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While dogs make great companions, playmates, and protectors, they also continue to be a problem for insurers. Nearly two million people are bitten by dogs each year with around 800,000 persons requiring professional medical treatment for their wounds. Each of these incidents is a potential lawsuit.
Have Teeth, Will Bite
Tens of millions ofU.S.households own dogs and biting incidents keep climbing. A key factor that contributes to these incidents is the failure of dog owners to supervise and train their pets. Another problem is that many persons, especially children, do not know how to behave around dogs. Bites may occur when:
- a person stares at a dog, which the animal perceives as a threat or challenge
- people attempt to handle dogs during sensitive moments (while a dog is trying to eat or while nursing puppies)
- trespassers or house guests invade a dog’s territory
- “rough-housing” with a dog escalates beyond playing.
An Issue Of Control
Insurance is still designed to handle accidents, and companies are at a severe disadvantage when policies are asked to respond to losses that are easily avoided. Dog bite claims involve the insured having control over areas such as:
- choosing to own a dog
- choosing the particular breed of dog
- raising the dog in a certain manner
- housing the dog in a certain manner
- exposing the animal to various social situations
- being knowledgeable about a dog’s temperament and inclination to bite or attack.
All of the above elements can contribute to lawsuits and to action from an insurer.
The “Policy” On Dogs
If you have homeowners insurance and you own a pet, the liability portion of your policy provides protection for losses arising from pet ownership. Not only are you and your household protected, but coverage even extends to persons who have custody of your pet. However, your policy won’t cover businesses that may have custody of your pet, such as kennels, obedience schools, groomers and professional sitters or walking services (they should carry their own coverage). Further, coverage could become problematic if dogs in a home are related with unreported, in-home business activity. Losses involving persons who are bitten while in a home for business reasons may not be covered.
Minimizing The Problem
Owners have a responsibility to raise and handle their dogs in a manner that reduces the chance for a loss. Steps to take include becoming knowledgeable about their breed of dog and about general principles of ownership and care. They should make certain that family members, social visitors, neighbors and strangers are protected from the owner’s pets. Owners should also take advantage of resources to help them, such as tips from animal shelters, dog ownership clubs, the AKC and a plethora of Internet sources.
It may not be the fairest set of circumstances, but more insurers are choosing not to give dogs the benefit of the doubt. It is becoming more common for companies to refuse to write coverage for persons who own certain breeds of dogs. Therefore, owners must fight this trend by not taking their pet ownership lightly….because insurers aren’t.
Employees routinely use their own vehicles in their jobs or just to run errands for their employer. Does your company have protection in case of an accident and both your worker and your company are sued? If your company has a business auto policy, it should include coverage for ‘non-owned’ automobiles. These are vehicles owned by others (such as an employee) that are used in the business of the company. Generally a business auto policy only protects against losses involving company-owned vehicles, so it is important to add “non-owned” coverage.
Basic business auto insurance only covers employees while operating a company-owned vehicle to perform company business. An employee’s personal automobile policy typically excludes business use; so a coverage gap may exist if an employer’s vehicle policy is not modified to handle non-owned vehicles.
Another important consideration is whether the amount of non-owned coverage is sufficient. Any non-owned auto liability limits should be high enough to protect both the business and the employee. A company has to evaluate its particular coverage need in order to determine the proper level of coverage. Including ‘non-owned’ auto liability coverage on the business policy will provide coverage for the business over any deficiency in limit from the employee’s personal auto policy. This is coverage for the BUSINESS, not the employee.
If the company does not own any automobiles, it is possible to purchase business auto liability coverage for only the danger of loss involving its use of ‘hired and non-owned’ vehicles. The ‘hired’ portion would cover business travel and vehicle rentals; the ‘non-owned’ portion would cover employees using their own auto in the business.
Even if a business rarely uses non-owned autos, it only takes one serious accident to create a significant loss for the business. You should find an opportunity to discuss this coverage with an insurance professional.
If you want to avoid the danger of something negative resulting from pursuing an activity, the safest action is…..don’t pursue the activity. Of course, choosing that option is impractical, unrealistic and boring. The quality of our lives is highly affected by how we choose to spend our time. Any activity involves a chance that a loss could occur:
- A pick-up basketball game could result in a broken ankle when attempting a sweet move on the floor
- A tennis match could include your collision with a partner’s backhand swing
- A hike through a forest path may end with a stumble down an incline and a broken leg
- A twirl on the dance floor could include tripping on a chair and falling, ending up with a back injury
- A game of catch comes to a halt with a ball sailing over a glove and through a neighbor’s window
- A canoe rental could end up with a drowning
The key is to be aware of risks and to take steps to minimize them. One method that tries to decrease the likelihood of being sued involves hold harmless agreements.
