Ten Most Asked Questions

Here you go: The most commonly asked insurance questions in the history of asking insurance questions:
1.
Q: Can someone get a life insurance policy on me without my knowledge?
A: Anything under the sun is possible. In order to get a life insurance policy issued, a person should have:
1. An insurable interest in the insured (you’re financially impacted if someone dies)
2. A need for the insurance $$ amount requested (no $5 million polices on your kids, unless she’s Miley Cyrus)
3. Access to personal information IE DOB, SSN, address, medical history
4. Signature of the insured (if insured is an adult)
5. Cooperation from insured if insurer requires paramedic exam (blood, urine, saliva, med history) or a physical exam. The people performing the exams are required to check IDs.
In order to collect on the policy, the person would need:
1. Cooperation from family or the executor of the estate to get death certificates.
2. Be outside the contestability period of the policy (usually two years from policy issue date) to avoid the scrutiny of the insurance company.
In the US, there are around 1,500 - 2,000 life insurance companies and they all do business in a similar manner with small differences in underwriting. None of them would make a profit by paying death claims on fraudulently obtained policies; so safeguards are put in place to guard against deception.
Without a paramedic exam or physical, there is a limit on how much insurance you can purchase. The industry limit seems to be around $250,000. So purchasing a $1M life insurance policy without the insured’s knowledge would be a challenge requiring a good amount of deception and fraud at policy issue.
This limits the size and type of policy someone could purchase. Small policies (say less than $100,000 for a young person, $25,000 for an older person) get less scrutiny. Group policies require only a few questions, but again limit the death benefit that can be purchased (usually only spouses can be named to purchase 50% of employee’s death benefit).
So, my conclusion; unless you’re the target of a well thought out deception, you’re probably just paranoid or watch too much TV.
2.
Q: My ______ (fill in the blank) died and we can’t find their life insurance policies. Where can I find this information?
A: There is not a central database of life insurance policies. I’ve written an article on searching for missing life policies: http://www.insuranceyak.com/2007/09/20/find-a-lost-life-insurance-policy/ Sorry for your loss and good luck with your search.
3.
Q: I need to file a claim against someone else’s policy. How do I find out who their insurer is?
A: A person or business’s insurance coverage is private information, so you can’t and you don’t. Their insurer will not accept claims from you and in most cases will not even speak with you. If the other party refuses to file a claim or admit fault, you’ll need to involve your insurance company or take legal action. In the case of any legal action, I would recommend involving a lawyer.
Keep in mind your insurance covers you, their insurance covers them. If you have bodily injury or property damage and someone else is the proximate cause, you could file a claim with your insurance company and allow your insurer to subrogate the claim against their insurance company.
4.
Q: What’s it like to work for _____(fill in the blank)? Is their training good? Will I really make $100K in my first year selling insurance?
A: There are a number of insurance companies who are always hiring sales agents, “account managers” or (my favorite) “manager trainees” : Farmers, Met Life, State Farm, Allstate, Primerica, New York Life, United American. The list goes on. There's a reason why they’re always hiring: They wash out 85-95% of all their new agents within two years, 98-99% after 5 years. These are SALES jobs; you sell you eat, don’t sell don’t eat. Some will pay you a stipend or advance your commission if you’re not selling, but the bottom line is you have to sell, week in, week out or your butt is out in the street. Now there always seems to be 1 out of 100 people who thrives is sales; kid natural who makes $100K her first year. If you’re one of these people, God has blessed you; may he continue to do so. Most other successful sales people just work hard and persevere long enough until they succeed. Average income for a first year sales agent? 30K if you work really hard and get a little lucky.
My advice: if you’re really interested in the industry, get a job working for a successful agent with a good reputation in the business and learn the ropes. When you’re ready, look for a good situation working for yourself selling what you like to sell.
See http://ohio-insurance-forum.blogspot.com/2007/06/q-how-does-insurance-agent-earn.html for a rundown on commissions earned and learn how big you’ll have to be in order to survive the business.
5
Q: A big expensive repair need to be done to my house, will my homeowners insurance cover it?
A: Homeowners insurance covers unexpected occurrences. Policies and coverage vary by state and policy, but repairs to a house are usually not covered unless the damage was caused by a covered risk.
Typically excluded items: earth movement, settling, faulty material, faulty workmanship, tree roots, old age & wear and tear, insect, vermin and pet damage.
So unless the proximate cause was something covered: fire, wind, falling objects, vehicle damage, building collapse, broken pipes you have no coverage. Water backup is an endorsement that usually has to be added to a policy; don’t have it, no coverage. If you call the insurance company claims center, they will log your call and start the count on number of claims you’ve filed in the past 5 years. Chances are 2 claims in three years will trigger a cancelation even if 0 dollars are paid on one claim. So you may want to hypothetically discuss this claim with YOUR AGENT.
See more about Homeowners coverage at:
http://ohio-insurance-forum.blogspot.com/2007/07/homeowners-insurance-covered-or-not.html

