National Risk Management and Associates

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The Holidays & Automobile Theft

Courtesy of iii.org

The FBI includes the theft or attempted theft of automobiles, trucks, buses, motorcycles, scooters, snowmobiles and other vehicles in its definition of motor vehicle theft. About $5.9 billion was lost to motor vehicle theft in 2016. The average dollar loss per theft was $7,680. Motor vehicles were stolen at a rate of 236.9 per 100,000 people in 2016, up 7.6 percent from 2015 but down 35.1 percent from 2007.

Vehicle thefts have been trending downward in the 23 years since they peaked at 1,661,738 in 1991, falling 58 percent to 699,594 in 2013, according to a 2014 report from the National Insurance Crime Bureau (NICB). As a result, 56 percent of Americans rarely or never worry that their car will be stolen, according to a 2014 Gallop poll. The NICB credits law enforcement efforts, along with the creation of specific antitheft programs, technology and insurance company-supported organizations such as the NICB for contributing to the theft reduction.

Despite the reduction in vehicle thefts over the past two decades, industry observers caution that thieves constantly devise new and sophisticated means of stealing autos. Tactics include acquiring smart keys, which eliminated hot-wiring to steal cars; switching vehicle identification numbers; and using stolen identities to secure loans for expensive vehicles. The number of vehicles stolen with the key or keyless entry device left inside by the owner climbed 22 percent in 2015 to 57,096, according to the NICB.

Motor Vehicle Theft In The United States, 2007-2016

Year Vehicles stolen Percent change
2007 1,100,472 -8.2%
2008 959,059 -12.9
2009 795,652 -17.0
2010 739,565 -7.0
2011 716,508 -3.1
2012 723,186 0.9
2013 700,288 -3.2
2014 686,803 -1.9
2015 713,063 3.8
2016 765,484 7.4

Source: U.S. Department of Justice, Federal Bureau of Investigation, Uniform Crime Reports.

View Archived Tables

  • Motor vehicles were stolen at a rate of 236.9 per 100,000 people in 2016, up 7.6 percent from 2015 but down 35.1 percent from 2007.
  • About $5.9 billion was lost to motor vehicle theft in 2016. The average dollar loss per theft was $7,680.

Top 10 U.S. Metropolitan Statistical Areas By Motor Vehicle Theft Rate, 2016

 

Rank Metropolitan statistical area (1) Vehicles stolen Rate (2)
1 Albuquerque, NM 10,011 1,114.01
2 Pueblo, CO 1,325 899.43
3 Bakersfield, CA 7,176 854.66
4 Modesto, CA 3,820 767.69
5 Riverside-San Bernardino-Ontario, CA 25,708 679.05
6 Anchorage, AK 2,273 669.38
7 Merced, CA 1,622 660.65
8 San Francisco-Oakland-Hayward, CA 29,414 640.26
9 Fresno, CA 5,682 631.79
10 Billings, MT 877 625.38

(1) Metropolitan Statistical Areas are designated by the federal Office of Management and Budget and usually include areas much larger than the cities for which they are named.
(2) Rate of vehicle thefts reported per 100,000 people based on the 2016 U.S. Census Population Estimates.

Source: National Insurance Crime Bureau.

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Understanding Umbrella Liability Insurance

Courtesy of iii.org

Your standard auto insurance or homeowners insurance will provide you with some liability coverage. If you are sued, those policies will pay up to your policy limits for legal judgments against you, as well as the related attorney’s fees.

However, in our litigious society when a lawsuit settlement could very well wipe out your financial assets, you may want the extra protection for your assets that a personal umbrella liability policy provides.

An umbrella policy kicks in when you reach the limit on the underlying liability coverage in an auto, homeowners, renters or co-op / condo policy. It will also cover you for additional types of claims, such as libel and slander.

You can buy a $1 million personal umbrella liability policy for about $150 to $300 per year. The amount you pay decreases for each million dollars of coverage beyond that. Because the personal umbrella policy pays out after the underlying coverage is exhausted, 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 they will sell you an umbrella policy.

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Home Insurance Coverage

Courtesy of iii.org

The price you pay for your homeowners insurance can vary by hundreds of dollars, depending on the size of your house and your insurance company. From raising your deductible to making home improvements, here are some ways to save money while you adequately protect your home and assets.

