Is Your Home Winter Ready? – Part 3

In this part we discuss a different hazard of the winter season.

Fireplace, winter hazardFiring Up A Hearty Loss

Do you own a fireplace, wood-burning stove or portable heater? What about a gas or an electric furnace? If so, you need to take steps to make sure that they are safe and used properly. This should be done well before the arrival of the heating season.

Have your furnace inspected to make sure that it will operate properly in cold weather. Clean filters and vents will go a long way to keep your furnace a source or warmth rather than a cause of a fire loss. An inspection should also make certain that your furnace is not a creating a dangerous carbon monoxide buildup.

Fireplaces and wood-burning stoves should also be inspected and, if necessary, thoroughly cleaned. Creosote, a tar-like byproduct of burning wood, builds up in chimney and stove flues very quickly. Even a single wood-burning season could produce enough buildup to create a fire or severe smoke hazard. Don’t do the inspection yourself. It’s worth the cost to have a professional inspect and clean your fireplace or stove. Also, make sure that you don’t burn softwood or paper. Using anything other than hardwoods exposes your fireplace or stove to quicker creosote buildup (softwood) or more intense heat (paper), which could clog or contribute to cracking a flue or liner.Home fire risk increase in winter

Be very careful with the use of portable heaters. Depending upon the type, they can be prone to malfunction or could be a hazardous source of burns, especially for children. Further, many types can be easily tipped with the combination of heat source and fuels, creating a serious fire hazard.

Finally, make sure you have fire/smoke and carbon monoxide detectors properly installed and in good working order. Test them and put in new batteries. Small expense, big payoff.

As always, insurance professional is a valuable source of safety and insurance information. Don’t hesitate to contact an agent to discuss your questions. If you haven’t had the chance, please be sure to read parts one and two of “Is Your Home Winter Ready” which discusses other winter concerns.

 

            Return to Section 1                                                           Return to Section 2

 

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What’s your best insurance analogy?

InsuranceI would be very interested in how you answer the following question.  So if you have the time to comment, please leave a reply at the end of this post, including the season, month or holiday as well as insights why?  Just curious!

Question:  What’s your best insurance analogy?

For me the answer is easy.  It depends on the current season.  Of course, I am an insurance agent, which means I can draw a correlation to insurance to everything.  That includes the bologna sandwich I am eating.  However, this time of year there seems to be an almost endless list of things to associate with insurance.  Below are just a few:

  • Fall is the time of year that we associate with change and mystery. Insurance don't be afraid of insuranceprotects us from the uncertainty that results during periods of change. Fall is also associated with a period preparation and protection. Insurance is no different.  We prepare for less desirable times by purchasing insurance.
  • Halloween is a time that most of us associate with fear. Ghost, goblins and all sorts of creepy critters running around asking us to fork over a few sugary treats. By doing as requested we avoid and unexpected and frightening trick.  That certainly sounds a lot like risk transfer to me.
  • Haunted Houses, we all know they’re not real, but the can scare even the bravest soul. Insurance agents have a bad rap. I am not going to say that it isn’t earned.  There are a number of agents out there that are similar to the haunted houses; they just aren’t the real thing.  Finding a good agent can and will reduce many of the fears that you may have regarding insurance.
  • Peanuts, It’s the Great Pumpkin. Every year around this time we all cringe as CharlieInsurance Sales Brown once again put’s his trust in Lucy to hold the football. Every year, in spite of severe ridicule, Linus forgoes the big Halloween sugar score.  Waiting in the pumpkin patch for a no show, the Great Pumpkin.
  • In most transactions, the buyer receives some degree of immediate satisfaction.  Insurance is not that way at all.  In fact, it is one of the only things that we as consumers ever buy that we hope to never use.  As a result, insurance consumers can in many regards be compared to Charlie Brown and Linus.  They have both made decisions based entirely on trust.