Hold harmless agreements are typically in writing and involve a first party agreeing not to take legal action (sue) against another party. In exchange for this promise, the second party agrees to permit the first party to engage in a given activity.
These agreements can come in many forms. They can be separate contracts or, often, they are statements added to other contracts. They are also called different names, such as disclaimers or waivers. Schools use them in permission slips for student trips or activities, including team or individual sports. Youth sports leagues use them, vendors who rent recreational equipment use them, and plenty of businesses make such agreements part of their operations.
There are a number of issues to keep in mind with such agreements including:
- Are they necessary
- Are they enforceable (state laws often control this issue)
- Are they valid (if not worded properly, they may be useless or may have unintended consequences)
- Are they fair (this depends on the level and nature of risk involved)
- Are they part of a business or strictly a non-business transaction
In some cases, it may make a lot of sense to use a valid hold harmless agreement. In others, one may have to make a decision whether a given activity is worth giving up that important right to hold another party responsible for serious injury or substantial damage to property. Be aware that it may not be valid to hold another party harmless on behalf of a child. Some states hold that a child’s right is separate from a parent’s and a parent may not legally waive that right.
Having fun and staying active involves risks and it’s important to be aware of which ones you’re assuming when you pursue those activities. Be careful with the agreements you make.
Has your car ever suffered from diminished value (DV)? DV refers to damage to an auto that reduces its market value and there are several different types of DV:
Inherent DV: Describes a general conviction that a wrecked vehicle, which is then repaired, is less valuable than a vehicle that has never been damaged. This belief is unaffected by having information on the scope of the repairs or by whether there are any visible signs of repair. It is the perception that any significant damage reduces a vehicle’s worth.
Example: Will Prudunt is ready to get a new car. Although his ’07 model has served him well, he’s ready for a change. After finding his dream car, Will wants to make a good trade-in deal. Will and the sales rep looks over his ‘07 and agrees on a $5,950 trade-in. As they discuss the loan papers, the rep asks if the ’07 has ever been in an accident. Will slaps his forehead and says “Oops, I was rear-ended three years ago. My insurer paid about $3,000 in repairs.” The sales rep then picks up the finance paperwork and says that he will have to re-figure the agreement. When he comes back, the rep says that they can only offer him $4,400 on the trade-in. Will points out that he’s never had any problems with the car and that it ran even better after the repairs…the rep won’t budge on the lower trade-in offer.
Claim Related DV: This refers to any instance where an insurer’s action or practice results in an inferior vehicle repair. This is subjective because parties can argue over what is meant by inadequate repair. Insurer actions that could trigger claims-related DV include an insurer’s:
- insistence upon the use of selected auto repair shops
- requirement that a repair facility use after-market, rather than original, equipment and manufacturer parts
- refusal to pay for additional repairs identified by a repair shop
Repair Related DV: This refers to any instance where a repair shop’s action or practice results in an inferior vehicle repair. What is considered a below-standard result that is created by a repair shop may involve:
- completed work which includes below standard labor or improper procedures
- completed repairs where below-standard parts were used when an insurer authorized standard parts
- incomplete repairs when an insurer authorized that all needed repairs be performed.
Now that you have more information on the basics of DV, please be sure to read our companion article, “Is Diminished Value Covered?”
Insurance fraud makes victims out of insurance companies and their customers. In common terms, insurance fraud is lying to or deceiving an insurer in order to make money or to become insured. Some common fraud schemes include:
- “padding” (inflating the true amount of) a claim
- lying or hiding (concealing) important information when applying for insurance
- lying or hiding (concealing) important information when reporting a loss
- submitting false claims
- “staging” accidents
- Failing to report recovered property
- faking theft claims
- committing (home or vehicular) arson for profit
As a consumer, fraud should concern you since the cost is passed directly on to you in the form of higher insurance rates. You can play an important role in reducing fraud.
Fighting Auto Insurance Fraud
Persons attempting to commit insurance fraud often do so by deceiving innocent drivers during actual accidents or by involving innocent drivers in “staged” accidents. Do the following in order to minimize this risk:
- Drive defensively, keeping space between you and surrounding cars.
- When traffic slows, begin braking before the car in front of you does.
- Be careful when turning into a lane that allows two or more autos to turn left at the same time. Victims of insurance fraud are often people who float across the line when turning and then are intentionally sideswiped by a person who is “staging” an accident.
- If you are in an accident, write down license numbers of all cars involved in the accident, get the names and contact information of all persons involved and their insurers. Count the number of passengers in the other cars and get their names, addresses and any other pertinent information.
