A client in my office reviewing insurance had just been laid off.  Planning to surf and travel and enjoy his time off, he hadn’t planned on keeping his health insurance due to cost.  After all he was in pretty good shape.  My recommendation was to get the least expensive Anthem Blue Cross plan, just in case, which he did.  And BAM!  A headache turned into full blown melanoma that had metastasised into his spine and lungs. We’re talking THOUSANDS of dollars that was covered by the insurance company.  His quote was ‘the health insurance literally saved my life.’  You never know.  Insurance is like airplane fuel.  It’s better to have it and not need it, than to need it and not have it!

What’s a Good Deal?

It’s unwise to pay too much, but it is worse to pay too little.  When you pay too much, you lose a little money – that is all.  When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the job it was bought to do.

The common law of business balance prohibits paying a little and getting a lot.  It can’t be done.  If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that, you will have enough to pay for something better.

                                                                                                                                                                                                                                                                                                         John Ruskin (1819-1900)

Farmers Disaster Response Recognized by A.M. Best

Our industry-leading disaster response frequently earns praise from our customers. It also garners us recognition from the media and insurance industry representatives.

A.M. Best recently invited Jerry Davies, assistant vice president of Media Relations, to speak at the sixth annual A.M. Best Communications and Marketing Symposium in New York, N.Y.

Davies’ presentation focused on Farmers Media Relations work with the media before, during and after disasters and Farmers employees, district managers and agents actions during disasters including the Birmingham, Ala., and Joplin, Mo., tornadoes in 2011. In attendance were representatives from the insurance industry, trade associations and disaster organizations from around the United States.

You can read more about Davies speech and question and answer session in the January 2012 issue of Best’s Review.

Safety Tips to Help Avoid Holiday Fires

For many, the holiday season brings joy and happiness, but it can also bring danger.  Fires during the holiday season claim the lives of many Americans and injure even more.  The statistics below are provided by the United States Fire Administration (USFA)

The average number of lives lost due to holiday fires is 400, and the average number of injuries due to holiday fires is 1,650. 

Some safety tips to help you and your loved ones stay safe and happy this holiday season:

–          Use only non-flammable decorations (be sure to place the tree and any decorations away from heat vents)

–          Maintain holiday lights (check for frayed wires, bare spots, or gaps in insulation)

–          Do not overload electrical outlets  (do not link more than 3 strands together, unless directions indicate it is safe)

–          Avoid using lit candles (more than half of all December home decoration fires are started by candles)

–          Don’t block exits (be sure your tree or decorations do not block an exit, as this is a safety hazard)

Source: ServPro, Fire & Water Cleanup and Restoration

Please follow these helpful tips to be sure you enjoy a SAFE and happy holiday season.

All of us here at Russ Holcomb Insurance wish you a Merry Christmas and Happy New Year!

Reconstruction Cost

In June of this year, the state of California passed new laws changing how the insurance on your home is calculated. Homes have always been insured for the amount it would cost you to rebuild, and not the market value; but how insurance companies must calculate the cost to rebuild your home has changed.  Insurance companies must now take into account the costs for debris removal, labor, and permits when calculating the reconstruction cost of homes. For many companies the biggest change is that they can no longer use square footage as the primary means to calculate the cost to rebuild your home. Everyone must now account for the quality of your home, the types of flooring you have, and the other unique features that make your home yours. If you are insured with Farmers this is not a big change. Farmers has always accounted for many of these features when calculating how much it would cost to rebuild your home. We are now using a program that can calculate the rebuilding cost with greater accuracy based on your zip code! If you haven’t taken a look at your homeowners policy in a long time I recommend making sure that your Insurer has accurate, up to date information about your home. Take a close look at what types of floors you have, and let your agent know if you have renovated your kitchen or bathrooms as these features are the most likely to have changed.

Megan Mullen (CSR)
License #0G48640

Top Five Mistakes People Make Regarding Auto Insurance

Russ on the Radio!  Russ was a guest speaker on KSCO “money moves” talk show last Thursday, May 12.

5. Choosing a policy that is inconvenient or an agent or company that is hard to communicate with.  You should choose a policy that “clicks” with you.  Choose the coverages that are important to you.  Options like towing and road service, auto medical, rental car reimbursement, and original manufacturer replacement parts are all convenient coverages, but can be redundant (if you have health insurance, you might not need auto medical, if you have membership in an auto road club, you might not need towing) Also, choose a payment plan that is right for you.  There are many options, like annual payments, monthly payments, or automatic payments (EFT).  Communicate with your agent.   Don’t let your policy go out of force!

4. Spending too much on insuring your car, carrying too low of a deductible, or insuring physical damage on a car with a low value.  In the event of a total loss, all insurance companies pay Actual Cash Value (ACV) not replacement cost.  Actual Cash Value is the depreciated market value of the vehicle.  You should research your car online, to get an idea of how much cars like yours sell for in your area.  Then decide if it is cost effective to carry comprehensive and collision coverage.

3. Not understanding who is covered.  Who is defined as a named insured?  You should check the contract, to understand who is covered to drive your car.  Do you have permissive use on your policy?  Or is your policy a “named driver” policy?  Who is excluded?  If you are not feeling well, and your friend drives your car home, are they covered to drive your car?  Take the time to read your policy.

