An article published in the Lancaster Newspaper on Sunday, Dec 11, 2011 by Associate Editor, Gil Smart, interrupted the game I was watching.  It was about two recent incidents of alleged employee theft.  Or, more simply, two businesses that had money stolen from them by former employees. 

The article was a sad tale of a retail shoe store that, even though they had insurance for employee theft, is faced with closing their store because of the loss.  In the middle of the article was a reference to another recent incident at a local movie theater.  Both cases of employee theft resulted in losses over $100,000. 

Do you know if your business could sustain such a loss?  Do you know if you have insurance that covers a loss by employee theft?  If you have insurance, is it enough? 

Is your business too small to worry about such things?

Many insurance package policies provide a minimal amount of coverage for employee dishonesty.  These built-in limits could be $10,000, $15,000 or $25,000.  But in the two examples I referenced above, the total loss was over $100,000.  This means that, after the insurance company pays their $25,000, you could still be out more than $75,000.

The newspaper article goes on to reference a comment by Christopher T Marquet, chief executive officer of Marquet International Ltd, which is an investigative and security consulting firm based in Boston, Mass.  Christopher runs a blog called “Fraud Talk,” which tracks cases of fraud.  He says, “We only talk about cases over $100,000, but there are a lot of small businesses, townships or religious organizations that have been subject to that kind of fraud…  It is happening every day.”

In addition, the article indicates that, according to newspaper records, “Since last December, area police have brought charges in at least five fraud or embezzlement cases where losses totaled $100,000 or more…”  And, “Since 2008, 21 cases involving theft of $100,000 or more have been reported in Lancaster County.”

But it’s something the owner of the shoe store said that is even more telling, “Unfortunately I never envisioned a massive loss and did not have enough coverage to save the business.”

My guess is, you haven’t given much thought to the possibility of losing money by employee dishonesty.  Or, if you have, you haven’t thought about the need for higher limits of coverage.  You may not even be aware that you can buy coverage for employee dishonesty.  As I mentioned previously, many package policies provide a minimal amount of insurance.  Many, however, also give you the option of buying more.  An insurance company I am familiar with will write up to $100,000 of extra coverage with the possibility of more given the right circumstances.  The price for additional coverage would probably depend on your number of employees, your type of business and your location.   

The bottom line is, theft by an employee could have a devastating impact on your business.  It’s never too late to begin taking steps to protect yourself, no matter how big (or small) you are. 

You can read the referenced article in its entirety at http://lancasteronline.com/article/local/548489_Secret-Sneaker-closing–police-investigate-claimed-loss-of–115-000-.html#ixzz1jH4F1Hu8

The problem is most people who cancel their insurance on a recreational vehicle or motorcycle during the winter months do not surrender the tag to PennDot and de-register the vehicle. Thus, they have a registered vehicle without insurance. This situation may result in fines, suspending your vehicle’s registration and suspending your driver’s license. In addition, it may also deny you benefits on your auto insurance!

According to Section 1714 of the PA Motor Vehicle Code, keeping a registered vehicle without insurance prevents the owner from being able to claim first party benefits (ex. medical bills, loss wages), even if they are injured in a vehicle that carriers insurance. This provision is meant to ensure that “one may not receive medical and wage loss benefits unless you have the ability to provide them to another.”

While the law’s intent is commendable, its application raises huge concerns for individuals who have innocently kept the tag on a motorcycle or ATV during the winter months. Also note that this same rule applies for a vehicle that is inoperable or being repaired.

How Can Prevent This Major Problem?

You have 3 options if you want to cancel coverage on a vehicle because:

• it is inoperable or under restoration, OR
• it is used on a seasonal basis, OR
• it is used occasionally (such as a classic, collectible or antique car),

Option 1- You must send the tag back to PennDOT immediately. This will suspend the registration and ensure that the owner is compliant with Title 75. To return the license plate, fill out form MV-141 and send it to the Bureau of Motor Vehicles, Return Tag Unit, P.O. Box 68597, Harrisburg, PA 17106-8597. Form MV-141will be stamped by PennDOT upon receipt and returned to the sender, thus evidencing receipt. As an alternative, you may return the tag directly to any PennDOT agent. 

