Handling Replacement Costs

An assortment of United States coins, includin...

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Last week I attended a class on Commercial Property from the National Alliance for Insurance Education & Research. I found that as much as you think you know, there’s always something new to learn. If one new piece of information comes to light, then it’s worth the 3 day class! The new piece of information that I learned is how replacement cost coverage is handled on “Stock”.

On a Commercial Property policy, coverage for Buildings and Business Personal Property may be written on a Replacement Cost vs. an Actual Cash Value basis. Actual Cash Value, or its acronym, ACV, is a depreciated settlement based upon a negotiated portion of total cost of replacement or repair of the insured’s property. Replacement cost is an insurance settlement based upon the actual cost to replace or repair the insured’s property at the time of loss.

Business Personal Property (BPP) is defined as: office furniture & fixtures, machinery & equipment and stock. Opting for replacement cost coverage on BPP does not give replacement cost coverage to stock (even though it’s part of BPP). You must additionally opt for replacement cost coverage on stock. Replacement Cost Coverage is indicated separately on the insurance policy for Building, BPP and Stock.

A classic example is the plumbing contractor. The plumber has opted for replacement cost coverage for his Building, BPP and Stock. Examples of his Business Personal Property would be: office furniture, photocopier, fax machine, telephone system, plumbing torches, compressor and generator. Stock would be: pipes, tubing and fittings.

Call us to review any coverage questions or concerns that you may have.  At A.G.G., we strive to build you a better mouse trap!

Bill C.
A.G. G
ordon, Inc.

For more insurance information, visit the A. G. Gordon Website.

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Don’t Let the Bedbugs Bite!

Bedbug

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You can’t scroll the internet or listen to the news without hearing about  the harsh reality of bedbug infestations in hotels, planes, theatres, campuses, hospitals and office buildings.  This public health issue is quickly becoming a global crisis with sightings of these creepy critters from most U.S. cities  to the far reaches of Mumbai, India.

However, there are several measures you can take to minimize the risk of bedbug bites and infestation. Some include: checking your hotel mattress and keeping luggage away from soft bedding or upholstered furniture so you don’t transport the unwanted guests back home. Yard sale aficionados  need to think twice about snagging upholstered sofas  or chairs left at the curb.  These tips may help to minimize your exposure to bed bug bites and property infestation.

What happens if you do have an infestation? Will insurance pay the costly expense to eradicate the pesky pests? Unfortunately, insurance usually isn’t the answer here.   Most policies exclude insect infestation of any kind and do not include any coverage. “…The cost of getting rid of bedbugs, like other vermin, is considered part of the maintenance associated with owning a home and generally is not covered by standard homeowners’ and renter insurance policies,”  wrote Claire Wilkinson, Vice President for Global Issues at the Insurance Information Institute; “Most standard commercial-property insurance policies also have vermin exclusions for infestation”.

Most seasoned insurance agents will agree that insurance property coverage forms clearly exclude coverage for bedbug treatment; however, liability coverage may be a different  bug story. Ever think what would happen if a guest  is bitten by a bedbug at your home? Or perhaps your child has a sleepover and a young guest is bitten, resulting in infection and ongoing medical treatment. Before you know it,  you are being sued by the parents for negligence as a result of harboring the bloodthirsty buggers.  The good news is most homeowners liability policy forms do not exclude insects so there is probably liability coverage for this kind of lawsuit.. The same is true for commercial policies if the policy form does not specifically exclude insects. In addition, many businesses have coverage under business interruption forms if the need to close their business to properly exterminate the creepy crawlers arises.

Insurers may end up feeling the bite from bedbugs in other ways. New York state legislators became the first state to introduce a bill that would require bed bug coverage as an option for policyholders.  If NY passes this law, look for other states to follow suit.

It will be an interesting few months in the insect and insurance world as the globe grapples to safely avoid a 21st century plague. 

And for more relevant and topical insurance information, visit the A. G. Gordon, Inc. Website.

Water, Water, Everywhere.

Water damage due to faulty rainwater downpipe

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Homeowner claims resulting from water damage are on the rise (no pun intended). Bob Passmore of the Property Casualty Insurance Association of America reports that “out of every $100 paid in insurance claims, $12 goes to water damage and freezing claims, not including water damage from flooding rivers and seas.   Flooding from ground water is not covered unless you have a flood insurance policy.  

Water damage, other than floods, is covered if the cause is sudden and accidental. A loose drain pipe from the bathtub that slowly leaks for months and buckles the bathroom floor is not covered.  However, the damage caused by a pipe that suddenly bursts is covered. The plumber’s repair to replace the pipe is not covered but the resulting damage is.  

There are measures you can take to prevent and lessen the amount ofwater damage and their resulting claims. Here are some that come to mind:  

  • Ice dams are caused by the melting ice in your gutter that backs up under your roof shingles, causing water damage to your ceilings, windows and walls. Use an ice dam rake on your roof when snow accumulates.
  • Have a licensed plumber periodically check your plumbing pipes.
  • Replace your washing machine and dishwasher hoses with ‘no-burst’ hoses. Unlike rubber hoses that can burst over time, these are made of a metal sheath that protects against bursting.
  • Periodically check around and under your hot water heater for any signs of leakage – a small drip from the tank can turn into a ruptured tank in no time at all!
  • Never run your dishwasher or washing machine when not at home (easier said than done, I know).
  • Check your toilets and under your sinks for any signs of water leakage.
  • At the first sign of freezing weather, turn off your outside water spigots (from the inside of the house) then drain from the outside. Newer spigots are designed to prevent freezing do not have to be shut off from the inside during the winter months. These can be replaced by a licensed plumber.
  • Check your ice-maker and its water line for any signs of leakage.
  • When on vacation, especially in the winter, have someone check your home daily.
  • Water alarm sensors are available to detect the presence of water in your basement
  • A temperature monitoring device plugs into your phone outlet and can alert you via cell phone that the temperature has dropped to the danger point of freezing. Use such a device when vacationing in the winter.
  • Newer gas furnaces operate with an electronic pilot. Older models have a gas flame pilot that can blow out from a draft. No heat means freezing pipes! Before going away on vacation, familiarize which type of pilot you have. If the former, this is another good reason to have someone check your home daily or have a temperature monitoring device!

Please watch for our future blog, “How to minimize further damage if you sustain water damage to your home “.  

And for more relevant insurance information, and resources to save you time and money, visit the A. G. Gordon, Inc. Website.