Don’t skimp

Don’t shop price alone. Remember, you’ll be dealing with this company in the event of an accident or other emergency. When you need to file a claim you’ll want an insurer that provides good customer service, so test that while you’re shopping, and choose a company whose representatives take the time to address your questions and concerns.

Raise your deductible

A deductible is the amount of money that you are responsible for paying toward an insured loss. The higher your deductible, the more money you can save on your premium, so if you can pay above the minimum $500 or $1,000 deductible, for example, you may reduce the cost of your homeowners policy.

If you live in a disaster-prone area, your insurance policy may have a separate deductible for damage from major disasters, so be sure you take this into account when considering whether to raise your standard homeowners deductible.

Buy your home and auto policies from the same insurer

Many companies that sell homeowners insurance also sell auto insurance and umbrella liability policies. If you buy two or more insurance policies from the same provider, you may be able to reduce your premium. To be sure you’re getting the best price, make certain any combined price from one insurer is lower than buying the coverages separately from different companies.

Make your home more disaster resistant

If you live in a disaster prone area, you will have more insurance options to choose from if you take certain preparedness steps— for example, installing storm shutters and shatterproof glass or reinforcing your roof. Older homes can be retrofitted to make them better able to withstand earthquakes. Consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. These precautions may prevent excessive damage and the related work and stress involved in rebuilding.

Do not confuse what you paid for your house with rebuilding costs

Your homeowners policy is based on the cost to rebuild your home, not its real estate value. While your house may be at risk from theft, windstorm, fire and the other perils, the land it sits on is not, so don’t include its value in deciding how much homeowners insurance to buy. If you do, you’ll pay a higher premium than you should.

Ask about discounts for home security devices

Most insurers provide discounts for security devices such as smoke detectors, burglar and fire alarm systems or dead-bolt locks. As some of these measures aren’t cheap and not every system qualifies for a discount, consult your insurance professional for recommendations.

Seek out other discounts

Types and levels of discounts vary from company to company and state to state. Ask your insurance professional about discounts that are available to you—for example, if you’re 55 years old and retired, or you modernize your plumbing or electrical systems, you may be qualify for a price break.

Look into group coverage

Does your employer administer a group insurance program? Check to see if a homeowners policy is available. In addition, professional, alumni and business groups may offer an insurance package at a reduced price. Whatever the offer, do your homework to make sure it is a better deal than you can find elsewhere.

Stay with the same insurer

If you’ve been insured with the same company for a number of years, you may receive a discount for being a long-term policyholder. But to ensure you are getting a good deal, periodically shop around to compare your premium with the prices of policies from other insurers.

Review the value of your possessions and your policy limits annually

Review your home inventory and any upgrades to your house or condo. Make sure your homeowners or renters policy covers any major purchases or additions to your home and also check that you’re not spending money for coverage you don’t need. For example, if your five-year-old fur coat is no longer worth the $5,000 you paid for it, you’ll want to reduce or cancel your floater and pocket the difference.

Another great way to save money on your homeowners policy is to take into account the cost of insurance while you’re shopping for a house and before you buy. These home buyers’ insurance guidelines provide tips on the locations, types of construction and other factors that will help keep down the cost of your coverage.

Next steps: Here’s how to figure out how much homeowners insurance you need.

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Travel Insurance Tips

Courtesy of iii.org

Before leaving on vacation, make sure you have adequate insurance. Vacations can sometimes cost thousands of dollars, so it is important to have the proper insurance protection in case the cruise or tour operator goes bankrupt or you need to cancel the trip due to illness or other unforeseen events.

There are four major types of travel insurance, although you can also purchase packages that offer several options, including Trip Cancellation, Lost Baggage, Medical, Dental, Emergency Evacuation, 24 Hour Traveler Assistance, Baggage Delay, Travel Delay, and Accidental Death Coverages. Some policies also have options for Collision/Damage coverage for rented cars.

1. Trip cancellation insurance

This would reimburse you if the cruise line or tour operator goes out of business. It would also provide coverage if you have to cancel the trip due to sickness, a death in the family or another calamity listed in the policy.

In addition, if you or an immediate family member becomes seriously ill or is injured during the trip most policies would reimburse you for the unused portion of the vacation.

