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Welcome back again everyone to another edition of All Things Financial. The last couple weeks we’ve been talking about Policy Comparisons – How to Compare. And if you missed the first 2 parts you’ll want to check those out. Because I went through some general concepts that are little known and widely misunderstood on how people compare insurance policies when they’re shopping.
But to continue this we were ending up last week with some differences and nuances with, as opposed to car insurance coverage, what recreational vehicle policies might provide; or boat policies; or classic car policies. So for those of you who have motorcycle insurance or any of these ancillary type vehicles, I wanted to point out some of the different coverages which we started on last week.
And I want to pick up this week where I left off. And I’ll also discuss some other areas in insurance issues. And maybe exposures that you don’t even know you have as we get through this show today. And maybe help you identify some areas you’ll want to hurry and call your agent about and ask him, “Am I covered?”
So back to the recreational vehicles – I wanted to share with you a couple other areas especially with boats and like I say the motor homes and mobile homes. But a lot of times when you’re going on a trip, especially when you have a motor home you will take a pet. And I bet most of you don’t have your pet insured. You never even thought of it.
So yes you can buy pet insurance but secondly in a motor home, you can actually add pet coverage while you’re transporting a pet, in some policies, in some cases, with some companies. So whether or not you have pet insurance, so to speak, which normally provides for medical care for the pet, this type of insurance is if they get injured in an accident or something happens to them in an accident let’s say.
So your motor home policy might be able to endorse pets on and I’ll bet that you never knew that.
When we look at some of the boat coverage – you know if you’re sailing in international waters do you think you might need some special coverage? You know, seems like common sense. Most of you would know that but I bring it up anyway because it is something you want to ask – If you go in international waters. Well be careful because – is Mexico international waters? or when you go off the coast of Florida. So be a little bit careful there.
We’re talking about some coverages that we didn’t have to concern ourselves or at least we didn’t know to like piracy and terrorism. So even on domestic waters we now have coverages that you may need to contact your agent and find out, “Am I covered for piracy and am I covered for terrorism?”; some of these things.
Now for you fishermen with the bass boats and I know they’re probably a lot of you listening. Some of you might be fishing tournaments for money and you might miss out on a tournament that you’ve invested money for, that your boat didn’t make it. It broke or you had a boating accident. What I want you to do is – know that you can talk to your insurance carriers about, “I fish for tournaments. And can I have coverage for loss of income or revenues or expenses as a result of the boat failing or me being in an accident?”
So I’m sure a lot of you didn’t know you could even buy that coverage but you can in many cases. Now again, remember there are a lot of discounts available that are not available in regular car insurance for boat policies. And that’s again Boaters’ Safety Training.
And you also have to know you might have to pay additional premiums. If you’re taking passengers you might have to pay additional premiums that cover those passengers if they’re hurt. Especially uninsured boaters liability and all those type of things. And you might have to cover equipment especially. They might not cover it on the regular boat policy. So know that fishing equipment, life preservers, things like that might qualify you for discounts but might also need covered. So you have to know all those things.
You know when you go into a Boaters’ Safety Course you might have as Boaters’ Certification – every 2 years or 3 years you might have to update that to keep the discounts but it’s good to have that. And you might also get a discount for having ship-to-shore radio on there; because it’s a safety feature. You might not think of but it might be a safety feature that’ll give you some discounts.
Alright let’s take a quick break and we’ll be right back after this.
Welcome back again everyone. Now we’re going to get into some areas that I’ll bet you never even think of. But I’m here now to help you. One of them is texting while driving. There are issues with texting while driving and we’re a little bit concerned as insurance agents over – will policies begin putting provisions for if you’re texting while driving maybe coverages will be limited or something like that. So be aware of this because we already know the police can check your phones and see that there was texting and things like that; very, very dangerous. Remember when you’re driving a vehicle you’re really driving a loaded weapon so be very, very careful out there.
But an area I wanted to point out was an article I ran across. And I’ll cite the study, but you know what it pertains to? – Football games. And I don’t mean participating in football games. I mean fans of football games and fatalities and car accidents after their team wins. So here goes.
There was an article. It’s an old article but I wanted to resurrect it for those of you now that it’s football season. And here is what it is, it dates back to 2011. It was in the “Insurance Journal” in the “National Region”, April 4th of 2011. And what it did was, it cited a study which I’ll tell to you about in a minute who did this, but here’s what it is.
The description says, “Closely contested major sporting events are followed by a significant increase in traffic fatalities for the fans of the winning team”. Whoever heard of this? So what seems to be happening is research from the North Carolina State University came up with this report that when your team wins there’s sometimes an increase in traffic fatalities – because the teams are winning and I guess it gets everybody all hyped up.
