Does Your Hobby Need Insurance? Part 1

Your hobby may significantly affect your insurance needs. Hobbies often require a large investment in tangible property and may even create some legal responsibility to other persons or their property.

Hobbyists: Collectors or Enthusiasts

Hobbies typically involve either collectors or enthusiasts. A collector acquires property that especially attracts him or her. Examples include people who collect stamps, art, coins, autos, antiques, comic books, baskets, dishes, glassware, sports memorabilia, etc. An enthusiast also collects a certain type of property. However, the enthusiast acquires property in order to pursue a given, physical (particularly sporting or artistic) activity. Examples are hunters, musicians, painters, sculptors, cyclists, and enthusiasts of many types, such as fans of model or radio control planes, helicopters, etc.

With collectors, the focus should be placed on the nature of the property being acquired. With enthusiasts, besides attention to the property exposure, there should be equal emphasis on the liability exposure that is inherent in their activity.coins-collection

Property Coverage Needs Created By Your Hobby

Your special property should be properly insured. Most homeowner policies provide minimal protection for collectible property. Why? Items such as coins, stamps, antiques, guns, etc., are often fragile. Also, such property is very valuable in relation to its size. The value of collectibles kept in one room may be more valuable than all of the rest of your home’s contents. Regular homeowner coverage is not designed to handle high-valued property that is easily destroyed, lost or is vulnerable to theft.

Even when collectible property is eligible for a policy’s full coverage, this may not be enough. You may want your special property to be covered from more causes of loss than your family room couch. It may be worthwhile to buy an endorsement to add additional coverage for your collectibles to your homeowner policy. Depending upon the type and value of your collectibles, you may even have to consider specialty coverage which typically makes consideration for replacement cost and for property that appreciates in value.

Liability Coverage Needs Created By Your Hobby

If your hobby is more hands-on, then be sure you’re protected against any legal liability related to your activity. Ask yourself the following:

  • Are there any dangers associated with the hobby?
  • Does the hobby involve frequent travel to sites or meets?
  • Does the activity attract frequent visitors to your home?
  • Do you publish hobbyist newsletters or give advice to others?
  • Do you actively sell or trade property on or away from your home?
  • Does your activity involve equipment that’s inherently dangerous to others?

Get Serious About Protecting Your Hobby

Fortunately, many aspects of a hobby, especially legal liability, are covered by a homeowners policy. However, your activity may need special or even business coverage (see part 2 of this series). The way you spend your leisure time should be a happy diversion. Don’t let your enjoyment be interrupted by inadequate protection. Discuss your special interest with Smart Insurance today. Our professionals have a special interest in meeting your coverage needs and can walk you through planning and protecting your hobbies.

Flooding, Again

Natural catastrophes are events that occur on a massive scale and are beyond the ability of private insurers to properly  handle, such as the recent Hurricane Harveyflood-insurance-drop-in-bucket-01_medium. The flooding with Harvey was catastrophic. While flooding can affect a single home, floods tend to occur on a large scale, often causing substantial damages to dozens, hundreds or even thousands of homes during a single occurrence.

Because of their catastrophic nature, flood coverage in the United States is handled by an insurer of last resort; the federal government. Coverage for homes and businesses are available under the umbrella of the Department of Homeland Security; which oversees the Federal Emergency Management Agency.

In the years after the devastation caused by Hurricanes Katrina and Sandy, the government flood program has run into a number of major problems. The program is a financial black hole. The rates that are charged to policyholders are highly subsidized by taxpayers. The lack of sufficient premiums for the program is accompanied by other problems such as:

  • Adverse selection – coverage is purchased primarily by those with the very highest likelihood of loss
  • Communities that are supposed to help reduce losses by following building code strategies fail to enforce their laws
  • The trend continues of persons migrating to and building increasingly expensive homes in flood prone areas

However, another issue represents an ongoing problem. A small percentage of homes (less than five percent of homes insured under the program) cause a disproportionate share of losses. Technically they have been labeled Repetitive Loss Structures. The term refers to property located in areas that are highly prone to flooding and which have suffered several major losses within a given timeframe. Such homes were supposed to be subject to new flood program rules that required such buildings to undergo loss mitigation after a given number of losses. However, rather than owners being required to add features to minimize flood damage or to elevate the sites of the homes; they are repaired and/or rebuilt with no changes.

