Weather-proofing your liability Featured

8:00pm EDT October 25, 2006
Are you adequately covered with personal property insurance? Have there been changes in your life that might affect what you thought was adequate coverage? When was the last time you sought the assistance of an experienced insurance professional?

“Most affluent people are under-insured, under-serviced and are not properly protected,” says Mary Hammett, personal lines broker at Westland Insurance Brokers Inc. “You need a professional insurance broker to perform a risk analysis on a regular basis to quickly uncover the ‘goofs, gaps and inadequacies’ (or the GG&Is) in your current coverage.”

Smart Business asked Hammett for additional insight on determining your personal property insurance needs.

What are some common GG&Is?
Inadequate limits, no personal injury protection (libel, slander, wrongful eviction, etc.), not-for-profit board membership, workers’ compensation for domestic employees, and no coverage for ‘toys’ (jet skis, motorcycles, ATVs, boats, planes). Also, assets owned in trusts or LLCs that haven’t been listed. Homeowner’s policies without build-to-code coverage, no extended replacement cost, no coverage for sewers or drains that back up. Other areas include condos with no insurance, personal property that has ACV (actual cash value) instead of replacement cost. Valuable articles that have not been scheduled are another common gap. No personal umbrella or a liability limit too low to adequately protect a client’s net worth.

How do you determine who needs a personal umbrella?
Everyone should look into owning one. Your homeowners or auto policy limits most likely would not be adequate for a liability lawsuit involving a crippling injury or — even worse — death.

A personal umbrella policy will help defend you should a catastrophe occur. It will protect your assets and maintain your lifestyle. A personal umbrella provides protection against many unusual claims and beyond your usual limits, all for a surprisingly low premium.

Another option to look into is a group excess policy. These are especially helpful for high-net-worth executives, partners and professionals of corporations or organizations who have substantial personal liability exposure. In our litigious society, these individuals are among the most alluring targets for lawsuits. The group excess policy works similar to group health in that it allows some who otherwise may not qualify become eligible, at costs of up to 50 percent less than regular stand-alone policies. Many businesses are providing these group excess policies as an added benefit to retain their most valuable employees.

Why do you think these inadequacies occur?
One major reason is a lack of communication. Having policies with multiple agencies often leads to goofs and gaps, because one agent doesn’t have the whole picture.

Another reason is that life events — such as an inheritance, selling a business or other sudden money occurrences — can happen. The individual might purchase homes or other assets with this new-found cash. Without a lender requiring insurance, the person ‘forgets’ to contact his agent. Even if he or she can afford to go without property coverage, the liability exposure it creates isn’t good risk management. People also upgrade or add onto their homes and don’t think to inform their agent.

How can these inadequacies be remedied?
Work with a broker who has partnered with multiple A-rated carriers. Because such a broker has the markets to cover your most precious possessions, you can save time and money by consolidating all of your personal insurance. Talk to your broker about confidential risk analysis, which will identify your assets and exposures. Ask your broker to create a customized package to fit your specific needs.

It’s also good to follow up with an annual review to ensure that your agent continues to have the most current, up-to-date data on all your personal insurance needs.

Do you have any other recommendations?
When remodeling and/or adding square footage or decks, porches or garages, the insurance coverage must be increased. You should always call before the work begins. Depending on the size or nature of the construction, a change in policy type may be required.

Ask your broker to do a computer workup that will evaluate the cost of demolition, debris removal and the rebuild to your property.

For homes valued above $750,000, your agent may provide a more professional evaluation once the coverage has been placed. The insurance carrier may send a trained appraiser to photo, measure and calculate the cost to rebuild your home. The appraiser documents the unique features of your home so that they can be recreated. This is to ensure your home can be completely replaced should a loss occur. All of those services should be included with no additional fees.

MARY HAMMETT is a personal lines broker celebrating 20 years with Westland Insurance Brokers Inc. Reach her at (619) 641-3217 or