Saturday Shots: Rodents!

It's Saturday! Instead of waiting for something to go wrong with your house, be preventive. After a couple shots of morning espresso, let's spend 15 minutes taking a quick look around... and maybe making a couple of quick repairs.

Saturday Shots: Rodents!

Last week, we took a stroll around the house, looking at the surfaces that stuff can fall on. If you found droppings, go back outside and see if there are more. (Here's a hint... really old ones are gray or white. Older droppings are usually dry and brittle. (Feel free to use plyers to test them – or wash your hands well) I expect you can figure out how to tell if you see new "sign". 

Rodents are not good housekeepers. Anywhere they go, they'll leave a bit of a trail... on window sills, in corners of cabinets and closets, even where they go in and out of a wall. They're not clean - and they like to chew on stuff. Let's avoid illness, energy inefficiency, and fires from rodent damage.

Look in corners of the garage, behind things. In the basement, look on the high surfaces 1 inch or wider (window sills, floor joists, the sill plate where the house is bolted to the foundation) Look inside and outside for:

• rodent droppings (this should be obvious) look like black rice. Generally, small is mice, large is rat, chipmunk, or squirrel. Rats are not consistent in shape or size from one moment to the next. (Round is from rabbit, goat, sheep, deer.) This time, before you clean 'em up, think about how you're going to address the problem. If you're going to hire a professional, leave 'em so they can see what's really going on. 
• a dirty patch (usually gray or brown) on the wall outside in the upper corners near the roof, around doors or windows. All animals have oils in their hair. The oils rub off when climbing or squeezing through an area... and dirt will stick to the oils. The larger patches are usually from larger rodents like squirrels or rats. Mice usually leave a small ring around the hole. 
• chewed corners of wood or plastic. Rodents are gnawing pests. Their teeth never stop growing, so they need to keep them to a manageable length. And it is amazing how sharp rodent teeth are... but usually they only use them for plastics (coating on wires must contain a sweetener) and wood. These items, along with fiberglass are often used for nests, but my experience is that we can rarely get to the nest without destroying the house. (Remind me to tell you about the rat in our house in NY when we talk... bbbrrr, I still get the chills when I think about it.)

When you're done, I'd recommend making notes in a small notebook or computer file, in case you find something similar in a couple months or years. 

Remember that exclusion is the best method of pest control... keep 'em out! Before you put out chemicals, make sure you've properly identified the pest... Most pesticides are targeted to specific pests, even particular types. Do your homework (or contact me) before attacking the rats. There are lots of sources online... npic.orst.edu (the National Pesticide Information Center) is a very thorough resource. 

Until next week's 15-Minute Check-up, enjoy your day off!

~ Jon

"A shot of prevention is better than a venti of cure." 

The Fine Print: Because of the general nature of this advice and the individual application thereof, neither the Merriam Agency nor Jon Barron assume any responsibility for any loss, cost, damage, injury or expense which may be incurred or suffered as a result of the use of this information or your own foolishness

Saturday Shots: Bugs!

It's Saturday! Instead of waiting for something to go wrong with your house, be preventive. After a couple shots of morning espresso, let's spend 15 minutes taking a quick look around... and maybe making a couple of quick repairs.

Saturday Shots: Bugs!

It's summer. I was traveling for a month. Honestly, I haven't paid much attention to the house to see if there are any new residents. Bugs and rodents usually move in quickly during spring or fall – or slowly over the summer. 

Today, take a stroll around the house, looking at the surfaces that stuff can fall on. Grab an old broom and a dustpan. Don't bother with the ladder unless something catches your eye that you'd like to investigate. Start at the main door and head around the house... I always go left for some reason.

Many bugs are good housekeepers - and any stuff they sweep out of the house will show up on window sills, sometimes on the siding, ledges, patios, decks, and often on the ground next to the foundation. Look for:

