Damage to Rented Premises

Any time a business rents or leases a space to operate from they sign a contract. In that contract are insurance requirements stating that the tenant will carry certain liability limits. Normally they will ask the tenant to carry a commercial general liability policy, and more often than not they ask for at least $1,000,000 per occurrence limit. The reason they ask for this is that if the tenant is the cause of a fire or other type of damage to the rented building, the landlord wants to make sure that the tenant’s insurance will pay for the damages, and not their own insurance.

Commercial General Liability takes care of a lease contract with two different types of coverages. The first is the coverage I mentioned above of $1,000,000 per occurrence limit. This coverage, however, only gets the tenant half way there. The per occurrence limit doesn’t cover for actual areas of a building that the tenant rents or leases. It will pay for only the part of the building that is not rented by the tenant. An example might help explain this better.

Example:

Let’s say that business XYZ, Inc rents unit A of a four unit office building. If XYZ, Inc causes a fire that extends damages to both unit A and unit B, the per occurrence portion of their insurance policy will only cover damages to unit B. It will not pay for damages to unit A because it is leased or rented by them.

Damage to Rented Premises (sometimes called Fire Legal Liability) is the other coverage a tenant needs when they rent space. This coverage is often included in a general liability policy as well but many times is not specifically mentioned in lease contracts. In the example above, Damage to Rented Premises would be the coverage that would pay for unit A that XYZ, Inc. rented.

The reason I bring this up as a blog article topic is because the Damage to Rented Premises is often overlooked. Since it is left out of many lease contracts, businesses don’t think to check with their insurance carrier about the coverage. Your typical commercial general liability policy will only include $100,000 to $500,000. If company XYZ, Inc. in the above example rented a large space, this may not be enough coverage, and they could pay for some of the damages out of pocket.

So next time you rent a space for your business be sure to have Fey Insurance Services review the lease and double check your commercial general liability insurance limits to make sure you are covered in case of a large fire.

How Safe are the Airbags in Your Car?

U.S. Department of Transportation Issues Warning

Since their invention in the 1950s, through their development during the 1970s and added as a required feature in the 1980s, airbags have become an important factor in decreasing injuries of those involved in automotive accidents. Airbags function as supplemental safety devices designed to work with seat belts to minimize injuries in car accidents. In theory, airbags reduce the chance that the occupant of a vehicle's upper body or head will strike the vehicle's interior or windshield during a crash, thus decreasing the severity of injury.

But, are the air bags in your car really safe? Will they deploy in the event of a collision, or will they actually cause further injury? That question has been raised due to the increase in faulty air bag deployment caused by improper installation of airbags in a number of independent auto repair shops in the past few years.

The U.S. Department of Transportation recently warned the public that they have a concern involving the purchase and installation of a significant number of potentially faulty air bags by these smaller repair shops. Soon the DOT will announce a process for the public to follow to determine if their vehicle may be at risk. That process may involve questions for insurers who paid claims for air bag replacements. 

The DOT estimates less than one tenth of one percent of all vehicles may be affected, and they have determined that this problem is limited to within the last three years.


In addition, the National Highway Traffic Safety Association (NHTSA) has determined that air bags must be used correctly or injury or death can result. Children are especially vulnerable to injury or death from airbags. The NHTSA estimates that about 300 people, including 180 children, have been killed because of air bags. Countless others have sustained injuries.
 
NHTSA Findings:

• Passenger-side air bags, as they are currently designed, are not acceptable as a protective device for children positioned in front of them and can kill or critically injure these children in accidents that would have been survivable had the air bag not deployed.
   
 • The number of children killed and critically injured in accidents similar to those investigated for the Board’s study will continue to increase unless immediate action is first taken to determine the benefits of passenger-side air bags, as currently designed.

• Air bags are being designed, because of certification testing requirements, primarily to protect unbelted rather than belted vehicle occupants even though the air bags are promoted as supplemental restraint systems and the majority of motor vehicle occupants now use seatbelts.
   
• In 9 of the 13 accidents investigated for this study in which there were collisions with other vehicles and passenger-side air bag deployment, the change in velocity was less than 20 mph, yet 5 of the 9 children in the right front passenger seats in these accidents sustained serious, critical, or fatal injuries from contact with the passenger-side air bag (2 of the 5 children were in rear-facing child restraint systems).

