Not all high net worth individuals started out that way; they’ve spent years building a business and career, slowly accumulating assets and wealth. Even though they have more items to insure and face different risks, they often don’t adjust their personal insurance to reflect their changing needs.

“They are so busy building a business, they often don’t take the time to adjust their coverage as their needs and circumstances have changed,” says Marc McTeague, president at SeibertKeck.

Most of these people would never go without necessary coverages on their business, but there can be major inadequacies with their personal insurance, he says.

Smart Business spoke with McTeague about where high net worth individuals need more or different types of insurance coverage.

What is the biggest area that high net worth individuals underinsure?

The biggest concern is liability. While it is upsetting to lose an expensive piece of jewelry, it generally will not ruin someone financially; a liability claim, however, can. With inadequate liability and/or umbrella coverage, one incident can affect the total wealth and earnings of an individual and their family.

If the individual sits on non-profit boards, or is involved with charity work, he or she needs to consider increasing his or her limits and supplementing coverage with an umbrella policy. If a non-profit is sued, it is common to name all the individual board members in the suit as well. Without the proper coverage, you could be footing the defense or judgment bill yourself.

For example: A high net worth individual sat on a youth athletic league’s board of directors, and a former coach sued all board members for improper dismissal. Thankfully he had a personal umbrella policy that covered him for liability resulting from unpaid or voluntary positions and paid for his entire defense.

Auto accidents are a common source of claims and can result in financial pain if you and your estate are not adequately covered. For example: An individual has a $1 million umbrella policy over a $250,000 per person liability limit with his automobile policy. Unfortunately, he or she had an accident in which a child was severely injured. The child’s care will more than likely exceed $5 million within 15 years; his or her estate, business and earnings will all be at risk to cover this situation.

What problems do you see with homeowner’s policies?

Homeowners policies come with limitations on certain items like fur, jewelry, fine arts and firearms. These provided limits are not usually adequate for high net worth individuals. As individuals gather wealth, they tend to gather expensive items that with a standard policy have a very limited amount of coverage. It is important to review these items with your insurance agent to be sure the items are properly and fully covered. Collectibles and rare or unique items often require a separate policy, known as an Inland Marine Policy.

Making sure the values on your homeowner’s policy are correct, and ensuring you use insurance products that are designed for higher risk, will be extremely important in the event of a claim.

How should household help be covered?

If household help, such as a gardener, nanny, cleaner etc., doesn’t come from an established company, you need to pay workers’ compensation. This will protect you in case they are injured in your home. If the employee comes through a service company, ask for proof of coverage with a workers’ compensation certificate. It is also important to inquire with the company about background checks for anyone coming to work in your home to make sure there’s compatibility, experience and no other issues. Your insurance agent will be able to assist you with determining if the company’s coverage will extend to the employee, or if you need to purchase your own policy for them.

A good agent will do a risk management audit, asking what you’ve got to protect and walking you through the different items you have to ensure there’s adequate coverage. By spending time with a qualified high net worth agent, you’ll know your assets and income are properly insured.

Marc McTeague is president of SeibertKeck, Best Hoovler McTeague. Reach him at (614) 246-7475 or mmcteague@seibertkeck.com.

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Summer time is best spent outdoors. Jumping in the pool. Taking the boat out. Getting away for a road trip on your motorcycle. However, it is easier to enjoy the great weather when you know your summer “toys” are properly insured.

“The season of summer usually conjures up feelings of fun, especially vacations, swimming, boating, fishing, picnics and other outdoor activities, but along with the fun comes responsibility,” says Cliff Baseler, vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company.

Smart Business spoke with Baseler about how to handle insurance for these extra items.

What is personal lines insurance?

Personal lines insurance is a layer of protection that provides coverage for you and your assets, such as your home, car and possessions, against damage, theft and other potential risks.

When it comes to boats, jet skis, RVs, motorcycles, summer cars, pools, etc., what insurance should you have?

Watercraft, such as boats or jet skis, are placed under a marine policy. These annual policies would provide coverage for bodily injury and property damage. Bodily injury is any injury that you caused to someone else’s body, while property damage is damage caused to the boat.

