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Home Real Estate
Weddings, Injuries and Homeowners Insurance

Articles in this issue include:

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 business use.

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 respond.


Cell phone usage by motorists increases
In 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 2004.
  • 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).

Cost-drivers for insurance

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.

“Auto 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 trend continuing.”

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 areas.

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.


Deadly deer: fatal crashes caused by animals at all-time high
Cars and motorcycles crash into deer more than 4,000 times 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.

Home 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 estimating technique.

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.



 

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