• fine saw dust, usually made by termites / carpenter ants / carpenter bees. If you do observe some, see if you can figure out where it is coming from. If you think it's old, and you see no bugs, clean it up and check on it next week. If you do see bugs or believe it is fresh, address the situation... quickly.
• piles of black dirt or mud that look abnormal. These can be any number of bugs, but just assume that they're not helpful to your house.  Clean it up / wash it off. Be careful if you're dealing with mud-dauber bees. Make a note and check on it next week. If it comes back, address the situation... especially quickly if the mud tubes extend to the ground.
• rodent droppings look like black rice. Generally, small is mice, large is rat, chipmunk, or squirrel. (Round is from rabbit, goat, sheep, deer.) Clean 'em up and make note of where they were. We'll check the same place again next week.
• cob-webs & nests should be brushed off. An old broom works well. Bird's nests should be taken down, too. If the bee/wasp nest is live, wait until evening to spray it... so the bees are all home. The canisters of bee/wasp spray usually have a 25-30 foot range... just be sure it's not windy when you're spraying. Some people like to use hairspray (or gas) and a lighter... let's just say that's not the best way to kill bees!
• bugs on the building, watch to see if there's a pattern of where they come from - or where they go... patterns are important. Random bugs are usually inconsequential. Moths and flies like to congregate behind things. Bees... some bore holes, some build on the surface and some just utilize holes already there. Ants with pinchers should be watched carefully, while the others are just looking for crumbs of food. Roaches are hard to find in daylight... they're usually hiding in dark places.

When you're done, I'd recommend making notes in a small notebook or computer file, in case you find something similar in a couple months or years. 

Before you spray chemicals, make sure you've properly identified the pest... Most pesticides are targeted to specific bugs, even particular types. For instance, not all ants will be affected by the "stuff" you get at the local hardware store. There are lots of sources online... npic.orst.edu (the National Pesticide Information Center) is a very thorough resource. 

Until next week's 15-Minute Check-up, enjoy your day off!

~ Jon

"A shot of prevention is better than a venti of cure." 

The Fine Print: Because of the general nature of this advice and the individual application thereof, neither the Merriam Agency nor Jon Barron assume any responsibility for any loss, cost, damage, injury or expense which may be incurred or suffered as a result of the use of this information or your own foolishness

Baked!

One of my hobbies is baking... I particularly enjoy baking bread. I got started making French bread 17 years ago, shortly after Lydia and I were married.

Since then, I have followed, altered, created, and tested hundreds of recipes. I've cooked for hundreds of people and taught quite a few how to bake.

My favorite recipe is still French bread... The one I learned from my Kitchen Aid cookbook. I have come to understand that it's the foundation for all other yeast breads - and understanding how the dough should feel is key to all other breads. All others are simply variations on French bread.

The my sister married a guy from France. Needless to say, I was intimidated to cook for him. He was gracious and taught me the key tests of a good loaf of French Bread were the squeeze and tap tests, which should result in (imagine French accent) "crack, crack. Boom, boom" respectively.

Tonight, that's exactly what we enjoyed for dinner, to which my daughter declared a third component to the tests... "yum, yum"

It's no secret recipe. But it has become a great Sunday evening tradition.

What, you wonder, does this have to do with insurance? Absolutely nothing. This is my day of rest - and I haven't thought about insurance a bit.

Stop!

Two Perspectives on Insurance Claims. 

I'll agree. It is frustrating when we realize that we pay insurance for years and never see any return. (Maybe I shouldn't think about this very often.) Some people, however, have seemingly figured out how. A friend seems to get a new roof on his house every 3-5 years from hail damage. Another friend seems to end up with cash in his pocket after an auto accident. (Thoughts on insurance principles and fraud will be covered some other day.)

I recently was talking with a friend who has received a letter of non-renewal from his insurance company. The reason is that the account had too many claims over the past 3 years. Well, there were 3 claims for legitimate hail damage that included a broken window, damage to the siding, and (of course) roof damage. Then there was a claim for water from the fridge malfunctioning, which damaged the hardwood floors – and the ceiling in the room below. Oh, and don't forget the expense of evacuation and smoke damage from the recent Waldo Canyon Fire.

The four claims would push the insurance company right up to the edge of willingness to continue the relationship. But what pushed the relationship over the edge were the 4 claims that resulted in no money being paid out because there was actually no damage. This makes me think of the kid who cried wolf so much that no one listened anymore... the insurance company doesn't want to hear it any more.

The Logic Behind the Decision

At first, there seems to be no logic behind the $0 claims being a problem. But if you had the potential of losing the full value of the house on any claim, or even just $100,000 on any claim, how would you feel about having 9 opportunities to lose every bit of that money – and then some?