It said, “A previous study showed that traffic fatalities increased in the hours following the Super Bowl. Dr. Stacy Wood-Langdon” L-A-N-G-D-O-N, “distinguished Professor of Marketing at North Carolina State and a lead author of a paper describing the research went into a question saying – “Are close games or highly contested games; are the fans at more risk after the game?” Basically they’re all ramped up.
Now we don’t know whether it’s ’cause of drinking or whether it’s ’cause of testosterone, as it goes on to say in the article, that hypes people up and makes people more aggressive but here’s part of their conclusion. And the reason I’m sharing it with you on the show is because yes it pertains to insurance but it also pertains to your safety. Remember this show is All Things Financial so I’m trying to keep you safe folks.
“Games rated as nail-biters are far more likely to result in traffic fatalities” this study goes on to conclude, “but only for fans on the winning team”. So I don’t know maybe it doesn’t pay to win but be careful when you’re at these football games. “Wood and researchers”, it goes on to say, “from the University of South Carolina (USC) evaluated traffic fatalities after 271 games played between 2001 and 2008 including championship games”.
And it just goes on to say that they found that traffic fatalities increased significantly after close games and games that were like nail-biters. So the paper, it’s called if you want to look it up – “The Bad Thing about Good Games – The Relationship between Close Sporting Events and Game day Automobile Fatalities”. And the reason I bring it up on the show is forewarned is forearmed. So it’s from the General of Consumer Research. It was co-authored by Dr. Melane Morgan-McInnis – a Professor of Economics at USC; and David Norton PhD student at USC. Also the North Carolina States Department of Business Management is part of the university’s Poole College of Management had a part in this study.
So I bring it up for one main reason – it’s football season, be careful. As I say forewarned is forearmed. So be careful out there.
Now another thing I wanted to point out. A totally different area for those of who are involved in so many different sporting events or any community events – I know most of you don’t even think about insurance but my question as a financial planner not just an insurance agent is – are you covered? So if I had a hundred of you listening – tell me everything that you do on your off time. I’d be asking, or I’d ask you to ask me the question, “Am I covered?”; “Am I covered?”; “Am I covered?”; “Am I covered?” for all these different things.
It might be scuba-diving and you know bungee-jumping; it might be Little League Baseball; it might be coaching Little League Baseball. So all of these bring up activities and it might be being on a community board; or a community association; could be holding picnics; it could be holding trade shows; it could be doing all these things; holding fairs, farmers’ markets. All of these different ancillary activities raise the question to a seasoned and skilled financial professional – “Am I covered?”
So, I want to get into one area which is for those of you who are on boards or in leadership positions because you’re volunteering – and I know a lot of you probably are. I will start this discussion by saying many of you or maybe most of you are not covered. So you’re volunteering for organizations; you’re taking on responsibilities for those organizations; you’re making decisions on behalf of those organizations and may be personally liable for those decisions made having no protection through the organization.
So we’re going to take a quick break again. Come right back I’ll explain what I need; what I mean and what you need to make sure you’re covered when you’re volunteering out of the goodness of your heart to these organizations – to make sure that you’re also protecting yourself and the other members on the board; and the other members of the association properly, okay. Let’s take a quick break and we’ll be right back.
Okay let’s get right into this issue. You’re volunteering for organizations; they get, they have no money sometimes. So you’re doing volunteer work- you’re coaching, whatever it is for no money. You’re putting yourself and your family and maybe even your business at risk. For what? – To do good work. But, be careful here folks because if you’re not covered it backfires. If you wish you never had done it then you need to know in advance – could coverage have been available; and then could the organization have afforded the coverage.
Many people are not volunteering because of the risks. But there’s a policy that can help mitigate some of the risk and it’s called – a Directors’ and Officers’ Liability Policy. Now for those of you listening you first need on your own; your automobile insurance, your home insurance; your miscellaneous insurance like I’ve talked about – recreational vehicles, motorcycles, boats, whatever and Umbrella Liability Insurance.
I’ve not talked about that on recent shows so write that one down. I won’t go into it in detail today. It will not typically provide coverage though for Directors’ and Officers’ Liability. So you still need; if you’re volunteering or on a paid board. You need to make sure that Directors’ and Officers’ Liability is first purchased from a reputable company. And many organizations don’t have the money to be able to afford the coverage.
And secondly, I’m going to help you see and write down what you need to be looking for, for starters out of the Directors’ and Officer’s Liability policy. So the very first thing that I want you to do is look and see when you join a community association or a board, I want you to realize you’re a fiduciary when you’re acting on a board. Talk to your attorneys first. And ask them, “Am I putting myself in any legal liability that I need to know about and I’m unaware of?”
And that can go so far as the attorneys might tell you, “Do you sign any leases? Do you sign any papers as a board member? Do you vote on anything?”
“Well yes we do.”
“Well that might be deemed as a contract.”