Each of the above associations are valid, but it is the Peanuts analogy that rings the loudest. Insurance shouldn’t be about selling, Insurance is about trust.  Think of Lucy as being the insurance agent.  Sure she’s a salesperson, a salesperson with a bad memory.  She will do everything in her power to convince Charlie Brown to trust that she will hold the ball.

Insurance is something you are required to have or should have.  Maybe you don’t know you need it yet, but if you need it then it’s not selling, it’s educating.  Everyone knows that Charlie Brown is going to kick the ball.  Charlie knows he’s going to, even though she’s not there, the little red-haired girl knows, and yes Lucy knows that Charlie Brown is going to try and kick the ball!

So if Lucy knows that Charlie Brown is going to kick the ball, why does she have to use the full-blown sales pitch?  Seriously, she doesn’t have the best reputation to start with.  So why not just shoot straight?  High-pressure sales must be addictive.  Just like Lucy, it seems that there continue to be too many insurance producers trying to sell something that can only be earned.  Trust!

 

So if Lucy is symbolic of the fast-talking hard selling insurance agent, they who should be associated with the insurance consumer.  A case can be made for both Charlie Brown and Linus.  Both characters display faith that is foolish.  This is very similar to what insurance consumers are doing.  Savvy consumers are asking questions aimed at obtaining adequate coverages at a fair price, while the foolish are lining up to be sold.

Linus also displays a firm commitment and faith in his beliefs.  Once again he forgoes the annual Halloween candy score while failing to prove his theory about the Great Pumpkin.  From this standpoint Linus is similar to consumers that refuse to seek advice from multiple sources.  Just as Linus’ belief in the Great Pumpkin left him with no candy; insurance consumers may be confronted with paying too much for insurance, being sold inadequate coverages, or both.

What is insurance? Part 2 of 2

Understanding InsuranceInsurance

 

 

What is insurance?

 

 

Practice Risk Avoidance at your own risk

Individuals and business also practice a direct from risk avoidance.  Suppose you sold your car and committed to using public transportation.  Without a car, you have successfully eliminated your primary automobile liability exposure.  And without the risk, you are no longer required to carry the state-mandated insurance.

Businesses might opt to outsource specific functions allowing them to eliminate multiple risks ranging from property to casualty to workers Risk Avoidance at your own riskcompensation.  Altering production methods, implementing automation, and revising policies and procedures are just a few avenues where businesses can eliminate specific risk.

Risk avoidance is not a practical solution for all exposures, but it can be a very cost-effective solution when implemented correctly.  Those practicing this method must realize that risk avoidance may not be as simple as it appears.  You may have noticed in the auto liability example above, the phrase “primary exposure.”  This suggests that there continues to be potential exposure even after the sale of the vehicle.

You don’t have to own a vehicle to drive.  People rent cars all the time.  While it is hard to imagine a scenario where you could rent a vehicle without liability insurance if you did you would be exposed.  A more likely scenario would be your exposure in the event you borrowed a friend’s car. Coverage stays with the auto, so as long as you had permission from your friend to drive their vehicle, the policy covering the car would protect you.

Borrower Beware!  What auto liability limits does your friend have?  Did you ask?  Does it matter?  Let’s assume that the vehicle has the minimum coverages allowed by your state.  For us, that would be $25,000 for bodily injury for any one person, capped at $50,000 if multiple individuals are injured and $25,000 for property damage.

As the driver of the vehicle, you are potentially liable for damages that exceed the vehicles policy limits.  In this scenario, the vehicle coverages are limited, placing you in a position with significant exposure.  In your past, this wasn’t an issue.  When you owned an auto and had insurance, your policy extended liability protection to you even when it wasn’t your car.  Your decision to practice risk avoidance has triggered additional and perhaps unforeseen exposures.

There is an old saying, “You’re picking up pennies in front of a train,” or more simply said, you’re taking too much risk for only a modest reward.  If you practice risk avoidance, you better know the train schedule.

