a vacation cottage with a dock on a lake, and a boat. Both children are now driving age, and while one of the young drivers is conscientious the other is not. In just a few years both children will be in college. Not only does this family have the exposure of youthful drivers, but the mostly unattended vacation cottage offers up its own special hazards with its dock on the lake. Furthermore, a speed boat is a serious hazard in the hands of an inexperienced or reckless operator.

What will happen if the daughter, who is not the best driver anyway, takes the boat for a joyride and collides with a 38’ sailboat? The family’s boat policy has a liability limit of only $100,000, and the sailboat, now on the bottom of the lake, was valued at $150,000. Without additional coverage, Dad and Mom might have to pony up $50,000 that they have set aside in a college fund to pay for the damage. And this does not take into account possible injuries to passengers in the other boat.

With the addition of the umbrella policy, this family does not have to kiss their dreams goodbye. The umbrella policy blankets over your underlying policies, like your auto, home, and boat, providing its coverage worldwide. The umbrella policy requires that you have minimum limits of liability on your underlying policies, but a covered claim above that limit, usually up to $1 million, would then be picked up under the umbrella.

Umbrella policies are either “excess” or “drop down.” Excess coverage occurs when the claim is covered by your underlying policy. The umbrella policy will respond once the liability limit in the underlying policy is exhausted. An umbrella policy will also drop down and pay first dollar for some claims that might not be associated with the underlying policy.

Umbrella coverage can be purchased quite reasonably. If you would like to discuss how an umbrella policy could be added to your package, just give us a call.

The Personal Umbrella Policy

Defense Costs

There are two parts to the

liability insuring agreements

found in personal liability

insurance as found in the

homeowner and umbrella

policies. In the first, the

insurer agrees to pay for

covered claims for which

you are legally liable. In the

second, the insurer

promises to defend you

even if the suit is

groundless, false or

fraudulent. The duty to

defend in the umbrella policy

is very broad and requires

the carrier to defend even if

one allegation or claim could

potentially fall within the

scope of coverage.

The duty to defend in the

umbrella policy allows the

umbrella carrier to join suit

with the underlying carrier if

it appears likely the claim

will exceed the limit in the

underlying policy.

The duty to defend is not

without significant value.

Often times, the cost of

defense could equal or

exceed the amount of

damages. In the event that

the underlying policy’s limits

are exhausted, the umbrella

policy limits can be tapped.

Kids Away At College It’s that time of year again. Kids are returning to school, some to colleges away from home. Insurance needs for your student are often overlooked during this busy time. Your child will no doubt be taking a modest amount of personal property including clothes, furniture, television, and laptop computer to a fairly unsecured location.

In general, a child away at college continues to be covered by his parents policy while away at school if he was a member of the insured household prior to leaving for college. The special form homeowner policy provides up to 10% of the amount you carry on homeowner contents coverage for property away from your premises. If you have $70,000 of contents coverage, you would have $7,000 in property coverage away from your premises, subject to extensions and limitations in the homeowner policy.

What about liability coverage for your child? College life offers so many opportunities for a child to be exposed to liability threats and should not be overlooked in your college planning.

Children away at school are covered for bodily injury or property damage they cause to others when held legally liable for their actions. However, if your child provided alcohol to others and those individuals then cause bodily injury or property damage, your child would not be covered by the homeowner policy. An umbrella policy would be necessary for this serious exposure.

These coverage extensions may be in question if your child is living off campus in an apartment or house. Insurance companies handle this exposure differently, so it is important for you to check with our office to verify coverage.

Dorm rooms qualify as an insured location since the insured is residing there temporarily and it is not owned by the insured.

If your child is a member of your household and fits the definition of “insured,” your child has liability coverage while away from home.

When considering insurance coverage for your child leaving for college it is important to remember that some classes of property have specific limitations. For example, most policies limit their coverage for the theft of jewelry to $500. In some policies computers are limited in coverage. Numerous other items are also typically limited anywhere from $200 to $2,500. It is important to make an inventory of those property items taken to school and make sure they fit within the limits.

It may also be advisable for you to add certain property to a scheduled personal property floater.

In some cases, there are endorsements which can expand coverage for special items.

Considerations

for Property Away

at School

Dog bites accounted for more than one-third of homeowner insurance liability claims paid in 2011.

Insurers paid out nearly $500,000,000, as reported by the Insurance Information Institute (III).

According to insurance company data analyzed by the III, the average amount paid for a dog bite claim

in 2011 was $29,396, up from $19,162 in 2003. The percentage increase in claim payments from 2003

to 2011 was 53.4 while the number of claims was virtually the same as in 2003. The rapid growth in payment amounts can mostly be

attributed to the increased cost of medical care and the amounts of settlements and jury awards.

When Dog’s AttackA rapidly growing claim problem

Negligence Laws: The dog owner is liable if injury occurred because the owner is

unreasonably careless in controlling the dog.

Dog-bite Statutes: The dog owner is automatically liable for damage or injury.

One-bite Rule: In some states, if the animal has bitten once, thus demonstrating

vicious behavior, the owner can be held liable. Many states are moving away from this

approach and adopting the position that the owner is liable regardless whether or not

the animal has shown vicious tendencies in the past.

