Advocate Claim Service, Inc

Advocate Claim Service Newsletter December 2006

It is with great satisfaction that we bring this newsletter to you. In this issue and in coming months, we will discuss pertinent insurance topics which may affect you. We sincerely hope that you will find this newsletter informative and please do not hesitate to contact us should you have any questions or needs.

This months topics:

• Is Your Homeowner's Coverage a Mystery to You?
• Bearing the Risks of Condo Ownership
• Will Your Insurance Cover the Cost of Rebuilding Your Home?
• Study Shows Adults Aren't Always Careful When Cooking At Home
• Flood Damage to Cars Isn't Always Easy to Spot

Is Your Homeowner's Coverage a Mystery to You?

If you feel in a quandary when you look at your homeowner's insurance, take heart; you are not alone. In fact, a recent study conducted by Harris Interactive for Travelers Insurance shows that a large number of American homeowners are unsure of their coverage specifics. Many of these homeowners are underinsured and the smallest disaster could send them into a financial hardship.

The researchers questioned more than 1,300 homeowners to determine exactly what they knew about their coverage. They also asked the study participants how often they reviewed their policy to ensure they maintained appropriate coverage and how they conducted their review. According to the survey data, more than 44 percent of those surveyed had not examined their insurance coverage in the past year. Some respondents had not reviewed their insurance policy in the last 10 years.

The "Travelers In-synch Homeowner's Insurance Study" also indicated that nearly 27 percent of these homeowners weren't sure whether their policy would cover the cost of rebuilding their home. Thirty-six percent didn't know whether their policy would cover damage caused by a hurricane. Forty-two percent were unsure if they had earthquake coverage. Twenty-six percent didn't know if they had coverage against flood damage, and 37 percent didn't know whether their policy would cover a prolonged hotel stay if their home were damaged.

Many items impact the amount of homeowner's coverage you need. That's why it is important to review your coverage frequently. Here are some criteria to use in your review:

• Have you recently remodeled your home?

If you've improved your home, chances are you've increased its estimated replacement cost.

• Has the inflation rate increased since your home was last appraised?

Certain conditions, such as severe weather, can increase the demand for labor and materials, which raises costs beyond the normal inflation level. It is important to update your coverage each year to account for changing inflation.

• What factors influence building costs in your area?

Replacement costs are directly proportionate to factors, such as the availability of labor, the current demand for labor, and the cost of construction materials. Adjusting your coverage regularly can ensure your policy will provide the money you need to rebuild.

To determine whether you have adequate coverage you should know your home's estimated replacement cost. Keep in mind that your replacement cost could be higher or lower than your home's market value. You should also consider the building materials used to construct your home. The more difficult the building materials are to find, the higher your replacement cost. Your coverage needs to reflect these increased costs.

The best way to stay ahead of changing costs is to contact your insurance agent annually to discuss your current coverage and your changing needs. They can help you manage risk by updating your coverage so there won't be any surprises should your home be damaged.

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Bearing the Risks of Condo Ownership

Living in a condo can be risky business if you fail to discover where you are vulnerable so that you can remove or at least lessen your liability. As always, any liability assessment starts with the condo association's master policy.

There are four basic types of risks that associations must protect themselves against. The first is property loss, which means physical property as well as intellectual property such as legalities of the association's operations. The second is liability resulting from a person or legal entity filing a claim against the association. The third is any unplanned loss of revenue or increase in expenses in an accounting period, and the fourth is losses resulting from the inability of an association employee or board member to continue in their current capacity.

In order to manage the risk associated with these losses, condo associations generally have master policies that include:

• General Liability - for claims of bodily injury or property damage

• Workers' Compensation and Employer's Liability - coverage of employees against injury while they are working

• Directors & Officers - to cover claims of negligence or malfeasance by association leaders

• Fidelity Bond - for claims of misappropriation of association funds

These policies can be written separately, but they usually are combined into one umbrella policy. As a unit owner, you need a personal policy to cover personal property. Your policy is typically written on Form HO-6. The liability coverage on Form HO-6 is similar to other homeowner's policies, but the property coverage is not.

Form HO-6 covers your personal property, as well as improvements, additions, and private ownership spaces such as balconies, private entranceways and private garages. However, the policy only covers physical damage to property if it is caused by a named peril that is specified in the policy. Named perils are standard and include events such as fire, lightning, storm, explosion, riot, aircraft, smoke, vandalism, theft, and broken glass.

