by Eddie Rodriguez, CAIB | Jul 26, 2014 | Research Centre
DON’T LET A TORNADO BLOW YOUR ASSETS AWAY
ON AUGUST 21, 2011, THE FIRST F3 TORNADO IN OVER 15 YEARS HIT THE LAKESIDE TOWN OF GODERICH, ONTARIO, CAUSING OVER $75 MILLION DOLLARS IN DAMAGE. LIKEWISE, ON JUNE 6, 2010, AN F2 TORNADO WENT FROM HARROW THROUGH KINGSVILLE AND LEAMINGTON, ONTARIO, BEFORE DISSIPATING NEAR POINT PELEE NATIONAL PARK, CAUSING $120 MILLION DOLLARS IN DAMAGE.
These tornadoes are a vivid reminder of the threat windstorms pose to life and property, as well as emphasize the importance of having the right insurance coverage.
No matter where you live, you need to have the right amount and type of insurance in order to recover financially after a natural disaster.
Across Canada, Ontario, Alberta, Manitoba and Saskatchewan average the most tornadoes per season, at approximately 15, followed by Quebec with less than 10. New Brunswick and the interior of British Columbia are also recognized tornado zones. All other provinces and territories have significantly less threat from tornadoes. The peak season in Canada is in the summer months when clashing air masses move north, although tornadoes in Canada have occurred in spring, fall and in the rarest of cases, winter. This differs from the United States’ southern-central plains, when spring is the most prominent season for tornadoes.
For a variety of reasons, such as Canada’s lower population density and generally stronger housing construction, due to the colder climate, Canadian tornadoes have historically caused fewer fatalities than tornadoes in the United States.
The standard homeowners and business insurance policy covers wind damage including that caused by tornadoes to the structure of the building and contents including broken windows and removal of debris.
However, you should make sure your coverage limits reflect the cost of rebuilding the structure, removing the debris and fully replacing personal belongings.
It’s important to make sure you have purchased ‘replacement cost coverage’ on your business policy and your homeowners’ insurance policy. If you have a business policy, it is also important that you carry ‘blanket bylaws coverage’ on your policy.
A homeowners’ policy also provides ‘Additional Living Expense (ALE) coverage’ to pay the costs of living away from home if you cannot inhabit your house due to damage from an insured disaster.
The policy ALE provision covers hotel bills, restaurant bills, and other living expenses incurred while away from your home, while it is being repaired or rebuilt.
‘Guaranteed Replacement Cost (GRC)’ or ‘Additional Rebuilding Cost (ARC)’ is another homeowner’s insurance coverage that can provide extra coverage, over and above the limit you have on your home insurance policy.
For example, let’s say you have your home insured for $400,000 – a tornado destroys 200 homes in your area, and building costs and inflation cause the replacement of your home to be $450,000. The GRC and ARC coverage’s would pay this additional amount subject to the terms and conditions of your policy. Make sure you review these coverages with your broker.
If you own a business that has been damaged, ‘business interruption coverage insurance’ is important to make sure you have revenue to continue to make your payments when a tornado has impaired your business. There are many different forms of business interruption, and as a business owner, you should review this on a regular basis with your insurance broker.
Damage to cars, trailers, motor homes and ATV’s are covered under the ‘comprehensive optional coverage’ portion of the policy. Marine insurance policies will usually cover damage to boats from wind.
Please make sure you review your insurance policies with your insurance broker on a regular basis to make sure your assets don’t get blown away, should a Tornado destroy or damage your home and business. With changing weather patterns, your home could be the next target.
For more information on your coverage options, call your insurance broker.
by Eddie Rodriguez, CAIB | Jul 26, 2014 | Research Centre
WATER DAMAGE CLAIMS HAVE BECOME A BIG PROBLEM FOR CANADIAN HOMEOWNERS. REASONS FOR THE INCREASE CAN BE TRACED TO CLIMATE CHANGE, LIFESTYLE CHANGE AND AGEING INFRASTRUCTURE. MOST HOMEOWNER POLICIES COVER WATER DAMAGE THAT HAPPENS SUDDENLY AND ACCIDENTALLY, BUT MAY NOT COVER SEWER BACKUPS (WHERE SEPARATE COVERAGE IS NEEDED).
Slow leaks and water seepage that occur over time may also not be covered; quite often they’re considered home maintenance.
And if a flood happens from a local river swelling, you’re likely not covered for that either. So. What to do? Prevention! The first place to start is your sump pump. How old is it? When was the last time you checked it? To ensure it’s working properly, lift the cover and slowly pour water into the sump tank; watch for the float to rise and trigger the pump to activate. Once the water level is lowered, the pump should turn off. Additional tips:
- The pipe that carries the water out of your house should be at least 2 meters from the building, and the water should flow away from your house
- A battery backup is great to have in case of a power failure – make sure the battery is always fully charged
- Remember to check your roof – is it reaching its best before time? If in doubt, have a professional roofer take a look
- Make sure any belongings that are stored in your basement are placed in plastic bins located off the floor
- If you’re converting your basement to a living area, use water resistant materials
What about lifestyle?