If you have had repairs done on your vehicle in the last three years that involved the installation or repair of airbags, it is imperative that you have the devices checked out to make sure they will work properly in the event of an accident. 

You can find more information at http://www.nhtsa.gov/ 

Deductible Basics

When a covered insurance claim happens the insured, in many cases, will be responsible for the first few dollars of most losses. The amount they are responsible for is called the deductible. More often than not, deductibles are only associated with property damage of the insured’s own possessions whether that is a vehicle that was damaged or damage to their contents, their buildings or even their loss of income. On some occasions you may see deductibles on liability claims but not in many.

Deductibles can come in many different forms on insurance policies. You can have a given dollar amount, say $500. Often times you see this type of deductible on home insurance or business property insurance. Some deductibles might be a percent of the loss like 1% or 10%. Sometimes you will see this type of deductible on a home or business but many times it will be associated specifically with earthquake coverage. Deductibles can be vanishing deductibles. As the insured racks up years of no losses, their deductible gradually drops each year until eventual it is $0.

In most cases the deductible is per claim. This means that each time you have a claim you pay a deductible. It isn’t like your typical health insurance policy where you have an out of pocket deductible for the year and once you meet that limit you are done with the deductible. In property and casualty, if you have a $500 flat per claim deductible you will pay $500 each time you have a claim no matter how many you have in a given year.

Deductibles can be a helpful cost savings tool. They can be raised to help drop premiums but the insured needs to understand that by raising deductibles they have taken on a bit more of the burden of possible claims.

It is important for insureds to understand what their deductible is so that they can be prepared to financially meet its requirement if a claim were to happen. I mention this more in connection with a percentage deductible. The insured should know if the percent is on the cost of the claim or on the coverage limit. For example, if a person had a $200,000 house and an insurance policy with a 5% deductible (on the coverage limit) it would be best to know that you have a $10,000 deductible before you have a claim. Someone that doesn’t know their policy might think that it is 5% per the cost of the claim.

Deductibles are just one of many facets to an insurance policy. Be sure to familiarize yourself with your policy and policy coverages and consult your independent insurance when ever you have any questions.

Mobile Phone Rule Changes: How CMV Drivers Communicate on the Road

Here is recent information about cell phone use in CMV published by RiskControl360:

All drivers of Commercial Motor Vehicles (CMV) should know by now about the new rule restricting their use of hand-held mobile telephones and devices. This rule was adopted by the Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and Hazardous Materials Safety Administration and went into effect on January 3, 2012.


The purpose of the rule is to help reduce distracted driving and prevent roadway accidents, injuries and fatalities. According to the FMCSA, the odds of a driver being involved in a safety-critical event, such as an unintentional lane deviation, crash or near-crash, are 6 times greater when dialing a mobile phone while driving than when not doing so. Similarly, CMV drivers are 23 times more likely to be involved in a safety-critical event while texting and driving versus when not texting and driving.

Therefore, the rule restricts CMV drivers from reaching for or holding a mobile telephone while operating their vehicle, or pushing more than one button to operate the device. What this means is that the device must either be mounted or otherwise securely within reach at the control panel. In short, CMV drivers who use a mobile phone while driving can only operate a hands-free phone located in close proximity and cannot unsafely reach for a device, hold a mobile phone, or press multiple buttons.

So what are drivers still permitted to do?

-Locate the mobile phone so it is operable by the driver while restrained by properly adjusted safety belts.

-Utilize an earpiece or the speaker phone function.

-Use voice-activated or one-button touch features to initiate, answer, or terminate a call.


Drivers found not in compliance with these rules can face civil penalties of $2,750 and disqualification for multiple offenses. In addition, employers are prohibited from requiring or allowing their drivers to text or use a hand-held mobile phone while driving and may be subject to civil penalties up to $11,000.

CMV drivers wishing to comply with the new rules and improve roadway safety can follow FMCSA’s simple slogan: No Call, No Text, No Ticket!

For more information, please contact RiskControl360’s Group Safety Coordinator, Lisa Shaver at (877) 360-3608 ext. 2367.