The flood program’s viability has been threatened by the fact that billions of dollars continue to be spent on, essentially, the same set of homes that undergo repeated losses. In essence, the flood program is being “flooded” by the lack of action and enforcement by individual property owners and their respective communities.

Being Prepared with a Personal Emergency Plan

Watching the news these days can be a stressful endeavor. Between natural disasters and the threat of man-made disasters such as war, being prepared takes on a new meaning.  And if you pay attention to the headlines after natural disasters, you’ll typically notice reports of persons stumbling around, seeking aid and at a lost for what to do. Often there is little an individual can do to control a situation, but any level of planning is preferable to doing nothing. That is the simple philosophy behind the personal emergency preparedness plan (PEP) aka Family Disaster Plan

PEPs give individuals and families a plan of action when a natural disaster (such as flooding, earthquake, serious windstorms, tornadoes, etc.) is eminent or should a severe accident (home fire, structural collapse, utility line or pipe breakage, etc.) occur.

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Generally PEPs should have the following objectives:

  • Identify safe areas during an emergency – what are safe areas of the home during storm or earthquake? – What safety rules should be followed in event of a fire or flood?
  • Escaping from area that is endangering family members – identify escape routes from every room (at least two)
  • Establishing means for all family members to re-unite – Determine a safe meeting place immediately outside the home, or a neighborhood location – make sure to have access to working radio to access emergency information
  • Ascertaining everyone’s safety – Check everyone for possible injury – apply first aid or contact emergency personnel as appropriate. Check residence for any dangers created by the emergency event, such as leaking utility lines, structural dangers, fire, etc.
  • Establish means to contact other family members and loved ones – have access to working phones, post emergency nos., training children on how and when to make emergency calls – make contact list of family members and emergency contacts (work and/or school numbers and e-mails)

Families should also consider issues that support a PEP, such as maintaining proper insurance, having an adequate first aid kit available and acquiring first aid training. Being aware of an area’s emergency plans and procedures as well as information on nearest emergency facilities are also helpful.

The above suggestions are merely plan guidelines. Please seek out competent sources (such as city, state, hospital and similar websites) for information on creating a detailed PEP for you and your loved ones.

Are You at Risk for Identity Theft and is There Insurance to Cover That?

ID theft is a form of fraud that has been around for as long as there have been dishonest people. It is a high-profile problem because technology has created many more opportunities for this crime. Credit cards, funds transfer cards; ATMs, debit cards, smart cards, wireless payments, slipshod business practices and the Internet have all combined to make identity theft a major problem for individuals and businesses.

ID theft describes any dishonest and unauthorized use of private information. In the past, the term rightfully described forgery or passing oneself off as another person to trick someone out of money and/or property. Today, it refers to an unauthorized party who secures goods, services, or other financial benefits by the fraudulent use of another person’s confidential information.

The favorite piece of information is a social security number. This information has routinely been used for gaining access to other private information such as driver’s history, credit information, bank accounts, loan information, credit cards, occupational history, military records, mortgage information, and investment accounts and so on. Having this critical bit of information can allow a criminal to use another party’s accounts, secure loans, and charge a host of goods or services; the list is only limited by the criminal’s resources and imagination

A complication of ID Theft is that it is a by-product of modern commercial life. Lenders, retailers, supermarkets, gas stations, airlines, travel clubs and everyone else have elevated cashless payments into the premiere way to do business, either live or electronically. This “ease” comes at great cost. As naïve as it sounds, business still operates on the assumption that everyone is honest. Few businesses have adequate safeguards to protect the information they collect on customers. Many businesses commonly mail out or electronically transit communications and solicitations that include private account information. It is common for electronic transactions to be transmitted through wireless networks and thieves are now able to intercept such data. Further, since businesses are often embarrassed that information has been stolen or compromised by hackers, many businesses keep such invasions secret or substantially delay reporting incidents to authorities and to their customers.