Who knows I’m not an attorney. But you need to ask the attorneys, your own attorneys and maybe the board’s attorneys – and they should have one by the way, “What liability are we exposing ourselves to individually and as an organization?”
So typically we see that as a fiduciary liability which means – you have to do what a prudent person in the court of law they say- would have done to put the interest of the organization first and the members of the organization over yourselves and above and beyond. So get to an attorney is my first recommendation. And ask them, “What risks am I undertaking that I’m unaware of?”
Number 2 – on the insurance side with this Directors’ and Officers’ Liability even with your best efforts you still can’t control all the risks. So there are potential lawsuits that you might want to be buying this insurance to protect, and you might want to be shopping the insurance from many different companies.
So one is – breach of fiduciary duty. Are we covered if there’s breach of fiduciary duty? A lot of; how about employment issues? We had a secretary, we had a janitor, at the association we fired and they sued us. So for discrimination, “We didn’t hire”. You know sometimes you might be in a situation where it’s not an employee that you had. It was a perspective employee that you chose not to hire and they sue you for discrimination or whatever.
So don’t you think you might better have coverage so that you’re not on the hook paying all the legal bills defending yourself that you did not do anything wrong. Low and behold 2 or 3 years later it goes through the courts and yeah it was proven you did not do anything wrong. But it didn’t get to the courts for 2 or 3 or 4 years. Who’s paying all those legal bills for those 2 or 3 or 4 years until it gets to the judge to say, “Yeah it’s a ridiculous lawsuit”? – Well you are.
So when you look for the Directors’ and Officers’ Liability coverage, you’re looking for – does it have these coverage for breach of fiduciary liability but you’re also looking to see does it pick up defense costs of each individual; and in fact is each individual an insured under the contract or is only the organization insured?
So if the organization’s sued and the judgment goes against them, the organization is not remunerated but the payment is made based on any liability to the organization. But what if it doesn’t pay based on the liability of any one individual in that organization acting on behalf of the organization? Ouch!! So you better make sure you’re covered; do your homework there.
Now you want to make sure that the insured like I say is – picking up all the members and all the officers. So I’m talking here about members and officers. Why do I want that? Well what if one member in the organization does something, and they’re not an officer and they put the organization at risk for being liable for something because they were a member of the organization? Boy oh boy, what a mess huh!!
So you want to find out who’s an insured – are the members insured’s? Any action of the member as a result of an organizational activity? Are the officers insured?
Then you get to the next point and you say, “What about somebody stealing money?” What about members stealing money are we covered? What about officers stealing money or embezzling or not only money – theft of equipment? So are these things insured?
How about liability? When you’re a member of an organization and you conduct a picnic as or fundraisers. If anyone gets hurt at those activities are you insured? And another one is what if you plan a big event? Put all that expense into the big event, have all the commitments from all the vendors, let’s say, and all the members or not members but participants who might pay an entrance fee to the event and then it gets rained out. Or power goes out in the facility where you were holding the event. Do you have No Show Insurance? Do you have Show Cancellation Insurance? There’s a lot to think about here.
Now you see why I tell you – business owners and individuals alike. You need to surround yourselves with competent financial, legal and tax professionals. Don’t try to do this yourselves. Like the old TV shows, “Don’t try this at home kids!” because it’s too complicated. And I’m sharing that with you here. Don’t try to do this on your own. It’s tough. There’re a lot of things that you’ll never think of and in fact many professionals don’t even think of, so you have to get highly skilled ones.
How about this? What if a lawsuit is between an insured to another insured? Wow! A lot of policies don’t cover that, but you wouldn’t know to ask. So when you shop one company and you shop another company and they both say they’re giving you the same coverages, and you look at the policy quotes and they’re both saying $1 million or $5 million, and this and that and the other. You don’t know how to look in that policy coverage booklet.
Insured versus insured is excluded on one; claims on that and they’re covered on another one. Obviously one policy is going to be more expensive if it’s including more risks of loss than the other one is. Have your attorneys review your contracts when you’re shopping for coverage folks. Do not try to do this on your own.
Now – employment discrimination. Again I just touched on that but what about breach of contract? You know the attorneys will tell you there are verbal contracts, they’re written contracts, but if you tell somebody you’ll do something and don’t; what if your organization says they’ll do something and don’t? What if they sign agreements and then have a breach of contract for whatever reason? Are breach of contracts covered?
These are all issues that when you’re a member of an organization you’re now taking on that you weren’t before you volunteered or for pay. So either way I’m asking you to be very careful. I’m asking you to research. I’m asking you to ask the right questions. And I’m asking you to get and surround yourself with the right professionals to help guide you.
Okay folks, that’s it for another edition of All Things Financial. We’re out of time. I could go on and on as you know. But we’re out of time so we have to stop. I’ll be back again next week.