Take Note…

NOT ALL SURPRISES ARE GOOD …ESPECIALLY WHEN IT COMES TO INSURANCE 

Ever been at a dull party and to stoke the fire to generate some passionate conversation, someone asks if anyone has had a gotcha experience from an insurance company? Regardless, the passion for this topic is unmistakable. In the world of insurance problems arise, claims occur, poor service abounds! Is there no hope? Keep it together, there is always hope.

Insurance can be a very complex matter and that’s why it is so important to use a qualified insurance professional with specialized insurance experience in order to represent your overall interests. This may exclude your brother-in-law who got his insurance license last year. Also, the great guy who insures your car insurance may not be the best person to handle your estate planning.

Here are some insurance surprises for your personal validation and perhaps a means to impress some of your friends the next time the “I” word comes up in conversation.

Homeowners Insurance Surprises

• Many people mistakenly believe that their homeowners insurance provides coverage against natural disasters. A flood, for example, will not be covered by your homeowners insurance. If your house floats away in a hurricane, a typical policy will not cover it. The same idea applies to earthquakes.
• Some people don’t know that their policy does not cover mold. Although in the past, it was covered, many states are completely cutting it out.
• If your house is involved in an act of terrorism, it will not be covered by homeowners insurance. If anyone destroys your home during war, your home will not be covered.
• Insurance companies pay over $300 million every year to those that have been bitten by dogs. If you own a Rottweiler, Pit Bull, or other aggressive breeds, your insurance company may not cover you at all or they will raise your premiums significantly.
• Intentional damage would not be covered and the rule is applied to all family members. If you have a rebellious teenager or a feuding spouse that causes damage, get out your checkbook - surprise/surprise.

Takeaway: Check with your insurance advisor for additional coverage that may be available to address gaps. And while you are at the pet store maybe a cocker spaniel may be a better choice than the pit bull.

Auto Insurance Surprises

• Most people seriously underestimate how much they might owe if their vehicle was “totaled”. In the case of a new vehicle totaled only a few weeks after being purchased, insurance companies will deduct for depreciation which could leave the customer owing thousands of dollars on a car loan.
• Although more than half of Americans don’t purchase additional rental vehicle insurance from rental agencies, many are not aware that most personal auto insurance policies will not reimburse the rental company for loss in rental income while the rental car is out of service, the decrease in the market value of the rental vehicle, as well as the cost for towing and storage of the vehicle while it is being repaired.
• Most standard auto policies deduct depreciation for items such as batteries, tires and shocks if damaged in an accident. This should be of special concern to owners of hybrid vehicles since the batteries in their cars cost thousands of dollars. This coverage gap could leave hybrid owners with a surprise out of pocket expense for the difference.

Takeaway: Understand your policy limitations and work with your insurance advisor to address risk mitigation options.

Life Insurance Surprises

• Most people accept that in virtually all cases life insurance proceeds are paid at the death of the insured to beneficiaries free of income tax. But, when calculating the value of an estate, the total of the group life insurance proceeds will be included in the total value of the estate potentially pushing assets over the Estate Tax exemption amount, creating an estate tax bill on what would have otherwise been completely tax free proceeds.
• Another common surprise trigger for families occurs in regards to estate taxes at the death of the second spouse when all the home equity, possessions, IRA proceeds, life insurance proceeds and assets transferred to the remaining spouse with no tax bills being triggered at the first death. Now the assets of the remaining spouse have grown quickly, and potentially compounded the problem.

Takeaway: The professional services of an insurance and tax specialist can help you design a properly structured program to minimize problems for your loved ones.

Workers’ Compensation Surprises

• Traditionally, businesses have had only one way to pay their workers’ compensation: up front and based on an educated guess of expected annual payroll. Then at the end of the policy term the insurance company audits payroll and either surprises you with an additional bill or surprises you with the return of your excess premium that they have had the opportunity to invest during the year.
• Payroll fluctuations throughout the year related to economic or seasonal conditions do not provide corresponding workers’ compensation premium adjustments during the year.


Takeaway: A limited number of insurance companies are now offering a pay as you go workers compensation product. Here are some highlights of this innovative product offered through Intego Insurance Services, a national insurance agency specializing in pay as you go and working in conjunction with hundreds of payroll companies across the country. www.integoinsurance.com
Rather than paying estimated premiums based on projected payroll for a coming year, SmartComp sm calculates exactly what customers owe based on actual payroll. And instead of making hefty down payments and writing separate premium checks to the insurance company throughout the year, SmartComp sm provides Intego customers with electronic debit all in coordination with their regular payroll provider.

Client Testimonials…

“Thanks to all of you. This type of service is what sets Intego and our service bureau apart from the competition. What we had here is a great client who for some reason let his priorities get in the way of a workers’ comp audit and was ignoring the consequences which could have been catastrophic. Our teams went the extra mile and did not simply rely on official letters and emails but rather got the client to understand the consequences of ignoring the issue. Many companies would have just let this become a statistic. This was really a win-win-win for us, Intego and the client! Kudos to both teams. We really appreciate the relationship we have with Intego and your diligent efforts to provide superior service. Merry Christmas.”

John L., Atlanta, GA (payroll service bureau partner)

Industry Speak…

Top 5 New Year’s Resolutions for Businesses:

1. Make only 2 resolutions in 2010, not ten
2. Connect with and listen to customers – Your most valuable source of business and referrals, get to know them better.
3. Focus on cash flow – Review all potential sources including insurance
4. Employees must be productive not just active
5. Grow

TIP: Review your homeowners insurance once each year and shop around every 3-5yrs.
Be sure your coverage is appropriate for the value of your house and belongings. Are you limits and deductible levels appropriate? If you’ve been with the same insurance company for 5 years or so there are a couple variables to review. First, determine if the inflationary adjustment the insurance company made to your policy limit is appropriate. Second (if you haven’t had a claim) call them and ask for a discount. Many times the insurance company will grant discounts to long time, claim free, policyholders.

Interesting Tidbit…

 “No pessimist ever won a battle.” – Dwight Eisenhower

“Even if you’re on the right track, you’ll get run over if you just sit there.” – Will Rogers

“A good beginning makes a good ending.” – English Proverb