Tune in next week for questions 6 - 10

SR22 - What is it?

Here's a question insurance agents hear week in and week out..can you sell me SR22 insurance? I'm here to clear up some of the confusion concerning the SR22 and what states require to keep people driving legally.

An SR22 is a document required as proof of financial responsibility by the court or under state law for persons convicted of certain traffic violations. The SR22 is not insurance, it is a certification that an auto insurance policy is in effect for a certain individual. This is the legal proof that courts need to show someone is complying with state financial responsibility laws. Insurers are allowed to charge a reasonable processing fee for filing SR22s. Insurers are not required to provide SR22s or may elect to offer them in one state and not another.

Definition of an SR-22 from the Car Insurance Learning Center:" SR-22 is a form which must be filed by the insurance company stating that auto liability insurance (or bonding in Ohio) is in effect for a particular individual. Required when insurance is provided to an individual who was in an accident or was convicted of a traffic offense and was unable to show financial responsibility. Each state has different variations of this form and requirements."

Long story short, someone got caught driving without insurance or the courts suspect they are or will be based on poor behavior (DUIs, reckless driving) .

SR22s are state specific and the requirements in one state may not apply in another state. You can expect an SR22 or financial responsibility in every state except for these exceptions.

Delaware, Kentucky, Minnesota, New Mexico, Oklahoma and Pennsylvania don't require SR22s, but if you have an SR22 and then move to one of these states, you must continue to meet the requirements of the SR22 state where the offense was committed.

New York and North Carolina don't require SR22 filings, and most companies don't offer out-of-state SR22 filings for policies in these states.

If you currently carry an SR22 in one state but move to another state, you must fulfill the SR22 filing period for your former state, even though you no longer reside there. Also, your insurance policy for your new state must have liability limits which meet the minimums required by law in your former (SR22) state. You can only get an SR-2 form from an insurance company that is filed with the state to issue SR22s.

SR22a forms: Similar to an SR22; there are used in Georgia, Texas and Missouri. In Georgia & Texas these are certifications used for repeat violators of financial responsibility laws. SR22a in GA & TX must be paid in guaranteed funds and policies must be paid in full for a 6 month term. In Missouri, SR22a are used for policies where drivers on a policy are restricted to only driving certain cars.

SR22 bonding: Very common in Ohio and other states that allow bonding in lieu of insurance. Drivers are told by the courts to secure a SR22 bond, go to an agency, ask for a SR22 bond and that's what they get, a bond. It's important to note the difference between a insurance policy and a bond; when an at-fault accident occurs, the insurance policy will absorb the cost, the bond will pay the cost and then request repayment from the bond holder. Sort of like a line of credit for the driver that must be repaid. This comes as quite a shock to most drivers who think they're insured.

SR26 forms: A filing done by insurance companies to cancel a SR22 or SR22a. Most states require notice in advance (usually 10 days) when a SR22 is being canceled. To avoid mix ups in SR22/SR26 filings, it a GOOD idea to get your insurance bills paid ON TIME.
Ernesto

Liability Insurance: The Most Overlooked Piece of the Financial Planning Process?

By: Stephen J. Evanko, Jr., CPCU, LUTCF, AAI
Delaware Insurance Advisors

Liability insurance – you probably have it now and don’t give it a second thought. You see, it’s part of your car insurance policy – the coverage that protects you if you are found liable for causing injuries or damaging property. It’s also included with most home policies – just in case someone slips and falls at your house or Fido decides to become too aggressive and bite someone.

If you own a business, your business liability insurance protects you from things such as customer’s accidents on your property, your negligent activities or your faulty products (i.e. food poisoning).