 

Risk Reduction; Modifying exposures for everyone’s benefit

Reduce riskWhat is risk reduction role in risk management?   Unlike the other three methods, risk reduction is not a stand-alone method.  It is more akin to a complimenting strategy or modification.  Examples of risk reduction would be businesses utilizing sprinklers, keeping parking lots and sidewalk free from ice and snow, or preemptively addressing employee actions that put an organization at risk.  Individuals performing regular maintenance on their home or auto are practicing risk reduction.  Installing a security system or erecting a fence with a locked entry gate around a pool are also examples of individuals utilizing risk reduction techniques.

When combing risk reduction methods with risk retention, the results directly benefit the individual or business.  These actions may have one of two outcomes.   The installation of a sprinkler system is an action that results in lessening the loss.  Steps taken to reduce risk can also lower the probability of loss.  The previously mention action to address snow and ice removal would most likely reduce the potential for a loss.

 

Don’t Fear the Loss Control Man!

The role of Loss Control can be confusing.  Insurance companies can be viewed as risk management consultants and as risk transfer solutions. However, a fine line exists between providing beneficial risk management counseling and becoming a deterrent to business.  The action of an insurance companies loss control efforts can easily gauge the company’s success in balancing the two roles.  When this group with providing risk reductions techniques for the insured they become a catalyst for change that becomes genuinely value added for both the insured and the insurer. Loss Control units aimed at creating awareness of potential risk reduction opportunities will have a positive financial impact on the insurance company, which should, in turn, have a positive effect on the insured’s cost of risk management.

When you buy an insurance policy, you are purchasing much more than a risk transfer agreement.  The insurance policy today has evolved to incorporate many aspects of risk sharing, risk retention and indirectly risk avoidance.  The final method of risk management, risk reduction also comes into play.  Acting primarily as an incentive, or a chance to reduce the overall cost insurance.

 

 

 So what is insurance?  Today, insurance is a contract/relationship between an insured and an insurer where the insurer utilizes modern risk management tools and encourages proactive steps by the insured which will lead to an increasingly efficient process of indemnifying the insured against specified peril(s). 

Access Part 1 of this series 

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What is insurance?


Insurance      Understanding Insurance

 

 

 

 

 

Insurance

Some people think that insurance is risk management.  But industry professionals will argue that insurance coverage is only one component of the risk management process.  What’s the difference between the two?  Risk management is a discipline used to identify, evaluate and address specific risks.  A risk management plan will utilize one or more of the four risk management methods.

The Four Risk Management Methods

     Risk Avoidance                  Risk elimination

     Risk Reduction                  Reduce

     Risk Sharing                       Transfer, Insurance

     Risk Retention                   Do Nothing, Self-Insure

 

So what is Insurance?

If insurance isn’t risk management, then what is it?  Insurance is commonly considered to be a mechanism for risk transfer.  If you look up the word insurance, you are apt to find the words “transfer of risk” or “risk sharing.”  So insurance is risk sharing or risk transfer?  Yes.  But it’s more.

Insurance is a mechanism that can be used to transfer risk from one party to another. In exchange for a premium, insurance companies will agree to provide indemnification.  Indemnification, or the protection against loss, can be purchased to mitigate a large number of exposures.  Insurance products exist to transfer both property and liability risks.

 

Insurance Today

“Ah, the joys of homeownership,” words muttered regularly by homeowners.   Homes generate problems.  Many associated with either property or casualty exposures.  Typically these risks are transferred to an insurance company through a homeowner’s policy.  In a pure form of risk transfer, the insurance company would make the insured whole in the event of a specified loss.  But most of us don’t transfer all the risk.  The amount we recoup will be the value lost less a deductible.

Most property policies have a built-in risk retention mechanism, the deductible.  On the surface, this may seem to be negative.  But before making these assumptions consider why it’s there.  The deductible is in fact risk retention.  By retaining the first $500, $1,000 or more, the insured can significantly lower the cost of insurance.  Without deductibles, insurers would become inundated by the number of small claims.  Smaller claims would also adversely impact administrative cost markedly.  Finally, without a deductible, insurance company’s exposure to fraudulent claims would likely skyrocket.  Without a deductible, insurers would face mounting costs that could only be offset by raising premiums.