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In light of business practices and attitudes, it’s basically up to the individual consumer to guard against ID theft. Though, in recent years, business best practices and government regulations are ramping up security activities. See the following for tips on guarding against it.

Unfortunately, even as instances of ID theft grow, insurance is not a particularly important anti-ID theft tool. The type of loss is not something that an auto, home or similar insurance policy may be adequately adapted to handle. While homeowner policies do typically protect against credit card loss, coverage is usually just for the amount that falls below the minimum liability imposed by federal law (currently $50 per card). The serious harm suffered by ID theft victims are the costs associated with clearing up the aftermath, such as correcting one’s credit history and straightening out various accounts and records. This effort routinely takes months and hundreds to thousands of dollars in legal fees.

More insurers offer coverage for ID theft. Typically, the coverage reimburses legal fees or paying costs related to dealing with third parties to correct records. The most effective protection is for individuals to prevent becoming ID theft victims. Following are some suggestions:

  • Keep your account information and Social Security Number (SSN) safe. One idea: keep home records in a locked file.
  • Keep details about your various account numbers in a safe place so you can rapidly take care of stolen or lost cards.
  • Be very careful with on-line transactions. Is the Website you use secure?
  • Find out the privacy guidelines and safeguards of the businesses and parties you deal with.
  • Make sure that you verify that websites for online transactions are legitimate
  • Use password protection on smart phones and never leave such devices unattended
  • Challenge those who request an SSN. Why is that information needed? Can some other information be used as an alternative?
  • Think about buying and using a paper shredder. Many information thieves steal mail by going through garbage.
  • Write companies who send unsolicited charge cards and request removal from their mail list.
  • Check bank and business records thoroughly for irregularities. Track down the reason for any unusual transactions or entries.
  • Ask stores that use credit cards if they transmit the information with a wireless network. If yes, ask what safeguards they use to prevent airwave theft.
  • If you ever have a charge card transaction involving an imprinter that uses a carbon set for copies, ask for the carbon or watch the clerk destroy the carbon before it’s thrown away.
  • Collect mail from mailboxes quickly and don’t put outgoing mail in your own mailbox. These practices give thieves fewer opportunities to fish for checks and private information.

Remember that these are just a few suggestions. Taking steps to minimize the chance of ID theft is a lot of work. That is a major reason that ID theft will continue to be a problem to individuals and businesses. Call Smart Insurance to discuss your risks and options for coverage.

Farm and Ranch Coverage is Unique

Farms and ranches here in central Kansas differ from other business operations since, at least with small to medium operations, the owner both conducts his business and lives with his entire family on the same premises. Therefore, a farm or ranch has a combination of commercial and personal loss exposures that must be properly insured.

One coverage method might be to use commercial policies to handle the business needs and personal (auto, home, recreational vehicle, etc.) policies to tackle the personal needs. However, such a combination of policies would be awkward and expensive. Further, the method would allow a large number of coverage gaps and overlaps. A much better approach would be to use a product that satisfies all potential coverage needs in a single policy.

Farm and ranch

The differences among various farm and ranch operations certainly complicate the task of finding proper coverage. Successful farmers and ranchers tend to be specialists, yet are flexible in order to run efficient operations. Fortunately, farms and ranches have a number of elements that are common to all operations, so products have been developed for this challenging market.