I've only tried gambling a couple of times... and I wasn't victorious. I've tried predicting the future and my results were similarly disappointing. Insurance companies specialize in trying to predict the future based on past results... something individual consumers are warned about when considering investments. The only way the insurance companies have a chance to successfully (profitably) predict their cost is by segmenting their pools of risk. They organize them in such a way that they can see patterns and make fairly accurate predictions.

One of the rules for segmenting is frequency of claims. There are insurers who specialize in homes with a high frequency of claims, but they are generally not the first choice when people are shopping primarily on price. (Oh, there's another conversation for another day... price vs. value).

The Trade-offs

Every action has an opposite and equal reaction. Remember that? Don't forget it.

How do I walk that fine line without getting caught? Well, let me suggest: that may be the wrong perspective. If everyone insured with your same insurance company took that approach this year, your insurance would go up next year... based primarily on the law of averages. 

Insurance, in my opinion, is a service to help avoid financial hardship or catastrophe. And, so, it is our responsibility to recognize how much responsibility we want to (or can) carry comfortably. When we think there may be insurable damage to our property (or someone else's), it is prudent to spend $50 for a consultation fee – and have a professional take a quick look at the situation.

Summary: How to Avoid Higher Insurance Premiums

• Hire a professional to take a quick look at questionable damage and provide an estimate. (Some actually offer free consultations in hopes that you'll use their services.)
• Pay for the small stuff out-of-pocket. (While you're not obligated to tell the insurance company about every bit of damage, be aware of time limitations for submitting claims.)
• Carry a deductible that you could stand to pay 2 times in a year as a worst-case scenario. Even though it would make things tight for a little bit, you'll likely enjoy lower premiums in return. (Your agent/broker should show you the math.)
• Instead of waiting for something to go wrong, be preventive... remove leaves from gutters, follow fire mitigation guidelines, test sump pumps periodically, and pay attention to signs of animals and bugs on or in your house... more on that in the weeks to come.

One final note... if you're ever threatened with a lawsuit, or even have reason to believe that you might be sued, ALWAYS contact your agent/broker promptly... it's required in your insurance contract. And if you don't alert them, you'll not enjoy the equal and opposite reaction from the insurance company.

~ Jon

Lawsuit!

How to Handle a Potential Lawsuit

The moment you have an indication that you may be named in a law suit, you should contact your insurance company (usually through the agent/broker). The insurer has the legal right to advise you, research the situation, take pre-emptive action, and be prepared for what may come next. To delay may be violating the terms of the contract.

Look at it like this... if you loan your car to a friend, wouldn't you like to know about any damage sooner than later so you can prepare or make arrangements to get to work tomorrow?

You have paid the insurance company to defend you... it's in your best interest to help them do that.

~ Jon

Umbrella!

Umbrella Insurance Basics

Here's an excellent article, entitled "Protect your family from lawsuits even if you aren't rich" in USAToday. It has statistics and information that are valuable to the discussion on Personal Umbrella Policies.

Most of us think that a personal umbrella insurance policy is excessive - and there's no need for it. But when we look at our liability and lawsuits, the total expenses add up pretty quickly. If you are concerned about protecting your income or future income, your assets, or your future inheritance, you ought to be consider an umbrella policy.

It is my recommendation that everyone consider an umbrella policy because it inexpensively adds significant coverage – and it will cover some things that would otherwise not be covered in the underlying policy.

Six sample Scenarios...

Tom's 22-year-old son repairs neighborhood bicycles from the garage during the summers. Both the premises liability risk and the completed operations/products liability risk are probably uninsured. Homeowners policies exclude business-related lawsuits.

Bill works occasionally from home (telecommutes). His homeowners policy excludes injuries to those who come on the premises for business purposes. (Like a courier or UPS delivery person who falls on Bill's icy driveway while delivering a business package.)

Joe is 80 years old. He has no car and no longer drives, but he occasionally needs to be driven by others to doctor appointments, shopping, etc. Under principal/agency statutes and caselaw, Joe can be sued if his driver causes an accident, but Joe has no personal auto insurance policy and therefore no coverage.

You have a company-furnished vehicle and no other personal automobile. Your employer has broad form DIC coverage for her use of nonowned vehicles. But the business auto policy contains the usual exclusion for injuries your client causes to coworkers riding with her (i.e., the fellow-employee exclusion).

