Why California Residents Need Earthquake Insurance

Most people in the United States are not really worried about earthquakes. That’s certainly not the case for those in California. Even though the state is well-known for its geological activity, studies and statistics sill suggest a pretty small amount of residents actually have earthquake insurance. This is a big mistake.

The purpose of insurance is to protect yourself and your financial situation from unforeseen disasters. Earthquakes can strike without any sort of notice and can cause massive amounts of damage, especially if they take place in an urban area.

Earthquake insurance is something homeowners have to buy separately, or have added by endorsement to their policy. Even though jumping through these hoops might be time-consuming, there are a number of reasons why California residents need earthquake insurance.

Click here to learn how home insurance can improve your way of life!

Why You Need Earthquake Insurance

Earthquake insurance is important for several reasons. If your home is damaged or destroyed by an earthquake, you are off the hook for paying for repairs on your own dime. Expenses will be covered in the case of repairs or a total reconstruction.

Plus, if your home is rendered uninhabitable by an earthquake, your insurance policy might allow you to accrue money so you can live somewhere else while your home is being rebuilt. Having money to go and relocate somewhere can drastically affect your recovery process after an earthquake. It will also allow your spouse and kids to maintain a sense of normalcy even if they are in a different area.

Earthquake insurance is especially necessary in places like California since there is a potential for more quakes due to natural human activity associated with mining and fracking, which has been known to awaken dormant fault lines.

Research has shown these types of activities could mean earthquakes could start occurring with more frequency, especially in places that are not even close to a natural fault line. As a result, this means people all across California are well-served by buying earthquake insurance, even if you are not in a major city or live close to a fault line.

Earthquake insurance can be a good buffer against the types of devastating damage seen after a quake, which can include building collapses, structural damages, damage to landscaping and property, explosions, gas leaks, fires, and even flash floods and tsunamis if you are living on the California coast.

These types of damage can be very expensive to fix on your own dime, and are all examples of instances where adequate earthquake insurance would cover repair and replacement costs.

Outlook for Earthquake Insurance

Even if you are a bit wary about the sticker prices of earthquake insurance, it is still important to go and get a quote for yourself. The costs of insurance are usually less in lower-risk areas, so you could be saving a bundle of cash by not paying premiums, depending on where you are living in the state.

Ultimately, it is up to you to decide if earthquake insurance is the right way to go, but everyone living in California should still understand how important it is to purchase, no matter your situation.

Do you have a question about earthquake insurance? Click here to contact Partners Direct Insurance Services today!

Courtesy of Cuselleration

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Guatemala: the Forgotten Tragedy

This day, we are going to get our minds off of insurance for a moment to call attention to, and help insure the well-being of the people of the country of Guatemala. They are in the midst of experiencing a traumatic volcanic eruption and their story has not had much media attention but deserves it.

Guatemala is a Central American country south of Mexico, and is home to beautiful rainforests, ancient Mayan sites, and volcanoes. . The capital, Guatemala City, features the stately National Palace of Culture and the National Museum of Archaeology and Ethnology. Antigua is west of the capital and it contains preserved Spanish colonial buildings. Lake Atitlán, formed in a massive volcanic crater, is surrounded by coffee fields and villages.

Recently, Guatemala’s Volcan de Fuego, “Volcano of Fire” erupted. At last count, at least 99 people have died, but there are more than 200 people unaccounted for so the number is certain to increase. Firefighters in the nearby town of San Miguel Los Lotes are not hopeful, saying the possibility of finding survivors is unlikely. The weather is creating an additional burden for first responders, as rain has hardened the thick ash, making rescue efforts extremely difficult. Ash, mud and debris are now more likely due to the rain.

Efrain Suarez walks through a barren terrain near the Volcan de Fuego, or “Volcano of Fire,” in San Miguel Los Lotes, Guatemala on Wednesday.  (AP Photo/Moises Castillo)

Just like the volcanic eruption on the Big Island of Hawaii, there are warnings of new flows of lava descending down throughout the canyons on the volcano’s western slope, toward the Pantaleon River. As you can imagine, people in Guatemala are panicked, uncertain and need assistance now.