One standard farm program uses a cafeteria approach to offer coverage. The owner of a farm or ranch operation may choose to have only Farm Property and Farm Inland Marine Forms to address the property coverages, but use the Commercial General Liability Forms for the liability coverage exposures. They may choose to use the Farm Umbrella or a Commercial Umbrella with a Farm Endorsement. A Homeowners policy may be used on the dwelling but a Farm property coverage form on everything else.

Options are an important feature of a good farm program. The following, basic coverages are widely available:

  • The Farm Property Policy – covers farm-related buildings (residence, barns, sheds, silos, etc.)
  • The Farm Inland Marine Policy – covers farm-related machinery and equipment
  • The Farm Liability Policy – protects against damage or injury caused by farming/ranching activities
  • The Farm Umbrella Policy – provides a higher level of liability protection
  • The Farm Combination Policy- offers a way to bundle stand-alone farm/ranch coverages into a single package

Call Smart Insurance today and we can assist you with developing an effective farm and ranch insurance plan.

Insurance Perils- Part 3

This is part three of a three-part discussion on different causes of loss. Call us today at Smart Insurance to make sure you have the best service and best coverage in Central Kansas.

Vandalism and Malicious Mischief–Vandalism and malicious mischief are generally cited as a single peril meaning willful or malicious physical injury to or destruction of property. “Vandalism” means willful destruction or defacement of things of beauty. It implies general hostility to nice things and satisfaction from their destruction.

“Malicious mischief” implies damage to property motivated by hatred or spite. It is not associated with beautiful things, but rather with utilitarian things such as machinery and business buildings and their contents. Acts leading to this kind of destruction are premeditated and include those arising from resentment and ill will during labor disputes.

Accidental damage is not covered under the “vandalism” peril. Coverage applies only when the damage is intentional. The vandalism and malicious mischief peril does not include loss to property on the “residence premises” if the dwelling has been vacant for more than a number of consecutive days immediately before the loss (the period may vary by policy). A dwelling being constructed is not considered vacant. Furthermore, the vandalism or malicious mischief peril does not include loss by pilferage, theft, burglary or larceny.

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Damage by Burglars–Damage caused by burglars refers to the damage caused during a break-in and not to the actual stolen property. For example, if two burly burglars attempted to remove a grand piano from the insured residence, the actual damage to the walls, floors and doorways caused by the piano being moved would be covered. The actual loss of the piano would not. Typically there is no coverage for loss to property in a building that has been vacant for more than (a specified number) of days immediately before the loss.

Falling Objects–This peril covers damage to the exterior of the insured premises and its contents if the falling object first damages the roof or exterior wall. Damage caused by any falling object is covered, including falling trees; however, damage to the falling object itself is not covered. This peril does not include loss to outdoor radio and television antennas and aerials including their lead-in wiring, masts and towers, outdoor equipment, awnings and fences.

Weight of Ice, Snow or Sleet–Damage to the insured building and/or contents due to the weight of ice, snow or sleet is covered. This coverage excludes loss to certain property, such as: awnings; fences; patios; swimming pools; foundations; retaining walls; bulkheads; piers; wharves; or docks.

Accidental Discharge–Damage to insured property caused by accidental discharge or overflow of water or steam from within a plumbing, heating, air-conditioning or automatic fire protective sprinkler system or household appliance is covered. Coverage includes the cost of tearing out and replacing any part of the building on the residence premises necessary to repair the system or appliance from which the water or steam escaped.

Damage caused by continuous or repeated seepage or leakage to the insured property is not covered; the cause must be sudden and unforeseen. Damage caused by freezing is not covered under this peril. Further, this type of loss is not covered if the dwelling has been vacant for more than (a specified number of) days immediately before the loss. A dwelling being constructed is not considered vacant.

Sudden and Accidental Tearing Apart–Sudden and accidental tearing apart, cracking, burning or bulging of steam or hot water heating systems, air conditioning systems or fire protective sprinkler systems or appliances for heating water is covered. The emphasis on this peril is that damage caused by the steam, hot water and related systems must be sudden and accidental as opposed to gradual and foreseen.

