Addressing Wildfire Policy Concerns With Your Clients

To say that the designated fire season time of the year is limited to just the summer months wouldn’t be accurate. According to the U.S. Department of Agriculture, today’s wildfire “season” has unfortunately become an all-season, year-round event.

In 2020, due to extremely dry conditions and unusually warm temperatures across much of the country, the nation experienced significant climate anomalies. In fact, last year was the warmest year on record in the U.S. As a result, the nation had one of the most active wildfire seasons to date, burning nearly 10.3 million acres — the largest acreage consumed by fire in the U.S. since 2000 — and exceeding the 2000-2010 average by 51%, according to the National Oceanic and Atmosphere Administration.

As things heat up across the nation, your personal lines clients will likely be looking to you, their insurance professional, to help them better understand coverage issues as they relate to wildfires under their homeowners’ insurance policies. The following are common issues surrounding homeowners’ insurance and coverage for fire-related losses.

Homeowners’ insurance and wildfire insurance

As you’re aware, most all standard homeowners’ insurance policies provide coverage for fire damage to the insured dwelling and any attached structures. However, if your clients live in an area where there is a higher-than-normal risk for wildfires, they may need to purchase additional coverage, typically at an additional premium that is based on a number of factors such as where the home is located and the distance to a fire station or hydrant, to name just a few. Simply put, wildfire insurance is really just a homeowner’s policy, but it is designed to protect homes in high-risk fire locations.

Tip: Now’s a good time of the year to review policies with your homeowner clients who may be in high-risk areas and discuss the different types of coverages available to ensure they have enough protection to replace their home and personal property.

Structures not attached to the dwelling

Structures that aren’t attached to the main dwelling (e.g., a detached garage, pool house, fencing, gazebos, outdoor garden and storage shed), will have coverage under most standard homeowners’ policies in the “other structure” provision. However, your clients may not be aware that the typical amount of coverage provided for other structures is based on a percentage of their dwelling coverage. Every carrier is different. Therefore, it’s difficult to say what that specific percentage may be. However, most standard policies allow for 10% or 15% of the dwelling to cover other structures not attached to the home.  

Tip: Homeowners are always making improvements to their property and don’t always take the time to inform their insurance agent as to these changes. When writing a new homeowner’s policy or when reviewing existing policies, remind clients of the importance of contacting your agency when they have added any new structures to their property. Then, crunch the numbers to make sure their limits are where they need to be in the event of a fire loss. 

Protection for personal property

Coverage for personal property in a standard homeowner’s policy is also based on a percentage of the dwelling’s coverage. So, in the event of a fire, coverage for personal property will be limited to whatever the policy limit is on the home. This number will vary among carriers, typically ranging anywhere from 50% to 75% of the dwelling.   

Tip: If your homeowner clients have concerns as to how much coverage they have for personal property, advise them to take an inventory of their home’s contents and the estimated replacement cost of each item, and request that they email the list to your agency for safekeeping. Again, run the numbers to ensure they have the most appropriate limits.

Additional living expenses

Finally, it’s always a good idea to review coverage under their policy’s “loss of use” provision. Your clients may not be aware that in the event they are unable to live in their home due to a fire (or any other catastrophic event), their policy will help cover costs associated with being relocated to a hotel or motel, meals and other additional living expenses while their home is being rebuilt or repaired after a covered loss. The limit for this coverage is also a percentage of the dwelling coverage. Typically, the coverage limit for loss of use is about 20% to 30% of a home’s insured value.

Tip: While policies will differ, it’s important to let your clients know that loss of use involves more than just providing costs for additional living expenses. In fact, many policies also include coverage for expenses associated with fuel or mileage, clothing, pet boarding, storage units, and car rental and public transportation costs.

Last, it’s important to note that in certain states or other wildfire-prone areas, there may exist homeowners’ policy exclusions for wildfires, or homeowners may be denied coverage altogether. In these situations, it’s important to discuss options with your clients to see whether they may be eligible for coverage through a surplus lines carrier. In very high-risk areas or where there is a moratorium prohibiting insurers from offering coverage, there is always the Fair Access to Insurance Requirements Plan, otherwise known as FAIR. As a state-mandated program, FAIR provides insurance access to homeowners who are having difficulty securing coverage.

