Lingo watch: endorsement

An endorsement or a “rider” is an optional, written addendum to a basic insurance policy that modifies the terms of the insurance contract. Generally, an endorsement would be added to protect the insured by expanding or limiting the coverage in some defined manner. An endorsement or rider can occur at the start of a policy or can be added midterm.
Example: for a standard homeowners policy, common endorsements might include coverage for a home business, coverage for damage incurred during natural disasters such as earthquakes, floods or windstorms, coverage for property’s replacement value rather than cash value or – as discussed in a prior post – an endorsement might expand coverage limits for valuables.
A specific endorsement may not be available from every insurer or in every state. A good insurance agent will likely inform you of any common policy options, but when discussing a specific type of insurance with your agent, ask if there are any options that would expand your coverage.

The most dangerous times to drive

If you are risk averse, avoid driving on Saturdays in August. According to a recent article in Forbes, those are the most dangerous times to drive. The article is accompanied by a short slide show filled with interesting accident and fatality statistics.
But as Mark Twain was fond of saying, “There are three kinds of lies: lies, damned lies, and statistics.” In reader comments about the article, several people point out that it is not the sheer number of fatalities that is significant but the relative risk. If numbers alone were significant, then motorcycles would be the safest means of transportation since the sheer number of fatalities is low in comparison to autos. As the AAA Foundation for Traffic Safety notes: “Risk is characterized by the bad outcomes for a given level of exposure.” To determine the risk, it would be more significant to determine the fatality rate in relation to the number of cars on the road at a given time or in relation to the number of miles driven.
That being said, the Forbes article sheds light on an important topic and notes one indisputable and sobering fact: auto accidents kill upwards of 40,000 people each year or about 110 per day, far too many by any yardstick one might care to use. And most accidents and related injuries are attributable to human error: distractions, speeding, drunk driving, failure to use a seat belt, driving too fast for the weather conditions, and failure to keep a safe stopping distance from other vehicles. John Tesh has collected some interesting data points on relative driving risks from Traffic Stats analysis:

  • A cautious 82-year-old woman is more likely to die in a car crash than a risk-taking 16 year old boy. Why? Because the 82 year old is more fragile
  • The second most likely group to die in a car accident, after little old ladies, young male drivers between the ages of 16 and 23. Their fatality rate is 4 times higher than average
  • Drivers in New England are the safest. They get in the fewest crashes of any region
  • The safest passenger in the car? A baby or toddler secured in a car seat during morning rush hour traffic
  • The safest vehicle is a school bus
  • The most dangerous vehicle is a motorcycle
  • The safest driving day is Wednesday. There are the fewest crashes and fatalities
  • Saturdays are the deadliest days on the road
  • The safest driving month: February
  • The deadliest month: October
  • And the drivers with the lowest risk of death are adults between 40 and 50 years old

A primer on fire extinguishers

Fire caused 33.1% of all home insurers’ losses over a three-year period, the highest of any source of loss, according to a report by American Association of Insurance Services.
That statistic leads into a topic that we’ve been planning to introduce: How much do you know about fire extinguishers? If you’re like most people, probably not too much. But using the wrong type of fire extinguisher might be more dangerous than not using any fire extinguisher at all. Paul Caret of MEMIC Safety Blog has a great post on fire extinguishers that includes a chart on various types of fire extinguishers and their ratings, along with links o interactive sites that provide information on anything you might need to know about the selection, use and maintenance of fire extinguishers. We particularly liked the animated and interactive fireextinguisher.com, available in English and Spanish.
The Escondido Fire Department offers a quick one-page summary for fire extinguishers in the home, including where to put them, how to maintain them, and when to use them. But have you ever actually used a fire extinguisher? In this short video, Captain Joe Bruni offers a quick demonstration.

Are your bank accounts safe?

