The homeowner’s insurance policy covers your home and personal property for many types of losses – theft, wind and water damage just to name a few.  But the most common type of loss is fire.  Fire losses can be devastating and costly.  Homeowners should be prepared by installing smoke detectors and fire extinguishers.  For more on fire extinguishers, please read the following article:

Purchase and Maintain Your Fire Extinguishers

According to a National Fire Protection Association study, there are approximately 400,000 house fires each year in the United States, which account for 75 percent of all structure fires. This study also indicated that residential fires result in over 3,700 deaths per year. Indeed, fires typically kill more Americans than all other natural disasters combined.

Having properly placed fire extinguishers in your home is an excellent loss control measure that targets the most common cause of property loss.

Before purchasing fire extinguishers, learn about the different types of fire extinguishers. There are four basic types, as follows.

• Class A extinguishers put out fires in ordinary combustibles, such as wood and paper.
• Class B extinguishers should be used on fires involving flammable liquids, such as grease, gasoline, and oil.
• Class C extinguishers are suitable for electrically energized fires.
• Class D extinguishers should be used on flammable metals and are typically specific for the type of metal in question.

The following are some tips concerning this important fire protection device.

• Most home fire safety experts recommend medium size, multipurpose fire extinguishers that are labeled as suitable for use on class A, class B, and class C fires.
• A fire extinguisher should be kept in your garage, kitchen, and on each floor of your home.
• You and other potential users in your household should thoroughly read the extinguisher’s instructions on a periodic basis.
• A professional fire equipment supplier should inspect each extinguisher annually.

Note that prices on fire extinguishers start at around $20. Many insurers offer modest premium credits to encourage homeowners to purchase and maintain extinguishers.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2010
International Risk Management Institute, Inc.

Last weekend, we experienced a tsunami warning in Hawaii.  The 8.8 magnitude earthquake in Chile was the cause of the warning.  The whole state of Hawaii went through the drill.  Some people stocked up on gas, groceries and water.  Others moved to higher ground to avoid the potential waves.

All in all, I thought everyone handled the situation well.  From the newsrooms to the tsunami warning center to the people of Hawaii, everyone stayed calm and informed.  I heeded the advice to stay home and prevent potential traffic jams.  I think it was extremely fortunate that the warning was on Saturday.  If I remember correctly, the last tsunami warning was on a weekday, and the traffic was horrendous.

The actual tsunami turned out to be nothing more than a 1-2 foot surge.  But what if a larger tsunami hit the islands?  Would your homeowner’s insurance policy cover losses from a tsunami?  Unfortunately, like earthquake losses, you would need to get separate coverage to cover flood (tsunami) losses.  Flood coverage is provided through the federal government under the National Flood Insurance Program.  Like earthquake insurance, flood insurance is very expensive.  For the most part, only homes close to the shoreline or close to a water source (river, stream or lake) are required to purchase flood insurance.

If you have any questions about flood insurance, feel free to ask me.

Do you own an ATV (all terrain vehicle)?  Every year, thousands of people are injured in ATV related accidents.  Many individuals mistakenly think that their homeowner’s insurance policy or their auto insurance policy will cover them for ATV accidents.  Unfortunately, this is not the case.  Both the homeowner’s insurance policy and the auto insurance policy exclude coverage for ATVs.  In addition, mopeds and jet skis generally fall under these exclusions as well.

Consult with your insurance agent for further details.  Feel free to comment if you would like my response.

If you own an ATV, check out the following article for some safety tips.

Exercise Caution with Your ATV

Over 16 million Americans enjoy the experience of operating an all-terrain vehicle (ATV). Unfortunately, approximately 600 people die each year and nearly 122,000 are injured each year due to ATV accidents. Injuries and accidents are particularly common for children under age 16. If you own an ATV or operate one, you should advise your insurance agent accordingly to verify that you have proper liability and physical damage coverage in place. In addition, the following safety tips should be followed.

• Children should be allowed to operate only age-appropriate or “youth” ATVs.  Most youth ATV-related deaths and injuries occur while operating “adult” ATVs.  No child under age 6 should ever be allowed to ride or operate an ATV.
• Most ATVs are designed for only one person, so children should not take on passengers or be passengers on their parents’ ATV.
• ATVs should not be driven on paved roads. Because of how they are designed, ATVs are difficult to control on paved roads. Collisions with other vehicles on the road can prove fatal.
• ATV operators should never drive an ATV without a helmet. Wearing a certified motorcycle helmet can dramatically decrease the chances of a head injury while operating the ATV.
• All operators should complete a “hands on” ATV training course.  A single class is estimated to be equal to one year of experience. Reputable ATV dealers often provide these classes free of charge to their customers.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2009
International Risk Management Institute, Inc.

What is an umbrella insurance policy and who needs this type of policy?

An umbrella insurance policy is a liability policy. It provides excess liability insurance over and above your auto insurance liability and homeowner’s insurance personal liability limits. What is liability insurance? Liability insurance protects the policy holder from claims from a third party. If you cause an auto accident and injure someone or if you injure someone because you were negligent, liability insurance can cover the costs of a lawsuit against you.

Your personal auto policy and homeowner’s insurance policy provide auto liability and personal liability coverage respectively. If the liability limits on these policies are insufficient for your claim, an umbrella policy can provide additional liability coverage (usually up to $1,000,000).

In Hawaii, anyone who owns their home, condo or townhouse should think about getting an umbrella insurance policy. For $150 – $200 a year, it’s well worth the peace of mind that the policy provides. Check out the following article for more details.

