Is Your Boat Insurance Ship-Shape?

Summer is in full swing in North Idaho and most boaters have already finished their waxing and other maintenance chores and launched their vessels.  What very few boaters do, however, is review their boat insurance policy.  Most consider it a necessary evil to be thought about as little as possible and, since Idaho does not require boaters to have insurance, many boats on our lakes have no insurance whatsoever.  Could that be a problem?  Consider the fact that there have already been two fatal boating accidents in North Idaho this year, and it’s not even the Fourth of July yet.  Whether you or someone else has boat insurance can suddenly become a very important question.

Boat insurance has some coverages that are very similar to auto coverage, so it’s not all that difficult to read your policy.  There are also a couple of areas unique to boat insurance that you need to be aware of.  In this blog I will cover, very briefly, the most common coverages and what you should know about them.  If the topic generates more questions than answers, be sure to contact our office or your own insurance agent.  As with all insurance, the time to ask questions is before the accident happens!

The most basic coverage, just like an automobile, is for liability.  The amount shown on your declarations page is the maximum amount the company will pay if you cause either property damage or bodily injury with your boat.  So, you run into another boat while trying to dock or you back over a swimmer or skier behind your boat, this is the most your policy will pay.  Make sure this amount is adequate to not only be a responsible boater, but also enough to protect all of your assets: home, business, retirement accounts and anything else at risk in a lawsuit.  Typically, the maximum limits on a boat policy are around $500,000 and if that is not sufficient you may want to consider purchasing a personal umbrella policy.

Next you have Uninsured Boater coverage which is similar to Uninsured Motorist coverage on a car.  The really big difference is that boat insurance is not required by law like auto insurance is, so there is a much higher percentage of uninsured boats than there are cars.   If you are hit by an uninsured boat, the amount shown on your declaration page is the maximum amount your insurance company will pay for injuries sustained by you and the occupants of your boat.  Not all boat policies even have this coverage, so look carefully.   You should be carrying an amount of coverage equal to your liability limit.  After all, why would you want to carry more insurance for the other boater than you do for yourself and your passengers?

Medical Payments is usually a small amount, typically $5,000 or so.  It is designed as almost a “courtesy” payment.  If someone should slip on the gunwale of your boat while exiting and break a leg, it is probably not a result of your negligence.  However, this amount can be paid for someones medical expenses for an accident occurring on your boat without regard to whether you are actually liable for the injury.  It’s nice to have and you usually can’t get much more than $10,000 with most policies.

The coverage for the boat itself can be a little different than your auto policy, but it depends on what your insurance company offers.  You will find the most basic of policies will cover the boat for its “actual cash value” up to the limit you have specified on the policy.  This is similar to auto insurance except that on auto insurance you do not specify a maximum amount.   Actual cash value means, essentially, the current market value of your boat.  Some companies offer “agreed value” coverage which can be very nice and avoids any argument with the adjuster over what the boat is worth.  Agreed value simply means that you and the insurance company have agreed that your boat is worth “x” at the time the policy is written.  When the loss occurs, the boat is either repaired or, if it is a total loss, the check is made out for the amount you agreed on minus whatever your deductible is.  No muss, no fuss.  Finally, some insurance companies are offering a full replacement cost option on boats that are less than a couple years old.  There are usually some special requirements, but under this coverage the insurance company will, in the event of a total loss, buy you a brand new boat as close to what you had with regard to make, model and options.

There are a couple of special areas of property insurance that are not at all similar to car insurance and you need to be aware of these.  Usually, the hull, motor and permanently attached accessories are covered in the main boat coverage.  If you happen to buy a trolling motor later on, be sureto tell your insurance agent — it may not be automatically covered.  One person on our lake was adjusting his motor bracket a few years ago when the trolling motor slipped off the bracket and went down in over 400 feet of water.  It happens.  Two other categories of property are often insured separately on a  boat policy: Unattached Equipment and Personal Effects.  Unattached Equipment are such things as fire extinguishers, tarps, anchors, safety gear, water skis and wake boards.  Personal Effects can include clothing, fishing gear and scuba/snorkel equipment among other things.  Most policies come with a limited amount of coverage for each category but check your policy, especially if you are seriously into fishing — that stuff adds up quick!