 

Rescue workers remove piles of ash spewed by the Volcan de Fuego, or “Volcano of Fire,” eruption, in El Rodeo, Guatemala on Wednesday.  (AP Photo/Rodrigo Abd)

Volcanic eruptions in Guatemala are not uncommon. But people in the area were used to small spits and spurts. Not this, when a huge cloud of ash shot out of the volcano, with lava pouring down the sides of the mountain.  Residents say their entire village disappeared within a matter of three to four minutes, becoming smothered in lava. Entire families were lost.

Now, at least 3,500 people are living in shelters. They are the fortunate ones, who left before the lava and ash rendered them helpless. But what now? Some families have a local support system, and many do not. They were scurrying to leave and could take very few possessions with them.

At Partner’s Direct Insurance, taking care of people is embedded in our DNA. We have a heart for the region, and want to help the people of Guatemala who are suffering. They are not getting the world’s attention and resources that they need. Here is a list of organizations that are actively involved in trying to alleviate the suffering. This should not be a forgotten tragedy, and we want to work to make sure it is not.

All our best,

Partner’s Direct Insurance

 

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6 Types of Construction Insurance to Help Protect Your Business

As a small business owner, you likely can’t bear the weight of a potential construction accident. To help keep you and your business protected, we compiled a list of some of the most common types of construction insurance policies and what they each mean. Continue reading to find out which insurance policy is the best choice for your business to have during your next project or remodel!

 

  • Builder’s Risk

 

If your business is set to undergo building construction or remodeling in the future, builder’s risk insurance is a smart choice to help protect it. This type of insurance can protect the structure itself, provide coverage for necessary materials, and insures you, the business owner, from any accidents. This kind of policy usually only lasts for the duration of the project, so you don’t wind up paying for insurance before or after you need it. Builder’s Risk insurance does not usually provide coverage from situations like earthquakes, employee theft, or weather damage, so it’s important to clarify these situations with our team at Partner’s Direct prior to signing.

 

  • Commercial General Liability Policy

 

A Commercial General Liability Policy is the most common for construction-related projects, and it is known as a good starting base for business owners who might not know what specific policies they need to protect their project. The standard form of this policy insures against bodily injuries and property damage caused on a construction job. This policy, however, does not cover the costs of repairing any flawed work done incorrectly during the initial project, but this differs based on the contract signed between you and your insurance provider.

 

  • Umbrella Liability Coverage

 

This type of insurance is useful for contractors or business owners who are operating large construction sites or multiple projects at one time. A good supplement to the Commercial General Liability Policy, a ULC policy protects larger projects that might be maxed out on a basic CGL policy. If you’re wondering whether this policy is a good add-on for you, talk to our team at Partners Direct to see what’s right for your specific situation.

 

  • Contractor’s Pollution Coverage

 

If your business’s construction projects involve mechanical, excavation, carpentry, industrial, or other heavy-duty work, this policy could help protect you and your business from any damages caused by pollution from these services. This policy protects you from third-party claims and could help save your business thousands of dollars if a pollution accident caused bodily harm onsite.

 

  • Worker’s Compensation Insurance

 

Does your construction project involve more than five workers? In most states, this is when Worker’s Compensation Insurance is a required investment for your company. However, the State of California dictates that this type of insurance is needed in every work environment, even if there is only one employee. This policy can protect your business in the instance of an employee getting injured on the job, even in a non-construction related setting. It can help prevent you from paying out-of-pocket for any potential medical bills and lost wages that could be incurred by an injured employee, so this type of insurance is one of the most essential for any business owner.

 

  • Commercial Automotive Insurance

 

Does your construction project require any type of vehicle or heavy equipment? We’re guessing it does. If so, a Commercial Auto Insurance policy is necessary to protect these vehicles, as well as your wallet. No matter if it’s you behind the wheel or an employee, you will likely want to insurance covering your business if an accident occurs.

By signing up for several types of insurance policies for your business, our team at Partners Direct is willing to discuss discounts and potential packages to help fully protect your business. Whether you are searching for an overall policy like a Commercial General Liability Policy or need something that offers more coverage, like an Umbrella Liability Coverage Policy, our team wants to provide you with the coverage needs to protect you, your employees, and your wallet. Take a look at a comprehensive list of our services here and if you have any questions, give us a call today!