Freezing–Loss caused by the freezing of a plumbing, heating, air-conditioning or automatic fire protective sprinkler system or of a household appliance is covered. This peril does not include loss on the residence premises while the dwelling is vacant, unoccupied or being constructed unless the insured has taken reasonable care to maintain heat in the building or shut off the water supply and drain the system and appliance of water.

Electrical Damage–This peril involves damage to insured property as a result of sudden and accidental artificially generated electrical current. Tubes, transistors and similar electrical components are not covered.

Check with Doug, Kyle or Brad at Smart Insurance to see what perils are covered in your policies. Make sure to use the best agency around Central KansasLogo and get the best service and best coverage from Smart Insurance. Give us a call today at 785-263-1920.

Insurance Perils- Part 1

If you have ever read the insurance policy for your home or rental property, you probably ran head-first into the terms “hazard,” “peril,” or “cause of loss.” These are events that are covered by your insurance. This three-part article explains these terms.

Fire–Fire has been defined by the courts as “combustion sufficient enough to produce a spark, flame or glow.” By definition, a fire is not smoke or charring. A fire must produce a spark, flame or glow. And not all fires are covered under the fire peril. Over the years, the courts have distinguished between “friendly” and “hostile” fire. A friendly fire is one that burns where it was intended to burn: a flame on a gas stove; a fire in a fireplace; fire in an outdoor grill.

A hostile fire is one that burns where it was not intended to burn: the kitchen drapes; the rug by the fireplace; a tree near the outdoor grill. Only direct damage caused by hostile fire (including smoke from a hostile fire) is covered by the fire peril.

Lightning–Lightning is “naturally generated electricity from the atmosphere.” Damage covered by the lightning peril may be the result of lightning itself or the result of a fire caused by the lightning.

With regard to lightning, there is rarely a coverage problem for direct strikes. The other common cause of lightning loss is the surge of electricity, typically caused by lightning striking power company equipment. Appliances in a house can be damaged by the electrical surge. The cause must be established for coverage to apply. A surge from malfunction of power company equipment, or a short circuit, would not qualify.

clouds and thunder lightnings and storm; Shutterstock ID 123174094; PO: website; Job: hillary Leo; Client: web

Explosion–In basic or stripped-down policies, explosion refers to any explosion that occurs within a structure that is covered by a given policy. However, several types of explosive events are usually excluded such as:

  • bursting of water pipes
  • electrical arcing
  • explosions of steam boilers or pipes owned, leased or operated by the insured
  • rupture or bursting of pressure relief devices

In more comprehensive polices, explosion also applies to events that originate externally.

Windstorm–The peril of windstorm involves damage caused by direct action of the wind, including high winds, cyclones, tornadoes and hurricanes. Windstorm coverage primarily covers wind damage to a building’s exterior, but will also cover interior damage if the wind breaches the exterior (causes a hole or opening in a wall or roof).

Winds must reach sufficient velocity to have caused direct damage at more than one location to establish a “windstorm” loss. However, leakage through an aging roof during heavy rain is not a basis for a windstorm claim. The windstorm peril does not cover loss to the following property when located outside of the insured building: awnings, signs, radio or television antennas or aerials including wiring, masts or towers; canoes and rowboats; lawns, plants, shrubs or trees.

If you have specific questions about your policy, contact Kyle or Doug at Smart Insurance at 785-263-1920.

Smart Insurance Included in IIABA’s Best Practices Study

Smart Insurance is part of an elite group of independent insurance agencies around the United States participating in the Independent Insurance Agents & Brokers of America (IIABA) “Best Practices” Study Group.

Each year since 1993, IIABA and Reagan Consulting, an Atlanta-based management consulting firm, join forces to study the country’s leading agencies in six revenue categories. The agencies comprising the study groups are selected every third year through a comprehensive nomination and qualifying process and awarded a “Best Practices Agency” designation. The selected “Best Practices” agencies retain their status during the three-year cycle by submitting extensive financial and operational data for review each year.