Things like dishwashers, hot tubs, hot water heaters, washing machines and water-dispensing fridges are all appliances that have the potential to leak.
Keep an eye on your water bill. If it seems it’s increasing without reason, check the hoses and connections to your appliances. If they’re plastic, consider changing them to CSA approved stainless steel braided hoses. And consider having someone take a look at your hot water heater – their life span is usually only ten years.
Need advice? Call in a professional for recommendations and ask your insurance broker to confirm what’s covered in your policy.
by Eddie Rodriguez, CAIB | May 27, 2014 | Research Centre
So your bags are packed and you’re ready to go.
But are you?
Vacations are a great way to relieve stress and get away for a while, but a call to your broker will ensure your trip goes smoothly and you don’t return home to unwanted surprises.
Step 1 – make sure your home is ready for vacation too.
Standard wording in a homeowner insurance policy limits coverage if you’re away over the winter months or “heating” season. The limitation relates to water in your pipes freezing, which could happen if your heating system also decides to take a few days off.
This coverage exclusion can easily be resolved in one of two ways: you can shut off the water supply to your home and drain your pipes; or you can have someone you trust enter your home every 24 hours to confirm your heating system is still operating. Make sure they can reach you, or are able to have the problem fixed on your behalf.
If you’ve chosen to turn off your water and have your pipes drained, you should be aware that toilets don’t completely drain of water. Try adding antifreeze to the bowls to prevent freezing should the temperature drop. Consider a marine antifreeze that’s ecologically friendly.
There’s no need to leave electronics plugged in while you’re away. Even if they’re attached to surge protectors, it’s still safer to unplug them.
To give your home that still lived-in look, you may want to leave a few things plugged into time-delayed sensors. But don’t stop there! Make sure your mail and newspapers are being picked up, or stop their delivery. You should also have snow removal (or lawn cutting) taken care of while you’re away.
Leave a spare key with a friend or neighbour, instead of hiding one around your front door. Same goes for the inside of the house – don’t hide your jewellery or valuables; store them in a safety deposit box.
Posting your beautiful vacation photos on social media alerts others that your home is empty. Even if the photos are intended only for friends, they can easily extend beyond this group. Share your pictures once you’re home!
Lastly, many people rent cars when they’re on vacation and needlessly pay for insurance coverage. You may be surprised to learn you’re already covered under your policy. If not, your broker can arrange it at a fraction of the cost of what rental agencies charge, and explain limits on vehicle types, values and locales.
Bon Voyage!
by Colin Moor, CAIB | Jan 2, 2014 | Research Centre
January 2, 2014. Parts of Ontario continue to be without electricity. Therefore, some people may have left their home as power is being restored. Here are some home insurance coverage reminders as well as some timely safety tips.
Homeowners insurance policies do not cover losses caused by freezing during the usual heating season in a heated portion of the home if someone has been away from their home for more than four consecutive days, UNLESS the homeowner has:
- arranged for a competent person to check the home daily;
- shut off the water supply and drained all the pipes and domestic water containers; or
- their plumbing and heating system is connected to a monitored alarm station.
If you do leave your property remember to:
- Turn off the main water valve and drain water from the pipes and flush toilets several times. Keep the basement drain clear.
- To prevent a power surge when the electricity does come back on, unplug all tools, appliances and electronic equipment and turn the thermostats down to minimum.
- Turn off all lights including Christmas lights, except one inside and one outside, until power is restored.
- Leave natural gas service on unless authorities tell you to turn it off.
- Lock your home.
Here are some other ways to keep safe, even if you do stay in your home:
- To prevent frozen pipes turn the taps on slightly so water can trickle through as pipes with running water will not freeze. Alternatively, turn off the main water supply and open the pipes completely.
- Take extra caution when using a wood-burning fireplace.
- Use a flashlight and not candles to reduce the risk of fire.
- Do not use appliances intended for outdoor use indoors, such as camping or heating equipment and gas barbecues.
- Keep your fridge and freezer door closed as much as possible. A full freezer will keep food frozen for 24 to 36 hours if not opened.
- If you see downed power lines, stay far away and report them to your local power authority.
Once power is restored:
- Do not enter a flooded basement unless it is absolutely safe to do so.
- Flooded appliances, electrical outlets, switch boxes or fuse-breaker panels should not be used until they have been checked by an electrician.
- Replace the furnace flue if removed, and turn off the fuel to the standby heating unit.
- Turn the thermostats up, wait a few minutes, then plug in the fridge and freezer back in. Wait 10-15 minutes before plugging other appliances back in.
- Turn on water supply.
- Check the food in your fridge and freezer for signs of spoilage. If in doubt, throw it out. Check the Food Safety website for details about specific foods
by Eddie Rodriguez, CAIB | Jan 28, 2013 | Featured, Research Centre
It’s a fact: as you attempt to achieve your company’s goals, you will naturally take a number of risks that may bring about accidental losses to your property, to your income, through liability to others, etc.
Perish the thought!