Option 2 – You can choose to maintain insurance on the vehicle. It is, after all, a very simple solution. If it is possible, you may be able to save money just by reducing liability limits to the minimum legal requirement on that vehicle only.

Option 3- If, and only if, you qualify, you may apply to PennDOT for seasonal registration. If properly handled, you will be able to drop Financial Responsibility (Insurance) during the off-season of a seasonal vehicle. However, due care and diligence in choosing the new expiration date for the registration is of utmost importance. The individual should be clear as to when the registration ceases and make sure the Financial Responsibility matches that date. The vehicle must never be operated during the off-season.

Again, bear in mind that the majority of seasonal registration applications are incorrectly filed. Seasonal registration is more likely to be applicable when you are dealing with recreational vehicles, motorcycles, or trucks or farm vehicles with a gross weight not exceeding 9,000 pounds. It is not applicable to antique, classic and collectible vehicles, or vehicles that are inoperable or under repair/restoration.

To read PennDOT’s Fact Sheet about seasonal registration, click here.

To apply for seasonal registration, click here.

The bottom line is that if you do not have insurance on all registered vehicles, your medical bills and loss wages as a result of an auto accident may not be covered. If you are thinking about cancelling insurance on a vehicle make sure to contact your agent and have them verify your first party benefits will not be compromised.

The key component to any successful business is their people and this summer we had the privilege to add another great team member to our family, Beth Kilpatrick. Beth brings a wealth of business and life experience to our team and as you will learn she also has a real passion for her family and helping others.

As a child I loved pretending I worked in a store selling my toys, serving ice cream to people, or actually having a lemonade stand. Needless to say, I’m not pretending anymore and I can really do what I love, helping people. Over the years I have worked in the customer service field and even owned my own business with my husband while staying home with my children. Then I returned to work part-time as a Para-educator at Manheim Twp School District. Now that my children are older, I am excited to make a career change into the world of insurance and jump back into a full-time customer service career.

As a para-educator, I was fortunate to become educated to work with special needs children for 11 years. During those years of working with children, I learned the importance of being patient and understanding. I believe patience and understanding are critical when working with customers, because I appreciate when others show these same qualities towards me. Simply put I believe in the Golden Rule. I expect a customer service representative to be pleasant, knowledgeable, patient, and understanding under any circumstance and that’s what I want to give to my customers.

My husband, Mark and I have been raising our 5 sons in Manheim Township for the last 20 years. Our oldest son Erik is 27 years old, a second grade school teacher at Pequea Elementary, head basketball coach for the JV Penn Manor basketball team, and a new father to my first granddaughter, a beautiful 7 month old named Finley. Next in line are 21 year old twins, Michael and Travis. Michael is a senior attending Shippensburg University with a dual major in International Management, Supply Chain/ Logistics, and a minor in German. He plans on graduating in December 2012. Travis is a senior attending California University of PA with a major in Sports Management and a minor in Parks and Recreation. He will be graduating in December 2011. Fourth in line is Wesley, who is 18 years old and a Freshman attending Slippery Rock University, with a major in Sports Management and minor in coaching. Last but not least, there is Justin who is 13 years old and in eighth grade attending the Manheim Twp Middle School. Justin loves to play baseball, football, and is a devoted Green Bay Packers fan.

Mark and I love traveling to the Caribbean together. As a family, we love to have cookouts on our deck, go to the boys sporting events, spend time with our new addition to the family (Finley), and play a competitive game of Clue.

I currently passed my Life and Health Insurance examination and now I am working on getting my Property and Casualty license. I am learning so much working at Baron Insurance and I look forward to using my knowledge and education to help customers achieve what they’re looking for in a personal insurance agent. I am very excited to be part of the Baron Insurance Group family!

When my husband died I was 24 and neither of us had life insurance. Three weeks prior we learned that FMLA (Family Medical Leave Act) was approaching its 12 week limit and we would lose my husband’s work issued life insurance policy. With his cancer diagnosis, there was no possibility of being approved for any life insurance policy. It was too late.