There are plenty of other coverages and options, but this covers the basics.  You will also find coverage form some companies for tenders, trailers, emergency towing and assistance and fuel spill cleanup to name just a few.   The point is, it is important to know what coverage you do and don’t have.  Everyone has to make decisions about what coverage is right for them and it is always a balancing act between what they would like and what they feel is affordable.  My theory about this is simple: if you feel you might be interested in a particular coverage, don’t assume that it’s too expensive.  Call your agent and get a quote.  Getting a quote obligates you to absolutely nothing.  Once you know the price, however, then you can make a rational decision as to whether you think the coverage is worth the premium.  It is impossible to make a rational decision if you don’t even know how much the coverage costs.

I hope you have found this helpful and that everyone has a sunny, warm and safe boating season!

Good Neighbors May Lack Coverage

Life was so much simpler when people didn’t sue each other over everything, lawyers didn’t scour insurance policies to find coverage for things never imagined and insurance companies weren’t constantly revising their policies to stay ahead of the game.  But the fact is, that is the world we now live in and it is important for consumers to pay a little more attention to the insurance policies they once assumed covered “everything” (Even though they were never quite like that!).

Case in point is an activity that occurs thousands of times every summer weekend across our country.  Someones son or daughter runs down the street with the riding lawn mower to pick up a few bucks mowing some lawns.  Or a good neighbor takes his riding mower next door to take care of the neighbors lawn while they are on vacation.  In those situations a few years ago, if the mower were to pick up a rock and throw it through the window of a passing car, the home owner’s insurance policy of the owner of the mower would have paid the bill.  That has changed.

What if you loan your riding mower to the neighbor and forget to mention the sticky throttle?  The neighbor gets off the mower and it runs over his foot, sending him to the emergency room.  (Before you scoff, the Consumer Product Safety Commission reports that riding mower accidents kill 75 people a year and injure another 20,000)  Are you liable?  Maybe, and more importantly, would your home owner’s policy pay for your legal defense?

Up until the year 2000, the answer would normally have been “yes” to these scenarios above for most home owner policies.  That’s because the standard policy language used to say that there was Property and Liability coverage for “Vehicles or conveyances not subject to motor vehicle registration which are used to service an ‘insured’s’ residence”.  Under that definition, people with larger lots who used a 4-wheeler to plow the snow in the driveway, check the sprinklers and otherwise get around the place also had coverage if they happened to take the vehicle on their once a year hunting trip.  If, on the hunting trip, they bounced someone off the back of the vehicle or even if the vehicle were stolen, the home owner’s policy would cover it as long as it met the definition above.  So what changed?

In 2000, ISO (Insurance Services Office) changed the standard homeowners policy in several respects.  Most insurance companies either use the ISO policy or at least adopt much of their language into their own policy forms.  One of the changes they made in 2000 was to insert just one word into the definition in the previous paragraph which opened up a coverage gap for home owners all across the country.  In the new policy, ISO said the policy excluded coverage for all motor vehicles, however “We do cover ‘motor vehicles’ not required to be registered for use on public roads or property which are used solely to service an ‘insured’s’ residence.”  Did you see it?  Notice the word solely.  That changes everything dramatically.

Obviously if your son or daughter has your riding mower down the street making a little money, the mower is not used “solely” to service your residence.  Same with the 4-wheeler.  The moment you leave the residence you lose both Liability and Property coverages for those items.   Under the scenarios outlined above: NO COVERAGE.  In the case of a liability claim, you get your own lawyer and pay any damages out of pocket.  And, should the vehicle get stolen or damaged while off the premises (other than maybe at the repair shop), there is no coverage for that loss either.  But what is even worse is that the language of the policy, as it is written, could even exclude coverage when the vehicle is at your house.

Let’s say your son takes the riding mower down the street, mows Grandma’s yard, then comes back and parks the mower in your back yard.  That night the mower is stolen, so you call your insurance agent.  The adjuster comes out and, in explaining the theft, happen to mention that your son parked the mower in the yard after returning it from Grandma’s.   Whoops!  You see, you’ve just told the adjuster that your mower is definitely not used “solely” to service your residence, haven’t you?  Re-read that definition above and you will see that once it doesn’t fit the definition, it can never fit the definition again.  One insurance policy analyst suggested that the only solution would be to get rid of that riding mower and get a new one!  And bear in mind that the same problem would exist if you were using the mower a week later to mow your own yard and threw a rock threw the neighbor’s car window.  Still no coverage.

