Un-clutter

Not really an insurance topic.

I am un-cluttering.  Went through my bookcase the other day.  Pulled out about 200 books and donated them to the community college I teach at and Goodwill.

One book I put on my desk - feeling that I just could not part with it - my college dictionary.  I have not opened it in at least 15 years.  It is well beat up and most of the "bad" words have been highlighted (youthful interest in the naughty).

I threw it in the recycling bin this morning.  The Internet has better and faster dictionaries.  My Kindle has one too.  I'm 50.  If I don't throw it out now someone else will have to when I die in 43 years - chances of me needing a hard copy dictionary between now and then are slim to none.

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Scott's Rules of Insurance - Rule 7 - Good Agents Manage Risk

Insurance Rule 7 - Many insurance agents are transaction based - the good ones are focused on managing your risk

There are lots and lots of insurance agents out there. Most are focused on transactions - sell a policy, help with a claim, answer a question, get a payment... The good ones are looking at ways to manage overall risk. They see their own value as providing knowledge and tools that help their clients minimize the impact of negative events.

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Bedbugs and Property Insurance

For some reason bedbugs are in the news now.  Apparently there is an epidemic of infestations.  (Perhaps there is just an epidemic of reporting of infestations - who am I to say?)

If your place is plagued by pests, how does insurance respond?

Short answer?  It doesn't.

The standard home insurance policy excludes loss caused by insects.  That means that the damage caused by insects is not covered and the cost of extermination is not covered.

The standard commercial property form includes a similar exclusion.  Damage repair?  Not covered.  Extermination? Not covered.  Loss of income because of insects?  Not covered.

I understand a few insurers are considering providing coverage to restaurants and hotels.  I have yet to see a policy, though.

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D&O ABCs

Directors' and officers' insurance is coverage against suits for wrongful acts by directors and officers. Lawsuits can be brought by stockholders, investors, employees, and other stakeholders who have been harmed by decisions and actions made by the leadership of an organization.

Directors are personally liable for damages their decisions cause. The by-laws of most organizations recognize this liability and protect directors with an agreement to indemnify any loss - the organization reimburses the losses of a director using its assets.

Some D&O policies refer to Sides A, B, and C coverage.

Side A insures the directors and officers directly for events that are not indemnified by the organization.

Side B reimburses the organization for the losses of directors and officers which are indemnified.

Side C protects the organization for suits brought against the organization.

So, if a director is sued and an award is made, the organization reimburses the director. The Side B coverage of the D&O policy reimburses the organization. (Some policies pay the director directly or pay the expenses directly.)

In some situations a director is not indemnified - either because of a law preventing such reimbursement (derivative actions for example) or because the organization is insolvent and has no assets. That's where side A comes in.

Side C protects the organization from direct suits.

A key issue is how the limits of insurance are allocated. Do suits against the organization (Side C) reduce limits available to pay directors? Can non-director suits use up the insurance available to directors?

Ask your insurance advisor.

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Why Do Insurance Policies Include Exclusions?

Exclusions are a common bone of contention with insurance buyers. Reading some policies makes it seem like nothing is covered.

Actually, I like exclusions. They tell me what I need to worry about.

There are three reasons why something is excluded by an insurance policy:

1) The issue is insured by a separate insurance policy. Auto accidents are excluded by your home insurance policy because they are insured by your home insurance.

2) The exposure can be covered by this policy but the insurer wants to get a separate premium for the issue. Property insurance policies exclude damage by the failure of a sewer or drain. You can remove that exclusion if you are willing to pay an additional premium.

3) Exposures are not insurable due to matters of public policy, insurer reluctance, or reinsurance restrictions. Flood is excluded by most property insurance policies. Some insurers will add the coverage back for an additional premium. Most are unwilling to provide flood coverage to properties in a flood zone due to the heightened risk of loss inherent to the property. That's why most flood insurance is offered through a US government program - only the government is willing to insure an exposure of the nature of flood.

Class dismissed.

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Scott's Rules of Insurance - Rule 6 - Your Relationship With Your Agent Is Key

Insurance wiz Howard Candage told me twenty years ago that the most important part of the insurance transaction is an insurance buyer's relationship with his insurance agent.  It must be based on mutual trust and respect.  You should view your agent as a professional, an advisor, a confidant.  If trust and respect are at all missing, it's time to start looking for a new agent.

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