Most dogs are friendly, loving pets. However, even the most docile dog may bite if it is frightened or if it feels it is protecting its

owner or puppies. At the first sign that your dog is showing aggressive tendencies, you should engage the services of a dog trainer.

The data demonstrates that there is a growing problem with claims involving pets. We will continue to see insurers restricting

coverage for owners of certain breeds of dogs that have a serious history of attacks. Each company provides of list of restricted pets.

If you have questions about a pet you are thinking of getting, make sure to call our office.

source - Insurance Information Institute

Dog owners are subject to

several different types of liability

imposed by statute. While not

all laws apply in every state,

generally there are three main

types of laws.

Business Insurance

The information in this newsletter is meant as a guideline only. There is nothing in this newsletter that alters the coverage or interpretation of any specific policy or endorsement. Because some statements are generalizations, and because different companies’ policies contain slight differences, please refer to your specific policy. Call our office before

making any judgments or decisions concerning your particular situation and the coverage that may, or may not, apply.

The information in this newsletter is meant as a guideline only. There is nothing in this newsletter that alters the coverage or interpretation of any specific policy or endorsement. Because some statements are generalizations, and because different companies’ policies contain slight differences, please refer to your specific policy. Call our office before

making any judgments or decisions concerning your particular situation and the coverage that may, or may not, apply.

A Health Savings Account (HSA) provides a real opportunity for eligible employees to lower their out-of-pocket healthcare costs and take advantage of the beneficial treatment on federal taxes. An HSA operates similarly to a flexible spending account (FSA). Unlike an FSA, whatever remains in the HSA at year-end can be carried over to the next year and beyond. In an FSA the money that you don’t use by year-end is lost. Some employers will take back your leftover FSA dollars on December 31, while others will let you file claims using those funds as late as March 15 of the following year. After that date the money is your employer’s, so

only put money in an FSA if you know you are going to use it all.

One requirement to have an HSA is that an individual must carry health insurance coverage with a relatively high annual deductible. Many self-employed individuals already carry deductibles required to qualify for an HSA. For the years 2011 and 2012 that deductible must be at least $1,200 for single coverage, or $2,400 for family coverage. Additional requirements for setting up an HSA are that an

individual cannot be eligible for Medicare benefits and cannot be claimed on another's tax return.

If the requirements for the HSA are met, these individuals can make a tax-dedutible HSA contribution of up to $3,100 in 2012 for single coverage or up to $6,250 in 2012 for family coverage. Additionally, it is acceptable that the insurance plan doesn’t

impose any deductible for preventive care. When an employer contributes to the employees HSA, the contributions are exempt from federal income, social security, Medicare, and unemployment taxes.

An HSA can be set up at a bank, insurance company, or another organization that is approved by the IRS. The HSA must be established exclusively for the purpose of paying qualified medical expenses including uninsured medical costs. Health insurance premiums do not qualify as a qualified expense in an HSA.

Health Savings Account

200250300350400450

150

Rising Health Care CostsNational

2003 2005 2007 2009 2011 2013 2015

$225$249

$266$299

$335$373

$417

National per-capita spending for out of pocket healthcare cost

Source-Centers for Medicare & Medicaid Services, Office of the Actuary

If you operate a business that is considered small to medium-sized and relatively low-risk, you may be eligible for coverage through a package called a Business Owner’s Policy (BOP). A BOP is a single commercial insurance policy that combines general liability with property coverages. In addition to liability and property coverages, the BOP policy may also cover loss of business income and extra expenses if loss is caused by a covered peril as defined in the policy.

The business owner’s insurance package policy insures damaged property for its replacement value. In the event of a claim, you will receive a large enough settlement to replace the property without any deduction for depreciation. This is subject to the policy limits, and meeting minimum insurance requirements such as coinsurance.

The BOP’s general liability section is comparable to the more typical general liability policy used in much larger commercial operations. The BOP’s general liability coverage provides business liability coverage to pay for your defense costs in a lawsuit arising from an accident that causes bodily injury or property damage. The liability section of the BOP also pays the cost of claims for libel, slander, and false advertising, regardless of merit.

For the small business operation, the BOP can be the perfect policy combining many coverages useful to small operations. While the BOP policy is a great policy for small businesses, there are many available endorsements that can be included enabling us to craft a package suitable to your specific needs.

Something Simple for Small Business

Jack owns XYZ Corporation. Trying to

save money on insurance and taxes, Jack

insures his family’s personal autos through

his commercial auto policy. This presents

unique coverage issues that could leave

Jack and his family members without

needed coverage.

An insured under the business auto

policy includes the named insured (in this

case XYZ Corporation), and “anyone else

while using with your permission a covered

auto you own, hire or borrow except . . . (2)

your employee if the covered auto is

owned by that employee or a member of

his or her household.”

In this case, Jack is an employee of his

corporation, the legal entity named in the

policy. Coverages that are automatic in the

personal auto policy, such as use of a non-

owned vehicle, are not automatic in the

commercial policy and certainly not for

family members. There are a number of

endorsements that can be used but are

never automatic. It is usually advisable to

insure your personal autos on a personal

auto policy.

Personal or Commercial

Auto CoverageYou may be missing coverage