I did talk to an underwriter from one company (Safeco) who assured me that they would not interpret the policy that strictly and would cover the “on premise” losses described above.  That’s nice to know, but you should be aware that such an “interpretation” would be at the discretion of the insurance company because the actual policy language is quite clear.  This is one of those aggravating situations where there used to be coverage a few years ago but now there is not.

The final, and standard, caveat is that not all policies are alike.  All the home owners policies I have examined so far contain this new wording but your policy may not.  If this situation might apply to you or someone you know, then get the policy and read it.  Better now than after the claim is denied.

Building costs are up – check your policy!

With the current economic downturn dominating the news, it is easy look at your home or business insurance renewal, be happy if it didn’t increase much, and send off a check for payment.  Unfortunately, when it comes to property insurance on your home or commercial building, you could be making a mistake that might bring another kind of economic disaster to your doorstep.

Over the past few years, in every part of the country, building costs have risen dramatically.  Here in North Idaho, just a few years ago, it was not unusual to use an $80 per square foot estimate for a basic, single family dwelling.  Today, many people are surprised that we often recommend $125 per square foot to estimate the replacement cost of the same home.  Surprised, that is, until they call their local contractor.  So, the 2000 square foot home, with very modest appointments, that could built for $160,000 in 2004, would probably cost $250,000 to build today.   And it doesn’t take much to go above that “basic” home cost.  Upscale flooring, hardwood kitchen cabinets, top-of-the-line windows — you would be surprised how quickly a home’s replacement cost can reach $200 per square foot and above.

Most insurance companies automatically increase the insured value of your home each year in an effort to keep up with inflation.  The problems with depending on that are:

1. There is an assumption, often incorrect, that you started with the correct amount in the first place.
2. The inflationary figure the insurance company uses is an average, sometimes based on national statistics, that may or may not be reflective of your own local costs.

Most good home insurance policies nowadays have a bit of protection built in for unexpected jumps in building costs.  That protection usually offers to pay up to 125% of the insured amount in the event of a total loss.  A few policies offer a 150% option.  Using the example above, the replacement cost of our 2000 square foot home is now 156% higher than it used to be so even the better home policy would leave you short.

Commercial buildings have not been immune to these increases either.  In fact, due to the huge run up in concrete and steel prices, the commercial market has been hit harder in many cases.  Recently, I reviewed the value of a nice, 3,000 square foot commercial building one of my clients had purchased in downtown Sandpoint.  The insurance company’s estimate of the replacement cost was around $285,000, my client felt $450,000 was more accurate and was flabbergasted when I suggested $200 per square foot, or $600,000.  She happened to have a contractor working on the building at that time so she picked up the phone and called him for his opinion.  Without being prompted, he did some quick calculations and came back with $200 per square foot!   I have to confess, I had a distinct advantage in this case.  Only the week prior I had some discussions with our County Assessor about this very subject and had gotten his estimates on some similar commercial buildings which happened to be in the $200-$250 per square foot range.  I wish I could take credit for being so darn smart, but I can’t.

The additional problem with commercial buildings is that business insurance policies seldom offer the inflation protection of 125% or 150% that some home owner policies do.  If you’re under-insured, you’re just out of luck at the time of the loss.  And, in the event of a partial loss, you may still have a problem if the low insured value puts you in a coinsurance penalty.  That’s a subject for a entire blog, but just be aware that you can be stung by a partial loss as well as a total loss if you are under-insured.

My advice is to check your insured value right now and review it with your insurance agent.  Check his or her figures against what I have found out by talking to contractors and the County Assessor.  And remember, don’t compare your “replacement cost” to any kind of “appraised value”.  It is apples and oranges.  Appraised value is, essentially, the depreciated value of your home or building added to the current value of the land it is sitting on.  Replacement cost is the amount you would have to pay a contractor to rebuild your home on your lot today.