2. Carrying lower UM coverage or carrying uninsured motorist and underinsured motorist coverage that does not match your liability limits.  You can lose everything you have if you’re hit by someone with no insurance, or not enough insurance.  You should carry the same limits of uninsured/underinsured motorist (UM) coverage that you carry for liability.  There is a chance you might become disabled, short term or long term because an uninsured driver collided with you.  Your UM coverage would help to pay your medical bills, and loss of income if you are unable to work, so make sure your UM matches your liability limits.  Remember:  25% of drivers on the road in California are uninsured!  (Study conducted by the Insurance Research Council, published in the Insurance Journal, on-line)

1. Carrying the state minimum limits of liability.  If you cause an accident, you may find that the liability limits you purchased are not sufficient to protect your assets.  The state minimum limits of 15,000 per person, 30,000 per accident, and 5,000 property damage is simply not enough liability coverage in today’s world.  The law was passed in the early 1940s and the limits have never been raised to keep up with inflation, and the high cost of medical bills, and auto repairs.  You should make sure you have enough coverage to protect your assets and your future earnings.  Everything you have is at risk every time you or someone else drives your car!  Not carrying enough liability coverage is the number one mistake people make regarding auto insurance.

Capitola flood victims caught by subtle differences in insurance

By TOVIN LAPAN  as seen in the Santa Cruz Sentinel, April 23, 2011
Posted: 04/23/2011 01:30:31 AM PDT

Businesses Wading Through Insurance

CAPITOLA — The stores Hot Feet and Euphoria are separated by about 100 feet of sidewalk in the Capitola Village.

Both were hit hard in the flash floods of March 24 and 26, closing for a week or more while mold-harboring carpet and drywall were torn out.

When it came time to submit insurance claims, however, the responses to their shared circumstances were completely different.

Amy Tognazzini, who owns Hot Feet, Slap Happy and Big Kahuna on Capitola Avenue, had a general business insurance policy with Farmers Insurance Group. A claims adjuster visited her stores within a couple days of the flood and soon after her claim was accepted.

“The adjuster was down here right away,” Tognazzini said. “I’ve had Farmers for 30 years, and I think everyone in the village who used them has been happy.”

Indeed, others who carry insurance through Farmers, including San Jose Avenue’s Rainbow City Limits, have said that the company approved their claims and was very responsive.

Tatiana Lima, who owns the clothing store Euphoria on Stockton Avenue, had a general policy with Allied Insurance.

No adjuster came to look at her store, but she recently received a letter saying her claim was denied. The letter from the insurance company cited her policy, which specifically excludes coverage for water damage from broken pipes or backed up sewers.

“Allied basically denied my claim over the phone, no one ever came to look at the damage,” said Lima, who said there was $10,000 in damage to her store. “I’ve been with them nine years and never filed a claim until now.”

Allied said that they cannot discuss individual claims because of privacy issues, but that they try to resolve all claims as quickly and accurately as possible.

“In all cases, we evaluate each claim on its own merits subject to the terms of the policy and state law. Allied makes its claim decisions based upon the applicable facts and circumstances in a fair manner and pursuant to the terms of our insurance policy,” said Elizabeth Gianetti, spokeswoman for Allied’s parent company, Nationwide Mutual Insurance.

The two March flash floods occurred after heavy rains blanketed the county, and a drainpipe that carries Noble Gulch Creek under the city-owned Pacific Cove Mobile Home Park ruptured, creating a sinkhole and releasing a rush of water through the park and the village.

Insurance policies can vary significantly in the language and type of coverage. Where one company may include coverage for an item in its basic package, for water damage from off-site broken pipes for example, another company may charge less for its basic policy but require additional coverage for certain types of water damage.

“All insurance policies contain differences in language that affect claims, and different adjusters can interpret the policy in different ways,” said insurance agent John Allanson, who sells Farmers policies. “It can make it tough for the consumer to know what will happen ahead of time.”

When consumers are shopping for insurance, the little details can have huge ramifications.

“In general Allied is cheaper than ours and there is a reason why. They exclude some things that we don’t,” said Matthew King, an insurance agent who sells Farmers policies, “When people buy insurance they may think certain policies are all the same, but that’s the furthest thing from the truth.”

Allied is not the only company that has denied claims for the water damage. Nat Inpong, who owns the clothing store La Vita, said her State Farm business insurance policy also did not cover her estimated $8,500 in loses. Others in the village are still waiting on decisions from their insurance companies.

Some business owners had flood insurance, which covered repairs to their stores but not business losses such as lost payroll and income from having to close for cleanup.

The Village Mouse and Thomas Kinkade Gallery received some money through their flood insurance policy, but Allied turned down their claim through their general business policy. After carrying the Allied policy for 30 years, they found that none of the lost revenue, wages or business materials would be covered, said the Village’s Mouse’s Valerie Austen.

Tom Austen, of the Thomas Kinkade Gallery, said the store lost 120 giclee canvases and frames in the flood, and, while he did not have an exact figure for the damages, he previously estimated the total cost at more than $1 million.

Since it is common for policy holders to go years, or even decades, without filing a claim, it is important for people to review their policies regularly, industry experts said.

“You want to check your policy yearly and go over what is and isn’t covered,” said Tully Lehman, a spokesman for the Insurance Information Network of California, a nonprofit consumer information organization supported by the insurance industry. “You want to make sure you have the right amount and type of coverage. A lot can change in 30 years in a given area. Areas that didn’t flood 30 years ago may flood now because of new construction that has limited the amount of water the ground will absorb.”

The California Department of Insurance will investigate claims in which the policy holder thinks they have been unjustly denied.

“The department will mediate and try to find a positive resolution,” said Pat McConahay, Department of Insurance deputy press secretary. “If we see something that they should pay, we encourage them to pay and most times they do. If they don’t, there can be financial penalties, but generally things are resolved before that point.”

In the end, if the decisions of the insurance companies are upheld, the only recourse for policyholders may be to react with their wallets.

“I’m not going to renew with Allied,” Lima said. “After talking to my neighbors, I’ll be switching to Farmers.”