The cost is generally five to seven percent of the price of the vacation, so a $5,000 trip would cost roughly $250 to $350 to insure.

Trip cancellation is very different from a Cancellation Waiver that many cruise and tour operators offer. Waivers are relatively inexpensive, costing approximately $40 to $60. They provide coverage if you have to cancel the trip, but they have many restrictions. They must be purchased when you book the trip and will usually not cover you immediately before departure (the time period most people cancel) or after the trip has begun. Most importantly, waivers are not insurance. Cancellation Waivers are not regulated by the state department of insurance, so if your tour or cruise operator gets into financial difficulty, you may not be able to collect.

2. Baggage insurance or personal effects coverage

This would provide coverage if your personal belongings are lost, stolen or damaged during the trip.

To insure $1,000 worth of personal belongings for a week, it would cost roughly $50 per year.

Before purchasing this type of coverage, find out how much insurance the airline or trip operator provides for your belongings.

Also, check your homeowners or renters policy. It will usually provide coverage for off-premises theft. Therefore, if your luggage is stolen, your insurer will pay to replace it, less the deductible.

If you are traveling with expensive electronic equipment, jewelry or sporting gear, it might be more cost-effective to purchase a floater or endorsement to your homeowners or renters policy. The cost to insure a $1,000 ring would be between $10 and $40 annually. This would provide full coverage for the item, anywhere in the world, usually for one year.

3. Emergency medical assistance

This provides insurance and medical assistance for travelers. It would cover you if you had to be airlifted off a mountain due to a skiing or hiking accident, or if you had to stay for a prolonged period of time in a foreign hospital. It would also provide coverage if you got seriously sick or were injured and needed to be flown home. Some commercial airlines require very sick passengers to travel on a stretcher with a doctor. This means that you might have to purchase 10 or more seats on a plane at a possible cost of over $10,000.

Before purchasing this type of coverage, check with your own health insurance carrier. Find out what type of coverage you have when traveling abroad and if there are any limits. Also, ask if the policy will pay to fly you home or to a country with first-rate medical care.

4. Accidental death

This provides a variety of coverages if you or a family member die on the trip. If you have a good life insurance plan or made other financial provisions for your loved ones, this may be duplicate insurance.

Your credit card company may provide travel-related services and coverage. You can also purchase travel insurance from either a travel agent or you can buy directly from an insurer that specializes in this type of coverage.

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Cyberattack & Small Business Risk

Courtesy of iii.org
More than half of U.S. small- and medium-sized businesses (SMBs) experienced a cyberattack within the past year, yet only 14 percent of businesses felt prepared and protected, according to a recent white paper from the Insurance Information Institute (I.I.I.).

The white paper, Protecting Against #Cyberfail: Small Business and Cyber Insurance, examines how insurers are addressing the threat cyberattacks and data breaches pose to SMBs through a combination of innovative insurance products, risk management techniques and employee training.

“Insurers foresee substantial growth coming from the SMB segment, as these companies become aware of the possibilities of liability, especially a breach and resulting response costs arising out of the possession of private data,” said Sean Kevelighan, chief executive officer, I.I.I.

The vast majority of cyber insurance claims involved the loss, exposure, or misuse of sensitive personal data. About half (48 percent) of the data breaches of U.S. small businesses in 2016 were caused by either a negligent employee or contractor, according to the Ponemon Institute.
U.S. insurers reported collecting $1.35 billion in direct premiums written for cyber insurance in 2016, according to the National Association of Insurance Commissioners. Stand-alone cyber insurance policies accounted for $921 million of that total (68 percent), while the balance came primarily from endorsements on either a small commercial or businessowners policy (BOP).

Typical cyber-related policies cover the costs arising from either a cyberattack or a data breach, such as responding to lawsuits, repairing damaged infrastructure, and paying the ‘ransom’ demanded by cyber extortionists, among other potential exposures, such as business interruption expenses.

“Creating an affordable product that SMBs will be willing to buy is a key component in the insurance offering. Since different industry sectors represent different levels of exposure, pricing will vary depending on the type of SMB,” the white paper, co-authored by James Lynch, the I.I.I.’s chief actuary, and the I.I.I.’s Claire Wilkinson, a consultant, states.

The I.I.I. has a full library of educational videos on its YouTube Channel.

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