Advocate Claim Service, Inc

Advocate Claim Service Newsletter December 2005

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:

• How to Prevent and Treat Mold in Your Home
• Avoid Getting Nailed When Hiring a Contractor for Your Home Repairs, Remodeling
• Recent Survey Shows Majority of Homeowners Are Underinsured
• Survey Shows Inattention to Homeowners Insurance Could Prove Devastating in the Event of a Disaster
• Covered Against Loss for Your Business’ Leased Equipment?

How to Prevent and Treat Mold in Your Home

The impact of mold has become a prevalent topic recently, but do you know all you need to know about its impact on you and your home? Although certain molds may be discussed more than others, all molds are treated the same when it comes to their potential health risks and their removal.

It is easy to know if you have a mold problem. Large mold infestations can be seen or smelled. Mold grows naturally in the environment and may enter your home through open doors, windows, and ventilation systems such as heating and air conditioning. Mold spores may even attach themselves to your clothing and pets, which then bring them inside the home. Once inside, mold attaches itself to areas with moisture, such as a leaky roof, pipes, wet wallboard, plant pots, areas of condensation, and where flooding has occurred.

Many building products make a hospitable place for mold to grow. Stachybotrys chartarum is a greenish-black mold, which grows in areas with a high cellulose and low nitrogen content, such as fiberboard, gypsum board, paper, dust and lint. Even carpet, fabric and upholstery can easily support mold growth.

The most common health concerns resulting from mold exposure are allergy-type symptoms. The severity of the reaction depends on the amount and duration of the exposure to the mold. Individuals with chronic respiratory disease, including asthma, may experience difficulty breathing. Also, those on immune suppression therapy may be at an increased risk for health problems associated with mold. If you feel that you or your family members are at risk for infection, see your doctor for diagnosis and treatment.

Prevention is the key to combating mold. Just as with termites, buildings should be inspected for mold growth. Areas affected by water damage should be inspected thoroughly. Leaks and other conditions that supply moisture should be corrected, so as to prevent mold from taking root. Remove and replace flood-damaged carpets and carpet pads. Helpful tips are to keep humidity levels in your home below 50%, using air conditioning or a dehumidifier if necessary. Also, make sure your home is well ventilated, checking heating and air conditioning units as well as exhaust fans. Clean bathrooms and kitchens with mold-killing products. And, consider using paint that contains a mold-inhibiting agent.

If you are going to rid your home of mold, a bleach and water solution will suffice for most jobs. Mix 10 parts water to 1 part chlorine bleach and never mix bleach with ammonia. Clean walls and other flood-damaged items with the bleach solution and discard moldy items. Professionals may be needed to clean larger areas of mold.

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Avoid Getting Nailed When Hiring a Contractor for Your Home Repairs, Remodeling

When hiring a contractor to add value to your home investment, it makes dollars and sense to verify the contractor’s workers compensation coverage. Otherwise, you may be responsible for injuries incurred by the workers while they are remodeling or repairing your home.

With this in mind, take a look at some important insurance issues before you select a contractor. To start, verify that the contractor you want to hire carries workers compensation coverage. If a contractor does not have this coverage, workers who are injured while working on your home could sue you. You may also want to see a copy of the contractor’s workers compensation policy and ask the same of subcontractors such as electricians and plumbers. It is important to make sure all of the contractor’s employees are covered - full and part time. It is advisable to get insurance policy numbers and to take that extra minute to call and verify that the insurance is still in effect.

You can also check the contractor or remodeler’s credentials, including whether the contractor or remodeler is licensed and/or a member of an applicable trade group. Of course, you will want to compare costs and solicit bids from more than one contractor or remodeler. When doing so, get all bids in writing and make sure each bid includes building specifications (what is being worked on and to what extent), labor costs, material costs, and time needed to complete the project. This will protect you from unforeseen costs while further protecting you from future misunderstandings and project mishaps.

You can call Better Business Bureau (BBB) to quickly and easily verify local references. The local BBB office will also be a good source for letting you know if there have been complaints made against the contractor or remodeler.

Lastly, most contractors and remodelers will gladly show you work done at other nearby homes. Take them up on this offer and see for yourself their workmanship and check customer satisfaction. Talk to former clients and see what they think of the contractor’s ability to meet their needs while staying on schedule and within the projected budget.

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Recent Survey Shows Majority of Homeowners Are Underinsured

Two out of three U.S. homes are vastly underinsured according to a recent survey. Based on survey results, the average homeowner’s policy insures less than three quarters of the projected replacement cost of the home. With disastrous wildfires in California and Colorado, this point was really driven home as thousands of homeowners were left without enough coverage.

The survey, completed by insurance consultant Marshall & Swift/Boeckh in November 2003, found that 64% of U.S. homes are not insured at a high enough level to pay for a complete reconstruction. Although the study did not show results regionally, nationwide the average policy falls 27% short of the projected cost to rebuild the house. Put in other terms, the owner of a house insured for $200,000 would be $54,000 short of the funds needed to rebuild if the averages held true.