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Spring Cleaning Tips to Avoid Home Insurance Claims

Are you and your family in the spring-cleaning mood? You’ve probably already started on clearing out your closets and decluttering your rooms, but what about the lesser-thought-of chores, like cleaning out your gutters and checking for any damage? If you want to keep your home in good shape and prevent any future insurance claims, take a look at these 6 spring cleaning tips.

 

  • Check your HVAC

 

After a winter where you probably used your home’s heater pretty consistently, it’s important to check and change your HVAC filters to prevent a build-up of dust. Not properly maintaining a clean HVAC can result in physical illnesses, a higher energy bill, and a shortened life-span of the entire appliance. Make sure this is one of the first spring-cleaning chores on your list to help keep a healthy home and a happy family.

 

  • Repair your driveway

 

Cracked sidewalks and driveways, broken bricks and stones, or holes in your yard can be a tripping hazard that could potentially cause injury to you, your family, or your guests. To avoid paying out-of-pocket for someone else’s medical bills, keep an eye out for any tripping hazards. Similarly, watch out for any loose nails or screws on your deck that could have been exposed by rotting wood. It’s easy to forget to look at the floor, but doing so could protect your loved ones from some painful injuries!

 

  • Watch out for the windows

 

If an earthquake or other weather-related event hit your home in the past, it’s possible that your windows and doors were harmed in the process. Double check the caulking and seams around your windows and doors for any cracks. If cracks are present, moisture could be entering your home and causing damage to your walls, ceilings, floors, and appliances. This damage could show up in the form of insurance claims and home repair bills, so catching it early is essential.

 

  • Replace the batteries in your smoke & carbon monoxide detectors

 

Every 6 months or so, mark your calendars to check the batteries in your home’s smoke and carbon monoxide detectors. While these likely go unnoticed during the year, it can be incredibly damaging to your home if they are not functioning properly in times of need. Instead of being oblivious when real damage is being caused to your home, make a point to switch out these batteries every spring and fall and help protect your family from danger.

 

  • Clear out your gutters

 

While we may not have traditional falls and winters in Orange County, our home’s gutters are still susceptible to becoming clogged with leaves and other debris collected throughout the year. If clogged, even the few showers of rain we receive in Southern California can back up your gutters, causing overflows and potential water damage to your home’s roof. Clean these out at least every spring, if not more, to help prevent making any insurance claims on a damaged roof!

  1. Keep an eye out on your home’s roof and walls

Similarly, any number of things can occur and cause potential water damage to your home’s exterior. If you notice water stains on your walls and ceilings or see any sagging spots on your roof, it’s likely your home has water damage and needs repairing immediately. Also keep an eye out for missing shingles, holes in the siding, or signs of damage caused by critters.

If you’re hoping to avoid paying a high repair bill or filing an insurance claim for damages, keep these 6 chores in mind when making your spring-cleaning to-do lists, and click here to receive a quote on our homeowner’s insurance policies. If you do happen to notice any damage on your home incurred over the last few seasons, give our team at Partners Direct a call and we’ll be happy to assist you with any insurance issues you have.

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5 Reasons to Invest in Commercial Insurance for Your Business

Why do you need to invest in commercial insurance coverage? Most people don’t like paying for insurance, but are very grateful for it when they need it. Maybe you own a fledgling company, just starting out and trying to find the best deal for your needs. Your company may have been in business for awhile, is doing well, but you just aren’t 100% sure that your insurance needs are covered. That’s what Partners Direct Insurance provides for our clients: good, solid advice on what coverage you need today. We take your unique business and give you tailor-made solutions. Here are a few things to consider:

1) Professional Liability

Professional Liability Insurance, or PLI is also known in the industry as Errors and Omissions (E&O) insurance. It protects professional advice and service-providing individuals and companies from bearing the brunt of a lawsuit where a person or corporation is claiming damages from your services. It protects you from the full cost of defending against a claim, and any damages that may be awarded following the lawsuit. This kind of policy covers things that wouldn’t be covered under a general liability insurance policy. Physicians and attorneys, for example, have PLIs to cover them in case of alleged negligence.