At first blush, deductibles appear to work to the benefit of the insurance companies.  Deductibles no doubt benefit insurance companies.  But after considering the implications, it would seem that consumers are reaping the most value.

 

Today’s insurance contains a risk retention component

 

 

When insurance companies avoid risk it benefits the company and the consumer

You may have learned from experience that insurance companies will not provide coverage in some instances.  Insurance companies don’t want all risks.  By insuring only the risk that they prefer, they are practicing risk avoidance.  Trampolines, pit bulls, fireplaces, and log homes are good examples of risk that many insurance companies avoid.

Insurance companies underwriting higher risk exposures are expected to have increased losses.  What does this mean for the insured?  That’s hard to say.  It doesn’t mean that you can’t get insurance.  You most likely can.  It does mean that you will have fewer options and in most cases, reduced competition leads to higher costs.

 

Rejecting certain risk helps insurance companies, but how does it help the consumer

The practice of risk avoidance improves insurance companies underwriting results.  In theory, insurance companies that can successfully manage their risk are more likely to have higher profitability and faster capital growth.  As the company’s capital grows, so does the need to write additional insurance.  If enough insurance companies are experiencing the same results, competition will increase. The increased appetite for risk will ultimately impact the insured, by putting downward pressure on premiums.

 

Trickle-down risk management

The benefits from risk avoidance can be direct or indirect. The risk avoidance techniques used by insurance companies have both a direct and indirect effect. As mentioned, the direct actions put downward pressure on the cost of insurance. These practices can passively encourage consumers to avoid unacceptable risks. Over time, sound risk management practices trickle-down which further reduce risk management costs.

 

Access part 2 of this 2 part series which will be published on 9/20/18 

 

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TruePoint Insurance brings you Kentucky High School Football

 

 

 

 

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Friday Night Football in Kentucky

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Perils of Tailgating

High School FootballAutumn is noted for the color and delight found in the changing of the seasons! But change also arrives in the form of the colorful masses that gather and celebrate…..around football stadiums. It happens around high school games on Friday nights and on crisp cool Saturdays around colleges and universities. It happens on Sunday afternoons, Sunday Nights, Monday Nights and all the other times that they squeeze in days and times for professional football. From amateur to professional contests, upwards of 50 million people annually enjoy tailgating.

Tailgating refers to the custom of arriving to games many hours before the scheduled event’s beginning, Tailgating, reducing the risklowering vehicle tailgates and enjoying food, drinks and recreational activities! Tailgating began simply enough with socializing among folks who came to game locations early enough to secure scarce parking. The socialization was enhanced by food and drinks, then the events became more elaborate involving bring your own pitch-ins, barbecues, concerts, recreational sports, etc.

  • Sadly, most activities that involve large crowds are too frequently accompanied by various dangers. Of course, it makes sense to reduce the chance of injury or loss by taking precautions such as the following:
    Avoid using breakable containers for beverages or for any food service items. Dropping items is unavoidable and glass shards can cause serious injuries during a time where getting quick medical assistance can be difficult
  • Carry a well-stocked, comprehensive first aid kit, especially to handle burns, dehydration, sunburns, cuts, and bruises
  • Restrict games and activities to larger, clear areas that minimize the chance of injury to non-participants
  • If games or activities are near high-traffic areas, use spotters, persons situated to warn those passing by such areas.
  • Be very careful with cooking areas, never leave them unattended, keep them away from pedestrians (especially children) and be sure to have safety gear, such as fire extinguishers
  • Keep an eye out for thieves who often target unlocked vehicles for valuables

It is also very important to make sure that you are properly insured to handle possible damage or loss of your property. It is far more important to carry insurance coverage to protect you for injury or loss you may cause to others. Tailgating can be enormous fun, but with great fun comes great responsibility. Protect yourself and others.