About FastrackCE

Need to complete your personal lines insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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Watercraft Policy Coverage Options and Exclusions: Summertime Tips for Agencies

With summertime fast approaching, more of your clients will likely be adding coverage for various types of watercraft. However, because your agency might not write these types of policies all but once a year, and that policyholders are relying on you to guide them toward the coverage they need in order to protect their investment, now is a good time to refresh your watercraft insurance know-how. 

The fact is, boat policies are often as diverse as the watercraft they insure. As a result, clients might be uncertain as to what is and isn’t covered and opt for the most basic of policies. As an agent, the last thing you want is for a claim to occur and for a policyholder to find out they don’t have coverage or were only partially covered for their loss. The following are important key coverages and policy exclusions that are typically not included in a standard boat or watercraft policy but are too important to leave out of the conversation with your insureds.  

Optional coverages and special endorsements

Fuel-spill liability. Not typically included in most standard boat and watercraft liability policies, this provides coverage for claims involving the cleanup or third-party damage due to the accidental discharge of fuel or oil. Some examples would be a boat catching fire, colliding with another object, becoming grounded, or simply sinking and causing a spill. With stricter federal and state environmental laws holding boaters liable for the containment and cleanup, this type of coverage has become increasingly vital.

Emergency service coverage. Much like roadside service for a vehicle, this optional coverage provides coverage for towing, medical services, and mechanical labor if a boat becomes stranded.

Equipment coverage. Provides coverage in the event a boat sinks or is involved in a collision in which accessories and equipment such as fishing and safety gear or a pricey fish-finder or navigational system are damaged or lost.  

Repair cost endorsement coverage. For pricier watercraft, standard boat policy limits might not be enough to cover custom upgrades, modifications, or specialized motors and equipment. Many carriers offer an endorsement that provides additional coverage above what the policy offers for repairing and even replacing equipment in the event of a loss. 

Common policy exclusions

While most coverage for boats remains rather standard, there are more-common policy exclusions that you’ll want to review with your clients. 

  • Wear and tear. Because water (particularly saltwater) is damaging to a vessel, deterioration is a common factor in the normal wear and tear of a boat and isn’t typically included in coverage.
  • Coverage for competitions or racing events. Boating races typically involve high speeds and are subject to risks involving collisions and injuries. Some carriers offer supplemental insurance for this type of risk.
  • Boat trailer liability. The liability of towing a boat trailer is covered under an auto policy — never under a boat policy. However, the trailer is only considered eligible for liability coverage under a vehicle policy if it is designed to be towed by a motor vehicle, and only if it’s owned by the named insured on the towing vehicle’s auto policy, or it is permanently attached to the towing vehicle.
  • Damage to the boat or equipment from marine life. Typically, boat insurance won’t cover damage to a vessel caused by sea creatures. If clients indicate that they might be headed into waters where there could be an exposure to hazards involving marine life, you might want to discuss adding additional insurance to ensure they have coverage. 

Additional claims tips

Avoiding all claim situations is impossible. However, there are ways to lessen certain risk exposures. In addition to reminding policyholders to always report a claim as soon as it occurs, the following are other good claim mitigation tips for your boating clients.   

  • Remind them that if they decide to sail out of their specific navigational area, they must notify your agency.
  • Warn about the dangers of underwater collisions when exploring new waterways or when boating in murky water conditions.
  • Advise clients to maintain a detailed inventory of their boating equipment (pictures, serial numbers, costs, etc.). In the event of a theft or other loss, they’ll have an accurate list to present to the claims adjuster. 
  • Advise of the benefits of taking a boating safety course to learn more about how to avoid an accident.
  • Most boat-sinking events occur due to leaks while a boat is docked. Stress to policyholders the importance of maintaining their docked boats from water wear, tear and corrosion and regularly checking small parts and the overall condition of the boat — even during the off-season.
  • Remind clients that their boat coverage only covers named drivers of the vessel. If they have a change in drivers, they must notify your agency.
  • Warn of the dangers and consequences of being found intoxicated or under any other substances at the time of an accident, as this could lead to costly liability claims or even a claim denial. 

