Fair Vs. Unfair Discrimination

Discrimination is regularly practiced by insurance companies and it's quite necessary. Before going further, let's make an important distinction. Insurance companies must practice fair discrimination. Discrimination refers to making choices and the practice makes sense as long as the choices are not unfair.

Unfair Discrimination

Unfair discrimination takes place whenever a choice revolves around a distinction that is irrelevant to offering insurance coverage. An example of this is to deny coverage based upon an arbitrary difference such as race or religion.

Fair Discrimination

Insurers are constantly involved in discriminating. They continuously evaluate situations to see if they are in a position to offer insurance coverage. Companies note differences and make choices among their insurance applicants. This process is important because insurance programs are designed using justifiable distinctions regarding the type of persons, property and situations they wish to cover.

Market Selection and Pricing

When an insurance company does business, it has to make decisions about the market it wants to serve. For example, in the car market, does it wish to insure only regular cars and drivers with pristine records or expensive sports cars and drivers with a few blemishes? In the homeowner's market, does the company wish to target higher-value homes, such as those with a value over $300,000 or might it decide to exclusively write mobile homes?

Once their market niche is selected, a company has to create matching prices. What components must a company consider? Well, an insurer must charge premiums that reflect the:

• dollar amount of losses paid to all parties filing valid claims
• company's costs to investigate and settle claims
• insurer's operating expenses (including compensation to employees and agents)
• premiums charged by their competitors
• the legal requirements of applicable state insurance regulators

Underwriting

Underwriting comes after market selection and pricing. A company has to create and follow rules for selecting and keeping the type of business that matches its premiums. Through underwriting, an insurer must properly select (fairly discriminate) among persons and kinds of property that fit its insurance program. If a company doesn't apply their selection standards consistently, it will eventually lose the ability to do business. An easy way to determine a company's selection practices is to look at their applications. If the information is important for underwriting, it should show up on the application. This is true no matter the type of insurance or market targeted by the insurer.

Discriminating Conclusion

Remember, the decisions made by an insurer in writing and renewing coverage must validly affect their market and prices. When the decisions are not based on these factors, then unfair discrimination takes place.

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Contractors or Cons?

Your home may be destroyed by a fire, flood, storm or other catastrophe. You're scrambling around to get your life back in order and you may think that things couldn't get worse. Well, they can and often do because of people who can't spell contractor without c-o-n.

The period after a serious loss is hectic, emotional and disorienting. Your major concern is to get your home repaired or rebuilt. These elements make you very vulnerable to "CONtractors," people who specialize in victimization instead of construction and in rip-offs rather than repairs.


Slow Down And Make Good Decisions

While you may be in a hurry to restore your loss, it is critically important to avoid persons who appear on your damaged doorstep offering to start construction. While handling a serious loss, think of taking precautions such as the following in order to avoid compounding your problems:

• Pay attention to any "feelings" you get about any contractor, particularly when they initiate contact
• Refuse to pay any money "up front"; a reputable contractor always works according to a written agreement, spelling out cost of materials, labor and other important work details
• Contact more than one contractor to get competitive estimates
• Make sure that any contractor you talk to provides references and proof that they are insured
• Check references and ask for evidence of how long the contractor has been in business
• If a local chapter is available, call the Better Business Bureau and check for complaints
• Ignore any tactics intended to pressure you into making an immediate financial commitment.

Keep in touch with an insurance professional during such trying times. They're already committed to providing genuine help.

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Identity Theft - Part 2

Part 2 is a brief explanation of what can be done to prevent ID Theft. Please see Part 1 for an explanation of what is meant by ID Theft.

Unfortunately, even as instances of ID theft grow, insurance is not a particularly important anti-ID theft tool. The type of loss is not something that an auto, home or similar insurance policy may be adequately adapted to handle. While homeowner policies do typically protect against credit card loss, coverage is usually just for the amount that falls below the minimum liability imposed by federal law (currently $50 per card). The serious harm suffered by ID theft victims are the costs associated with clearing up the aftermath, such as correcting one’s credit history and straightening out various accounts and records. This effort routinely takes months and hundreds to thousands of dollars in legal fees.

More insurers offer coverage for ID theft. Typically, the coverage reimburses legal fees or paying costs related to dealing with third parties to correct records. The most effective protection is for individuals to prevent becoming ID theft victims. Following are some suggestions:

• Keep your account information and Social Security Number (SSN) safe. One idea: keep home records in a locked file.
• Keep details about your various account numbers in a safe place so you can rapidly take care of stolen or lost cards.

• Be very careful with on-line transactions. Is the Website you use secure?
• Find out the privacy guidelines and safeguards of the businesses and parties you deal with.
• Make sure that you verify that websites for online transactions are legitimate
• Use password protection on smart phones and never leave such devices unattended

• Challenge those who request an SSN. Why is that information needed? Can some other information be used as an alternative?
• Think about buying and using a paper shredder. Many information thieves steal mail by going through garbage.
• Write companies who send unsolicited charge cards and have yourself removed from their mail list.
• Check bank and business records thoroughly for irregularities. Track down the reason for any unusual transactions or entries.

