National Risk Management and Associates

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Are You Prepared For a Wildfire?

Courtesy of iii.org

Facts about wildfire risk

The deadly destruction of a wildfire is not to be underestimated. Hard to contain, wildfires consume everything in their wake and wreak havoc on lives, landscapes and homes. Wildfires:

  • Occur in 38 states – California is the state most associated with wildfires and, in fact, eight of the 10 most costly wildfires in the U.S. have occurred there. That said, Texas has been known to have twice the wildfires as California in a given year and 38 of U.S. states have areas at risk.
  • Like dry conditions – Drought conditions, dry undergrowth and the presence of combustible and flammable materials contribute to wildfire hazard.
  • Are more dangerous in combination with development – The risk of damage increases as housing and business development expands into the wildfire-prone wildland-urban interface (WUI)—such as mountain, foothill or grassland areas.
  • Spread mostly on the wind – Direct flame contact and radiant heat from a wildfire can ignite combustible materials. However, research has shown that homes burned during wildfires most frequently catch fire from live embers (or “firebrands”) that are blown by the wind.
  • Thrive on house “togetherness” – Because of the dangers of the embers, close proximity of homes and presence of combustible features both increase the chances of a home going up in flames. Fire spreads rapidly when homes are less than 15 feet apart, making homes that are clustered near others more likely to burn. Features like fences and attached decks made from combustible materials often hasten the spread of fire.

Wildfire preventative building features

Wildfires need fuel to spread—like wood, plastic, wood-plastic products and foliage. Don’t help your house feed the flames—fit or retrofit your home with features that deter fire. The Insurance Institute for Business & Home Safety (IBHS) and others have this advice:

  • Maintain five feet of non-combustible “defensible space” around your home – Keep a five-foot diameter space of gravel, brick, or concrete in the area adjacent to your home.
  • Maintain an expanded “defensible space” between five and 30 feet from your home – Keeping this area as unattractive to wildfires as possible will reduce the risk. Move trailers/RVs and storage sheds from area, or build defensible space (see above) around these items. Remove shrubs under trees, prune branches that overhang your roof, thin trees, and remove dead vegetation.
  • Use non-combustible siding – and maintain a six-inch ground-to-siding clearance
  • Regularly clean from your roof and gutters – to keep debris from being ignited by wind-blown embers. Use noncombustible gutter covers.
  • Get a Class A fire-rated roof – Class A roofing products offer the best protection for homes.
  • Use non-combustible fences and gates – Burning fencing can generate embers and cause direct flame contact to your home.
  • Cover vents and create soffited eaves – Use 1/8-inch mesh to cover vents, and box-in (create soffits) on open eaves to keep embers out.
  • Use multi-pane, tempered glass windows – Close windows when a wildfire threatens.
  • Fireproof the deck – At a minimum, use deck boards that comply with California requirements for new construction in wildfire-prone areas. Remove combustibles from under deck, and maintain effective defensible space around the deck.
  • Keep combustibles far away from the house – Combustible structures in the yard such as wood, plastic or plastic-wood playground equipment should be at least 30 feet away from the house. Experts indicate that evergreen trees, palms and eucalyptus trees have more combustible qualities than others—keep this type of vegetation 100 feet away from the house.

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Do I Need an Umbrella Insurance Policy?

Courtesy of iii.org
If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgements against you and your attorney’s fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability protection. That’s what a personal umbrella liability policy provides.

An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander.

For about $150 to $300 per year you can buy a $1 million personal umbrella liability policy. The next million will cost about $75, and $50 for every million after that.

Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.

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Understanding Business Owners Policies

Courtesy of iii.org

It may sound like a dance craze from the 1950s, but a BOP—a Business Owners Policy—can protect your small business against today’s most common risks. Fire, burglary, liability and business interruption losses are all covered under a BOP.

Since a BOP is prepackaged, there is only one policy to review and it can be more cost effective than purchasing separate policies. Additional coverage can be added in the form of endorsements or riders.

Since a BOP insurance policy is specifically designed for small and medium-sized businesses, the type of business can influence eligibility. Normally, companies with 100 employees or fewer and revenues of up to about $5 million or less are candidates for a BOP. Some types of businesses, such as restaurants, may be ineligible for a BOP because of the specific risks inherent in the business and may need to consider buying the individual coverages separately.