2) Workers Compensation

In the state of California, every employer is required by law to provide workers’ compensation insurance, even if the employer only has a single employee. Workers compensation is solely the responsibility of the business owner: an employee cannot be asked to assist in paying the premium. It is also California law that you post the “notice to employees” poster in a prominent place at the work site. This gives employees information on your workers compensation coverage and where to go for medical care for any work injury.

You must also provide newly hired employees with a workers’ compensation pamphlet explaining their rights and responsibilities. Should an employee get sick or hurt on the job, you are required to provide them with a claim form within one working day after the injury or illness is reported. You are also required to return a copy of the completed form to the employee within a working day of receiving it.

3) Commercial Property Insurance

You never want to imagine something going wrong at your business, but life happens and it is important to be covered in case of problems. Commercial property insurance may cover theft, accidents, or natural disasters. You may own a freestanding building, or lease an office, or work from home, and commercial property insurance can keep you covered. We are very familiar with wildfires in southern California. What if your business was destroyed by the Santa Ana winds and fire? Maybe a water pipe burst during the weekend while you were away and now your business is flooded and your inventory is ruined. So are your computers, furniture, equipment and other valuable documents that were stored in your office. Maybe the sign for your business was damaged in a storm and you now have the cost of replacing it. Perhaps the fencing and landscaping surrounding your property was damaged, or a storm caused damage to a neighbor’s property. Commercial Property Insurance will cover you from these out-of-pocket surprises.

4) Commercial Auto Insurance

You have to have commercial auto insurance to cover the cars, vans or trucks that help you do business. It doesn’t matter if you have a large fleet or just a truck or two, you should be covered just in case. When our team at Partners Direct Insurance meets with you, we’ll figure out the best policy to keep you covered in case of physical damage or liability. There are differences between personal auto insurance and commercial auto policies. A commercial vehicle insurance policy will cover:

  • Bodily injury liability coverage: injury or death resulting from an accident where you are at fault
  • Property damage liability coverage: if your vehicle damages another person’s property
  • Medical payments, no-fault or personal injury coverage: if an employee is hurt in your vehicle
  • Uninsured motorist coverage: if the ‘other guy’ in a wreck has no insurance or is under-insured
  • Collision coverage: when your business vehicle is hit or hits another object
  • Comprehensive physical damage coverage: for vehicle damage caused by theft, vandalism, fire or flood

5) Employment Practices Liability Insurance (EPLI)

This policy protects you against employee lawsuits. It will cover you in case an employee makes a claim against you alleging discrimination (based on race, sex, age, etc.) It also protect you from legal fees if someone brings a wrongful termination, failure to promote or harassment claim against you.

 

At Partners Direct Insurance, we take the “Partners” very seriously. We know small companies don’t have HR departments to provide this information to them, and may not know what insurance coverage they need to operate. We pride ourselves on offering custom, individual attention to you and your business and work hard to find solutions that cover you, so you can get back to doing what you do well: open for business!

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Helpful Insurance Tips for the New Year

Auld Lang Syne

It is now one second past midnight on January 1st, and people in your time zone are celebrating the New Year. Why do we attach so much significance to the changing of the calendar? We can thank Julius Caesar for New Year’s Eve parties, when he changed the calendar and everyone took notice. This unique time change gives us the opportunity to celebrate and reflect. We want to take stock of what went well in 2017, and make adjustments to bring forth a better 2018, and that includes insurance tips for the new year.

 

We want to lose weight. We want to make more money. We want to feel more spiritually fulfilled. We want to find the job we truly love. We want more control over our lives. Whatever ‘it’ is for you, one of the things we all should do at the start of the new year is to take stock of our insurance, and make sure we have the coverage we need to protect our families. The team at Partners Direct Insurance, take seriously the task of making sure you have the right insurance for your home, auto and business needs.

 

Most people find an insurance policy that works for them, and then they mentally check off that box and never think of it the rest of the year. But we think it is important to re-evaluate your policies and coverage to make sure it is the best fit for you. That’s why our company is dedicated to working with your individual needs to find the best fit for you.