When I was 22 and marrying my husband I never would have imagined that at 24 I would a) need a life insurance policy or b) that it would be too late to purchase a life insurance policy for my husband. We were both young, active and healthy enjoying our newly married lives. While both of us had experience death and serious illness with our parents, we did not believe we needed to worry about long term planning for quite some time. We both wanted to be established in successful careers and buy a home before making decisions about our long term wishes and financial goals. To us, life insurance was a perk that came with his great new job as an HVAC repairman. We believed that his work life insurance policy would offer us enough protection until we became more established.

In the past year I finally went through the process to place a life insurance policy on myself. I do not own a home. I do not have children. My largest debt are student loans from community college. To the average 20-something it doesn’t seem necessary to have a life insurance policy. Now that I know the costs of funeral expenses, having to process end of life affairs, and the possibility of high medical bills due to death or illness, I know that a life insurance policy is a necessity, not a perk.

Life insurance for myself was simple to obtain and inexpensive. It was a quick and painless process that involved meeting with my insurance agent, having an at home examination, and paying the bill. Now that I have this in place, I know that if I died, my family would have the financial means to be able to pay for my funeral, pay off all of my bills and debt, and have some extra money for what I term the ‘death fund’. This can be everything from affording some time off of work, paying to travel to see family in other areas of the world, going on a vacation to escape it all; whatever the choice, I want my family to have options when I die.

As a young adult, especially if you are married or a parent, life insurance is important to protect yourself against the ‘what ifs’ in life that you hope never happen. The assumption that it will not happen to you is naive, and the best way to protect your family and ensure a more stable future is to speak to your insurance agent about life insurance. Go with someone you trust, and it will make the experience much more pleasant.

Learn more about Brenda on her blog at http://crazywidow.info/. Also support Brenda’s non-profit organization Keepin’ it Kevin to promote awareness and provide research funding for Angiosarcoma cancer.

Sewer, Drain and Sump Pump Backup Coverage

The Backup of sewer, drain and sump pump coverage provides protection when heavy rains overburden sewer systems and sump pumps causing unwelcomed water to enter the home. Not only does a backup cause thousands of dollars of damage but it also can create a major health hazard if raw sewage is involved.

A recent study by Zogby International shows that 67 percent of homeowners believe water damage from a sewer, drain or sump-pump back up would be covered. However, most homeowner and renter polices do not cover this type of loss without specifically adding it to your policy by endorsement. The good news is that this coverage can be added to most homeowner or renter insurance policies for ~$50-$100 per year and it can give you $2,500 to $50,000 of protection.

Do not assume you have this coverage today and make sure to ask your agent about your specific policy and need for this coverage. If you are shopping homeowner insurance make sure to find out if this coverage is included in your quote. This is great example how buying based on the lowest price and not knowing the details of the policy can leave you with some unexpected surprises at claim time.

Flood Insurance Is Available to Everyone

According to the FloodSmart.gov, your home has a greater chance of being damaged by a flood than by fire. However, your homeowner or renter insurance policy does not cover damage to your home or property for a flood. The only way to have coverage for a flood is to buy flood insurance from an insurance agent.

One common myth about flood insurance is that it is only available to homeowners who live in high risk flood areas with mortgages. Actually, any homeowner, renter or condo owner can buy flood insurance. According to FloodSmart.gov, those in low risk areas are also eligible for flood coverage on their building and contents which can start as low as $129 per year. With the average flood claim for 1 inch of water in a 2000 square foot home costing $21,000, the benefits of having flood insurance can add up quickly for any renter or homeowner. Click here to find out how much a flood may cost for your home.

Flood insurance is not designed to be as comprehensive as a homeowner insurance policy but it is simply designed to get you back on your feet. For example, flood insurance can be very limited for damage to basements, walkout basements and crawl spaces and the property that is stored in them. Most flood insurance also has a 30 day waiting period before the policy takes effect. So it is a good idea to start the process early because you will not be able to get coverage the week prior to the next big Lancaster storm.

