Insurance Insights: The Cleary Insurance Blog
The Cleary Insurance blog covers insurance, risk management, and financial planning for New England businesses and individuals. Our team of licensed advisors and specialists publishes regular articles on commercial and personal coverage, employee benefits, life and financial planning, and insurance compliance. Browse recent articles below, or use the category filters to find topics relevant to your business or personal situation.
Why Risk Transfer for Landlords?
Presented by: Christopher F. Hawthorne, CPCU, CIC
A property owner’s Insurance premiums can be driven upward for rental properties due to loss history. The insurance policy provides money to rebuild damaged property, to defend in a liability suit, to pay settlements as well as take care of employees when they are injured on the job. These combined costs are labeled as losses.
An insurance loss has the potential of driving insurance premiums up for four or five years as well as limiting which carriers will wish to work with a property. When an insurance carrier is determining what it will offer in terms of premiums, it will incorporate the prior four years of losses as part of the pricing mechanism. The fewer and smaller the losses, the more carriers will be interested and the lower the premiums can be offered.
An available risk management technique to lower the size of a property owner’s losses arising from the rental of that property is the inclusion of Risk Transfer language in the lease. Risk Transfer in the lease can protect the landlord’s insurance program and future premiums by transferring the cost of a loss to the tenant’s insurance program.
The major types of protection in risk transfer are:
Hold Harmless-Tenant holds Landlord harmless for a loss when Tenant has caused part or all of a loss.
Indemnify– Tenant agrees to reimburse Landlord for damages (settlements and judgments).
Defend– Tenant agrees to pay the cost to defend Landlord after a loss if Landlord is named in a claim or suit.
Additional Insured Status– Tenant provides coverage for Landlord under Tenant’s insurance program.
Primary Coverage-Tenant states that it’s coverage is primary should Landlord be brought into the suit.
Non-Contributory-Tenant states it’s policy disallows Landlord’s policies from sharing in the loss.
Waiver of Subrogation-Tenant disallows its’ insurance company from pursuing Landlord’s insurance carrier for any amount due to Landlord’s negligence that may have contributed to the loss.
In short, Landlord is highly protected by Tenant through contractual agreement in the lease as well as the tenant’s insurance program.
While not seen in all leases, the above language is quite commonly used and is a very easy risk management tool for a Landlords to implement. The rewards are lower losses, a well insured tenant and a greater number of insurance carriers available to offer coverage / lower future premiums.
It is critical to involve your attorneys as well as your insurance agents when drafting a lease. As always, a team approach and communication will put everyone is a better position to succeed and survive a loss.
Cloudy With a Chance of… Flooding!
Flood insurance has been an afterthought in most Americans’ minds when it comes to insuring property. Well, folks…the time has come for us to re-think the way we view flood insurance-more importantly, how we define and imagine flood. Here are some quick flood facts:
- Just one inch of water in a home can cost more than $25,000 in damage.
- Floods kill more than 100 people annually, which is more than any other single hazard.
- An individual flood claim averages more than $20,000.
- Without flood insurance, the only option for assistance with repairs would be to apply for federal disaster assistance.
- Federal disaster declarations are issued in less than 50 percent of flooding events. Federal disaster assistance typically comes in the form of a low-interest disaster loan, which must be repaid.
- Hurricane Harvey’s average grant from FEMA was $7,000, while the average National Flood Insurance Program (NFIP) claim was over $100,000.
“Rain, Rain, Go Away”
When a hurricane is approaching, the first thought about damage that comes to mind is damage from wind and coastal flooding. This could be damage to homes and businesses due to the heaviness of the flooding, which may result in commercial roofing companies in Denver, or wherever the flooding hit, to be called in so they can survey the area and remodel it so it is stronger and safer. Did you know that flooding is the most common, costly, severe, and deadly weather-related natural disaster in the country? Additionally, did you know that a property does not have to be near water to flood? As a matter of fact, if you live in an area with low or moderate flood risk, you are five times more likely to experience a flood than a fire in your home over the next 30 years! More than 20 percent of all National Flood Insurance Program flood claims come from outside of high-risk flood areas. Floods can result from storms, melting snow, hurricanes, drainage system backups, broken water mains, and changes to land from new construction, among other things.