The most common reason for all this, quite simply homeowners often forget to update their policies. Home remodeling and additions often drive up the value of the property beyond the stated policy limits, but these improvements might never be reported to the insurance company. And rising construction costs and changing building codes are raising the price tag to rebuild.

To combat this effect, homeowners should review policies as they renew each year. Suspected changes in the value of their homes should be communicated to their agents.

Of course, not every homeowner wants or needs to insure the full cost to rebuild. But coverage options should still be reviewed.

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Survey Shows Inattention to Homeowners Insurance Could Prove Devastating in the Event of a Disaster

For the majority of Americans—even those making six figure incomes—their homes are their single biggest asset. Furthermore, the value of homes continues to rise with the continuing strength of the real estate market. Yet, a significant percentage of affluent homeowners are just not paying very much attention to protecting their most valuable personal asset, according to a survey conducted for Fireman’s Fund Insurance Company by Harris Interactive.

According to the survey, 94 percent of the respondents nationwide stated that the value of their home increased during the past five years. The National Association of Realtors® reports that median existing-home prices in 2004 were 6.6 percent higher than a year earlier. In some states such as California, a strong real estate market saw home values jump more than 20 percent in some areas from the previous year.

Yet, more than a quarter (27%) of those surveyed said they had not increased their insurance coverage to reflect their home’s increased value. Some of the most common reasons cited were lack of time to look into the need to increase coverage, and simply not knowing that they needed to change the policy’s limits to reflect a home’s change in value.

In addition to the rise of property values, home reconstruction and replacement costs are also climbing at a steady rate. With a healthy rise in new construction, recent hurricanes and ongoing trade disputes, the cost for lumber, plywood and other building materials is continuing to rise. According to the lumber industry publication Random Lengths, framing materials alone, such as 2-by-4s, rose nearly 40 percent in 2004 over the previous year. Without the right insurance coverage, homeowners who experience a loss could see these higher costs coming straight out of their own pockets.

The survey, based on responses from more than 1,000 affluent homeowners nationwide, uncovered a consistent gap between what homeowners think is included in their coverage, and what actually is covered. Of those polled, 88 percent said they know what their homeowner’s policy does and does not cover, yet further questioning revealed that many respondents also believed that their homeowner’s policy covered more property than would actually be covered in the event of a disaster. Only 37 percent of respondents correctly answered six of 12 questions about basic coverage on their homeowner’s and auto policies, such as the maximum amount of stolen cash that would be reimbursed if a home were burglarized ($200) or how much a standard policy will pay in temporary living expenses while a home is being rebuilt ($60,000).

The survey showed that most affluent homeowners spend far more time managing their investment portfolios (an average of seven hours a month) than they do staying on top of the insurance coverage for their homes. Seventy-six percent of those surveyed had reviewed their financial assets or investments within the last two months, but only half had reviewed insurance for their property assets within the past six months. The survey found that respondents spend an average of 4.7 hours per year—a fraction of the time spent on their investment portfolios—managing their insurance coverage on their physical assets including their home. This is true despite the fact that for nearly half (47%) of respondents, the value of their non-financial assets exceeds the value of their investment portfolio.

“The survey findings show a critical need for homeowners to communicate with their insurance agents and learn what their policies actually cover and when they should be updated, to ensure they are fully protected in the event of a disaster,” said Scott Garfield, vice president of Fireman’s Fund. “Homeowners also need to know that all policies are not created equal, and to understand the array of insurance options available in comparison to their current coverage before they are faced with a costly disaster.”

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Covered Against Loss for Your Business’ Leased Equipment?

Guarding against technological obsolescence, enhancing cash flow flexibility and the convenience of a range of services leasing companies provide are just a few of the reasons why a reported 80 percent of all United States businesses have leased equipment at one time or another. While leasing has become a widespread business practice, many companies never realize that they fall within an area of underinsured coverage.

Typically an equipment lease makes the lessee responsible for the leased property while it is under their control and generally requires that the lessee carry insurance on the leased goods. Most commercial property insurance policies will cover such equipment if it is contained and used inside. A common area of underinsured exposure occurs with the discrepancy between the compensation the leasing company requires if the property is destroyed and what the insurance company will reimburse.

Normally equipment leases require the lessee to replace the damaged equipment or pay off the balance of the lease. When it comes to the Personal Property of Others, most standard commercial property insurance policies pay out just Actual Cash Value, or the new equipment cost minus depreciation. The lessee would then be responsible for the difference between these two amounts.

For companies that rely heavily on expensive leased equipment, this exposure could prove costly if they suffer a widespread loss. Therefore any potential lessee should discuss this issue with their insurance agent in the context of their specific policy and lease agreement.

One way to cover this area of exposure is to add an endorsement to your commercial policy to extend Replacement Cost Coverage to the leased equipment. Depending on the amount and type of equipment you have, however, it may be more cost-effective to self-insure the difference between the Replacement Cost and the Actual Cash Value.

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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