For more information on the details of flood prevention and flood insurance visit www.fema.gov or www.FloodSmart.gov

One thing that was strange about the situation is that I just read an article about earthquake insurance the day prior and it stated that experts believe an earthquake between 6.5 and 7.5 remains possible in the East Coast or Northeast. In addition, John had put a sticky note on the article to write a blog post about this topic in the following weeks. After the most recent events in Lancaster and several phones calls from people wanting to know more about earthquake insurance, it was pretty obvious this blog topic needed to get moved up the priority list.

The Earthquake Exclusion
Earthquakes can have a devastating impact on property owners because earthquakes are not covered under standard homeowner or commercial insurance policies. The following excerpt is from the earth movement exclusion found in the ISO commercial property policy CP 10 30 06 07.¹

B. Exclusions
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss
b. Earth Movement
     (1) Earthquake, including any earth sinking, rising or shifting related to such event

The only good news about the exclusion is that coverage for related damages that may result from earthquakes, such as fire and water damage, may be provided by standard homeowner and commercial property insurance.

How to Get Earthquake Coverage
Unlike flood insurance, earthquake coverage in PA can be added to your existing homeowner or commercial policy by endorsement. However, the cost will differ widely based on location, insurance company, distance from fault lines and the type of structure covered. Generally, older buildings cost more to insure than new ones because older building are less likely to be updated to current construction code. Wood frame structures generally benefit from lower rates than brick buildings because they tend to withstand quake stresses better.²

Be aware that you may not be able to get earthquake coverage immediately. Right after the earthquake we felt in Lancaster we had customers calling to add earthquake coverage immediately to protect themselves against any potential aftershocks. However, we could not “bind” the earthquake coverage right away because insurance companies have specified waiting periods relative to the last tremor before earthquake coverage takes effect.

Earthquake Deductible Issues
The major difference about earthquake coverage compared to coverage for fire or any other cause of loss, is that it has its own separate deductible that is a percentage rather than a dollar amount. In Lancaster PA, earthquake deductibles normally range between 2-5% with deductibles up to 20% in higher risk areas of the country. This means if your home is insured for $200,000 and you have a 2% earthquake deductible, you would have a $4,000 deductible for an earthquake claim.

Earthquakes are a real risk in our area with Harrisburg having an earthquake of 3.4 as recently as July 16, 2010. Take five minutes and ask your insurance agent if earthquake insurance is right for your home or business. To get other tips on taking protective measures before an earthquake strikes and what to do during and after earthquake visit FEMA’s website Are You Ready?

¹Christopher Tritto, “Are We Prepared for Our Own Disaster?” St. Louis Business Journal, Sept. 9, 2005
²Robert J Prahl, “Earthquake Insurance, What’s Your Experience?” Adjusting Today, Aug. 1, 2011

The Forgotten College Student Auto Discount

It is no myth that adding a young driver to an auto insurance policy can be expensive. According to MSN Money adding a teen driver will increase your auto insurance by an average of 156%! One of the factors driving this shocking auto insurance increase for young drivers is, not only who is driving the car but how they are using it.

This fall many families will be sending “young drivers” away to school and many of the students will not be taking cars that are insured on their parent’s auto insurance policy. For these families, the young drivers will not have regular access to that car and many insurance companies may offer a significant discount for the reduced car use by your young driver.

One thing to keep in mind is this discount usually has a distance requirement. The insurance company assumes if your child is attending college within a few miles from home, they will most likely still have regular use of that vehicle and the discount may not apply. However, other discounts like “good student” may still be available for college students that live close to home.

Are My College Student’s Belongings Covered?