 

So take the mental dust off those policies, and consider a few things:

 

Risk managers are essential to your family’s well-being. Yes, they will tell you to think about what could possibly go wrong in 2018. That’s their job. It’s important to listen so you can find the best coverage for your individual needs.

 

There’s No Place Like Home

For example, if your home was destroyed by a wildfire, what would it take financially to get you back on your feet? If you leave for a weekend and a water leak springs from your kitchen sink and half of your home is flooded, how well are you covered? It’s important to figure out what it would actually cost you to rebuild, repair or replace the structure with brand new materials of comparable quality. Does your policy include coverage that provides for your family if you need to relocate? Those costs can add up very quickly following a home emergency.

 

On the Road Again

If your car is totalled by a driver with no insurance, how soon can you get back on 4 wheels? One of the most common insurance pitfalls for drivers is being uninsured and not understanding the coverage they have already purchased. What if you are injured? Will your insurance policy pay for medical needs? What if you are at fault and others are hurt? Will your policy cover their medical needs? It’s estimated that 40 percent of drivers on the roads aren’t adequately covered by their insurance policies for bodily injury. One mistake on the road can ruin you financially for years to come. How much car insurance do you need? Talk with our team to discuss your individual needs: sometimes it makes sense to increase your deductible. If you can save $200 by assuming an additional $500 worth of risk, it might be worth it.

 

Now Let’s Get Down to Business

If you run a business out of your home, you’ll want to check on your insurance options. If you store inventory at your home, or have customers coming in, you need to consider your liability in the case of theft, or if a customer would slip and fall. It just makes sense to protect yourself from the worst case scenarios.

 

We agree: not pleasant topics, but these insurance tips for the new year are essential ones to consider when talking with our team. At Partners Direct Insurance, we love our clients and make sure we match the best policy to their needs. Call us and let’s celebrate 2018!

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Helpful Insurance Tips for the New Year

Auld Lang Syne

Why do we attach so much significance to the changing of the calendar? We can thank Julius Caesar for New Year’s Eve parties, when he changed the calendar and everyone took notice. This unique time change gives us the opportunity to celebrate and reflect. We want to take stock of what went well in 2017, and make adjustments to bring forth a better 2018, and that includes insurance tips for the new year.

Whatever resolutions you have made for this upcoming year, one of the important things to do at the start of the new year is to take stock of your insurance, and make sure you have the coverage you need to protect your family. Our team at Partners Direct Insurance take seriously the task of making sure you have the right insurance for your home, auto and business needs.

Most people find an insurance policy that works for them, and then mentally check off that box and never think of it the rest of the year. But we think it is important to re-evaluate your policies and coverage to make sure it is the best fit for you. That’s why our company is dedicated to working with your individual needs to find the best fit for you.

So take the mental dust off those policies, and consider a few things:

Risk managers are essential to your family’s well-being. Yes, they will tell you to think about what could possibly go wrong in 2018. That’s their job. It’s important to listen so you can find the best coverage for your individual needs.

There’s No Place Like Home

For example, if your home was destroyed by a wildfire, what would it take financially to get you back on your feet? If you leave for a weekend and a water leak springs from your kitchen sink and half of your home is flooded, how well are you covered? It’s important to figure out what it would actually cost you to rebuild, repair or replace the structure with brand new materials of comparable quality. Does your policy include coverage that provides for your family if you need to relocate? Those costs can add up very quickly following a home emergency.

On the Road Again

If your car is totalled by a driver with no insurance, how soon can you get back on 4 wheels? One of the most common insurance pitfalls for drivers is being uninsured and not understanding the coverage they have already purchased. What if you are injured? Will your insurance policy pay for medical needs? What if you are at fault and others are hurt? Will your policy cover their medical needs? It’s estimated that 40 percent of drivers on the roads aren’t adequately covered by their insurance policies for bodily injuries. One mistake on the road can ruin you financially for years to come. How much car insurance do you need? Talk with our team to discuss your individual needs: sometimes it makes sense to increase your deductible. If you can save $200 by assuming an additional $500 worth of risk, it might be worth it.