Here’s some good news about a type of insurance that you don’t have to buy: the FDIC has increased its protection for your bank and credit union accounts. The basic insurance limit was raised from $100,000 to $250,000 for a single account; joint accounts may be eligible for up to $500,000 coverage.** The increased coverage is a temporary measure that will extend through the end of 2009.
With news of two banks having failed last week, the first casualties of the new year, many people are understandably concerned about whether money in their bank account would be safe if their bank should fail. If your money is in a bank that is insured by FDIC, it will be insured up to $250,000.
The FDIC – or the Federal Deposit Insurance Corporation – is an independent agency of the federal government that was created in 1933 to protect consumers after thousands of banks failed during the depression. Since the start of FDIC insurance, no depositor has lost insured funds as a result of a bank failure. The key point here is that your bank must be insured by the FDIC.
You can learn more at the FDIC Frequently asked questions page, where there is information on how to find out if your bank is insured by FDIC, what types of accounts are covered, and what the coverage limits are.
**Clarification per FDIC site:
“Joint Accounts (two or more persons): $250,000 per co-owner”

Update your beneficiaries for insurance policies and retirement plans

As you gather your year-end documents for tax preparation, there is one important financial item that should be included: checking your insurance policies and other important financial records and plans to ensure that your designated beneficiaries are up to date. It’s a good idea to review beneficiaries annually because life events may have changed your situation. Parents die, marriages dissolve, children are born, and any of these events may warrant a change in beneficiaries. Failing to periodically update your beneficiaries could have unintended consequences – you might not want a former spouse rather than your current spouse to be the beneficiary of your assets but that could happen!
Here are some best practices when naming beneficiaries:
Always name a beneficiary. People who have wills often think they have their beneficiaries covered, but this assumption can be wrong. Generally, beneficiaries named in insurance policies and retirement plans will take precedence over any instructions you leave in your will. Make sure you have specified individuals as beneficiaries in your policies and plans. People often name their “estate” as the beneficiary but this can lead to benefits being tied up in probate court. Failure to name a beneficiary may also mean that you miss out on certain plan or policy advantages. For example, if you name an estate as beneficiary, an IRA will be liquidated on your death and taxes will be due. If your spouse is named as beneficiary, he or she could potentially continue to enjoy tax-free growth.
Be specific. Avoid ambiguous language. Simply stating “my husband” or “my niece” may not be sufficient, particularly in instances of multiple marriages. It’s a good idea to use full names of intended beneficiaries to avoid potential confusion or disputes.
Name a secondary beneficiary. Make sure that it will be you and not your state law that determines who will be the recipient of your policy benefits. If your primary beneficiary should pass away and you have not named a secondary or contingent beneficiary, your insurance policy or retirement plan will be distributed according to your will. If you have no will, the decision will default to state law.
Keep important records in a secure place and tell a trusted family member what and where they are. Many people die suddenly without leaving instructions as to where a will, insurance papers and other important records are kept. All too often, benefits go unclaimed because family members don’t know about potential benefits or can’t find important account information. Bank accounts and insurance policies are overlooked. Make sure someone in your family is familiar with your most important records and where they are kept.
Further reading:
Are your beneficiaries up to date?
Update your beneficiaries
Life Insurance: Reviewing Your Policy Important to Securing Your Family’s Future
Insurance Beneficiaries

Make sure your expensive gifts are protected – insure those valuables!

Was Santa good to you over the holidays? If you received any valuable gifts, you may want to review your insurance coverage to make sure that these items are adequately protected in the event of a loss. Standard homeowners, renters and condominium insurance policies will generally cover personal items, but policies often have limits of $1,000 to $2,000 on the dollar amount for certain valuables. You may also want to check your deductibles. It’s a good idea to review your policy to be sure of the extent of your coverage and to check with your insurance agent if you have any questions or doubts. You may want to add an endorsement (also called a rider) to give you additional coverage for valuable possessions.
Here’s a list of some potentially high-value items that you may want to consider for additional coverage:

  • Expensive jewelry and precious stones
  • Original art and custom or handcrafted items
  • Musical instruments
  • Antiques and heirlooms
  • Crystal, china, silverware
  • Furs
  • Collectibles and special collections
  • Computer equipment

It’s a good practice to keep a home inventory and to update it periodically. The Insurance Information Institute offers guidance on taking a home inventory, along with free downloadable home inventory software. The inventory is stored on your computer but it’s a good idea to keep a back-up copy in a safe location on a CD or a portable flash memory stick.
Additional reading
Insurance Information Institute: Jewelry and Other Expensive Gifts May Require Special insurance Coverage
South Carolina’s Insurance News Service: Insuring Gifts This Holiday Season.
FiLife: Valuables Insurance Guide: The Basics