You own a tractor and often plows the driveway or cut the lawn of an elderly neighbor. (The homeowners policies often exclude use of service vehicle if ever used off the resident's premises).

80-year-old Charlie needs some help getting dressed and eating. So his family helps him hire a part-time care provider to come into his home. He buys a small workers comp policy which includes employer's liability coverage, but he's not sure the policy has sufficient coverage.

You decide to rent [auto/boat/snowmobile/ATV] while you are vacationing outside the US. You want to be sure you have sufficient coverage in case you hurt someone or damage something.

You choose to rent a cabin for a wedding reception. You want to be sure there is coverage in case one of your guests gets injured.

The Results

In all above scenarios, since most homeowners or auto policies do not cover these items, you can be sure you have coverage with the right Umbrella policy. 

~ Jon

My Super Hero Status!

If we refuse to listen, nothing changes.

I shared my story about the diabetic who almost hit my wife a couple weeks ago. Here's the part that connected to me personally...

About a year ago, I was fishing at the lake with my kids and I passed out. Doc said it was a vagal syncope, which means I passed out, but the explanations are ironically... vague. I fought the unconsciousness for about 45 minutes. Unconscious for about 10 In-and-out for 45 minutes. It was like I was living the life of a drugged superhero, struggling to come to consciousness. But I'm not a superhero. And I was completely exhausted.

What if that happened while I was driving? What if that was me who almost hit someone?

Let's do a quick review of your Auto Insurance Coverage... 

Dig out your auto insurance policy for a minute... seriously, do you know where it is? 

On the "Declarations Page" (one of the first pages) there is a line that says something like "Bodily Injury and Property Damage" or "Liability" and there's a number next to it... that is a very important number. It is the limit of coverage you have. There are two possible types of coverage:

1. Combined Single Limit (CSL) - this is usually listed as per accident. The number represents the total amount of coverage.
2. Split Limits - often listed like $xxx,000 / $yyy,000 / $zzz,000. (Limits Explanation: x=per person / y=per accident / z=property damage per accident)

Now, consider the cost of surgery and lost wages if someone is seriously injured by your vehicle. You know what? It would be just my luck to hit a lawyer or doctor. And I'd probably be sued for lost wages during the time of rehab... this is getting really expensive and we haven't even considered repairs on the vehicle(s) I hit. Is that liability coverage sufficient enough for you? (Remember that past performance is does not predict future results.)

Let's face it. None of us put an accident on our to-do list. But through buying insurance, we are making some preparations to deal with the possibility of an accident. What if something happened to you tomorrow?  Is your liability coverage sufficient enough to protect you and your family?

~ Jon

Motor Homes / Trailers

I just had a conversation with a friend who enjoys getting away with his family. Their pop-up camper gets lots of use. Then I came across this well-written article. Enjoy!

~ Jon

Merriam Insurance Agency

Insuring Liability Risks When 

Motor Homes or Trailers Are Used 

as a Secondary Residence

When trailers or motor homes are being used recreationally to explore from place to place, the auto policy that covers those vehicles covers liability for injuries and property damage to others, either in an automobile accident or while parked, as long as the injury or damage arose from the ownership, maintenance, or use of the vehicle. The auto policy covering the trailer, however, only covers the trailer while it is hooked up to the insured automobile pulling it. By contrast, the motor home policy covers liability arising from injuries or damage, whether it is being driven or parked. Neither policy covers liability when the vehicles are parked for injuries or property damage occurring on the site on which the vehicle sits. So where does one find that coverage?

by Jack Hungelmann

Your primary homeowners liability coverage does extend worldwide to your personal liability arising from those sites, if the site is rented on a daily or weekly basis. Examples include trailer parks and campgrounds. The homeowners liability coverage also extends to vacant sites that you own or rent long term. The policy defines "vacant" as free of structures, which means no sheds, docks, fences, outhouses, and trailers or motor homes semipermanently set on the site to serve as a residence.

Now the good news. For about $20 a year, you can get coverage for the site by adding an endorsement to your homeowners liability coverage. For about $10 a year more per million, you can extend your umbrella liability coverage as well. This is an inexpensive solution to a critical gap in coverage.

When Do You Extend Liability to an Owned Vacant Seasonal Lot?