Recreational vehicles (RVs), motorcycles and summer cars require an auto policy separate from your everyday auto policy that is specialized for unique autos. In some cases, a company will be able to add the watercraft and/or special vehicle to your current home policy as an endorsement.

While pools typically are covered under your homeowner’s policy, there are specific requirements to ensure safety. These include, but are not limited to, the depth of the water with diving boards, slides and fence specifications, such as height, area around the pool, self-closing and self-latching gates. Be sure to check with your agent for specific rules and regulations for your pool.

How can you make sure these items are insured to value, and what kind of cost could you be looking at?

While it is important to insure all of your summer toys, it is even more important that they are insured properly and to value; this is critical at a time of loss. The value of the item is best determined by using the year, make, model, value and any customized additions. These details are often reviewed at the annual renewal of your policy for updates and additions.

Premiums also will vary based on many factors. A stand-alone marine policy for a pontoon-style boat valued at $10,000 could have an annual premium of anywhere from $500 to $750, but this is all contingent on the individual’s underwriting information such as insurance score and loss history. Also, some companies provide credits if you package all your insurance, meaning you place your boat with your home and auto. This would also apply to an RV or motorcycle.

Are there ways to save on the premium upfront without jeopardizing important coverage?

Premium savings on ‘toys’ are similar to savings on your current insurance program. Your insurance score, loss history, location, age and marital status will influence the rates applied. The better your insurance score, the lower your premium — just as a high claims history will result in higher premiums.

What else do you need to know about this kind of coverage?

When making a claim, the first step is to contact the proper authorities to help if someone is injured. Then, you will need to call your insurance agent with the details of the event and secure the contact information needed from all parties. Taking photos and obtaining contact information from witnesses is highly encouraged. Your claims adjustor will assist in the entire process.

Surprisingly, most homeowner’s insurance does not cover summer toys for your kids, such as mini-electric cars and scooters. Considered a toy, these are often overlooked but have the potential to be harmful.

When purchasing ‘toys’ it is best to advise your insurance agent immediately. He or she will make sure they are properly insured to value and be able to offer some safety tips to ensure you have a safe and fun summer.

Cliff Baseler is vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 or cbaseler@bhmins.com.

To keep up with the latest insurance news and how your company could be impacted, sign up to receive our newsletter at www.seibertkeck.com.

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Every day more than 10,000 baby boomers turn 65, and during the next 15 years it’s expected that more than 1.3 million home health and personal care aides will be needed to accommodate them. In addition, in-home care can be costly. On average, a caregiver or client will spend $18,000 a year for 20 hours a week of care.

“Long-term care insurance can fund home care that will allow you to remain at home where you are most comfortable, with safety and independence,” says Marc McTeague, president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck.

Smart Business spoke with McTeague about how to maximize your long-term care insurance for home health care.

Do people mistakenly associate long-term care with nursing homes?

Yes, but the opposite is also true. According to the American Association for Long-Term Care Insurance, 7.6 million individuals currently receive care at home because of long-term health conditions, permanent disability or terminal illness, but there are just 1.8 million individuals in nursing homes. Many buy long-term care insurance just so they can receive care in their own home.

Who typically uses home health care?

Every day, guardians, care managers and family members make long-term health care decisions for their clients and loved ones. Home health care can be an appropriate solution for those who wish to age at home.

However, it’s important to understand the differences in home care providers to make informed decisions. The Agency for Health Care Administration licenses home health care agencies following a comprehensive survey. A home health agency can assist with personal care and offer skilled nursing services including medication management. Certified nursing assistants or home health aides provide all personal care, and home health agencies are required to have a nurse available 24/7. A home health agency is a good choice when you desire nursing involvement or assistance with daily living.

What’s key to know when hiring a caregiver?

Here are some steps to follow:

  • Look for a home caregiver from a reputable agency, where he or she is licensed, bonded and insured. Also, check that the caregiver is covered by workers’ compensation insurance.
  • The caregiver should be supervised by a licensed professional who makes unannounced visits.
  • When hiring, review two to three references and require a recent criminal background check, as well as random drug tests, TB tests and a recent physical exam. The caregiver should have a minimum of two to three years of experience.
  • If the position involves driving, determine that the caregiver’s driver’s license and car insurance are current and valid.

