What is usage based insurance?

Many auto insurers now offer discounts in exchange for good driving habits that are monitored through a device that plugs into the OBD port on your car and transmits vehicle use data to the insurance company. This is sometimes referred to as telematics. Data may include information such as the time of day a vehicle is driven, rapid acceleration, hard braking, vehicle speed and the number of miles driven. If, after a trial period, the data indicates that the vehicle is operated safely, a discount will be applied to your premium.
One company that offers such a program is the New York Central Mutual Insurance Company (http://www.nycm.com) based in Edmeston, NY. Their program, known as inControl, uses information technology to promote safe driving by monitoring the way a vehicle is driven. In addition to monitoring safe driving factors, inControl provides the additional benefit of “teenage driver coaching” in which parents receive information on braking and acceleration, vehicle use times and driving boundaries which can be used to monitor the driving of household members.
For more information on usage based insurance programs call our office at (631) 758-1550.

5 Things Every Homeowner Should Know About Homeowner’s Insurance

Whether you’ve owned your home for many years or are planning on purchasing your first home there are some important things you should know in order to make sure that you’re properly covered.

1. Deductibles are not all the same. Policies often contain wind deductibles that apply if certain wind speed triggers are met such as a class II hurricane with sustained winds of 92 mph. With some policies these deductibles apply to damage caused by any wind regardless of its speed. Wind deductibles are usually a percentage of the dwelling amount. For example, a 5% wind deductible on a policy insuring a house for $300,000 would mean that the wind deductible is $15,000. You should be aware of the trigger that causes the wind deductible to apply on your policy as well as the deductible amount such as 2%, 5%…

2. Dwelling replacement cost endorsements usually provide 25% of additional coverage on a house. In other words, if your house is insured for $300,000 and it’s destroyed by a fire, your company will pay to rebuild the house up to a limit of $375,000. This extra coverage is designed to protect homeowners against increased construction costs and the possibility of finding a house underinsured after a loss occurs. Regardless of whether or not this endorsement is on your policy you need to insure your home to its full replacement cost. That means increasing your coverage after significant improvements are made to your home.

3. Insure your house for what it would cost to rebuild, not its market value. When we talk to homeowners about insuring their homes it’s common for people to request coverage that equals the market value of their home. Market value and construction costs may be similar in many cases but not always.

4. Consider scheduling unique or highly-valued items. Policies often contain sub-limits on items such as jewelry and fine arts. Scheduling specific property items provides comprehensive coverage, worldwide and often with no deductible. You will need a recent appraisal, bill of sale or some other credible proof of value to schedule property. There is an additional premium for scheduled property.

5. Be familiar with common policy exclusions.

Flood is a standard exclusion contained in virtually all homeowner policies. If you’re in a flood zone or near the water you may consider purchasing a separate flood insurance policy. Premiums vary based on your floods zone, coverage amount and dwelling characteristics.

Some policies contain a “canine exclusion” which excludes liability coverage for certain dog breeds. If your policy has a canine exclusion a separate canine liability policy can be purchased.

Some other common exclusions include:

– Injuries caused by trampolines
– Pollution from a leaking underground oil tank
– Property used in the course of one’s business such as tools and equipment

It’s important to read your policy to understand what is and is not covered. Your agent can be a valuable resource to help you learn more.

Rick Braile
January, 2016

Cyber-Insurance Basics

Cyber Insurance is a broad term that refers to insurance protection from risks related to a business’s information technology systems particularly with regard to its data and internet exposure. Common examples include a data breach in which personally identifiable information is exposed or a cyber-attack in which a company’s network is disabled.

Cyber-attacks and other security incidents involving personally identifiable information are increasing. A survey by Price Waterhouse Coopers found that, “the number of detected information security incidents has risen 66% year over year since 2009.”

Businesses that collect or maintain personally identifiable information (data that could identify a specific person) as well as those that would be harmed by a network failure should have some type of cyber coverage. Business that processes credit card transactions should also consider obtaining cyber-insurance coverage.

Cyber-insurance can provide first party and third party coverage. First party coverage provides direct protection for the insured for losses incurred. Examples of first party coverages would include:
– The cost of notifying customers after a breach
– Legal costs involved with regulatory compliance after a breach
– Business interruption costs
– Data restoration costs

3rd party coverage protects the insured by agreeing to indemnify a 3rd party in the event of a liability loss (liability coverage). Examples would include:
– Legal settlements related to the release of customer data
– Legal defense costs
– Government fines

Recommendations for purchasing cyber-insurance coverage:

1. Evaluate the risks your business faces and purchase the coverage that’s appropriate to cover those risks. For example, if your company maintains personally identifiable information consider obtaining network security or enterprise privacy liability coverage to provide protection in the event of a data breach. If your company would suffer a loss in the event of a system failure due to a network attack consider purchasing network interruption, business income and extra expense coverage.

2. Obtain coverage for retroactive events. Many policies provide coverage for claims that “occur” during the policy period. Policies can also be written to provide coverage for claims that are made during a policy period even if they occurred prior to the inception of the policy. This is important for cyber coverage because breaches may go undetected for a long period of time.

3. Understand what you’re covered for. Unlike many other lines of business, cyber-insurance policies are not standardized. A policy from one company may have coverages and exclusions that are completely different from a policy issued by another company.

Rick Braile

Directors Officers Insurance

Directors and officers insurance (D&O) provides liability coverage for directors and officers of organizations including businesses, non-profit and government entities. It provides a level of protection for individuals who serve in fiduciary roles as directors or officers allowing organizations to attract talented people to serve as directors or officers without incurring the risk of personal financial loss.

When considering whether or not to serve on a board it’s recommended that people make sure that D&O coverage is in place. As a director or an officer of an organization you are responsible for making decisions that are in the best interests of the organization and with that responsibility comes the risk of negligence. Examples may include liable or slander claims that can arise when condominium board members speak in anger or board members of a local yacht club facing legal action if members deem that funds have been spent improperly.

If you’re considering serving on the board of an organization make sure that they have a D&O policy in place. If you’re already involved with one and are looking to provide protection for your existing members and attract talented people it’s a good idea to purchase a D&O policy.

Higher Deductible on Homeowner Policy

I often find it interesting to hear people’s reactions when I suggest that they carry a higher deductible on their homeowner policy.  Many people focus on the risk of loss – paying a higher out-of-pocket cost in the event of a claim instead of focusing on the the risk of paying too much premium. A person with a policy that has a $500 deductible will pay the first $500 of a claim while a person with a similar claim having a policy with a $1,000 deductible will pay the first $1,000 of the claim before insurance coverage applies.

When we consider the difference in cost between the two policies the decision becomes easier to make. A premium for a policy with $470,000 of dwelling coverge and a $500 deductible is $ 2,710/year with the Kingstone Insurance Company while the same policy with a $1,000 deductible has a premium of $ 2,388/year. The difference in premium of $322/year is used to purchase $500 of coverage – the difference between the two deductibles.

The difference in premium between the two deductibles may not always be this dramatic however the numbers in this case illustrate how costly it can be to carry a low deductible. The $322 additional premium represents a cost of 64% of the coverage amount. In other words, it you chose the $1,000 deductible and didn’t have a claim in a year and a half, you’d have that $500 in your pocket instead of the insurance company’s.