Archive for April 14th, 2010
For Immediate Release:
Insurance: Three Questions Consumers Want Answered
(February 23, 2010, Greenville, SC) Insurance comes in a wide array of choices for a variety of consumer and business needs. Even the best-educated consumer who spends time researching insurance issues will come across a topic he or she doesn’t understand.
“Insurance can seem complicated. “Here are three common questions we hear and how we answer them,” says Ross Turner, President of The Turner Agency Inc. in Greenville.
Q: Why do I need insurance?
Insurance is for the uncertainties of life. Accidents and catastrophes happen. What can’t be predicted is when they will occur, and whom they will affect. Most people understand they’ll get sick at some point in their lives, but they can’t predict the severity and extent of the illness nor the cost of the treatment.
Catastrophes strike: In 2005, there were 24 weather-related or other disasters causing a total of $61 billion of insured losses. Hurricane Katrina alone caused $41 billion in damage from 1.75 million insurance claims.
Even the safest drivers face the risk of an accident, and even the safest homes can catch fire. In 2006, about 5 percent of insured homes had a claim, according to the Insurance Services Office. About 94 percent of these homeowners insurance claims were for property damage, including theft.
Lawsuits are another uncertainty that businesses and homeowners face. They’re costly: In the 56-year period from 1950-2006, the costs of the tort lawsuit system in the U.S. increased an average of 9.2% each year, reported Tillinghast-Towers Perrin. While most lawsuits are settled before they reach the courtroom, Jury Verdict Research data show that the median plaintiff award in personal injury cases was $45,000 in 2005, compared with $32,000 in 2002. Insurance provides two benefits to those who are sued: It pays for the cost of defending the lawsuit and pays for any liability payments for which the insured is found responsible.
Q: How do you define what insurance is … or does?
Insurance is simply a vehicle for transferring risk from one party to another. You need insurance if you have financial risk (and everyone does) and you want to reduce that risk. To do so, you pay someone else (e.g., the insurance company) to assume much of the risk for you, in return for a payment known as a “premium.”
Because American consumers hold a tremendous amount of wealth in property—ranging from homes and cars to collections of baseball cards and valuable artwork—they have a basic need to protect themselves from losing that value.
Insurance is designed to “make people whole” after their property or assets are damaged or stolen, or if they are responsible for harm caused to another party. An insurance policy is a contract under which an insurance company agrees to pay a certain amount of money to the policyholder if certain events happen (and their property is damaged or they cause harm to someone else or someone else’s property).
Q: Is life insurance an investment or purely insurance?
A: Life insurance for centuries has been first and foremost insurance: it provides a death benefit to the family or business partners of an insured person.
Beginning about 30 years ago, the attractive returns in stock investments led insurance companies to bring investment elements into life insurance policies. For example, agents and companies offered consumers the choice of placing life insurance premiums into mutual funds, stocks, and bonds within the life insurance contract—known as “variable” life insurance. The term “variable” implies that the investment returns on these premiums vary with market performance.
With these types of life insurance policies, the insurance carrier takes the policyholder’s premium dollars and places them in the investment account(s) chosen by the policyholder. These types of life insurance policies are subject to state insurance regulation and federal and state securities regulations.
While investment-oriented life insurance has grown popular over the past generation, traditional life insurance (both permanent and term) continues to be purchased in large amounts. Americans purchased $3 trillion of new life insurance coverage in 2006, according to the American Council of Life Insurers.
If you’re not sure whether a life insurance policy includes investment elements, you can check the disclosure information on a life insurance application or policy, which must discuss whether securities are part of the life insurance contract.
About The Turner Agency Inc.
The Turner Agency, Inc. has offered complete insurance services to the upstate since 1962. In an industry where companies today encourage customers to call a toll-free number or visit a website to purchase insurance, The Turner Agency is still committed to personal, long-term relationships and providing a one-stop shop for all insurance needs, whether business, personal, or life and health. Located at 623 Halton Road in Greenville, The Turner Agency is a full service independent agency offering a complete line of insurance services including but not limited to home, auto, business, life, and employee benefits.
Commercial Vacancy: Know the Risks
By Curtis Bull, CIC
One very visible result of the economic downturn is an increase in commercial vacancies across virtually all categories—and that could be leaving owners far more exposed than they realize.
How bad is it? By the second quarter of 2009, the vacancy rate for office space increased to 15.5 percent, according to recent analysis from CBRE Econometric Advisors (CBRE). Downtown office vacancies increased to 11.7 percent, while suburban rates to 17.6 percent. Vacancy rates among retail and industrial commercial properties are also rising. According to CBRE, the national industrial vacancy rate rose to 13 percent in the second quarter of 2009—its highest level since 2003. Rates among the nation’s retailers rose to 12 percent.