• Ask stores that use credit cards if they transmit the information with a wireless network. If yes, ask what safeguards they use to prevent airwave theft.
•  If you ever have a charge card transaction involving an imprinter that uses a carbon set for copies, ask for the carbon or watch the clerk destroy the carbon before it’s thrown away.
• Collect mail from mailboxes quickly and don’t put outgoing mail in your own mailbox. These practices give thieves fewer opportunities to fish for checks and private information.

Remember that these are just a few suggestions. Taking steps to minimize the chance of ID theft is a lot of work. That is a major reason that ID theft will continue to be a problem to individuals and businesses.

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Identity Theft - Part 1

Part 1 is a brief explanation of ID Theft and its consequences. Please see Part 2 for information on what can be done to prevent it.

ID theft is another form of fraud that has been around for as long as there have been dishonest people. It is a high-profile problem because technology has created many more opportunities for this crime. Credit cards, funds transfer cards, ATMs, wireless payments, slipshod business practices and the Internet have all combined to make identity theft a major problem for individuals and businesses.

ID theft describes any dishonest and unauthorized use of private information. In the past, the term rightfully described forgery or passing oneself off as another person to trick someone out of money and/or property. Today, it refers to an unauthorized party who secures goods, services, or other financial benefits by the fraudulent use of another person’s confidential information.

The favorite piece of information is a social security number. This information has routinely been used for gaining access to other private information such as driver’s history, credit information, bank accounts, loan information, credit cards, occupational history, military records, mortgage information, investment accounts and so on. Having this critical bit of information can allow a criminal to use another party’s accounts, secure loans, and charge a host of goods or services; the list is only limited by the criminal’s resources and imagination.

A complication of ID Theft is that it is a by-product of modern commercial life. Lenders, retailers, supermarkets, gas stations, airlines, travel clubs and everyone else have elevated cashless payments into the premiere way to do business, either live or electronically. This "ease" comes at great cost. As naïve as it sounds, business still operates on the assumption that everyone is honest. Few businesses have adequate safeguards to protect the information they collect on customers. Many businesses commonly mail out or electronically transit communications and solicitations that include private account information. It is common for electronic transactions to be transmitted through wireless networks and thieves are now able to intercept such data. Further, since businesses are often embarrassed that information has been stolen or compromised by hackers, many businesses keep such invasions secret or substantially delay reporting incidents to authorities and to their customers.

In light of business practices and attitudes, it’s basically up to the individual consumer to guard against ID theft. Though, in recent years, business best practices and government regulations are ramping up security activities. See Part 2 for tips on guarding against it.

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Managing Losses

What Is Loss Control?

A smaller dog is a lower risk for loss!

The process of identifying and acting upon situations that may lead to losses is called "loss control." Loss control may involve both simple and complex ways to reduce the likelihood of facing a loss. Besides insurance, you can choose to use protective devices, oral or written contracts to shift the responsibility for a loss to someone else, avoid ownership of items that may cause a loss (such as large pets), avoid dangerous hobbies and activities, or change your environment. Let's look at some areas where you might exercise loss control.

Loss Control - Automobile

•  Use a bike or public transportation instead of owning your own car
• Borrow or rent a car only when needed
• Take a course on defensive or advanced driving skills
• Practice defensive driving
• Obey traffic laws
• Avoid driving distractions such as texting
• When appropriate, voluntarily yield right of way
• Adjust driving habits according to driving conditions
• Park or store your car where there is greater security
• Install security alarm and/or other anti-theft devices
• Properly maintain the car in good condition, especially safety devices such as brakes
• Purchase or use cars that have higher safety ratings
• Don't lend your car to inexperienced or inconsiderate drivers
• Have an emergency kit available, including first aid 

Loss Control - Home

• Keep your  home and surrounding access ways in good repair
• Carefully store flammable liquids and dangerous chemicals
• Install security alarm and/or other anti-theft devices



an attractive nuisance?

• Consider an apartment or condo which avoids certain risks of home ownership
• Warn visitors about any known hazards in your home
• Avoid running a business from your home
• Take precautions when your premises includes attractive nuisances such as play sets, trampolines, tree houses and swimming pools
• Keep dangerous objects out of the reach of children
• Carefully scrutinize activities that may create a bigger exposure to loss such as dangerous hobbies or highly visible activities (volunteer work for organizations that may create extra chances for losses)
• If you are involved in high risk hobbies or activities, get the training and/or take precautions to be sure that your participation is as safe and responsible as possible
• Take care with heating and electrical devices and systems (such as portable heaters, loads on electrical circuits, etc.)
• Keep first aid kit available 
• Have a fire escape plan, including any needed safety devices (such as escape ladders from second floor exits)

Loss Control - Miscellaneous

• Store important papers in a secure, fire-resistance box or even in the corner of a freezer.
• Keep all the negatives of photos, so they can be reproduced
• Make digital recordings of personal property as documentation of your possessions
• Make copies of personal videos or digital property.
• Be sure to carefully read contracts or agreements before accepting them
• Arrange to exchange and keep important papers and mementos such as copies of videos and photos with friends so they're easier to access and less expensive than storing in a safety deposit box

Of course the help of an expert is invaluable and your insurance agent is a very helpful source for reviewing any actions you're considering to reduce your chances of facing a loss. So contact your agent for his or her expert assistance.