Your personal property is not covered for damage resulting from perils listed in the exclusions section of your policy. These usually include damage that occurs from enforcement of building codes, earthquakes, floods, power failures, neglect, war, nuclear hazard or intentional acts of destruction.

As the condo unit owner you also have to be vigilant about property loss in the master policy coverage. In general, a condo association's master insurance policy will require you to share a part of the loss if the building is damaged by fire, lightning, vandalism or the weight of ice or snow. Remember, as the common owner of shared spaces, you assume the liability connected with damage to those shared spaces. Your personal insurance coverage will provide you some relief from this debt, but be advised that you may want to consider augmenting it. That's because a policy written on Form HO-6 entitles you to collect up to $1,000 for loss assessments charged to you by the condo association. Be aware that Form HO-6 has a unique feature in this regard. When a loss is covered by both the condominium's master insurance policy and your individual policy, your homeowner's insurance will only pay for the balance of the loss that remains after the master insurance policy pays 100 percent of its limit.

Understanding the features of your personal coverage as well as the master policy will help you know your rights and responsibilities in the event it becomes necessary to collect on your coverage.

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Will Your Insurance Cover the Cost of Rebuilding Your Home?

After a disaster happens it is too late to determine if you have enough insurance to cover the cost of replacing your home and your lost valuables. And as we have seen from recent events, disaster has a way of striking without warning.

Savvy homeowners make it a practice to review their homeowner's insurance on an annual basis to see if their policy still provides adequate coverage to rebuild their homes at current construction costs. This is especially important if you have recently paid off your mortgage and you only purchased enough insurance protection to satisfy your mortgage lender's requirements.

When you evaluate your coverage, be sure not to confuse the real estate value of your home with what it would cost to rebuild it. Another point to consider is whether or not your policy covers improvements such as a new kitchen or bathroom and major purchases, as well as rebuilding costs.

Most basic homeowner's policies will provide replacement cost for damage to the physical structure of your home. Replacement cost covers the repair or replacement of damaged property with materials that are similar in kind and quality to what your home was built with.

For added protection beyond the estimated cost of rebuilding your home, you need a guaranteed or extended cost policy. This type of coverage is especially important if there is a widespread disaster that raises the cost of building materials and labor. A guaranteed replacement cost policy would pay to rebuild your home regardless of the actual cost. Insurance companies offer extended replacement cost policies, which provide an additional 20% or more of coverage above the limits found in the basic homeowner's policy.

You should also consider purchasing additional coverage that will increase the protection of the standard homeowner's policy:

• Inflation Guard - automatically adjusts the rebuilding costs of your home to reflect changes in construction costs because of inflation

• Building Code Upgrades - provides ordinance or law coverage that pays a specific amount toward increased building costs resulting from having to meet new or tougher building codes

• Water Back-Up - insures your property for damage caused by the back up of sewers or drains

Standard homeowner's policies do not include coverage for earthquakes or flooding, including flooding resulting from a hurricane. Flood insurance is available through the federal government's National Flood Insurance Program, www.floodsmart.gov. However, you may be able to purchase the coverage from the same insurer from whom you purchased your homeowner's insurance. Earthquake insurance is also available through private insurance companies. You should speak to your agent about purchasing flood and/or earthquake coverage if you live in a geographic area that can be hard-hit by these types of natural disasters.

The second part of your coverage evaluation should include a determination of whether or not you have adequate protection for your possessions. You can do this by conducting a home inventory, which itemizes everything you own and the estimated cost to replace these items if they are stolen or destroyed. If you find that your possessions are not sufficiently covered, you can increase protection in either of two ways:

• Cash Value Policy - pays the cost to replace your belongings minus depreciation.

• Replacement Cost Policy - pays the actual cost of replacing the item.

If you have a replacement cost policy for the contents of your home, your carrier will pay to replace lost or damaged items with new ones that are comparable. If you have a cash value policy, your carrier will pay only a percentage of the cost of any new items because they have been used and have depreciated in value. Generally, the price of replacement cost coverage is about 10% higher than cash value coverage, but the difference in cost will more than pay for itself in the event of a major disaster.

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Study Shows Adults Aren't Always Careful When Cooking At Home

The National Fire Protection Association reports that between 1999-2002, there were an average of 114,000 home fires associated with cooking equipment each year, resulting in 290 deaths and 4,380 injuries each year. The leading cause for these fires was unattended cooking.