And the worst of it may be still to come. At least one property research organization, Reis, predicts that the overall vacancy rate for U.S. office properties could rise to 17.6 percent, the highest since 1992.
From an insurance perspective, vacancy is considerable concern. Vacant buildings are more susceptible to certain types of damage, and for this reason, most commercial property insurance policies include a vacancy condition that significantly limits or, in some cases, eliminates coverage if the building is damaged.
For example, most policies eliminate coverage if the property loss to the vacant building is caused by vandalism, sprinkler leakage, building glass breakage, water damage, theft or attempted theft. If something else causes damage to the vacant building, such as fire or windstorm, most policies automatically reduce the loss payment by 15 percent. This reduction is in addition to the policy deductible; further increasing the owner’s out-of-pocket expense.
A major concern with the vacancy condition in most commercial property policies is exacerbated by the fact that a majority of building owners do not understand how the policy defines vacancy. In most policies, building owners are at risk of the vacancy condition and its potentially devastating limitations if less than 31 percent of the building’s square footage is rented or used to conduct customary operations and/or used by the building owner to conduct customary operations. (It’s important to note that buildings under construction are not considered vacant.)
As an illustration, consider a four-story office building. Each floor is a separate suite and each has identical square footage. ABC Company occupies the bottom floor. Due to declining economic conditions, three of the building’s four tenants move out, leaving ABC as the building’s sole tenant. Even though ABC is still there, they only occupy 25 percent of the building. Most commercial property policies now consider this building vacant due to the fact that total occupancy has fallen below 31 percent.
The vacancy condition in the policy is not effective immediately. Rather, the building owner typically has an allotment of time, usually 60 days, for occupancy to increase to greater than 31 percent. If after 60 days tenancy is still below 31 percent the vacancy condition is applied to subsequent losses and will be so until tenancy increases. Further, the building owner’s commercial property insurance policy may be non-renewed upon expiration and the owner may have to purchase a special policy designed for vacant buildings. Such a policy is typically harder to obtain, more restrictive in terms of coverage and may be more expensive then a standard commercial property insurance policy.
With gloomy predictions looming, do solutions exist that can help building owners protect their asset by mitigating the risk associated with damage to a vacant building?
Fortunately, yes. Talk with us, your Trusted Choice® agent about the options available for your vacant buildings properties. We may be able to amend your existing insurance policy to lower the threat of the vacancy condition by decreasing the occupancy requirement to a more achievable number (such as 10 percent). This option could help building owners weather turbulent economic times without the increased risk of significant financial detriment resulting from an uncovered or limited property claim. In uncertain economic conditions, why leave one of your biggest assets at risk?
Safe Winter Driving Tips
By Denise Long, Personal Lines Account Manager
“Winter weather and icy conditions present a particular set of driving hazards,” said Denise Long of The Turner Agency, Inc. “Preparing your vehicle for the winter and knowing how to react in severe conditions or if stranded are the keys to safe winter driving.”
Be prepared before a storm hits:
- Have a mechanic check your car’s battery, brakes, fluid levels (antifreeze, windshield washer fluid and oil), as well as the heating and exhaust systems to ensure that your car is in good, safe working condition.
- Try to keep your gas tank full during the winter months. Don’t allow the gas to go below half a tank. Not only will this prevent damage from freezing, you’ll avoid running out of gas if you’re stuck in a traffic jam during the dead of winter.
- An adequate supply of windshield washing liquid is critical to wash away the mud and melted snow that can severely limit visibility
- Prepare for an emergency. Keep blankets, flares, windshield scraper, tool kit, towrope, booster cables and a flashlight with extra batteries in your trunk.
When driving under adverse winter conditions:
- Back your car into the driveway so you have better vision when pulling out.
- When waiting to make a left-hand turn, keep wheels pointed straight ahead. If wheels are turned to the left in anticipation of making the turn and you’re rear-ended, your car will be pushed into the path of oncoming traffic, which could result in a head-on collision.
- If your car does not have anti-lock brakes and you start skidding on the ice, try not to slam on your brakes. Gently pump your brakes to maintain better control and prevent your wheels from locking.
- If your car does have anti-lock brakes, slam on your brakes when skidding on the ice. Pumping your brakes prevents the anti-lock system from taking over.
- Don’t travel alone. Notify someone of your estimated time of arrival as well as your primary and alternate travel routes.
- If stuck, stay in the car and wait for help. Run the engine and heater sparingly. Also make sure your exhaust pipe is clear of snow and ventilate your car so that carbon monoxide fumes won’t poison you.