I know that no one is looking for a way to increase the cost of their insurance, especially right now.  And, certainly, increasing the amount of insurance on your home or commercial building will do just that.  But, if you come up $10,000 or more short when it’s time to rebuild your structure, trust me — the few dollars you saved on your insurance premiums will seem pretty meager!

Life Insurance – who needs it?

Life Insurance.  It’s a product everyone is vaguely familiar with and one that many people own.  But there are are probably large numbers of people who think they probably need some life insurance, but then get hung up on the questions of what type and how much.  And, rather than subjecting themselves to what they perceive might be a sales pitch  from some agent, they just let the question go. 

The subject can be complex enough for a small book, but I’m going to simplify it enough for a short blog.  At first I was going to address both what types are available and then how much you need, but the blog ended up way too long.  In this blog, then, we will only talk about how much and we’ll talk about the different types another day.

First, though, the initial question is this: Do I need life insurance at all?  This is a real simple one and only requires two questions.

1. Will your death have any financial impact on anyone?
2. Do you care about that person?

See, that was simple!  And for you young people, out on your own with no obligations, you’re already figuring you don’t need it.  And, if you have no parents, brothers or sisters who would probably feel obligated to step in and make sure you get a decent funeral, you may be right.  But, families can be like that, all sloppy and sentimental, so keep that in mind.   And please, don’t tell me how they can sell that fine car of yours (which probably isn’t paid for anyway!) to take care of any expenses.  First, it probably isn’t worth that much and second, the funeral home isn’t going to wait around for a buyer to show up — somebody will have to write a check.  Now that’s out of the way, let’s get to the rest.

Now, how much?  For the single person who is over legal age, just make sure there’s enough for funeral expenses.  My opinion is just forget about paying off student loans, mortgages, credit cards, etc.  I mean, really, who cares that your credit is ruined!  Just make sure that whoever is going to step in and give you a decent funeral (or a fun wake!) has the cash to do so.

For a married or committed couple the planning gets more complex as you try to calculate how much your spouse may need while the kids are small (and she or he is collecting survivor’s Social Security benefit) versus how much they’ll need later.  A good planner can help you through some sophisticated numbers to figure all that out, but I’m going to cut right through that so you can come up with a pretty good estimate of where you’re at.

Take your household income (you and your spouse, if both are working) and multiply it by 70%.  That’s what the Department of Labor has calculated that a surviving spouse will need every month to maintain the same lifestyle you now have provided that a few other items are taken care of.  A separate fund must be provided to pay off a mortgage or provide ten years of rental payments, a separate fund must be provided for childrens’ education and a separate fund must be provided to pay off credit card and store accounts. 

Let’s say you make $50,000 per year and your spouse makes $30,000.  Seventy percent of your household income is $56,000.  Now, your spouse is making $30,000, so she’s going to be $26,000 short every year.   Next, take an investment figure that you’re comfortable with.  Right now even 2% is pretty scary, but over the long haul many planners have been comfortable using 5% for planning.  So, simply divide the $26,000 by .05 (or whatever number you choose) and you get $520,000.  That’s right, if you had %520,000 earning 5%, it would provide $26,000 per year to your spouse without invading the principal. 

So, the final tally is like this:

1. $520,000 for loss of income.
2. The amount needed for 4 years of college per child.
3. The amount needed to pay off your mortgage today.
4. The amount needed to pay off your auto loans, credit cards, etc.

Add it all up, and that’ what you need to keep your death from causing a negative financial impact on your surviving spouse.  Yes, it’s a big number, but keep in mind that any savings you have and any income property you may have can be used to offset either the income or debt figures. 

Finally, keep this very important thought uppermost:  You now have a realistic idea of how much life insurance you need.  Maybe you don’t have enough and, frankly, maybe you can’t afford it all right now.  But here’s my advice: start planning now to do something toward reducing the impact your death might have on someone else.  The fact is that something is better than nothing.  Get a price for some term insurance and you may be surprised.  Because we are living longer than we used to, life insurance is one of the few things that has actually decreased in price.

So get out your calculator, see where you’re at, and get going!  In a future blog I’ll go over the various types of life insurance.