Now Let’s Get Down to Business

If you run a business out of your home, you’ll want to check on your insurance options. If you store inventory at your home, or have customers coming in, you need to consider your liability in the case of theft, or if a customer would slip and fall. It just makes sense to protect yourself from the worst case scenarios.

We agree: not pleasant topics, but these insurance tips for the new year are essential ones to consider when talking with our team. At Partners Direct Insurance, we love our clients and make sure we match the best policy to their needs. Call us and let’s celebrate 2018!

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How Umbrella Insurance Plans Save You More

What is Umbrella Insurance Anyway?

Imagine it’s pouring down rain. You are wearing your suede jacket and not happy about the unforeseen weather change. Thankfully you have your umbrella with you: reach in, grab it, and whew! Problem solved! Umbrella Insurance is just like that. You aren’t ruining your suede jacket, but you are protecting your hard-earned savings from life’s accidents. An umbrella liability policy covers much more than your auto and home policies, and can make a long-term difference in your financial health.

Why Do I Need It?

No one likes insurance until they need it; then, they are grateful to have it. The umbrella protects your financial assets from an event you didn’t see coming. Say you were involved in a car accident, and the court decided you were responsible for damages and bodily injuries to the other party. If they were to file a lawsuit against you and you didn’t have an umbrella policy, you would be legally responsible for the damages and that can deplete your savings in a hurry.

What Does It Cover?

It covers the extras that your basic coverage does not. In the case of the car accident, it will cover the extra expenses of the others involved beyond what your normal policy does. It can also cover you for legal fees, false arrest, libel and slander.

Okay, You Have My Attention: How Does It Work?

Let’s go back to the car accident. The court found you liable for the wreck, and there are people who are hurt and a car that is totalled. You are sued and need to pay for your legal defense. Umbrella policies pay once your basic liability limits have been reached.

So Assets Matter!

What are your financial assets? Your house certainly. Add your cars, your investment and retirement accounts, and don’t forget your checking and savings accounts. If someone decides to sue you for a lot of money and you don’t have the policies in place to take care of what the court says you owe, your assets can be liquidated to pay your debts. Imagine that one bad mistake, one traffic accident, can ruin you financially because you did not have an umbrella plan in place.

Got It. How Much Does It Cost?

Our team at Partners Direct Insurance have a mission of making sure we look at each client’s needs individually, in order to design a custom insurance package that works. We want to be sure that you have the coverage you need, without overpaying. Getting an umbrella policy for $1 million worth of coverage can be very affordable. Our team can help design a plan that works for you.

How Much Do I Need?

That depends. Think about a few things, and talk with our partners to get the best deal for you.

  • How risky are you? Do you skydive? Race sports cars?
  • How much are your assets worth? The more property, stocks, and retirement funds to protect, the higher the umbrella policy to consider.
  • What would it cost you to lose your future income? If it would be devastating, you need more coverage.

Can I Write It Off My Taxes?

Generally speaking, personal umbrella policies are not tax deductible. However, if you own a business, an umbrella policy can mean your premium is tax deductible. This is another reason why it is important to have our team counsel you on what works best for your individual needs.

Let’s Talk!

At Partners Direct Insurance, we partner with our clients to make sure they have the best umbrella policy for their particular needs. Call us and we can discuss what makes the most sense for you, to keep you covered!

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Health Insurance Season

courtesy of www.toptenpack.com

Summer is coming to a close and, to a health insurance broker, that means work-life is about to get chaotic.  In the old days, health insurance policies renewed one year from inception; so our client renewal needs were mostly spread through-out the course of the year.  For reasons that can be directly related to the Affordable Care Act’s implementation, 90% of all of health insurance policies now renew in December and January.  This leaves your health insurance broker a very short window of time to help the vast majority of their clients.

To make things even more complicated, the insurance carriers are constantly looking for ways to keep their rates competitive and stay profitable, so they adjust things at renewal-time.  For example, they might reduce doctor networks on certain plans and/or they may change the copayment and deductible benefits around.  With hundreds of plans available to you at renewal, having a process of elimination based on your actual medical needs will make your time with your broker more valuable.  This year, do yourself (and your broker) a favor; prepare yourself early.  Here are some tips on how to accomplish this:

Look back at what types of claims you’ve had to for medical services in the past year.  The best way to easily accomplish this is to log into your health insurance company’s member portal and extract a claims summary.  This will help your broker determine whether you need to continue at the benefit level you were last year, or make some changes going forward.