I recommend that you extend coverage as soon as you buy the lot, even though it's vacant at the moment. Why? Because people have a way of doing things without notifying their insurance agent. They may add a dock or put up an outhouse. Or move a trailer onto the lot for the summer. If they do any of these things, add any structure whatsoever, they lose their homeowners liability coverage. Because the solution is so inexpensive in relation to the risk, I recommend adding it to the policy immediately upon purchase of the site. This follows a cardinal rule of risk management that I subscribe to: if coverage is uncertain and can be covered inexpensively by endorsement, always get the coverage. Or put another way, never rely on the generosity of an insurance company to pay a claim! Play it safe.

Illustrating the Problem

Paula and her husband have found a creative way of enjoying their motor home during this time of high gasoline prices. They have rented a trailer site on an annual basis on the banks of a beautiful southern Minnesota river. They park their motor home there year-round and use it much like you would use a cabin. One night, Paula and some of her neighbors are sitting around a campfire on their lot. The fire gets out of control, and one of the neighbors suffers third-degree burns over his chest and arms. He sues Paula and her husband for $1 million. They have no coverage: no defense coverage, no liability coverage. All they have for coverage is a standard unendorsed homeowners insurance policy.

The lawsuit settles for $500,000. The defense costs are $200,000. Paula and family are out of pocket $700,000, which could have been avoided with an inexpensive homeowners and umbrella endorsement for under $50 a year!

Happy camping!

---

Jack Hungelmann's book, Insurance for Dummies, contains much of this information and is available at your favorite bookstore or online. 

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.

Enough?

Verify That Your Dwelling Limits Are Adequate

One of the painful aftermaths of fires and tornadoes that decimate homes may be the crushing realization that the home is dramatically underinsured. According to one of the largest residential building cost data companies, Marshall & Swift/Boeckh, 64 percent of U.S. homes are undervalued by an average of 19 percent. If this figure is applied to a home with a replacement cost of $400,000, it might be insured for only $324,000, a shortfall of $76,000.

This underinsurance results in a potentially huge coverage gap, particularly if the home is not insured with a guaranteed replacement cost provision. A survey by United Policyholders, a consumer advocacy group, said 75 percent of California home owners affected by the 2007 San Diego wildfires were underinsured by an average of $240,000. [The statistics for this year's losses look like they'll be worse.]

Here are some general tips to consider to reduce the likelihood of your home being underinsured:

• Make sure your home has been physically inspected. This will increase the likelihood that it is insured for its replacement cost value. Ask for periodic reinspections of your home (particularly high-end ones) to ascertain whether the dwelling limits are adequate.
• Consider guaranteed replacement cost (or guaranteed rebuild) coverage; an alternative would be to procure coverage that offers a 30 to 50 percent cushion above the dwelling limit (extended replacement cost coverage).
• Increase the ordinance or law coverage (10 percent of dwelling limit for many homeowners policies) to a higher percentage of coverage. Note that this recommendation is particularly important if you have an older home.
• Keep the insurance company informed about any remodeling at your home, since remodeling can dramatically increase the need for higher dwelling limits. Americans spend more than $170 million annually on home improvement projects, according to the National Association of the Remodeling Industry.
• If building costs are rising rapidly, an inflation guard endorsement is worthy of consideration. This endorsement increases the dwelling limit of insurance (along with other coverages) to reflect increases in values due to inflation.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.

HO/Condo Association Loss

Many people are active in their condominium or home owners' association, serving as directors, officers, and editors of association newsletters. If you are an active member of your association, consider the following risk management tips and recommendations.

• Verify that the association has directors and officers (D&O) coverage in force with reasonably high limits. If the association refuses or chooses not to obtain D&O coverage, seriously reconsider your leadership activities within the group due to your unprotected liability exposure.
• If D&O coverage is in place, verify that this policy provides errors and omissions coverage for the proper purchase of insurance. To do this, verify that the "failure to maintain insurance" exclusion is not attached to the D&O policy.
• Ask your association to hire an independent insurance consultant to audit the association insurance program to uncover any potentially lethal coverage gaps. For example, home owners' associations should have at least the following types of coverages: guaranteed replacement cost property coverage for common areas, commercial umbrella coverage, workers compensation insurance (even if there are no association employees) to cover claims brought by uninsured independent contractors, and D&O liability coverage.
• If you don't already have it, consider adding a personal injury (HO 24 82) or related endorsement to your homeowners policy.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.