Identity Fraud – an everyday threat

So far I have been very fortunate regarding identity theft or fraud.  While my actual identity (meaning social security number, drivers license, etc) have not been stolen, I have had three different cases of fraudulent charges on my credit cards.  And that doesn’t include a couple of cases where internet based scammers “slammed” my card with bogus charges.

Imagine my surprise one evening when someone called regarding a Visa card that I still had active but had not actually used in several years.  The service representative from Visa wanted to know if I had been in Spain recently and had used my card.  At that time I had not even been out of the US for three years!  Apparently someone had run up charges in Barcelona and Madrid to the tune of nearly $8,000 over a span of two weeks!  The sudden activity on the card had alerted Visa’s fraud department which prompted their phone call.  That was pretty easy to fix.  I just had to sign an affidavit that the charges were not mine and, since my passport clearly showed that I had not been in Spain, that was pretty much the end of it.

True identity fraud, however, is much more complex, damaging and hard to fix.  This is where someone gets your SSN and/or driver’s license number and begins opening accounts in your name and running up all sorts of bills.  By the time you find out, you have a string of creditors coming after you and the burden of proof falls on you establish your innocence.  Some people have been financially destroyed by the time they could straighten it out because the legal actions against you naturally affect everything you do from getting a mortgage, a car loan, a job and on and on.

Many homeowner insurance companies are now offering some type of identity fraud coverage to help with expenses and, just as important, information on what to do to mitigate the damage.  Most of the optional coverages are pretty cheap — I have one from Safeco in front of me that costs $12 per year, and another from Hartford for $24 per year.  Yes, that’s one or two dollars per month!  Other companies have similar costs for comparable options.

The coverage varies from company to company but most concentrate on the expenses you will incur trying to correct the fraud rather than the actual financial damage which is sometimes hard to determine exactly.  Safeco, for instance, covers up to $25,000 in expenses you incur plus the assignment of a Case Manager to help you through the process.  Hartford’s coverage for expenses is limited to $15,000 and both policies have certain limitations and conditions.  For instance, both require that you notify them of the identity fraud within 60 days after it is discovered.

As important as these coverages are, it is critically important that you take certain steps to avoid making yourself more vulnerable to identity fraud.  There are common sense things like not carrying your Social Security card with you (you do have the number memorized by now, don’t you?), shredding certain documents and only carrying the credit cards you think you’ll need.  Additionally, you should occasionally check your credit file that is kept by the three major credit reporting agencies.  One of our companies, Safeco, has put together a 2-page pdf file that you can download and print out with all this information and more.

The additional insurance coverage is pretty inexpensive so if you are interested, be sure to contact your homeowner, condo or renters insurance agent for more information.  Beyond that, though, taking a few precautionary steps can go a long way toward making sure that you never become a victim of identity fraud.

Rental Car Insurance – Do you have it?

Does your auto insurance policy cover the cars you rent while on business or vacation?  Really?  The fact is, for many policies the correct answer is “partially”, and the part they don’t cover can cost you plenty!

In 2007, the National Association of Insurance Commissioners conducted a survey and found that 42% of consumers were “either thoroughly confused or had only a rough idea about insurance” pertaining to rental cars, and a significant number bought the extra-cost insurance from the rental car company just to be sure.  If you call your insurance agent and ask if a car you rent is covered, you are very likely to get a casual answer like, “Sure, it’s covered just like your own car”.  While this is probably true, in most cases it is simply not the whole story. 

Most insurance companies do extend the Comprehensive and Collision coverage you have on a full coverage automobile to a car you may rent.  If you suffer damage to the car, your policy will normally cover the damage just as it would to your own car subject, of course, to your deductible.  So far, so good.  But you soon learn that damage to a rental car involves costs that do not occur when your own car is in an accident.

Most rental car companies, following an accident, will charge you one or more of the following types of charges: Administration Fees, Loss of Use and Diminution of Value.  Some of these charges may be regulated by the state in which you rent the car, but don’t count on it.

An Administration Fee is often charged just for processing the paperwork for the claim.  It may be a set amount like $100 or it might be calculated as a percentage of the damage, say 5%.