The harsh reality is that, unless you are properly prepared to prevent these losses – and to “transfer” them to an insurance company when they do happen – the consequences could completely destroy or cripple your business. That’s why we prefer to call “risk exposures” and their potential consequences:
“The Monsters“
Calling them “The Monsters” helps us remember that these are not simply words you find on some “risk assessment report” that lies forgotten on your company’s intranet.
So, with the goal of helping you become aware of some of the monsters you need be on the look out for, let’s take a look at 8 loss scenarios specific to technology companies.
By the way, if you’re thinking “I’m fine. I have business insurance”, just remember that a General Liability insurance policy (which is the most common type of insurance a business would carry), would NOT protect you in the scenarios listed below. That’s because General Liability is there to protect you only against claims of property damage and bodily injury .
Tip: As you read each example below, ask yourself: Could this particular Monster attack my business? What are we doing (other than insurance) to mitigate the consequences of this Monster’s attack? Do we have the proper insurance protection for this scenario?
OK, here we go:
Errors and Omissions in general:
The first monster that IT companies and IT professionals must be aware of is the infamous “E & O” monster.
‘E & O” stands for Errors and Omissions, aka Professional Liability …. or, as it is known in other fields, “Malpractice liability”.
It’s usually your clients who will wake up the “E & O” Monster and send it out to get you, when they feel that the financial loss they’ve just suffered was caused by:
– your company’s ERROR (something you did wrong) or….
– an OMISSION (something you, a as professional, should have done, but didn’t).
The “E & O” Monster also visits you when, for example, your client claims that your product failed to perform as expected.
What really sucks is that you can be sued, even if you didn’t make a mistake!
For example, let’s say you design a new invoicing system for a client and the client alleges the final system lacks the functionality they wanted. This happens, even though you delivered what you thought was required. If your client sues you (and you have the right insurance coverage) your insurance company will defend you, which protects you from having to pay the potentially huge ‘defense costs’.
Monster # 2: Where’s My Data? *
How did “corrupted data” create a $900,000.00 loss for a software vendor?
A communications company sues for lost revenue and expenses to recover billing files for wireless customers.
The billing files were deleted by their software vendor while updating the system.
Indemnity Paid: $750,000 / Defense Costs Paid: $150,000
Monster # 3: Software Fails to Maintain Employee Hours *
A company provides timekeeping hardware and software to its customer.
The software doesn’t function correctly; it fails to maintain employee hours worked and correctly apply the hourly and overtime rate of pay.
The failure results in over/underpaying employees and the need to replace the timekeeping clocks. The customer sues the provider of the hardware and software.
Indemnity Paid: $440,000
Monster # 4: Missed deadlines cause a breach of contract *
It’s was time for a company-wide upgrade, and a firm decided to outsource to an information technology and management services company all the replacement of hardware, software and infrastructure as well as telecommunications and related services in order to upgrade its ability to serve customers and address any problems.
The information technology and management services firm fails to meet deadlines due to a high turnover of staff and a breakdown of project management.
Indemnity Reserve: $2,000,000 / Expense Paid: $500,000
Monster # 5: Breach of Security *
A telecommunications firm is sued by customers claiming they were sold a defective system with inadequate security protections.
The customers claim the faulty system allowed individuals to access their phone system and, as a result, they incurred fraudulent overseas charges.
Indemnity Paid: $345,000
Before we move on, here a couple of interesting facts about data breach losses:
Based on a sample of 900 breaches reported to insurance companies 86% of the data breaches were discovered by third-parties (not by the companies whose systems had been breached), and 96% were avoidable with simple precautions.
Monster # 6: Defending software that performed as promised *
How about getting sued when you have not done anything wrong and your product performs as expected?
A software company was sued by a customer after he used the company’s cost estimating software.
The software itself was found to have functioned perfectly. The error was on the part of the user who later underbid a work project. The customer eventually dropped the case, but only after considerable legal expenses were incurred by the software company.
Indemnity Paid: $0 / Defense Costs Paid: $175,000
Monster # 7: Inability to deliver on marketing “promises” *
A personal computer assembler is sued by a group of consumers in a class action suit.
The suit alleges that the company’s equipment did not live up to advertised specifications. Citing issues such as lack of speed and poor upgrade capability, the consumers demand full refunds.
Indemnity Paid: $1,600,000
Monster # 8: Web design and integration services * *
Our policyholder was hired to create an e-commerce website for
trading and selling valuable collectibles. The client later alleged that our policyholder failed to deliver a working website and negligently recommended that the client purchase Web-enabling software from another company that then abandoned the project and the software.
Indemnity Paid: $180,000
Defense Costs Paid: $558,928
* Loss Scenarios (examples) marked with * provided by Chubb Insurance Company of Canada.
* * Loss Scenarios (examples) marked with ** provided by Travelers Canada.
I’ve limited this article to the brief explanation about Errors and Omissions and the other 7 loss scenarios because I know that most people won’t be naturally inclined to reading about insurance.
But when you think about it, being able to learn about real-life examples of what could happen to your business (without actually experiencing it) is a very simple way to identify potential risks ….. and that, my friend, is precisely step #1 to implementing a good risk management plan.
Insurance can help you when/if bad stuff happens. But there’s tons of stuff you can do, aside from purchasing insurance, to protect your business.