“Smart Insurance is both honored and excited to be named ‘Best Practices Agency’ for 2016” said Doug Smart, President and CEO of Smart Insurance. Doug quote

More than 1,800 independent agencies throughout the U.S. were nominated to take part in the annual study, but only 254 agencies qualified for the honor. To be chosen, the agency had to be among the top-performing agencies in one of six revenue categories.

The agency was nominated by either an IIABA affiliated state association or an insurance company and qualified based on its operational excellence.

The Best Practices Study was initiated by IIABA in 1993 as the foundation for efforts to improve agency performance. The annual survey and study of leading independent insurance agencies documents the business practices of the highest performing agencies and urges others to adopt similar practices.

The Smart Insurance agency was founded in 1931 and can offer insurance products from a number of different companies including Alliance, Allstate, Buckeye, Continental Western, EMC, First Comp, Kansas Mutual, Liberty Mutual, Marysville, QBE/NAU, Progressive, Safeco, United Fire, and Upland.

 

Make Sure the Ooohs and Aaahs Over July 4th Fireworks Don’t Turn Into Ouch

The July 4th holiday is coming up and many are already planning on how to celebrate Independence Day. Many of those celebrations will involve fireworks. Make sure those celebrations aren’t ruined by injuries or burns due to those fireworks.

According to the U.S. Consumer Product Safety Commission, eight people died and approximately 11,400 were injured badly enough to seek medical treatment because of fireworks incidents in 2013. Fireworks are also responsible for thousands of home fires each year.

The Safety Commission’s study also said 36% of injuries occur to hands and fingers and 19% are eye injuries. More than 50% of injuries reported are burns.

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(Graphic courtesy of the U.S. Consumer Product Safety Commission.)

How can you keep your family safe, while still being able to enjoy the festivities? The following are some tips to keep you in the celebratory mood, and out of the emergency room.

  • Obey all local laws regarding the use of fireworks.
  • Know your fireworks; read the labels and performance descriptions before igniting.
  • Never allow young children to play with fireworks.
  • Always have adult supervision when using fireworks.
  • Never place any part of your body directly over a fireworks device when lighting the fuse.
  • Never re-light or pick up a firework that has not ignited fully or one that did not go off.
  • Keep a bucket of water or a garden hose nearby.
  • Use fireworks outdoors in a clear area away from buildings and vehicles. Also be aware of shooting off fireworks during times of high fire danger. Never light fireworks near a field that may catch on fire.
  • Dispose of fireworks by wetting them down and place in a metal trash can away from any buildings or combustible materials.
  • Always make sure all bystanders are a safe distance away from the display.

Sparklers are very popular and are usually seen as “harmless” and are often given to children to handle. They are more dangerous than most people realize. Parents need to be aware that most sparklers burn at 2,000 degrees. Sparklers can ignite clothing and can cause very severe burns very quickly of not handled properly.

It’s very important to know your local laws regarding fireworks. Most counties and cities have permits to be able to legally shoot fireworks off and are limited to a certain number of days surrounding the holiday. Fireworks are illegal in other municipalities. Below are links for the Dickinson County area regarding permits and fireworks information along with contact information for Abilene, Chapman, Solomon and Salina.

Dickinson County- http://ks-dickinsonco.civicplus.com/index.aspx?NID=521

Abilene- http://abilenecityhall.com/index.aspx?NID=16

Chapman- http://chapmanks.com/city-government/city-departments/

Solomon- http://solomonks.citycode.net/index.html#!articleFireworks

Salina- http://www.salina-ks.gov/fireworks

The July 4th holiday can be a very festive and fun time for the whole family. But be sure to review the safety tips before lighting up the sky with fireworks. You want to avoid any injuries, fires and especially fatalities. Be a SMART insurance customer and enjoy your holiday safely!!!

Sincerely,

The Smart Insurance Staff