In fact, three in 10 reported home fires start in the kitchen, and two out of three reported home cooking fires start with the range or stove. Electric ranges or stoves have a higher risk of fires, injuries and property damage, compared to gas ranges or stoves. However, gas ranges or stoves have a higher risk of fire deaths.

Because of these alarming statistics, The Hartford decided to commission Harris Interactive to create an online study of adults' cooking habits to examine what factors were contributing to kitchen fires. The researchers questioned 2,527 adults, aged 18 and over during October 2006. Two hundred forty-three of those surveyed lived with at least one child under the age of five.

The study revealed questionable cooking habits that could increase the risk of cooking-related fires. Seventyeight percent of those polled reported leaving an appliance such as a microwave, oven, or range unattended while cooking. One in five respondents reported leaving their house while the appliance was running.More than one-third of the respondents didn't keep a fire extinguisher in the kitchen.

The researchers noted that the overwhelming majority of respondents didn't seem to know the safety rules to follow when preparing food at home. The following guidelines have been developed by The National Fire Protection Association to help families stay safe in the kitchen:

• Kids and pets should stay at least 3 feet away from the stove while cooking.

• Keep an eye on the stovetop while frying, grilling, or boiling food.

• Items that can ignite easily, such as dishtowels, curtains, or paper towels, are remain at least 3 feet away from the stove.

• Potholders or oven mitts should be within easy reach.

• Pot handles should be turned in toward the back of the stove to prevent spilling.

• If someone gets burned, pour cool water over the burn for 3 to 5 minutes.

• Be careful when removing cooked food from a microwave, because the hot steam can cause burns. Children should never use a microwave unless an adult gives them permission.

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Flood Damage to Cars Isn't Always Easy to Spot

Wherever you find disaster, you almost always find someone attempting to profit. Following hurricanes Katrina and Rita in the summer of 2005, thousands of water- damaged vehicles showed up in car lots all across the southern United States, many with no visible problems. They were sold outside of the hurricane's heavy-hit areas, to avoid suspicion of flood damage. Though in excellent physical condition, these refurbished cars could still be prone to problems, which is why concealing their disastrous history is against the law.

A "flooded" vehicle is one that has been submerged or partially submerged in water to the extent that damage to the body, engine, transmission or differential occurs. However, even though physical damage is visible within hours of the flood, it could take weeks or even months for the car to exhibit symptoms of damage with the transmission, on-board computer or electrical systems within the dashboard, anti-lock brakes, airbags, and other safety functions.

Even though most state laws require that the buyer be informed in writing of previous flood damage to a vehicle, there are still several cases each year where the buyer believed they were getting a great deal on a great car. Despite a flawless exterior, there are other ways to spot a flood-damaged vehicle.

To prevent yourself from being taken advantage of in this situation, here are some basic guidelines in spotting a flood-damaged car:

• Check the engine, trunk, glove compartment, and the floor beneath the carpeting for signs of sand, silt or moisture.

• Examine all of the computerized and electrical components of the vehicle, including lights, gauges, air conditioning, wipers, turn signals, radio, etc.

• If you suspect the car may be flood-damaged, ask the seller directly.

• If you are still unsure, have the car examined by an independent mechanic.

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Disclaimer

Information contained in this newsletter about product offerings, services, or benefits is illustrative and general in description, and is not intended to be relied on as complete information. While every attempt is made to ensure the accuracy of the information provided, we do not warranty the accuracy of the information. Therefore, information should be relied upon only when coordinated with professional tax and legal advice.

Advocate Claims Service provides insurance claim help to Florida home and commercial property owners
to ensure you receive a fair settlement for your property insurance claim.

We provide public adjusting services to South Florida including:

Broward County, Miami-Dade County & Palm Beach County

and the cities of

Boca Raton   •   Coconut Creek   •   Coral Gables   •   Coral Springs   •   Davie   •   Fort Lauderdale
Hallandale   •   Hollywood   •   Jupiter   •   Margate   •   Miami   •   Mirimar   •   Pembroke Pines
Plantation   •   South Beach   •   Stuart   •   Tamarac   •   West Palm Beach

Residential Insurance Claims   •   Commercial Insurance Claims   •   Condo Insurance Claims
Hurricane & Windstorm Insurance Claims   •   Mold Insurance Claims   •   Flood Insurance Claims
Fire Insurance Claims