Umbrella Coverage for Preventing Your Ruin

The New York Times
March 18, 2008
By JOSEPH B. TREASTER

HERE’S the nightmare: Your car skids. You crash into a Mercedes with a highly paid business executive at the wheel. He’s hurt so badly he cannot return to work. A jury awards him millions of dollars and you have to pay it. You’re wiped out financially. The court takes your savings, goes after your home and, for decades, requires you to give up a part of your salary. For some people, such a nightmare could never happen. They have an extra insurance policy, known as umbrella or excess liability coverage, which takes care of their liability for the lawsuits and medical bills of the auto accident victim — or of the teenage guest who dives into the shallow end of the swimming pool or the deliveryman who trips on the front steps. But many people with major assets either do not buy the extra coverage or do not buy enough. Some do not know about umbrella coverage, which also pays for lawyers and other legal expenses. Others have heard of it but do not understand it. Still others decide that they do not want to pay for it, even though the cost is usually a fraction of the price of a typical package of home and auto insurance. “This is a neglected area,’ said Mark Schussel, a spokesman for the Chubb Group of Insurance Companies, which caters to affluent home and auto owners. “Some people have some coverage. But they haven’t changed the amount in years. Some people have a $1 million figure in their heads, and it just doesn’t make sense anymore.” Charlotte Edmonston has been an insurance agent for more than 30 years. She works with wealthy clients in Baton Rouge, LA, and oversees agents in 29 cities nationwide for the personal insurance unit of Arthur J. Gallagher & Company, a big insurance broker with headquarters near Chicago. Her first question for new customers is whether they have umbrella coverage. Most of them already do. But “90 percent of them are underinsured,” she said. “Usually, they were sold too little from the get-go, and their assets have grown and they never revisited the issue.” For Jeff Cox, an owner of the third-generation insurance agency of Lloyd Bedford Cox in Bedford Hills, NY and Greenwich, CT, “the discussion about umbrella coverage usually starts at $5 million.” But he can provide up to $100 million in coverage. Umbrella and excess coverage are extensions of home and auto insurance. Banks make people buy home insurance to get mortgages, and states require drivers to buy auto insurance. But no one mandates buying a policy that could turn out to be the most important part of your insurance package. As a result, only 15 percent to 20 percent of clients at the Wall Street insurance agency of Campbell Solberg Associates buy umbrella coverage, said Rick Wiltshire, an executive at the firm. Instead, they stick with the $100,000, $300,000 or, in some cases, $500,000 in liability coverage that comes standard with the most widely sold home-insurance policies. “You never think it’s going to happen to you,” said Rick Blank, an agent in White Plains, NY, with the Preferred Services Group. “Personal injury lawyers are making money by suing people. If you don’t have enough insurance, you become personally liable.” Some insurance companies that cater to the wealthy say that as many as half of their customers buy umbrella coverage. But State Farm, the biggest home insurer in the country, with a clientele of mainly middle-income and lower-income homeowners, says about 12 percent of its policyholders buy umbrella coverage. Buying such coverage usually does not greatly increase the overall cost of home and auto insurance. For example, in Louisiana, insurance on a $1 million home well away from the coast might run $4,500 a year, Ms. Edmonston, the Baton Rouge agent, said. Two cars could raise the cost of the package to $7,500. And $5 million in umbrella coverage might cost about $600 more, or about 8 percent of the total. In New York, agents say, $5 million in coverage might cost about the same. Ms. Edmonston consolidated home and auto coverage for Ann Brown Singleton, a stockbroker and financial adviser in Baton Rouge, after her husband died and she married Andrew Jackson Singleton, a sales manager for several national companies. Together, they owned several houses, three vintage cars, jewelry and art. “I had a $1 million umbrella, which I thought would certainly satisfy everything,” Ms. Singleton said. “When Charlotte Edmonston got through with her analysis she said, ‘Whoa, you need a $5 million umbrella.” Whether lawsuits are valid or not, you wind up having to defend yourself against them, and you never know how high the judgment is going to go. I find that frightening.” Philip J. Hirschkop, a lawyer just outside Washington, said he had a client without an umbrella policy who had only the $100,000 coverage that came standard with his home and auto insurance policy. He was sued for much more over an auto accident and was in danger of “losing everything he owns.” Around the country, at companies dealing with rich clients, the first million in coverage is usually the most expensive, at perhaps $150 to $300 annually, said Jeanne M. Salvatore, a specialist in home insurance at the Insurance Information Institute. Each additional million in coverage, she said, could cost around $100 to $125 annually. The rates per million decline as coverage increases. But at $10 million in coverage, the rate jumps because few customers buy that much, meaning insurers can spread their risk over only a relatively small group of customers. The situation is often the reverse for the many insurers who specialize in middle-income and lower-income clients. Often their rates shoot up after the first million in umbrella coverage because they have only a small group of buyers of umbrella policies larger than $1 million. A smaller pool of customers creates more risk per dollar of premium for an insurer, so the insurer charges more for the coverage. One homeowner said that for a $3 million umbrella policy from a middle-income insurer, the second and third million in coverage cost him 3.5 times the rate for the first million of coverage. Thankfully, accidents with elephantine lawsuits are not everyday events. When they do occur, however, the results can be devastating. One of Mr. Cox’s clients crashed into the rear of a car on a slick highway. A woman and a child were critically injured. After two years of litigation, his client settled the lawsuit for more than $5 million. The client had $15 million in umbrella coverage. The policy paid for the settlement and all legal costs. “Without the umbrella,” Mr. Cox said, “they would have been completely wiped out.”