Newsletter Links

Our agency subscribes to four very helpful newsletters that we want to share with you! Down below, you will find links to each one. Note that each updates monthly.

Construction Insurance Bulletin: This newsletter provides excellent information for anyone in construction, real estate development, architects, and building related industries. It's articles pertain to the interests of small to medium-sized construction companies.

Business Protection Bulletin: The Business Protection Bulletin is a very popular newsletter with business owners and executives. It will cover topics in business and professional liability insurance, errors and omissions insurance, commercial auto, and miscellaneous related topics.

Personal Protection Bulletin: This is a great resource for consumers of personal line insurance. This will keep the reader up-to-date on auto insurance, homeowners/renters insurance, personal risk, and miscellaneous pertinent topics.

Workplace Safety Bulletin: The articles of the Workplace Safety Bulletin will help readers stay current on important topics for any business that buys worker's compensation insurance. It provides valuable insights on reducing exposures and maintaining an excellent modification factor.

We hope these will benefit you. Remember, knowledge is power!

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

The Confusion of Coinsurance

Coinsurance is a flexible term, as it applies to many different policies, all in different ways. This article specifically discusses how the coinsurance clause works in property insurance, and this article uses a Homeowner’s policy to illustrate exactly how the Coinsurance clause would affect you in the event of a claim involving your home.

A Coinsurance clause can be found in nearly every property-covering insurance policy you can find. Coinsurance was created to make sure the insured was properly valuing their building/property. Coinsurance applies to both Replacement Cost and Actual Cash Value loss settlements.

How does the Coinsurance clause require property to be properly valued? 

The Coinsurance clause will require the property to be insured for a certain percentage of its total Actual Cash Value/Replacement Cost value. Typically, the Coinsurance percentage will be 80%, but can be more or less than that. So if the Coinsurance percentage is 80%, but a piece of property is insured for less than 80%, there will be a penalty applied to the claim settlement. So let's say your home's full Replacement Cost value is $200K, you can have it insured for $160K and still have no penalty (200,000 x .8 = 160,000). Note that if you did only have it insured for $160K, you would only receive $160K, not the full $200K. The optimistic view of the Coinsurance percentage is that the 80% Coinsurance allows for a 20% 'buffer zone' for valuation errors, inflation, market shifts, and other factors. 

How exactly is the penalty calculated?

Typically, the penalty is calculated by taking the amount that the property was insured for and dividing it by what it should have been insured for. The resulting fraction is then multiplied to the total claim/loss amount. The number calculated is the amount you will be receiving. 

Example: Home w/RC value of $200K, subject to 80% Coinsurance, insured for $150K at RC.

Insured for: $150,000
Should have been insured for: $160,000
Loss amount: $50,000
Amount paid to insured: $46,875
Penalty Amount: $3,125


The Bottom Line

If you don't have your property properly insured, come claim time, you might not be able to fully rebuild your house using the insurance money, or you may be forced to rebuild smaller than what you previously had!

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Medical Payments—Not Always What You'd Expect

Everyone has seen the ‘Medical Payments’ section on their homeowners,  or Auto policy, but what does it really mean? Does it cover my medical expenses if I get in a car crash? Does it mean that I only have coverage for X amount of dollars for other people's medical expenses? Does it cover my family's medical expenses?

The Homeowner’s Policy & General Liability Policy:

The Medical Payments (also referred to as 'Medical Expenses') section of your homeowner’s or General Liability policy, is to cover medical expenses of someone who is accidentally injured. The caveat with it is that Medical Payments coverage does not apply to you or your family getting hurt, because that should be covered by your health insurer. For businesses, the Medical Payments coverage would not apply to you or your employees, as that should be covered by Workers' Compensation.

The Medical Payments coverage comes into play when there is no proof of negligence, but a visitor is hurt. In this situation, your insurer will pay the medical expenses required to fix up the injured person, hopefully keeping you out of court. This coverage can be substantial, as litigation can be very expensive, not to mention time consuming. However, if you had negligently hurt someone, your policy is going to pay for their medical expenses, and any litigation expenses that are incurred. Medical Payments is simply a tool to prevent you from going to court in the first place.

Here are two basic examples:

—Your  guest trips over a rug, fracturing their arm. It was completely accidental, but your insurer will pay up to your Medical Payments policy limit to fix them up in hopes of keeping you out of court.

—A pedestrian cuts through the corner or your yard and slips on a child’s toy. Once again, your insurer is going to pay up to the policy limits to fix that person up, and hopefully keep you out of the courtroom.

As you can see, this could play out a million different ways, but trying to establish blame in the courtroom is time consuming and costly for everyone involved. This small, yet potentially huge, coverage can save you time in court, and can keep a small accident from becoming a multi-thousand dollar claim on your record.

The Auto Policy:

The concept is almost reversed in auto insurance. Regardless of your negligence in an accident, your insurer is going to pay up to the Medical Payments limit for each person in the car. So when you're the driver and have an accident, it'll pay for the medical expenses of you and every passenger in the vehicle. This coverage also extends to when you are a passenger in someone else's car, or if you are hit by a vehicle while on-foot. 