Combining three insurance policies into one package

In a single, convenient package, a BOP provides the core insurance that most small businesses need, including:

  • Property insurance—Protection for your building or office space, as well as property owned by your business, such as equipment and inventory.
  • Liability insurance—Coverage for costs that arise if someone is injured at your business or by using your products or services.
  • Business interruption insurance—Also known as Business Income insurance, this coverage replaces lost revenues in the event that your business has to shut down due to fire, wind damage or other covered losses.

You can tailor a BOP to meet your needs

It’s important to understand that a BOP doesn’t cover all risks associated with running a small business and the coverage limits are usually lower. If you have employees, you may be required to carry workers compensation insurance, depending on your state. If you have a business-owned vehicle, you’ll need coverage beyond your personal car insurance. You might also consider insurance for relatively new risks such as computer system break-in or business identity theft.

There are unique risks associated with your small business; an insurance professional can help you find the coverages that are right for you. Here are some other types of insurance to explore and ask about:

  • Professional liability insurance
  • Employee practices liability insurance
  • Business vehicle insurance
  • Workers compensation
  • Health and disability
  • Flood and sewer back-up
  • Cyberrisk insurance
  • Terrorism insurance

Increasing your coverage with excess and umbrella insurance

You can increase the protection provided by your BOP and other business insurance policies by adding an excess liability or umbrella insurance policy. This type of supplemental policy boosts your coverage beyond the limits of your primary insurance policies. Depending on the policy, your umbrella coverage is designed to broaden and increase coverage, “filling in the gaps” left by other types of liability insurance by covering additional areas of risk and even reimbursing you for deductibles. Your insurance professional can advise you about combining an umbrella policy with a BOP or other business insurance.

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8 Questions to Ask for Car Insurance

Courtesy of iii.org
Make sure your car coverage reflects your needs and budget

The vehicle you own, your personal priorities and your budget all factor into your unique auto insurance needs. Before comparing policies and insurers, evaluate how you use your car and what risks you face to figure out what options make the best sense for you.

1. How much do you drive?

Do you absolutely need your car every day—for instance, to commute to work or drive the kids to school and activities? Do you drive 100 miles a month or closer to 1,000 or more? Make sure your policy reflects how much you use your car. If you don’t drive a lot, you may want to opt for mileage-based insurance.

2. Will you be using your car for work?

If you use your car not just to get to work, but to perform tasks for which you get paid, commercial auto insurance is a necessity. A personal auto policy will not provide coverage if you transport paying passengers through a ride-share service, deliver pizzas, drive as a courier or use your car for other commercial activities.

3. What type of car do you drive?

Insurers have mountains of data, and they know in precise detail what types of cars, makes and models are more—or less—likely to incur claims. A flashy sports car with a powerful engine may be more likely to be stolen and its bodywork costs will be more than on a mid-sized sedan—and your insurance will be priced accordingly. Some types of cars—such as modified or classic cars—require special insurance. By the same token, you may receive discounts if you have a “safe” car—one with the latest safety features and a good safety record.

4. How much do you love your car?

If you love the way your vehicle looks and take pride in its appearance, you’ll likely want it fixed perfectly—or replaced with the same model—if it gets damaged. That means you’ll probably to consider the fullest range of insurance—including collision, comprehensive and glass coverage. On the other hand, if you drive a beater, see cars merely as transportation and want to save on premiums, you might prefer to limit your policy to liability.

5. Where do you live—and park your car?

Where you live will impact your insurance rates—and it may be a factor in what coverage you purchase. For example, cars parked on the street in urban areas face a greater risk for theft or vandalism, so comprehensive coverage might be a good option. You may discover that your premium rates are lower if you move from a city to a suburb.

6. Who else will be driving the car?

Generally, your car insurance will cover other occasional drivers. However, if other drivers live with you and use your car—whether a spouse, a teen driver or a housemate—they should be listed on your policy.

7. What are your legal obligations?

Nearly every state requires that you carry minimum liability coverage for your car. At the very least, you need to make sure your policy complies with state mandates. However, the levels of required coverage are generally pretty low. Keep in mind that, if you are involved in a serious accident, you may be sued for a large sum of money. Depending on your assets and financial risk tolerance, to be safe, you’ll probably want to purchase a higher level of liability coverage.

8. Is your car financed or leased?

If you still owe money on your car or have to return it in good condition when a lease expires, you’ll likely be required to insure the car for its full value—and even for any gap between what you owe and the car’s market value. Collision and comprehensive will cover damage to your car—and supplemental gap insurance will cover the rest.