How does long-term care insurance cover home health care?

Activities of daily living (ADL) refers to what we do on a daily basis to care for ourselves, including bathing, dressing and using the bathroom. Individuals with chronic diseases often have trouble performing some of these ADL, so the measure is used to assess long-term care insurance benefit eligibility.

Depending on your policy, you might have a waiting period before you can access your funds. Does your policy allow you to start collecting benefits on the day you begin receiving assistance, or are you subject to a waiting period of anywhere from 30 to 120 days? It’s important to get advice from your broker when deciding which policy is best.

Also, seriously consider when you can initiate a claim. The waiting period often corresponds to the benefit period, or the maximum amount of time that the insurance company will pay benefits. The longer the waiting period before benefits begin, the longer the company may pay for care. Benefits typically last three to five years.

When is a good time to buy?

Many people don’t realize the significant benefits to purchasing long-term care insurance earlier in life. For the same policy, yearly premiums for policies purchased at age 50 are notably less than premiums at 70. Also, the earlier you purchase, the more likely your application will be approved. By planning ahead, you will be best prepared to secure an affordable policy that helps you stay at home when the time comes.

Marc McTeague is president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck. Reach him at (614) 246-RISK or mmcteague@bhmins.com.

Visit SeibertKeck on Twitter @SeibertKeck or online at www.SeibertKeck.com/page/skmedical.

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In 2002, President George W. Bush signed the Terrorism Risk Insurance Act (TRIA) requiring insurance carriers and the federal government to establish a risk-sharing partnership for future losses. It was created as a result of 9/11 as a temporary measure to allow time for insurance carriers to develop their own solutions. Originally set to expire in 2005, the act has been extended twice, and will now expire in 2014.

“The private markets alone cannot and will not provide the level of terrorism insurance our economy demands,” says Marc McTeague, president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck. “The threat of terrorism has become a greater concern for businesses in today’s uncertain and rapidly evolving global climate. It should continue to be part of a comprehensive risk management program.”

Smart Business spoke with McTeague about terrorism coverage today and where problems still occur.

Why was the TRIA created and how does it work?

For property and casualty insurers, 9/11 losses paid out a reported $40 billion from property, business interruption, aviation, workers’ compensation, liability and life insurance lines. As the largest disaster in the industry’s history, carriers were reluctant to continue providing coverage. State regulators agreed to allow carriers to exclude terrorism from policies, and coverage was soon unavailable or extremely expensive.

The TRIA was created as a temporary federal program of shared public and private compensation for insured losses to allow the private market to stabilize, protect consumers by ensuring the availability and affordability of insurance for terrorism risks, and preserve state regulation of insurance. Carriers set the price of coverage within the limits imposed by regulations.

With the federal backstop in place, commercial lines policyholders could choose to purchase or reject terrorism coverage from existing insurance programs; the program doesn’t extend to personal lines policyholders. This offer continues today with most coverage lines, except workers’ compensation policies where insurers and qualified self-insured employers cannot exclude terrorism coverage because of lifetime medical care for on-the-job duties.

What changes were made when the program was extended?

In 2007, the government modified and extended the act through Dec. 31, 2014. Several provisions changed, including:

  • Revising the definition of a certified act of terrorism to eliminate the requirement that the individual(s) is acting on behalf of a foreign person or interest. Some property insurers add exclusionary language related to non-certified terrorism coverage.

  • Updating the payout cap to $100 billion per year for insured losses.

  • Requiring the Treasury Department to establish a procedure for allocation of pro-rata payments in the event that a terrorism loss exceeds the cap.

When purchasing terrorism coverage, how much do premiums increase?

The cost for the TRIA on an average risk is usually a single-digit percentage of the policy premium. Higher risk businesses such as financial institutions, real estate, health care and utility companies tend to be in the double-digit percentages.