Have a list of the doctors, hospitals and pharmacies that you must have access to in the coming year.

Be prepared to provide your broker with some financial data, specifically what you expect your household income will be for the coming year. 

Whether you purchase your insurance directly, or through your employer, having this information handy will save you from having to blindly choose a health insurance policy.  Partners Direct Insurance Services is a full service agency; we pride ourselves in offering a comprehensive suite of insurance products for both businesses and individuals.  If you don’t have a broker, or are interested in exploring a new broker relationship, learn more about our account management process on our website or call us at (877) 600-7437.

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Directors and Officers Beware!

The majority of people who find themselves in the position of making organizational decisions remain blissfully unaware of the substantial personal risk they have in doing so. It’s easy to assume that the wide array of insurance policies that their organization pays for each year will protect them from any exposure that exists. It should be safe to assume that between the worker’s compensation liability, professional liability, employer practices liability and, if nothing else, the general liability insurance policies; the organization should have ample coverage to deal with all potential risks that exist. However, unless the organization you are working with has purchased a Directors & Officers (D&O) liability insurance policy, any personal liability you may hold is not protected at all. And, while, it is true that officers of for-profit companies are commonly sued; it is also true that directors and officers of non-profit organizations similarly run the risk of being personally liable for their decisions – even those who are simply volunteering their services.

Directors, officers and trustees of non-profit organizations are exposed to a variety of personal risks, depending on what their duties are. The three major categories of risk for non-profit members are governance liability, fiduciary liability and employment practices liability. In some cases, such exposures are not covered perils under traditional liability policies, and when they are; the beneficiary of the liability protection would be the organization itself, not the individuals within it. A decision-making individual within a charitable organization can be personally sued by vendors, customers, employees, competitors, government regulators and even donors. And while your particular chosen organization may in fact be highly ethical and very functional; all it takes is a claim of wrongdoing to get a costly suit going. As the chart below indicates, defense cost makes up a significant portion of all claim examples:

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Graphic Source: Insurance for Non-profits

Some states have enacted statutes to help protect directors and officers from liability. For example, California, the state in which I write this article from, has enacted Cal. Corp. Code § 7231, which provides for “no liability based upon any alleged failure to discharge the person’s obligations as a director…”, but ultimately fails to protect said director from the reach of the federal government. Even where the state statutes are governing; you would still have to expend personal income to defend yourself in the doomed lawsuit. Also, it’s important to remember that not all non-profits are charities and therefore not protected by so-called “Good Samaritan” statutes; Home Owner’s Associations are considered non-profits as well. Do you, or your spouse, carry volunteer positions on your HOA board? If so, then you should be concerned about your liability there as well.

To ensure that you have the proper protection in place, there are several things to look for. Be sure to ask for a copy of the organization’s D&O policy “declaration page”, including the endorsement listing and any relevant amendments. Review the documents carefully and be wary of exclusions for claims that arise from employment-related issues because, as previously noted, the majority of claims arise from employment related issues. Additionally, as a coverage failsafe, you should verify that your own personal homeowners insurance and/or umbrella liability insurance policies do not exclude your actions in volunteer positions. Along the same line, confirm that the D&O policy meets the minimum limits of your personal liability insurance carrier(s). Finally, it would be ideal for the organization’s D&O policy to have a “per occurrence” policy form rather than a “claims-made” form to avoid coverage gaps in the future; though that is not always available.

There are many factors to be concerned with, and you might be overwhelmed by the multitude of things you are responsible for checking. This burden can be alleviated by obtaining a well trained insurance broker. For proper coverage coordination, clients who have D&O exposure should be using an insurance broker, rather than working directly with an insurance carrier. It is vital that your broker be well versed in personal liability and commercial liability product needs; rather than a broker who specializes in one or the other. If you haven’t ever heard of D&O liability insurance, it’s likely due to the fact that your personal broker is not adequately trained in commercial product offerings and doesn’t know the product exists.

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