How can this important protection so often be “overlooked”? Very simple… you have a life. Let’s face it, you’d rather plan your vacation than bring out and dust off the car, home and business insurance policies. You know they haven’t been looked at in years…and you’re probably thinking “if it isn’t broke, why fix it?”

Here’s why you should pay close attention: everything you have earned could be lost because of one careless accident. What if you are briefly distracted and don’t allow enough distance between you and the car in front of you. Or, what if your employee fails to clean up a spill at your business?

Don’t take your protection and security for granted. Get those policies out and make sure your liability protection equals or exceeds your assets. Your assets (both personal and business) are those that you have earned, worked hard for or even inherited. So, why risk them?
The purpose of liability insurance is to protect your assets from people who want to take them away from you due to your negligence. You want to ensure that you and your family can maintain your lifestyle! Of course, there are always exceptions. Before making important decisions, be sure to work with the help of an experienced, credentialed and licensed insurance advisor.

Contact Stephen at 740-369-1040 or sevanko@colinsadv.com

Track Down a Life Insurance Policy

Q - My Father died and we can't find his life insurance policies anywhere. My Mother died years ago and much paperwork had been misplaced. Any way to track down a life insurance policy?

A - Unfortunately, insurance policies are considered private transactions between an insured and the insurer. There is no single repository of life insurance policies that you can search. I'll touch on one service that could help you track down the policy if it's been purchased in the last 15 years or so, but you're really going to have to put on your CSI hat for this one. Most life insurance policies have premiums that need to be paid in order to keep the policy in force. Start any search by looking for the money trail.

First how old was the person who died? Did they die during their working years or after retirement?

For younger working people:

1. Inquire at their place of work, perhaps they had a group policy or payroll deducted premiums, examine pay stubs and question deductions.
2. Search check registers and bank statements for cancelled checks or direct withdrawals.
3. Check with the Financial Advisors or the Property & Casualty agency that handled other investments or lines of business for the deceased; sometimes they keep notes of when they discuss life insurance issues with their insureds.

For older people, the insurance products sold 25 - 30 years ago were a little different than what is popular today. Older people would have been more likely to purchase permanent Whole Life(WL) policies that could stay in force until age 100, give or take a few years. There were a few flavors of WL sold back in the day, some they paid until a pre-determined age (usually 60) other types they paid premiums their entire life. Since WL builds a cash value, the insured had a option to:

1. Pay premiums, keep policy in force.
2. Skip premiums and the policy will fund itself from cash value until that runs out.
3. Cancel policy and keep cash values.

Try to remember any discussion you've had regarding life insurance you had with the deceased. Ask their friends or neighbors if they ever had an insurance conversation with the deceased. This may give hints on where to look. Also:

1. Check registers, SS or pension checks(for deductions) savings & investment accounts for withdraws.
2. Check tax returns going back as far as possible (cashing a WL policy is a taxable event)
3. Rack you brains for mention of a salesman or insurance company. Search orphaned policies on https://external-apps.naic.org/orphanedpolicy/ ; if the company merged or was purchased by another company, this link may help.
4. Check unclaimed property office of the state. As a last resort, insurers pay death benefits to the state office if beneficiaries can't be found.

Finally, for newer policies, you can also check the Medical Information Bureau (www.mib.com) which has a database of all applications for individual life insurance that were processed during the past 10-15 years. The policy locator service costs $75 per search. Good luck in your search.
Ernesto

Insurance for Rehab projects

Q - How do I find an insurance company to cover my home rehab projects?

A - You've got a few options; if we're talking residential houses (1-4 units) go to Foremost.com and do an agent search; Foremost will do vacant property in rehab up to two years. The agent who handles your P&C may have another company they use. Make sure any policy in endorsed for Vandalism (VMM) and Liability. If Liability is not available, you may be able to extend Liability from your Homeowners policy. Make sure the coverage is in the name of the person(s) or entity that purchased the policy.

If you're a real contractor (with insurance, bonding, licencing) then your P&C guy may have access to a builders risk program that allows vacant property under rehab.

Each program will have underwriting guidelines and restrictions you'll have to follow. Good Luck

Insuring old buildings

Q --Who insures old buildings? We have purchased a building constructed in the 1880s and all insurance companies seem to be terrified of the structure. Most won't insure anything over 75 years old.We are setting up a ceramics studio on the ground floor and will be living on the second and third floors. We did find one company that will charge us an outrageous amount, but we'd like to find something friendlier.