Heavy precipitation is becoming more intense and more frequent across most of the United States, particularly in the Northeast and Midwest. Extreme precipitation is related to climate change, due to a warmer atmosphere that can “hold” more water vapor, and therefore deliver more rainfall.
The Tides (and Sea Level) are Changing
Sea levels are rising. Regardless of what side of the “Climate Change” fence you’re on, there’s no denying that sea levels are rising and storms are becoming more frequent and volatile. Global sea level has risen approximately 7–8 inches since 1900, with about three of those inches occurring since 1993. The current rate of rise is a little more than an inch per decade. To take that a step further, take a look at how this has impacted the Northeast specifically:
- The Northeast has seen an increase in extreme precipitation, more than any other region in the United States. Between 1958 and 2010, the Northeast saw more than a 70 percent increase in the amount of precipitation falling in heavy weather events.
- Between 1895 and 2011, temperatures in the Northeast have increased by almost 2˚F (0.16˚F per decade), and precipitation has increased by approximately five inches, or more than 10 percent (0.4 inches per decade).
- Global sea levels are projected to rise 1 to 4 feet by 2100.
- A sea level rise of two feet, without any changes in storms, would more than triple the frequency of dangerous coastal flooding throughout most of the Northeast.
Preparedness & Recovery
The most important thing you can do in the event of a flood or flash flood is to avoid the impacted areas. You may also need to keep in touch with experts who could help you Get the best in water damage restoration. Our familiarity with rain and water creates a different risk perception, but it should not be taken lightly. We have a tendency to overlook and internalize what 20+ inches of rain would look like in our daily activities, since it’s something most of us have never experienced. However, when you find yourself in a flash flood or flood area, you can take these helpful measures to avoid further loss of property or life:
- Use USGS’s WaterAlert system (http://maps.waterdata.usgs.gov/mapper/wateralert) to receive texts or email messages when a stream in your area is rising to flood level.
- Regularly clear debris from gutters and downspouts.
- Store copies of irreplaceable documents (such as birth certificates, passports, etc.) in a safe, dry place. Keep originals in a safe deposit box.
- Build an emergency supply kit. Food, bottled water, first aid supplies, medicines, and a battery-operated radio should be ready to go when you are.
- Move furniture, valuables and important documents to a safe place.
- Reduce the risk of damage from flooding by elevating critical utilities, such as electrical panels, switches, sockets, wiring, appliances and heating systems.
- Turn Around, Don’t Drown: We assume that the amount of water on the road we travel everyday isn’t that bad and that it is surely passable. However, it seems that in every storm that brings flooding, there are videos of cars stalling in that seemingly passable road that need to be rescued.
National Prescription Drug Take Back Day
On Saturday, April 28, 2018 – 10AM to 2PM local time, communities will team up with law enforcement to host the next National Prescription Drug Take-Back Day. You can call the Drug Enforcement Agency’s (DEA’s) Registration Call Center at 1-800-882-9539 or check the DEA’s website for collection sites in your area. The website will be continuously updated with new take-back locations.
Consumers may also continue to utilize the guidelines How to Dispose of Unused Medicines as posted by the FDA if they are not able to attend a scheduled Take-Back Day.
DEA began hosting National Prescription Drug Take-Back events in 2010. At the previous 14 Take-Back Day events, millions of pounds of unwanted, unneeded or expired medications were surrendered for safe and proper disposal.
At the last Take-Back Day in October 2017 over 5,300 sites spread across the nation collected unwanted medications totaling over 900,000 pounds (456 tons). The disposal service is free and anonymous for consumers, with no questions asked. Keep in mind that needles, sharps, asthma inhalers, mercury thermometers, iodine-containing medications, and illicit drugs (including marijuana which is still a schedule 1 drug under federal law) are not accepted at the drop box.
Opioid abuse is at epidemic levels in the U.S., and a top public health concern. The DEA’s “Take-Back” initiative is one of several strategies to reduce prescription drug abuse and diversion in the nation. Additional strategies include providing the right medication assisted treatment solutions, education of health care providers, patients, parents and youth; establishing prescription drug monitoring programs in all 50 states; and increased enforcement to address illicit methods of prescription drug diversion. In 2018, the U.S. government allotted $4.6 billion in the federal budget towards the expanding opioid crisis.
The DEA’s Take Back Day events provide an opportunity for Americans to prevent drug addiction and overdose deaths. To find a collection site near you, please click here.