Injuries and Homeowners Insurance
At this time of year, many people are planning the perfect wedding.
Their plans will likely include dinners and reception parties in
addition to the ceremony. They are signing contracts, writing checks
and doing everything possible to make sure things go as planned.
Lots of questions arise including “What if someone gets hurt
during the wedding or reception? Will my homeowners insurance pay?”
The answer is "yes", but let’s review the coverage
to understand why.
The liability section of a homeowner’s policy provides coverage
for bodily injury and property damage for which the insured is legally
liable, arising out of an occurrence anywhere in the world. Likewise,
the medical payments section will pay medical expenses should a
guest be injured by the host’s activities. Each coverage should
respond, even if the event is held somewhere other than at the insured’s
home, such as a church building, a hotel ballroom, a country club,
or a public hall. The only policy exclusion that stands out as a
potential coverage problem for injuries to guests is, “bodily
injury or property damage arising out of a premises owned by an
insured, rented an insured, or
rented to others by an insured, that is not an ‘insured location’.”
The definition of “insured location” however makes things
better in most cases by including locations used in connection with
the residence premises or those rented occasionally for other than
Another question arises, “we’ll be serving alcohol
during the reception, does that make a difference?” In all
likelihood it won’t, since there are no specific alcohol or
host liquor exclusions found in standard market homeowners forms.
In addition to having coverage that will defend the insured against
an allegation of serving a guest too much alcohol, we can take comfort
that Iowa courts have decided in cases that social hosts have no
legal liability for such accidents.
Finally, if you are concerned about the hold harmless agreement
the VFW hall or hotel makes you sign, you can relax knowing that
the homeowners policy while excluding liability assumed in a contract,
makes an exception for written contracts. So, if the hotel gets
sued for an injury and looks to the insured, the homeowners should
phone usage by motorists increases
2004, at any given daylight moment, an estimated 8 percent of all
motorists in the U.S. or about 1.2 million drivers were using cellular
phones (both hand-held and hands-free) while operating their vehicles.
This compares to 6 percent in 2002 and 4 percent in 2000. The survey
also estimated that 5 percent of motorists in 2004, or about 800,000
drivers, were using hand-held cellular phones at any given daylight
time, compared to 4 percent of drivers in 2002 and 3 percent in 2000.
Among the latest findings:
- Hand-held cellular phone use increased among drivers between
the ages of 16 and 24, from 5 percent in 2002 to 8 percent in
- For all age groups, hand-held cellular phone use increased among
female drivers from 4 percent in 2002 to 6 percent in 2004. Men
using hand-held cellular phones remained steady at 4 percent from
2002 to 2004.
- Motorists are more likely to use phones when driving alone.
In 2004, 6 percent of drivers traveling alone were holding cellular
phones, compared to 2 percent of drivers who had at least one
passenger. However, drivers who had at least one child passenger
(7 years old or younger) were as likely to use a hand-held cellular
phone as were drivers with no children on board (both at 5 percent
of observed drivers in 2004).
Medical costs have played an important factor in
the auto market. Each year more than two million car accidents
involve injuries. More than one in four auto accidents
resulted in injury claims in 2003, according to the insurance
Research Council (IRC). Typical costs for treating an
auto accident victim range from $6,000 to $9,000, but can easily
run into the tens of thousands of dollars.
Higher repair costs, reflecting insurers’
reduced use of generic crash parts, are another significant cost-driver
today – rising at nearly double the overall rate of inflation.
Higher jury awards in vehicular liability cases continue to put
additional upward pressure on auto insurance rates. The average
jury award in auto liability cases was $220,680 in 2002, according
to the most recent available date from Jury Verdict Research.
liability issues are much more important than people realize,”
noted Robert Hartwig, Senior Vice-President and Chief Economist
of the Insurance Information Institute. “About 60 percent
of auto premiums paid in 2004, more than $80 billion, were for
liability coverage. As we look at 2005 and into 2006, we see this
Auto theft is another significant factor
that affects rates. According to preliminary data from
the Federal Bureau of Investigation’s Uniform Crime Report,
the number of auto thefts rose by 1.1 percent from 2002 to 2003,
the fourth consecutive annual increase. This comes on the heels
of a 1.5 percent increase in auto thefts in 2002, 5.9 percent
in 2001 and 0.7 percent in 2000. An estimated 1.26 million auto
thefts were reported in 2003. The nation’s highest theft
rates were found in the West and South, with the lowest rates
occurring in the Midwest and Northeast. The largest increases
in auto theft were reported in medium-sized cities and suburban
New vehicle security devices, such as electronic
tracking systems, can help police to find stolen vehicles and
keep premiums down. Some insurers offer car owners these tracking
systems at a discounted price with premium discounts. Fraud and
abuse remain major problems in some states, such as New York,
Florida and Massachusetts. However, crackdowns by law enforcement
agencies and insurers are starting to yield results.
fatal crashes caused by animals at all-time high
|Cars and motorcycles crash into deer more than 4,000
a day, and it’s taking an increasingly deadly toll on people,
according to the Associated Press. Last year a record 210 motorists
were killed in collisions with animals, mostly deer. That was 40 more
than the previous year and more than twice the number in 1993, according
to a study by the Insurance Institute for Highway Safety.
Iowa had a ten percent increase last year in the number of deer accidents
involving motor vehicles causing over $60 million of insurance claims
for Iowa drivers.
construction costs increase more than gas prices!
According to the National Association of Home Builders,
construction materials costs have skyrocketed in the past two
years. While everyone is aware of the increase in gasoline prices
at the pump in the same period, few people are aware that the
costs of construction materials have increased two-to-five-times
more than gasoline prices. Last year, lumber prices increased
27% and scrap metal prices (used to make nails and other construction
supplies) increased 80%. Some homes
that were built two years ago for 4125 a square foot may now cost
of $200 per square foot to rebuild.
In an October 2004 press release, Marshall &
Swift/Boeckh reported that 61% of US homes were undervalued by
an average of 25%. It attributes much of the problem to the antiquated
use of a square footage valuation method rather than a total component
In some cases, according to MS/B, as much as 73%
of an agency’s book of homeowners business may be undervalued
by an average of 35%. Clearly this indicates that many homes may
be insured for less than 80% of their replacement costs, which
could lead to claim settlement penalties for partial losses and
ultimately to E&O claims against agents.