A -- You don't have a problem, you have TWO problems: AGE and USAGE.

The first problem with older buildings is dealing with replacement cost. Most of them cannot be re-built, so either actual cash value or functional replacement is necessary. If a insurer only sells a replacement cost policy, you're ineligable.

The other AGE related problems can be dealt with by pointing out all updates done in the past 10-15 years:

• Electric - modern three strand wiring with circuit breakers all up to code
• Smoke & security alarms and other safety features inspected and up to code
• Updated plumbing
• Updated HVAC
• Updated Roof
• General good repair of entire building, surrounding area sidewalks
• Sprinklers ? This would be a plus.

Show that these issues have been addressed and an insurer will more likely think of the building as a rehab, not a piece of history.

The USAGE problem is a little trickier. Old buildings are high risk, ceramic studios (if MAKING ceramics is involved ie ovens, heat, flames; retail stores no problem) are high risk, mixed residential and commercial are high risk. Trying to get all three together AND getting good coverage for all will be difficult at best.

Try breaking down the liability (as a disclaimer, I am not an attorney and laws vary from place to place, please consult the appropriate legal council).

1. Establish an LLC to own and manage the building
2. Establish an LLC for the ceramics business then rent from the building LLC
3. Rent the top two floors from the building LLC as residential space (maybe buy as a Condo?)

Now get insurance coverage:

1. Commercial building general liability (GL) and property coverage for the first LLC
2. Business GL with contents or business owners policy (BOP) for ceramics business
3. Renters/Condo coverage with endorsement for improvements to cover personal property

Ideally you get all three from the same company; this may be difficult, but possible. The three coverages are more comprehensive than one combined policy, and easier to place. Not cheap, but the best way to get insurance.

Ernesto

Homeowners insurance: Covered or Not?

Q: Does Homeowners insurance cover ANYTHING? Seems all I hear is people getting denied coverage, what a rip-off.


A: Homeowners and property insurance commonly has exclusions. As "all-risk" it generally covers any UNEXPECTED OCCURRENCE as long as it's not excluded.

Let's see.. excluded items:

• Acts of War
• Flood
• Earth movement (earthquake (may be covered under an endorsement))
• Nuclear accidents
• Animals, birds or fish (Pets that is)
• Motor vehicles
• Aircraft except models or hobby aircraft
• Property of roomers unless related or added through endorsement
• Wear and tear
• Inherent vice or latent defect
• Smog, wet or dry rot
• Discharge of pollutants
• Settling or expansion of pavement walls or roof
• Damage caused by vermin, rodents or insects

For property insurance including renters, vacant or 'standard market' property can be written on DP1 or Broad form coverage. This covers named perils:

• Fire and lightning
• Wind Hail Aircraft
• Riot & Civil commotion
• Vehicle damage
• Volcanic eruption
• Explosion
• Smoke
• Vandalism MAY be covered with an endorsement but usually is excluded if property is vacant
• May be endorsed for loss of use/rent

DP-3 Special form for property listed above but generally not vacancies. May be endorsed for replacement cost. Includes named coverages of DP-1 and also includes:

• Vandalism
• Collapse
• Glass coverage
• FD service charges
• Trees and shrubs (for named perils)
• Falling objects
• Weight of Ice & Snow
• Water leakage
• Freezing of plumbing or explosion of steam and hot water systems
• Power surge
• Damage caused by burglars
• May be endorsed for liability and loss of use/rent

HO-# the "Homeowners Policy" provides "All Risks" coverage includes above and any other UNEXPECTED EVENTS that are NOT EXCLUDED related to Owner occupied dwelling:

• Comprehensive policy covers all personal owned property; dwelling AND contents
• Covers personal liability both on and off premises.
• Covers personal property on and off premise
• Loss of use – payment if you cannot live in property
• Separate structures: garages, sheds, pole buildings fences, pools, any stand alone structure on property
• Covers Theft and mysterious disappearance
• Damage to property of others
• First aid to guests
• Typically endorsed for replacement cost

This is a fairly comprehensive list. Keep in mind that policies vary by state, company and type of property. To get a idea of what is covered under your policy, consult your agent or read the policy language.

Ernesto