Keep in mind that your insurance options and costs will also be affected by your age, gender and driving record. Be aware too that your credit score can also impact your insurance rates. Once you’ve looked at your needs and priorities, and understood how insurance options will match them, you’ll be better prepared to make an informed decision about the types and levels of coverage to buy.

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Increase in Distracted Drivers, More

Courtesy of iii.org

BACKGROUND

Cellphones play an integral role in our society. However, the convenience they offer must be judged against the hazards they pose. Their use contributes to the problem of inattentive driving, which also includes talking, eating, putting on make up and attending to children.

As many as 40 countries may restrict or prohibit the use of cellphones while driving. Countries reported to have laws related to cellphone use include Australia, Austria, Belgium, Brazil, Botswana, Chile, the Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, India, Ireland, Israel, Italy, Japan, Jordan, Kenya, Malaysia, the Netherlands, Norway, the Philippines, Poland, Portugal, Romania, Russia, Singapore, the Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, Turkmenistan, the United Kingdom and Zimbabwe. Most countries prohibit the use of hand-held phones while driving.

Supporters of restrictions on driving while using a cellphone say that the distractions associated with cellphone use while driving are far greater than other distractions. Conversations using a cellphone demand greater continuous concentration, which diverts the driver’s eyes from the road and his mind from driving. Opponents of cellphone restrictions say drivers should be educated about the effects of all driver distractions. They also say that existing laws that regulate driving should be more strictly enforced.

Earlier Studies: Over the past decade numerous studies have been conducted on driver inattention, in particular focusing on the use of cellphones. Below is a summary of some these studies.

Motorists who use cellphones while driving are four times as likely to get into crashes serious enough to injure themselves, according to a study of drivers in Perth, Australia, conducted by the Insurance Institute for Highway Safety. The results, published in July 2005, suggest that banning hand-held phone use will not necessarily improve safety if drivers simply switch to hand-free phones. The study found that injury crash risk didn’t vary with type of phone.

Many studies have shown that using hand-held cellphones while driving can constitute a hazardous distraction. However, the theory that hands-free sets are safer has been challenged by the findings of several studies. A study from researchers at the University of Utah, published in the summer 2006 issue of Human Factors, the quarterly journal of the Human Factors and Ergonomics Society, concludes that talking on a cellphone while driving is as dangerous as driving drunk, even if the phone is a hands-free model. An earlier study by researchers at the university found that motorists who talked on hands-free cellphones were 18 percent slower in braking and took 17 percent longer to regain the speed they lost when they braked.

A September 2004 study from the National Highway Traffic Safety Administration (NHTSA) found that drivers using hand-free cellphones had to redial calls 40 percent of the time, compared with 18 percent for drivers using hand-held sets, suggesting that hands-free sets may provide drivers with a false sense of ease.

A study released in April 2006 found that almost 80 percent of crashes and 65 percent of near-crashes involved some form of driver inattention within three seconds of the event. The study, The 100-Car Naturalistic Driving Study, conducted by the Virginia Tech Transportation Institute and the NHTSA, broke new ground. (Earlier research found that driver inattention was responsible for 25 to 30 percent of crashes.) The newer study found that the most common distraction is the use of cellphones, followed by drowsiness. However, cellphone use is far less likely to be the cause of a crash or near-miss than other distractions, according to the study. For example, while reaching for a moving object such as a falling cup increased the risk of a crash or near-crash by nine times, talking or listening on a hand-held cellphone only increased the risk by 1.3 times.

Employer and Manufacturer Liability: Although only a handful of high-profile cases have gone to court, employers are still concerned that they might be held liable for accidents caused by their employees while driving and conducting work-related conversations on cellphones. Under the doctrine of vicarious responsibility, employers may be held legally accountable for the negligent acts of employees committed in the course of employment. Employers may also be found negligent if they fail to put in place a policy for the safe use of cellphones. In response, many companies have established cellphone usage policies. Some allow employees to conduct business over the phone as long as they pull over to the side of the road or into a parking lot. Others have completely banned the use of all wireless devices.

In an article published in the June 2003 edition of the North Dakota Law Review, attorney Jordan Michael proposed a theory of cellphone manufacturer liability for auto accidents if they fail to warn users of the dangers of driving and talking on the phone at the same time. The theory holds that maker liability would be similar to the liability of employers who encourage or demand cellphone use on the road. Holding manufacturers liable would cover all persons who drive and use cellphones for personal calls. Michael notes that some car rental agencies have already placed warnings on embedded cellphones in their cars.

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National Risk Management & Associates
220 Magnolia Avenue
Sanford, FL 32771
Phone: (407) 767-2950