The Auto policy's version can be very beneficial to have if you are the passenger during an accident or hit as a pedestrian. This is especially so if the driver doesn't have Medical Payments coverage (or auto coverage at all!). Alternatively, the driver might have an Auto policy, but they might not have high enough limits to fully cover your injuries!

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Why Are My Rates Increasing? I Haven't Had Any Claims!

Insurance companies use various factors to determine the rates they use, and rate increases often have very little to do with you, personally.

Everyone knows a bad driving record or a hail loss on your home is going to make your rates go up; that’s to be expected. But what happens when your rates increase even though you've been a perfect angel this year? That is not an easy question to answer, because it could be one or a combination of the many factors that decide your final insurance premium:

Inflation: 

Insurance, just like everything else, is subject to inflation. Insurance companies are just like any other business; they need to make a profit to stay afloat. So when the costs of things go up (rent, labor, utilities, etc.), the cost of your insurance has to go up as well.  

Location: 

Actuaries are the ladies and gentlemen behind the scenes who crunch the numbers and come up with rates. These folks use location specific data for part of the rate calculations, which create different rates for different areas. They compile the loss information from an area, such as how likely they are to be affected by certain perils (hail, wind, snow), and then they have to predict the losses for the coming year. From these calculations and predictions comes your location-specific rate.

Example:

Let’s compare Omaha, NE to Lincoln, NE. Omaha has been hit with far more severe storms over the past few years, costing Omaha-insurers millions of dollars to cover the wind and hail losses. So you’ll find insurance rates are higher there than in Lincoln, simply due to more severe weather. Similarly, Omaha has higher rates of crime (vandalism, insurance fraud, arson) which increase the chance of loss to property. They also have a significantly higher population than Lincoln, increasing the chance of auto accidents. All of these uncontrollable factors add up to their higher location rate for Omaha than Lincoln's. 

Demographics: 

Similarly, actuaries divide the population between males and females, ages, education levels, marital status, years licensed, etc. They have access to statistical data that provide an insight into each of the different demographic segments, and how risky insuring each is. A good example is this: knowing nothing else, would you rather loan your car out to a sixteen-year-old boy, or a thirty-year-old mother? 

Financial Score: 

A little known rating tool of insurance companies are your insurance-specific credit scores. They have found that using your credit history is a good indicator of how good of a risk you are. While it may not be true for everyone, they have found that the higher the credit score, the lower the risk.

Legal Expenses:

Having a lawyer isn't cheap. Having them defend you in court isn't cheap either. After attorney fees, court fees, bonds, rewards, and penalties, that leaves a hefty tab to pick up.  Everyone remembers McDonald’s Hot Coffee lawsuit of 1994 that was initially settled for 2.86 million dollars. Insanely high awards are becoming more common, and all of the fees leading up to the final decision are increasing as well.

Litigation Frequency: 

Compounding the problem with Legal Expenses is the frequency of law suits. The lawsuits keep coming, and keep getting more expensive. We've gone from suing over coffee to suing for baking neighbors cookies. With an overly litigious society comes an even larger tab left for the insurance industry to pick up. 

Insurance and the Law of Large Numbers:

Insurance itself is simply having a large amount of people pooling their money together, and having the insurance company use that money to pay off people's claims. With the Law of Large Numbers, actuaries can accurately measure how many claims they'll have and how severe those claims will be. Then, along with their other calculations, they use that information to determine how much everyone has to pay.

Medical Expenses: 

Another trend is the ever-increasing prices of medical care. Going in to get that cough looked at can easily cost one hundred dollars, plus a thirty dollar prescription. So you can imagine what it would cost to fix-up a house guest that accidentally slips and breaks their arm.

Rebuilding Expenses:

The market value of your home or office building and the amount it would cost to replace it after a claim are very different values. Replacing or repairing a building costs far more than it did when it was originally built. These increased costs increase your rates.

"Hardened Market": 

Nationally, the insurance market fluctuates, and it has periods of being “Hard” and being “Soft”. A soft market occurs when an insurance company builds up enough profit that they decide to take market share by aggressively advertising and cutting insurance rates. In order to keep up, the remaining companies start doing the same. Eventually, you have companies with extremely low rates and companies who accept anyone, regardless of their claim history. That type of operation ends up with too many claims and poor profit margins for the insurance companies, so then they'll be forced to increase their rates and restrict the types of people/operations that they'll insure. That type or market is a hard market. (We are currently in a hard market)

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Myths About Auto Insurance--And the Truth

Myths About Auto Insurance

Please check out this link to Cars.com to check out their excellent list of common auto insurance misconceptions and find out the truth!

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Welcome!

Hello everyone, and welcome to our blog!

We're excited to use Blogger to keep you updated on what's happening with Copple and the insurance industry! We also post helpful articles that can help you protect yourself and others. Please subscribe and tell your friends.

You can find all of our posts on the right, under 'Article Archive'. You can also search through our posts using the 'Search This Blog' bar. Type in a subject you are interested in to see if we have material posted about it! We hope you find some articles that interest you!

Additionally, at the bottom of each article, there are post tags that allow you to search through all the articles quickly. So if you click on the 'Homeowner's Insurance' tag, all articles that pertain to Homeowner's Insurance will come up.

We hope you enjoy our blog!

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.