The short answer is it depends. To have any coverage for liability or their belongings at school they must first qualify as an “insured” on your homeowner or renter insurance policy. According to the PA Insurance Service Office’s (ISO) homeowner insurance policy, an “insured” on a homeowner insurance policy includes a student enrolled in school who meet all the following:

1. Enrolled as a “full time” student defined by the school

2. Who was a resident of your household before moving out to attend school

3. Under the age of 24 and your relative

Thus, if a student is not enrolled full time or is over the age of 23 attending school, they may not have homeowner insurance coverage from your policy. The good news for families in this situation is that endorsement HO 05 27 “Student Living Away From the Residence Premises” may be used to extend coverage from the parent’s homeowner insurance for a student who is 24 or older.

If a student is an “insured” on the parent’s homeowner insurance policy they should have coverage for their “stuff” at school – laptops, books, TVs, ipods, ect. However, the standard ISO homeowner policy has a limitation of 10% for personal property located off the insured’s “residence premises”. This means if your homeowner insurance policy has $100,000 of personal property coverage, student(s) at college would only have $10,000 of coverage for their “stuff”.

This may sound like more than enough coverage but $10,000 can go quickly depending whether you have multiple college students or just one student with some really nice “stuff”. Again there is an ISO endorsement to provide extra coverage beyond the 10% if needed. It is HO 04 50 “Personal Property at Other Residences” endorsement and it allows you to purchase additional coverage above the 10 percent limitation found on most policies.

I always use the phrase “you don’t know what you don’t know” and for many families sending students off to college this fall they don’t know how their insurance works for this major life event. Take five minutes to ask your agent if any additional auto insurance discounts apply and how your homeowner insurance covers or doesn’t cover your college student. The answer could be a very big surprise!

Caution: Many insurance companies have their homeowner policy forms and their provision may be different than the standard ISO form I outlined above. Always consult your insurance company to verify their specific requirements for definitions of “insured” and coverages.

Gold Prices July 2009 - July 2011

Let’s say you bought a $5,000 ring when you got engaged in 2009. Since you read our prior blog “Jewerly Insurance: You May Have Less than You Think!”, you already knew that a standard PA homeowner or renter insurance policy only has a $1,500 theft limitation on jewelry and you chose to buy a personal articles policy to insure the ring for the full $5,000. Your thinking this is great news, because if the ring gets lost or stolen you get another $5,000 to buy the same ring. No damage done.

Now fast forward two years where the price of gold and many other precious metals have skyrocketed and the same ring is worth $8,000. Guess what happens if the engagement ring is lost or stolen now? You get a “smaller” ring because the maximum your policy will pay is $5,000. I know that is not news I would be happy to hear or deliver to my wife!

What should I Do?

If you currently have jewelry scheduled or on a personal article policy, like in the example above, call your agent and get an updated appraisal. Having jewelry insured for an appraised value from just a year or two ago could leave you very disappointed if you need to file a claim today.

Even if you do not have any scheduled jewelry, make sure your total amount of jewelry does not exceed the standard PA homeowner and renter insurance policy theft limit of $1,500. If it does, look into raising the theft limit above $1,500 on your homeowner or renter policy or place some of the jewelry on a personal articles policy.

Overall, this is just another example of why it is important to review your insurance on an annual basis with an agent. Things change in life, like the price of gold, and most people don’t even realize it actually impacts their insurance.

What is this New Product?

The new product is called “Erie Rate Lock” which is offered by Erie Insurance for PA residents starting July 6^th. Erie Rate Lock is an optional endorsement that offers pricing stability by locking your current auto insurance rate beyond the normal policy period of 12 months. Once the rate is locked, it does not change even if you have an accident or violation.

How Much Does It Cost?                     

The cost is based on individual characteristics so pricing will vary for each policy. Thus, you may see no change in price to lock your rate, you may see an increase or you may see a decrease. It is not a flat charge or fee.

How Does Your Rate Unlock

Only you can remove the Erie Rate Lock feature, which can be done at any time. The endorsement cannot be removed by Erie Insurance or lost. In addition, if you make three basic policy changes the Rate Lock will also be removed

- Change in vehicles

- Change in drivers or

- Change in location where the vehicle is principally garaged

When the Lock Rate feature is removed the policy will be re-rated using Erie’s current pricing and any accidents, claims or violations that did not impact the “old rate” will be calculated into the “new rate”. You will have the option to re-lock the “new rate” but your driving record will be subject to Erie’s underwriting guidelines.