Many policyholders, regardless of size, continue to decline terrorism coverage — not considering themselves targets. Larger risks often feel the coverage doesn’t provide enough to protect their exposures.

What are some of the continuing problems with terrorism coverage?

It is the insurance industry’s goal to work with Congress on creating terrorism insurance renewal past 2014. Terrorism coverage provides market stability.

There will be a significant effect on real estate lending if this backstop disappears.  Mortgage-backed securities, for example, will be in default. Private markets aren’t able to offer coverage without the federal backstop and cannot offer the level of insurance our economy demands.

The Government Accountability Office is working to assess options and review proposals, and Congress is encouraging greater private market participation. We’re optimistic that a long-term solution will be reached.

Marc McTeague is the president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck. Reach him at (614) 246-RISK or mmcteague@bhmins.com.

 

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Insights Business Insurance is brought to you by SeibertKeck

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Having a driver training or fleet safety program is likely something your insurance company already has on its radar. Companies with five or more vehicles and a history of claims could be required to complete the insurance company’s fleet seminar or safe driving training.

But even if your company has a good driving record, some type of driver safety class and/or additional training benefits your business directly, as well as the insurance company.

“It does have an impact on your rates, only because if you do implement a fleet training seminar, each year or every other year, you will start to see an improvement in your rates because it’s less likely that you’re going to have an accident,” says Marc McTeague, president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck.

Smart Business spoke with McTeague about the importance of driver training and steps to consider taking that could help you maintain a motor vehicle safety program in your workplace.

What’s the first step to driver safety for business owners?

Business auto happens to be one of the bigger exposures to a business because, if there’s an accident, depending on injuries, it can be a pretty significant. So first, you want to start with employee drivers who have a good driving record.

If job candidates are applying for a position that requires them to drive, you can require a check of their motor vehicle report to make sure they are acceptable. Insurance carriers can provide you with what they recommend to be acceptable. Of course, if their record were clear, that person would be a good choice.

What are some conditions that affect auto rates or how much training employees need?

A number of things affect the underwriting, such as the radius of operation — a long distance radius of 200 or more miles could mean a higher rate. Other considerations can depend on the size and weight of the vehicles.

Often companies don’t have a choice with what kind or how much training employees need. Many insurance companies provide it through their loss control department at no cost. A loss control engineer may require drivers to attend a two- to three-hour class and take a test, or just listen to a seminar.

What, then, can employers do to create and maintain a motor vehicle safety program in the workplace?

Having formalized vehicle maintenance and a safe driving program of some kind are must-have risk management tools. However, some employers may feel reluctant to institute them because of the amount of time to set them up in their office. The idea is that improving driver training and fleet safety programs only can help your company, as the business auto exposure is lowered.

Some best practices that could help are:

  • Safety policy statement indicating that the company has established a fleet safety policy to emphasize a commitment to the safety of its employee drivers and the general public.

  • Seat belt use to reduce the severity of injuries.

  • Restrictions on personal vehicles for employees using a personal auto for company use.

  • Driver selection and qualification, including application for employment, reference checks, motor vehicle report investigations and an annual review of driving records.

  • Vehicle inspection and maintenance.

  • Post notices and signs in your building and in the yard reminding drivers to be safe and maintain their vehicle.

  • Driver training annually, either online or conducted by a loss control engineer.

  • Accident reporting and recordkeeping.

Keep up with the latest insurance news and how your company could be impacted by signing up for SeibertKeck's newsletter.

 

Marc McTeague is the president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck. Reach him at (614) 246-RISK or mmcteague@bhmins.com.

Insights Business Insurance is brought to you by SeibertKeck

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’Twas the night before Christmas and Santa was in doubt. He read his insurance policy and wondered what was left out? He sees his agent but once a year, and his policy and coverages are not so clear …

“We are all busy — sometimes too busy — especially around the holidays, and many business owners put off looking at their insurance,” says Marc McTeague, president at Best Hoovler McTeague Insurance Services, a member of the SeibertKeck Group. “It is far from the most important item in their mind.”