Loss of Use is based upon the theory that if the car had not been in the body shop being fixed, the rental car company could have rented it to someone else.  This theory often applies even if the particular rental car location has 20 other similar cars sitting idle on the lot!  Depending on the extent of damage to your rental car, this can add up to a lot since it is charged for every day the car is out of service.

Finally, Diminution of Value is the loss in the resale value of the car due to the damage even after the repair.  Often, major damage must be disclosed by state laws and, even if not, services like CarFax can often discover when vehicles have been in accidents and this can lower their value.  The rental car companies sometimes calculate this as a percentage of the total amount of damage.

So, the question is, “Does your auto insurance company cover these charges?”  You can either read your policy (horrors!) or call your agent to find out.  I have a policy sitting in front of me right now from a company  that does cover a rental car for Liability, Comprehensive and Collision (provided, of course, that you have a vehicle similarly insured on the policy).  However, you read on to discover that it will only pay up to $1,000 for damage you may be legally obligated to pay under a rental car contract (so that’s your limit for Loss of Use and Administration Fees) but another section absolutely excludes coverage for Diminution of Value. 

Another policy on my desk from a different insurance company also covers damage to rental cars as well.  With regard to Loss of Use and Administration Fees however, it will only pay them up to $25 per day to a maximum of $750.  And, once again, coverage for Diminution of Value is absolutely excluded.

There was a good article in the Denver Post last year about this very subject that also addressed how some credit cards may or may not help pay for some of these charges.  Additionally, in 2007, there was an article in USA Today about a business traveler who routinely declines the additional cost insurance coverage from rental car companies and explains his reasons for doing so.  If you are a person who occasionally rents cars for either business or pleasure, I suggest you read both articles and don’t skip the responses to those articles listed below them — they include some horror stories about rental car damage.

It is not unusual to hear someone at a rental car counter, in a hurry and with a line of people behind them, utter something like “I’m pretty sure my auto insurance covers this” and with a quick initial decline the Collision Damage Waiver (CDR).  If it is truly an informed decision and you know what you are doing, fine.  But you’d better be sure before you end up with several thousand dollars in bills from a rental car company as an unwanted memory from your last vacation.

The Case of the Neighbor’s tree

After almost every serious windstorm, we get this question: “If the neighbor’s tree falls on my garage, his insurance will pay, right?”  The answer often surprises people.  In most cases the answer is “No”, and the person with the crushed garage has to rely on his or her own insurance to repair the damage.  On the surface, it would seem logical that the neighbor’s insurance should pay — after all, it was his tree and it did fall on someone’s garage.  So why doesn’t that happen?

First, it is important to understand that there are two primary parts of your homeowners insurance policy.  The first is Property and this covers your home, additional structures and contents.  The second part is Liability and this pays for your “legal liability” for certain things pertaining to a home such as someone slipping on your icy sidewalk or your dog taking a bite out of the mailman.

With that in mind, what part of the neighbor’s policy might pay for the damage to your garage?  Obviously, the neighbor does not insure the garage on his own Property portion since he does not own your garage.  That leaves only the Liability portion and now we have to look at the concept of “legal” liability.

The key word in almost all liability claims is “negligence”.  Was the neighbor somehow negligent in causing the tree to fall on the garage?  Well, we know the neighbor did not initiate the windstorm, so is it possible in any way for him to be negligent?  The anwers is “Yes”, but this occurs rarely.  If the tree was obviously diseased, or if it leaned perilously over the garage there may be a case for negligence.  I use the word “may” very carefully here.  The tree may be discovered after the accident to be diseased, but was this a condition that the neighbor was aware of?  If the tree was leaning over the garage, is there any reason the neighbor might have thought it would actually fall?  Additionally, did the owner of the garage ever express concern to the neighbor about the health of the tree or its position over his garage?

You see, this is where it gets sticky.  To make the case for negligence, there has to be some indication that the neighbor did not act in a reasonable and prudent manner with regard to the tree.  And the fact is, in most cases I have seen, there simply is not evidence of negligence.  Most of the claims of this nature that I have seen over the past 25 years are trees that no one suspected of being a problem, not the neighbor and not the property owner.  Sometimes stuff just happens, and that’s why you want to make sure your insurance adequately covers your garage.