- Call the police and get a police report even if the damage is minimal. DO NOT let another driver talk you out of calling the police.
- Carry a disposable camera in your glove compartment or make use of a cell phones camera feature and take pictures of the damage to the vehicles and of all drivers and passengers in the cars.
Fighting Homeowners Insurance Fraud
It is far more difficult to involve an innocent party in homeowner fraud. However, a homeowner can help himself and help deter fraudulent claims by properly maintaining their home, and by removing or repairing items that could create tripping hazards to outside parties. Also, if someone is injured in your home, be certain that you get full information and be sure that an injured person gets any needed treatment. Carefully document any incident, including all impressions about likely injury. It may also be prudent to show healthy skepticism over any information on medical bills or claims.
Report suspicious actions such as a friend who asks you to store valuable property and you then find that they reported to his insurer that the property was stolen.
Think of insurance fraud as money out of your pocket-because it is. According to the US Chamber of Commerce, fraud adds 25% to property and casualty insurance rates.
If you are involved in an accident and you are suspicious that fraud may be involved, report it to the authorities and your insurer. Another helpful source for fraud information is the National Insurance Crime Bureau at 1-800-TEL-NICB (at the time of this writing, their Website was located at www.nicb.org).
Umbrella insurance only works properly when the primary (underlying) coverages are maintained. In fact, the obligation to make sure proper support remains in place is part of the umbrella insurance contract. It is found in the policy’s “Maintenance of Underlying Coverage” provision.
The provision typically refers to the policy’s schedule or declarations where all of the applicable underlying coverage is listed. The underlying (also called primary) coverage typically consists of:
- Personal automobile
- Homeowner’s
- Recreational Vehicle
- Miscellaneous Personal Liability
Besides listing the various policies, an umbrella policy requires that a specific limit of insurance be assigned to each underlying policy. The maintenance provision then acts as a contractual obligation. Via the provision, each listed coverage and each assigned insurance limit must be kept in force throughout the length of time that the umbrella coverage exists.
Of course, there are consequences when the insured person fails to comply with the provision, either by dropping or changing (lowering) listed coverage. Whenever a change in coverage occurs, the insured is also obligated to inform the umbrella insurer; though that only warns the insurer, but does not affect the consequences. In either case, the umbrella responds to a loss in the same manner as if the listed coverage still existed. Therefore, the insured bears the total financial obligation for a loss until the loss amount reaches beyond the level where the original coverage was supposed to apply. If it doesn’t affect the consequences, you may wonder why the insurer requests notification. For two good reasons: one, they can ask you to remedy the situation or face terminating your umbrella coverage; two, they will be warned to review any loss situations you report so they can monitor the situation and, perhaps, take steps to protect their interest.
If you have taken the step to buy extra coverage to protect yourself and your assets, be sure to comply with all that is required of you. If you have questions, discuss your situation with a professional insurance agent.
A standard homeowners policy offers a limit equal to half of the amount reserved for the residence (ex. Your home is covered for $150,000, so your contents and furnishings are covered for $75,000). While this is generous coverage, it doesn’t extend to all types of property nor for all causes of loss. Certain types of property, because of its high value and liquidity, is far more vulnerable to loss…either easily destroyed, easily stolen or both. So, to compensate for this difference, insurers use coverage restrictions.
Theft Coverage Limitations
When property is lost due to theft, coverage under a standard homeowner policy is severely limited (generally $1,000 – $2,500) for the following types of property:
- jewelry, watches, furs, and gemstones
- dinnerware, serving sets, trophies and similar property made of or plated with silver, gold, platinum or pewter
- for firearms, accessories and related property
Other Coverage Limitations
Several categories of property are subject to very modest limits ($200 – $2,500) of coverage, regardless of the cause of loss (theft, fire, accidental breakage, etc). Specifically:
- money, bank notes, coins, medals, gold, silver and platinum (other than jewelry or dinnerware)
- securities, accounts, deeds, tickets, stamps, manuscripts, passports and similar property
- watercraft and related property including their trailers
- trailers not used with watercraft
- business property located in your residence
- business property located away from your residence
- certain types of electronic property (CD players, DVD players, TVs, radios, computers )and related accessories) which is lost or damaged while in a car or is located away from your home and used for business.
Please refer to part two on how to get more coverage for these classes of personal property.
Unlike accidental events that result in a person suffering a serious injury (called Bodily Injury) or property that is damaged or destroyed (called Property Damage); Personal Injury usually involves one person’s alleged interference with another person’s legal rights. It also applies to incidents that damages another person’s reputation. Personal Injury commonly includes the following acts:
False arrest, detention or imprisonment
Example: A homeowner suspects that her teen daughter’s friend has stolen jewelry while visiting her home. She locks the teen in her bedroom for an hour until the police arrive and it turns out the teen did nothing wrong.