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Spencer County Bears 2018 Football Schedule

Spencer County Bears

 

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Insurance Companies Working Behind the Scenes Making the World a Safer Place

TruePoint Insurance Logo

 

 

 

The Greatest Tragedy of our GenerationThe Greatest Generation.  Triumph over adversity

I’ve heard that tragedy defines us.  I disagree with that; it is how we as a group rise and address adversity that defines us.  An excellent example is my grandfather’s generation.  They’ve been referred to as the Greatest Generation, a fitting accolade to the group that defended our freedom and won WW II.

What is the great tragedy of our generation?  Is it global warming?  It could be the rise of terrorism!  While I can’t answer the question, I do know that school shootings and other active shooter related incidents have to be somewhere in the mix.

Tragedy is often the precursor of innovation.  It certainly was during WW II.  It also drives changes and the creation of new products in the insurance industry.  The insurance sector exists because individuals, businesses and other entities have a need to transfer risks to another party.  Increasing active shooter incidents in recent years and the corresponding legal actions have created demand for products that can provide financial protection.

The insurance industry is actively working to develop products that will protect businesses, schools and other government entities from gaps in current insurance policies.  Professional liability policies were not designed to protect against active shooter risk or anything similar to that.

So what can be done and how do we do it?  Products have been created and will continue to improve that will offer financial protection to entities that have been accused of failing to adequately prepare.  But there is more.

Insurance companies seldom get the respect that they deserve; however, behind the scenes they are making a difference.  The insurance industry is much more than a financial risk transfer vehicle, insurance companies are the leaders in making our world a safer place to leave.  While most of us will never understand the significance, the insurance industry will lead America’s efforts as we deal with the risk of loss of life, mental trauma, and financial loss associated with active shooter incidents.

How?  Who understands risk as well as the insurance industry?  The better we understand risk exposures, the better we can prepare.  The insurance No!  Stop!! Now!!!industry will over time and after numerous assessments develop standards that when deployed will ward off many would be active shooters.  They work for insurance companies will also work to reduce the after effects and of course provide financial relief.

The insurance industry is working to make our world safer.  If you are interested in learning more about the insurance industries role in managing active shooter risk you are more than welcome to contact us:

 

by phone (502) 410-5089

 

by email: info@truepointgroup.com

 

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Employee or Independent Contractor? – Part 2

w-2 or 1099In part one of this article, we discussed the situation of properly classifying workers. In this part, we discuss a method for making that distinction.

In the U.S., common law helps determine worker status. Some confusion is created by improper focus on a given work relationship. Instead of a narrow focus, proper worker classification is a result of looking at the total work situation in which an individual performs a job. Essentially, classification is a matter of control. Specifically, consider the following areas:

Behavioral – Who has primary control over how work is done, the business or the worker?

Financial – Who controls how a worker is paid, how are expenses handled, who is responsible for supplies and tools that are needed for work?

Relationship – What defines the work relationship, manner of pay, what benefits are in place, does worker have paid vacation and what is the nature of the relationship?

It’s important that all the above factors be considered when evaluating a worker classification.

Evaluation should be performed on a simple scale. The greater the control by a given party determines how to make a classification. If a business exerts the greater overall control, the worker is an employee. If the individual worker exerts the greater overall control, the worker is an independent contractor.

Practically speaking, areas of control involve the level of freedom a worker has in getting tasks done, but Tax Law Rulesanother element is the nature of the work. Some businesses want to minimize both their tax liability and legal liability (and related payroll costs) by use of independent contractors. However, the situation can’t be a façade. If workers have an ongoing relationship with the applicable business because the work is normal for that business, likely the work involves employees. When the work is unusual for the given business and lasts for a short period, especially when it involves specialize labor or skills not existing in that business, the work likely involves independent contractors.

If a business or a worker is unclear over a classification, help is available from the IRS. Specifically, a work situation description can be submitted to the IRS to get its interpretation. Having that department’s help (and documentation) for a situation could be quite helpful in dealing with both tax and insurance matters.

 

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COPYRIGHT: Insurance Publishing Plus, Inc. 2018

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.