Who is It Available To?

Erie Insurance is the only auto insurance company that has the Rate Lock feature. It is available to new customers and to existing Erie Insurance customers only. However, existing Erie customers can only lock their rate when either their policy renews or if they make any of the 3 qualifying changes listed in “How Does Your Rate Unlock”.

After getting the basic information about this new product, what do you think about the concept of locking your auto insurance rate?

As we enter the summer vacation months, many families will be renting cars and unexpectedly dealing with the same rental car insurance question as I did a few years ago. Faced with a number of choices, families will either purchase all the coverage or they will decline the insurance without knowing if they are covered by other policies. This can lead to either wasting money by purchasing coverage you already have or leave you dangerously uninsured or underinsured.

Homework Before the Rental Car Counter

The first thing you should do if are planning to rent a car is call your insurance agent before getting to the rental counter. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car, assuming you are renting car for pleasure and not for business. This means if have comprehensive and collision coverage on your vehicle, the rental car will likely also be covered if it is stolen or damaged in an accident.

Another potential source of existing insurance coverage for rental cars is your credit card. To find out what type and how much coverage a credit card company offers call the 800 number on the back of the card. The Insurance Information Institute (III) recommends, “If you are depending on a credit card for insurance protection, ask the card company or bank to send you their coverage information in writing. In most instances, credit card benefits are secondary to either your personal insurance protection or the insurance offered by the rental car company.”

At the Rental Car Counter

Contacting your agent prior to getting to the counter is going to make reviewing these common rental car insurance coverages much easier and avoid the panic and uniformed decision I made when trying to get that convertible.

1. Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW): This is the rental company’s version of comprehensive and collision coverage insurance. If you do not have comprehensive or collision on your own vehicle this coverage is recommended in case the car is vandalized, stolen or damaged.  But be careful. According to III, your coverage may become void if the accident was caused because you were speeding, driving under the influence or some other reckless error on your part.

However, you may still want to buy this coverage even if you have comprehensive and collision on your own vehicle. Yes, there is some double coverage by doing this but a rental car company may charge for something called “loss of use”. Let’s say you get into an accident with your rental car and it causes $5000 of damage to the rental car. Since you have collision coverage on your own car your insurance pays the $5000 damage minus your deductible. Then the rental car company sends you a bill because they cannot rent the car to someone else (loss or use) for 2 weeks. Your car insurance company may not pay this expense and you could be left picking up this expense unless you purchased this waiver. If you have comprehensive and collision on your vehicle ask your agent if your policy covers “loss of use” and find out from the rental company if they would charge for “loss of use” to determine if buying this option makes sense.

2. Liability Insurance: Rental companies are required by law to make sure all rented cars have at least the state required amount of liability insurance. If you do not have any auto insurance you will be required to buy this coverage. Remember that state minimums do not offer much protection and it is recommended to buy additional liability insurance above the state minimums. 

If you already have auto insurance rental car company will ask you to purchase additional liability insurance. According to III, “You should probably only forgo the additional liability protection if you have adequate amounts of liability protection on your own car.” If you are interested in additional liability insurance it may be a better option to talk to your agent about an umbrella liability policy versus getting through the rental car company. 

3. Personal Accident Insurance: This offers you and your passengers coverage for medical and ambulance bills for injuries caused in a car crash. According to III, “If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance.”

4. Personal Effects Coverage: This provides coverage for stolen items in your car while on vacation. If you have a home or renters insurance policy, you are already covered for theft of your belongings away from home, minus the deductible. However, the amount of coverage away from home could be limited so tell your insurance agent if you are planning to take valuable items on the road.

In hind sight, the coverage I had on my own auto and renter insurance for our Everglades trip probably would have been adequate even if something did happen after I declined the car rental insurance coverage.  However, I would not of known it was adequate after it was too late and that is never the time to hope you have the right insurance. Take 5 minutes call your agent, be prepared and happy renting!