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How Much Are Your Possessions Worth?

In order to properly value your personal possessions, you have to go through the tedious, difficult process of documenting what you own. The following list could be very helpful in identifying what you own and, more importantly, be used as proof of loss in case disaster strikes such as a serious storm, theft, or fire.

If you print and complete this list, make a couple of copies, keeping one or two at a location away from your home. If you also want to keep a copy at your home, use an insulated safe (small ones are sold for in-home storage of important papers). Another good location is to put a copy in a plastic bag and keep it in your freezer (which can offer extra protection for non-food items).

Besides listing what you own, it's also good to do the following:

• take pictures of and/or videotape your possessions
• keep your sales receipts
• keep your warranty information
• get appraisals and keep them current (appropriate for expensive property)
• For items which you don't have receipts or product information, include information on when and where you bought the property.
• It may seem like a lot of work, but you'll be happy to have this gold mine of information to assist your insurer in giving you protection against loss of your possessions.

General Personal Property Inventory

Inventory completed by___________________________
Date completed_________________________________

$__________Sofa, couches, etc.
$__________Chairs
$__________Tables, end tables, etc.
$__________Desks, secretaries
$__________Chests, cabinets
$__________Cupboards, buffet, etc.
$__________Lamps
$__________Pictures, wall hangings
$__________Clocks
$__________Decorations
$__________Books
$__________Draperies, curtains, blinds
$__________Rugs
$__________CD players, DVD players and accessories
$__________Radios
$__________Televisions
$__________Digital Recorders
$__________Home entertainment accessories (speakers, digital equipment)
$__________Computers, scanners, copiers, monitors, printers, speakers
$__________Other computer accessories
$__________Table linens
$__________China, chinaware
$__________Crystal, glassware
$__________Kitchen appliances
$__________Small appliances
$__________Cookware
$__________Cutlery, utensils, etc.
$__________Beds, mattresses
$__________Dressers, vanities
$__________Bedding, blankets, linens
$__________Bath towels, linens
$__________Suits (men's, women's)
$__________Coats (men's, women's)
$__________Dresses
$__________Jackets, sweaters
$__________Skirts, slacks
$__________Shirts, blouses
$__________Hats, gloves
$__________Purses, wallets
$__________Costume jewelry
$__________Robes, lounging wear
$__________Shoes, boots, slippers
$__________Luggage
$__________Sports equipment
$__________Miscellaneous effects

$__________TOTAL


Valuables and Treasures

$__________Fine jewelry (list items separately at the bottom of the page)
$__________Valuable furs (list items separately at the bottom of the page)
$__________Art treasures
$__________Silver, silverware
$__________Camera equipment
$__________Guns and accessories
$__________Musical instruments
$__________Stamp collection
$__________Coin collection

$__________TOTAL


$__________GRAND TOTAL OF ALL ABOVE


List specific items and value below:


$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________
$__________ item__________

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Subrogation

Are you familiar with “subrogation”? It is a common insurance policy provision it is an important one! Your appreciation for insurance will increase if you learn about it!

An insurance policy, no matter what is being covered, is a contract between the insurance company and the person or organization that wants protection. When a policy involves liability coverage, the contract, essentially, means that the insurance company will handle losses (injuries to other people and/or loss or damage to property that belongs to others). However, eligible losses are restricted to those that are the policyholder’s legal responsibility. There are many times that a loss is settled under a liability policy; but someone else may actually be responsible. Consider an example:


Jon and Jenny are new to a neighborhood, so a few months after moving in, they throw a huge party and invite all of their neighbors. One of the activities is volleyball and they set up a net and space to play in their backyard.

The neighbors know each other well and they are quite competitive. During one game, an accident happens. Glen is injured while trying to block a ball at the net. The injury is very serious and Glen ends up paralyzed. He sues Jon and Jenny for his substantial medical costs and Jon and Jenny’s insurance company settles the loss.

Later, it is discovered that Paul, who was on the opposing volleyball team, had grabbed and pulled Glen when they were battling at the net, causing Glen to lose his balance and fall. Jon and Jenny’s insurance company learns of this and they sue Paul to recoup the money they paid for the loss.

The effort to recover payment made by Jon and Jenny’s insurance company illustrates “subrogation”. It is a legal right that allows the insurance company to take over a right held by their policyholder. Once an insurance company claims this right, it can pursue recovery from another person (including other entities such as partnerships or corporations) who is actually responsible for a loss.

Subrogation is an important process. When it is used, it helps to keep everyone’s insurance costs down and it also makes sure that liability insurance policies work as intended – by making sure that those parties who cause losses are held accountable.





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