As the holidays approach, Smart Business spoke with McTeague about a look at insuring one of the most familiar companies we all know — Santa Claus, CEO of the North Pole.

How does Santa know if he should purchase a liability insurance policy?

Santa is liable for the products he makes, along with potential property damage from coming down your chimney. To cover this exposure, Santa should purchase a comprehensive general liability policy. Reviewing this with your agent to determine the appropriate limit specific to your risk management plan is key to defending against losses. Keep in mind, there are exclusions that can limit coverage. For example, your policy excludes coverage for ‘your work’ in a typical CGL form.

How does Santa properly insure the North Pole operations facility?

Similar to many of today’s large corporations, there are many complexities to an insurance policy. Here is a quick overview of how Santa might cover his facilities.

  • North Pole — Since no one owns the location, he must have a tenant betterments and improvements policy to cover the build-out of the workshop.

  • Toys — Since Santa ships only by air freight, he should purchase business personal property off premise or, depending on the contract, an ocean cargo policy to cover the inventory when in transit.

  • Elves’ tools — Santa should have employees’ tools coverage under the property form for the extra small equipment his workers bring to the workshop. Many policies limit the amount provided for theft under the property form unless a specific limit is provided.

  • Reindeer insurance — These are expensive livestock that Santa should insure against mortality, loss of use and major medical. So don’t worry about that hole in your roof, if Rudolph breaks a leg; Santa has it covered.

  • The sleigh — This should be on an inland marine form. Like forklifts that your company sends to multiple locations, Santa uses this valuable equipment all over the world.

  • Workshop interruption — Santa works year-round to get ready for Christmas. Losing just one day could make a difference between Dec. 25 and Dec. 26. Business interruption insurance would ensure that Santa has adequate cash on hand to met his obligations, continues to employ the elves and could set up a temporary facility at the South Pole.

Why does Santa need directors and officers insurance?

We all know about how Santa determines who is ‘naughty’ and ‘nice.’ Business leaders make business decisions every day that could impact others just like Santa does. Directors and officers liability coverage pays for defense in a lawsuit. If purchased on a duty to defend basis, the insurance company will supply expert counsel for a suit not resulting from bodily injury or property damage. Just wondering what list your insurance agent would be on?

Now that the world is in cyberspace, how does that impact Santa?

It’s true kids can now email their letters to Santa. Most insurance policies do not cover blogs, emails or electronic messages of any kind under liable and slander. Cyber liability coverage would protect Santa from any electronic communications by him, or his elves, that might be the subject of a suit, breach of security or business interruption.

What if the reindeer sued because of who Santa promoted to lead the sleigh?

Employment practices liability insurance (EPLI) is often a missed coverage in a risk management program. EPLI was developed to protect the employer from losses not covered by directors and officers or general liability. This form applies to discrimination, wrongful termination, failure to promote, sexual harassment, wage and hour, and whistle-blowers claims. This protects Santa and Mrs. Claus, as well as elves that supervise others working at the North Pole.

What if Santa uses the 401(k) contributions to upgrade the sleigh?

Under the Employee Retirement Income Security Act (ERISA), all 401(k) plans must be insured up to 10 percent of the plans’ assets for theft. So if Santa misappropriates funds, the elves’ retirement fund is OK. This is purchased under an ERISA bond or endorsing the crime policy.

How can Santa be ready for what the workshop is like after Christmas day?

All year Santa’s helpers were busy working late hours. This can cause unwanted tension in the workplace and irritable elves could finally lash out. As an employer, you can purchase protection against the expenses that result from incidences of workplace violence. These can include the cost to hire independent security consultants, public relations experts, business interruption expenses and payment of death benefits.

Unfortunately, the ideal insurance policy is not gift wrapped and waiting for you under the tree. Business leaders need to invest their time meeting with an agent committed to helping you manage your risks to develop the right risk management plan and coverage to protect your company. But I heard him exclaim, ere he drove out of sight, Happy Holidays to all, all my coverages are right …

Marc McTeague is president of Best Hoovler McTeague Insurance Services, a member of the SeibertKeck Group. Reach him at (614) 246-RISK or mmcteague@bhmins.com.

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