Mind the GAP

Every time you step off the Tube in London's Underground you hear a women's voice in her perfect British accent reminding you to "Mind the gap". It is a good thing too. At some stops on the Underground there is a pretty big gap waiting for you as you exit and if you got caught in one of those monsters you could be in some trouble. The same is true for the gap that occurs in leases and loans on cars. Normally over time a vehicle's value depreciates faster than the loan or lease can be paid off. This is commonly referred to as being "upside down" on your loan or lease. If during this "upside down" period you total a vehicle in an accident there is going to be a gap between what the insurance company will pay you (actual cash value of the car) and what you still owe on your loan or lease. The good news though is there is insurance that covers this gap and it is appropriately named GAP insurance.

GAP insurance coverage helps pay for the difference between actual cash value of the car and what is owed on the loan or lease. One thing to keep in mind though, GAP insurance from personal auto insurance companies does not cover the cost of warranties or other add on charges that might have been included in the loan or lease.

So for an example, you totaled your vehicle and the insurance company is going to value your car at $5000 but your loan was still $7000. Let’s also say that of the $7000, $500 of it is because of the warranty that you had purchased. Therefore, the insurance company (if GAP insurance was on your policy) would give you $6500 ($7000 due on the loan minus the $500 warranty cost) instead of $5000.

Cost Savings Ideas

There is constant talk today about cutting costs. Here are two options that might help you save a few dollars on your insurance in this rough economy.


1)Raise your deductibles:
A typical homeowner policy has a deductible of $500 and a typical auto insurance policy has $100 for comprehensive and $250 for collision deductibles. One way to help save a few dollars on your annual insurance bill is to increase your homeowner deductible to $1000 and your comprehensive and collision deductibles on your auto to $500 each. Note that when you do this you bring a little bit of the financial risk back on yourself. A good rule of thumb to help figure out if the deductible change is worth the risk is to take the savings you will get for increasing your deductible and multiply it by three. If that number is larger than the difference between your old deductible and your new deductible in my opinion you are taking on an appropriate amount of risk for the savings.

2) Drop physical damage on your old vehicles.
If a car is 10 years or older it is probably worth researching whether you should have comprehensive and collision coverage on your car (many people know this as "full coverage"). Two ways to help you decide if dropping comprehensive and or collision from your car is worth it are:

1. The Insurance Information Institute says that if your car is worth less than 10 times the amount you pay annually for comprehensive and collision coverage it isn't worth keeping the coverage.

2. Another way to analyze if it is worth keeping the coverage is to take the premium you pay for collision and add it to your deductible amount. That is the total amount that it costs you to insure your car. (i.e. Your annual collision premium is $250 and your collision deductible is $500. If you total your car you will have paid $750 ($250 in premium and $500 in deductible) before you received any money from your insurance company) If in your mind it isn't worth spending that kind of money to save your vehicle if it was totaled than you might want to consider dropping that coverage.

Insurance and Your College Kids

Out in front of our Oxford, OH insurance office, it is a busy place. Today 16,000+ Miami University students return to begin a new school year. This annual pilgrimage brings up potential insurance issues pertaining to what parent's personal insurance policies cover or don't cover. Three areas that parents should be aware of:

(1) If your son or daughter is going away to school over 100 miles from home without a car, most companies will rate your Personal Auto Policy for them being married which is a nice discount. Let us know if this discount might apply to your family and your Personal Auto Policy.
(2) Most insurance companies will extend personal property (contents) coverage and personal liability for your son or daughter while they are in college and living in a dormitory. Some, but not all, will also extend coverage if they are living in off campus facilities such as an apartment or other student housing. Please check with us to see if your insurance company provides this extended protection. If not, we should be able to write a Tenant/Homeowner for your student to cover both their personal property and personal liability while they are an undergraduate. If they are in graduate school, they should definitely have their own Tenant/Homeowner Policy.
(3) If you or your children are using a rental truck to take their things back to college, U-Haul, Penske, Hertz and other will offer you coverage on the vehicle (collision damage waiver) and extended liability. While these may be covered by your Personal Auto Policy, not all companies extend the protection, so check with us before renting the vehicle. Whether or not they are covered will depend on the length and Gross Vehicle Weight of the vehicle and several other factors. We may be suggesting you buy the extra protection from the rental company before your trip.