Malicious prosecution
Example: A gentleman accuses his neighbor of stealing a laptop from his home and files charges with the police
Wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy
Example: A boarder comes home from work and finds his room’s door padlocked. The homeowner/landlord did it after the boarder, for the third night in a row, plays his stereo loudly;
Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services
Example: A homeowner is the president of her parent and school organization. She also publishes articles for the organization on her Website. After an argument with another organization officer, the president recounts the incident on her site and includes some insults and false items about that person
Oral or written publication of material that violates a person’s right of privacy
Example: A woman is visiting a friend. During the visit, she overhears her friend’s conversation with her doctor. The next day, the person reveals to others that the friend, a young, single female, is having medical problems due to an unexpected pregnancy.
All such acts are examples of incidents that could result in lawsuits. However, they are also the sort of events that are excluded from coverage by the typical homeowners policy. The major reason for their exclusion is that they are deliberate acts rather than being accidental. One way to secure coverage for personal injury losses is to purchase personal umbrella coverage. It may be worthwhile to discuss your possible need for personal injury coverage with an insurance professional.
When the topic of exotic, ideal locations for vacations comes up; island paradises and tropical locales are always popular. The water, the beaches, the warm winds are very attractive conditions. However, they are also the originating locales for tropical storms and hurricanes.
The dark side of the tropics is that all of the water and warm temperatures make up the key ingredients for cooking up massive storms. The low pressure areas allow the build-up of violent wind movement that is fuel by warmth and water. The hurricane season is a long parade of storms that form, build in power and size and then move toward land, and property……and people.
Often the major worry is “what is the storm’s category?” A storm’s potential life cycle goes may go from Normal Conditions – Tropical Depression – Tropical Storm – Hurricane (Category 1 up to Category 5).
Naturally it makes sense to be highly concerned about the size of storm surges (water and waves pushed by storms) and wind speeds; but less powerful storms do not automatically mean that there is less danger! Even when a storm does not maintain hurricane status, it can cause tremendous problems as it travels hundreds, even thousands of miles!
A slow-moving tropical storm or low category hurricane may not cause as many problems with wind damage; but may create wide-spread, substantial damage by inundating large areas with torrential rains. Massive amounts of water, smashing through areas where they shouldn’t be, is capable of washing away cars, trucks, boats, homes, businesses, bridges, roads and even lives.
In the aftermath, the incredible challenge is to rebuild and, without proper protection – such as flood insurance – the challenge may become impossible. The wish may be that you never have to deal with flooding caused by huge storms….the hope is that, if you do, you CAN deal with it. Flood insurance can be the key to your recovery!
If you own a home; you’ll want to think about the best way to insure it. One goal is to match your needs to the right company. Some companies like new, high-valued homes while some companies do well with older or historic preservation homes. Others are comfortable with country homes or old farm homes. It pays to shop around, both for the best coverage and for a company that likes your type of home.
There are two common levels of coverage that you may consider:
Named causes of loss coverage - The policy only covers certain causes of loss to your property. You must prove to the company that one of the covered causes damaged your property.
Risks of physical loss – This covers all causes of loss except those that are excluded. The company must prove that one of the excluded causes of loss damaged your building.
You may want to discuss other types of homeowners coverage if you own a different type of residence such as a modular home, mobile home, apartment, town home, condominium or you have personal living space in a commercial building.
A Basic Homeowners policy usually provides the following:
- Coverage for your building (ask about coinsurance and replacement cost issues).
- Coverage for your outbuildings – garages, sheds, barns, cabanas
- Coverage for personal property is usually 50-75% of your building limit
- Limitations – many policies have special limits on certain types of property, such as theft loss to Jewelry and gems ($1,000), Furs ($1,000), Gold, silverware, pewter ware ($2,500), Guns ($2,000), Building supplies – no coverage for theft. Further, very little coverage may be available of other types of property, regardless of the cause of loss, such as, money, stamps, fine arts, antiques, electronics, boating equipment, etc.
- Additional living expense – pays the extra cost of temporary housing, food and other increased costs of living when you are forced from your home by a covered cause of loss.
- Liability coverages - should you accidentally injure other people or damage their property
- Defense costs – includes hiring and paying for a lawyer (if necessary) and paying most court costs.
- Medical payments coverage is for minor injuries to people other than residents of the household. You don’t have to be sued or be negligent.
If this short article has raised more questions about your coverage…good. Find an insurance professional to get the answers (and the coverages) you need.