The Christmas Party Lawsuit

It is definitely the season for Christmas parties, both at work and at home.  If you are the host of such a party, it should be common sense to watch out for anyone who might be over-indulging just a bit with the alcohol.  It is really difficult though, to tap your buddy on the shoulder (or your boss!) as they head for the door and suggest they find someone else to drive them home.  As we all know, however, you may just be saving someone’s life.

That being said, it is also important to realize that every year there are lawsuits in which someone wrecked their car on the way home and now wants to sue the party host for over-serving them.  Can they do that?  Well, as I always tell my clients, this is America and anybody can be sued for just about anything at anytime.  The important thing, even for what you might consider a frivolus lawsuit, is whether or not you have insurance to pay for the lawyer.  Because, quite frankly, whether it is frivolous or not, the attorney is still going to charge you the same hourly fee.  (Unless he’s your brother-in-law, but that’s a topic for a whole ‘nother blog!)

The host who gets sued is usually covered by his or her homeowners, renters, condo or business policy under a provision known as Host Liquor Liability.  This provides a defense for such a claim provided that selling alcoholic beverages is not your business.  In other words, if you have a bar or restaurant, then you will need to have (and pay extra for) Liquor Legal Liability to be added to your business policy.  But, for other businesses or the homeowner, Host Liquor Liability will normally rise to defend you.  As always, be sure to check with your own insurance agent to make sure that you have this important coverage.

As I said at the start, though, your best course of action is to make sure that if anyone has had too much to drink that you do everything you can to keep them from getting behind the wheel.  That means offering to drive them home, calling a taxi or just taking the keys.  Yes, you could risk the friendship, but at least you may not have to attend the friend’s funeral and know you might have prevented his or her death.  The gift of a ride home might just be the best present you give this year!

Will installing a woodstove impact your home insurance?

With energy prices high and budgets tight, many people in our area are considering installing a wood or pellet stove for heating.  I often get calls about whether or not this will impact the person’s home owner’s insurance policy and the answer is “maybe”.

For some home owner’s, especially those with standard “stick-built” homes in good fire protection districts, there is often no problem at all and usually no additional premium.  It all depends on the company insuring the home though, and these rules vary greatly from company to company and area to area.

For homes in rural areas, especially in Fire Protection Classes 9 and 10, the rules can be different.  These homes already carry a higher fire insurance rating and some companies will not offer insurance at all on these homes if a solid fuel appliance such as a wood or pellet stove is installed.  This may be especially true for secondary or seasonal homes.

Manufactured or modular homes often have yet another set of rules that is usually more restrictive with regard to wood stoves.  Because many manufactured homes can become fully engulfed by a fire more quickly than a stick-built home, some insurance companies don’t even insure them.  Those that do will often charge an additional fee for having a wood stove or might refuse coverage altogether. 

Finally, even the installation can make a difference.  Common sense dictates that a person should follow the instructions very carefully with regard to distances from the wall and especially the type and location of the chimney.  In addition to that, however, many insurance companies require “professional installation” of a wood stove.  So, no matter how competent you might be, you may find your insurance application being declined on a “do-it-yourself” installation.  For manufactured homes, there are wood stoves designed especially for these homes so be sure you don’t end up with a non-approved stove in your home.  Not only could this cause insurance problems, it can be downright dangerous.

I often get the call with the question about wood stoves after  the installation, when it is too late to make a change.  In order to avoid problems, call your insurance agent or insurance company before you install a solid fuel heating appliance.  You can avoid a lot of grief!

What’s this blog about?

This blog is intended as an extension of our agency website, www.northidahoinsurance.com.  I plan to keep it updated at least weekly and address topics of concern not only to our clients but to the general public regarding insurance. 

The subject matter will cover all types of insurance coverage including how to decide on options, what to expect in the event of a claim, how to keep your costs as low as possible.  Hopefully, I can even offer some insight on national topics such as Universal Health Care.

While our agency is licensed to do business in Idaho, Washington, Montana, Alaska and Arizona, many questions about Auto, Home, Business, Health or Life insurance are universal in nature so I will certainly attempt to respond to comments or questions from any location. 

All this being said, I hope to have the first post up and running in just a few days.