The Insurance Fixer Newsletter

Scott Simmonds, CPCU, ARM

Insurance from an Unbiased Point of View

September, 2006 -- www.ScottSimmonds.com

Hints for Reading Your Insurance Policies

The mere thought of reading an insurance policy can make your head hurt. Here are some hints to make it less painful.

• Start with an understanding of the purpose of the insurance police. An auto policy is designed to cover vehicle accidents. General liability insurance is purchased to protect the insured from liability arising out of bodily injury, property damage, personal injury, and advertising injury. Directors' and officers' insurance indemnifies the key people for errors in judgment and bad decisions.

• Read the declarations page, usually the first few pages of the policy. It will have information specific to the policy being reviewed, such as:

-policy effective and cancellation dates;
-name of insured;
-the subject of the insurance policy (list of vehicles, buildings, description of property, etc.);
-premiums charged;
-policy form numbers and edition dates.

• Words in bold print or within quotation marks are defined by the policy. For example, in a general liability policy the word "bodily injury" is defined in a separate section of the policy. Find the definitions section and browse the terms.

• Read the insuring agreement. This is usually the first part of the actual policy wording. It will tell you what is covered by the policy.

• For property insurance, learn what causes of loss (perils) are insured. For a directors' and officers' insurance policy, look at the definition of "wrongful act."

• Review the exclusions to learn what is not covered by the policy. Most policies start with broad insuring agreements, then whittle away at the coverage with the use of exclusions. Broad exclusions are not necessarily bad. For example, a general liability policy will exclude auto accidents. No problem. That's why you buy an auto insurance policy.

• While reviewing exclusions, look for exceptions to the exclusion. Look for wording like "This exclusion does not apply to …." For example, the general liability policy excludes watercraft. There is an exception to the exclusion in most policies for watercraft less than 26 feet in length that you do not own.

• Review the endorsements (usually found at the end of the policy) for amendments to the standard policy language. It is not unusual to have more than ten endorsements to the policy. The title of the endorsement usually gives you a good idea of what is trying to be accomplished with the form. If an endorsement deletes a section of the policy, mark that section in the policy document for future reference.

• Review policy conditions to learn the general "rules of the road" for the policy. Issues like cancellation, arbitration, and claims reporting are usually covered in this section.

• I read insurance policies with a pencil in hand. I mark sections and summarize the contents of a particular clause in two or three words.

Debris Removal

After a fire or other insured damage to your building, there likely will be debris that needs to be removed. Coverage is usually limited to 25 percent of the loss. The amounts paid for debris removal do not increase the total limit of coverage for the whole claim. It is, therefore, possible that you can run out of coverage.

To help, insurers provide an additional amount of coverage (usually $10,000) to pay for the cleanup. Some insurance companies increase the additional amount to $25,000 or $50,000.

Review your buildings. Will special disposal of rubble and debris increase the cost of reconstruction? Asbestos or other hazardous substances (found in older buildings) may point to the need for additional insurance.

Kid at College? Get Your Auto Policy Adjusted

If you just sent a kid to college, consider changing your personal auto policy. Many insurers provide discounts when a driver leaves home for a college more than 100 miles from home – when they don’t take the car with them! Check with your agent.

Life In Maine And Other Stuff - The hummingbirds are gone. As soon as the calendar changed to September they left. The trees are starting to turn color. It will be a spectacular fall! It was thirty-six degrees yesterday morning.

I'm well into my year as President of my Rotary Club. Nobody has quit yet - a good sign. In the three months since I took over we have added two new members and have several more in the works. We even added a new fundraiser for our scholarship fund - a wine tasting party this Saturday. 40 different wines to try for $25. Call me for tickets if you're local.

Biggest Insurance Mistakes White Papers - Get my white papers covering the biggest business and personal insurance mistakes. Send a blank email to bizmistakes@ScottSimmonds.com for a copy of the business mistakes paper. Email to personal@ScottSimmonds.com for the personal insurance version. No cost.

Forward This Newsletter To Your Friends - Feel free to pass this newsletter on to others whom you think would be interested.

Your Privacy - I will never sell or distribute your email address to any other person or organization.

Do You Have The Right Insurance? Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Call 207.284.0085 or email me at Scott@ScottSimmonds.com. Remember, I don't sell insurance so I'm unbiased.

Need A Speaker? I'm pleased to speak to trade, business, or service associations about insurance topics. Call 207-284-0085 or email me at Scott@ScottSimmonds.com. See my speaker's page at www.ScottSimmonds.com/ispeaker.html.

Scott Simmonds, CPCU, ARM
Insurance Consulting
Phone 207-284-0085
Scott@ScottSimmonds.com
ScottSimmonds.com

Comments regarding insurance policies or products in this newsletter do not constitute an endorsement. I accept no fees or payments of any kind from any company mentioned in this newsletter.