And when the season comes to an end…

You’ll likely encounter clients who, when summertime is over, will opt to remove all coverage for their boat. Now’s a good time to remind them that even during the off-season, watercraft can be subject to damage or liability issues — costs that they’ll have to cover out of pocket. Remind them that boat insurance can be maintained year-round, providing protection against fire, vandalism, theft, liability and winter storms.

We hope these tips will help you keep your boating and watercraft policyholders safe and claim-free!

About FastrackCE

Need to complete your insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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Fraud in Health Care: FinCEN Report Reveals the Top Seven Pandemic-Related Scams

Law enforcement and financial institutions have detected several instances of potential fraud activity related to health care benefit programs, health insurance and COVID-19 health care relief funds. Earlier this year, the Financial Crimes Enforcement Center (FinCEN) released an advisory report regarding new scams involving health care and health insurance during the pandemic. In it, FinCEN notes that criminals are actively adapting known health insurance and health care fraud activities to take advantage of the pandemic. According to the report, the following represent the top seven types of scams the insurance and financial industry is seeing today.

Ordering or submitting claims for expensive and unnecessary tests or services that do not test for COVID-19. The insurance industry is finding that an overabundance of medically unnecessary and expensive respiratory, allergy and genetic testing, along with whole-body health assessments and other screening services, are being performed.

Submission of expensive billing claims for services not provided. The Department of Justice has uncovered numerous overbilling schemes involving upcoding or unbundling when administering or processing COVID-19 testing and treatments.

Illegal kickbacks to providers. Becoming more prevalent are illegal payments to service providers involving kickbacks or bribes in exchange for ordering, or arranging for the ordering of, excessive or unnecessary COVID-19 services and testing.

Health care technology schemes to defraud insurance benefit programs. False and fraudulent representations about COVID-19 testing, treatments or cures are used to defraud insurance carriers and to perpetrate fraud on the financial markets by defrauding investors.

Telefraud and telehealth schemes. Fraudulent solicitations to collect beneficiaries’ personally identifiable information(PII), including Medicare information, are being linked to patient requests for information on COVID-19 treatment and prevention, such as for testing or when inquiring about personal protective equipment. Fraudsters then submit bogus claims for payment from health care benefit programs. In addition, fraudsters are using stolen PII to submit false telehealth services claims.

Fraudulently obtaining COVID-19 health care relief funds. Numerous false claims and applications are being filed for specific COVID-19 federal relief funds provided under the Coronavirus Aid, Relief, and Economic Security Act’s Provider Relief Fund, the PPP-HCEA or the Economic Impact Disaster Loan program, whereas the claim or application is connected to health care benefit programs.

Identity theft leading to additional fraud. Beneficiaries are specifically targeted to obtain their PII to be used to commit COVID-19-related fraud against health care benefit programs.   

Conclusion

According to the report, fraudsters have been targeting a number of health care-related sources that include Medicare, Medicaid/Children’s Health Insurance Program, and health care programs provided through the Departments of Labor and Veterans Affairs and private health insurance companies.

As the nation continues to battle COVID-19 and more Americans seek care related to the virus, including vaccination services, insurance carriers will likely see more fraudulent activity over the next several months.

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3 Ways COVID-19 Has Challenged the Life Insurance Market for Seniors

While COVID-19 has had a substantial impact on nearly every sector of the insurance industry, agents and brokers in the senior life and long-term care insurance markets have faced particularly difficult challenges. A recent survey by New Horizons looks at the unique issues agents in the senior life insurance market are up against and considerations moving forward.

Agents are not able to meet with prospects face-to-face. The single largest pandemic-related challenge agents in the senior market said they have faced was the inability to meet with clients in person. In fact, 47% of agents surveyed cited that meeting with prospects over the phone or via Zoom hasn’t been effective in making a personal connection and forming that all-important initial bond with new clients.

Prospecting abruptly came to a standstill. According to the research, 6% of agents surveyed said that the ability to market to senior life insurance prospects during the pandemic was basically nil. With sales opportunities such as life insurance presentations at community centers and educational long-term care seminars and workshops being canceled indefinitely due to COVID-19, lead generation efforts continue to be extremely difficult.    

