Beware of Coinsurance

Coinsurance is a penalty provision found in most property insurance policies for underinsurance. It never helps you. It can only hurt at the time of a loss. Example – Underinsured Building With Coinsurance Property value: $1 million 80 percent coinsurance clause (requires the purchase of $800K of insurance) Amount of insurance: $750K Amount of … [Read more...]

ABA Insurance Services – Property, Liability, Auto, Workers’ Compensation, Umbrella Insurance For Banks

A bank's agent just sent me a quote for Property, Liability, Auto, Workers' Compensation, Umbrella, REO Property... I am very impressed.  The price is very good compared to other standard lines insurers and the coverages are great. Nice work ABA. I'll be sending more banks your way on these lines of insurance. Info Here … [Read more...]

Building Replacement Cost & Union Wages

As you think about the cost to rebuild your building, consider if your contractors would be union or nonunion workers. If union, inform your agent and insurer that the construction cost estimates you have used are at union wages. Ask that the policy recognize the increased cost that union wages require. This needs to be done before you have a … [Read more...]

What are “Special Perils”

Perils in a property insurance policy are causes of loss—fire, lightning, wind, or hail for instance. Policies that include coverage for “special perils” provide the broadest coverage— protection for any cause of loss not excluded by the policy. Common exclusions are earthquake, flood, nuclear events, damage by insects or animals, and mold. If … [Read more...]

Insurer Wants Square Peg For A Round Hole – Bank Loss of Income Insurance

A property insurer asked the bank's insurance agent to have the bank complete a loss of income worksheet. He reached out to me for help....   Matt,  Nice to hear from you. There is no way to fill out the "standard" business income worksheet for a bank. A bank's finances just dont match up with such a form. It's why I rail against … [Read more...]

Update To How Much Insurance Should A Condo Owner Buy

My post has caused the grumblers to come out... I've been lectured on my attempt to put some rules of thumb out there. It's wrongheaded, unethical, misguided, and will probably cause baldness, I'm told. Ya but... It's a start. Plus, there is a fudge-factor (proof that we are somewhat guessing here). If you start with the cost per square … [Read more...]

Exclusion for False Pretense, Trick, or Scheme

Patrick Morin, an acquaintance who is a CPA, wrote an article recently on risk management.  The piece reviews what steps an organization can take to understand and mitigate risk.  The article’s example of exposure points out an event not covered by most property insurance. Almost all property insurance policies exclude loss by false pretense or … [Read more...]

Silly Story to Explain Loss of Business Income Insurance

I'm finishing up the final draft for the second edition of Simmonds on Bank Insurance. (I've been saying that now since 2011.) My editor laughed at my story about loss of business income - then admitted it was effective! Pretend you own a goose (a building). Your goose lays golden eggs (cash flow). If your goose is run over by a truck, it’s … [Read more...]

How To Report A Loss Or and Insurance Claims

Insurance is purchased in case there are claims. Sometimes the first step in the claims process gets off on the wrong foot. Don't let that happen. Property Claims - Events should be reported promptly once you know you have suffered a significant property loss. I suggest not reporting small losses - losses you can pay for yourself without too … [Read more...]

Debris Removal – As Part Of Property Insurance

Debris removal insurance... After a fire or other insured event causes damage to your building, there likely will be debris that needs to be removed. Most property insurance policies limit coverage to twenty-five percent of the loss. ($100,000 fire means you get $25,000 of insurance to pay to haul away the debris.) That sounds like a lot until … [Read more...]