Many seniors aren’t comfortable using the technology needed to close the deal. More agents and brokers are using digital resources to their advantage to make the quoting, writing and policy issuance process easier and more streamlined. But for seniors who struggle with technology, things such as carrier eApps and obtaining online signatures can be a deal-breaker. Plus, some people may simply not feel safe providing their personal information over a computer or phone.

Moving forward

While pointing out sales and marketing shortcomings due to the pandemic may not seem particularly helpful, identifying and understanding them allows you to take proactive steps toward finding solutions and to be better prepared in the event of a future crisis.

For example, as the country begins to reopen:

  • Are there ways your agency can better adapt to the needs of clients and prospects who continue to remain cautious about meeting in person? How can you reassure them that the necessary precautions are being taken?
  • Are you using your website as a communication tool to help keep clients and visitors to the site informed about safety measures your agency has implemented?
  • Is it worth the investment of time and money to create a more user-friendly digital environment for things such as quotes, policy changes and finalizing policies?
  • Are there alternatives to in-person prospecting and lead generation when networking opportunities aren’t possible?  

Necessity is the mother of invention — particularly in the midst of a pandemic. Having to think outside the box a bit can often bring about new ways to reach your prospecting and retention goals.

About FastrackCE

Need to complete your insurance continuing education credits? Let FastrackCE help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.  We offer online courses in most states covering a broad range of topics, including most of the state-mandated courses such as ethics, flood, long-term care and annuity training.

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COVID-19 and the Impact on Long-Term Care Insurance

According to experts at the National Association of Insurance Financial Advisors (NAIFA) 2020 Impact Week: Focus on Long-Term Care conference, COVID-19 has highlighted health concerns and created unique challenges for Americans needing long-term care services. As a result, it has underscored the need for the insurance industry to plan ahead and adapt to changes in long-term care insurance (LTCI) products and services to better serve the market.  

The following is a consensus of what LTCI experts predict will be the top three pandemic-related drivers with the greatest impact on the LTCI industry moving forward.

More Americans want to remain in their homes longer. According to NAIFA, the increase in pandemic-related deaths in long-term care has prompted a growing desire for more Americans to avoid long-term care facilities and to stay in their homes for as long as possible — even if they develop conditions that require long-term care. As a result, more Americans are focusing on how to stay well and maintain good health for as long as possible in order to avoid LTC facilities. In response, the industry will likely see an uptick in hybrid LTCI and life plans that will allow insureds to remain in their own homes if and when the need for long-term care arises. 

Most Americans remain hyperfocused on their health. Today more Americans are implementing Center for Disease Control and Prevention best practices to stay safe from COVID-19. As the COVID-19 vaccine is rolled out and the country slowly begins the reopening process, Americans will continue to focus on staying well. To meet this trending need, insurers are coming to the table with new policy initiatives and products that include health and wellness programs to be offered in connection with their LTCI plans. 

COVID-19 has increased awareness of the need for long-term care. The number of pandemic-related deaths has shocked the world. At the same time, it has also increased consumer awareness regarding the need for LTCI coverage. As a result of the uncertainty of COVID-19, brokers and insurance companies are likely to experience an increase in more flexible and affordable consumer options for securing LTCI coverage such as group LTCI plans, the addition of LTC riders on life insurance policies and term life policy conversion options to provide access to coverage for future LTC needs.

Conclusion

Despite the market’s ups and downs, the LTCI industry continues to operate in a positive environment and pay out on claims for insureds. As an insurance professional working in what we hope soon will be a post-pandemic world, it’s worth your time to stop and consider who your LTC customers are who will benefit from LTC planning. According to NAIFA, a good place to start is with individuals who have personal experience — whether that’s theirs or a loved one’s — know how costly self-funding long-term care can be, don’t want to be dependent on family for funding their care and want to have a say in the quality of care they will receive. As the pandemic pushes consumer awareness of LTCI, agents and brokers should be encouraged to raise the topic of long-term care planning with their clients.

About FastrackCE

Need to complete your insurance continuing education credits? Let FastrackCE help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.  We offer online courses in most states covering a broad range of topics, including most of the state-mandated courses that include long-term care – to name just a few. For more information, call 800-544-3605 or visit us at fastrackce.com.

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