Who Needs Flood Insurance?


CLICK HERE to measure the cost of potential damage to your home. All it takes is a few inches of water to cause major damage to your home and its contents. This interactive tool shows you what a flood to your home could cost, inch by inch.


Did You Know……

Floods are the most common natural disaster and most often come from hurricanes, Nor’easters and winter storms.  Flood damage also occurs from heavy rains, snowmelt and ice dams.

Losses due to flooding are NOT covered under Home or Business policies.

The average flood claim is $33,000. 

Your property has a 26% chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9% chance of fire.

Nearly 25% of flood insurance claims occur in low to moderate risk areas.

New land development can increase flood risk, especially if the construction changes natural runoff paths.

The average flood insurance policy in the US costs $540 a year but varies based on the flood zone in which your property is located. 

It takes 30 days for a Flood policy to take effect, so it’s important to buy insurance before the flood waters start to rise.

ACBI can help you by evaluating your risk and offering the most cost effective protection.  Contact us today for more information and a quote.

Insurance to Value

Insurance to value. Properly protecting your single most important asset – your home. Now that’s a big responsibility. Selecting the proper amount of coverage for your home is the single most important decision you can make with your homeowners policy. Without it, you may not have enough coverage to rebuild after a total loss. In the industry, this process is called insurance to value (ITV).

 What is insurance to value?

Insurance to value (ITV) is the amount of coverage listed under ‘Coverage A’ on your policy declarations page. It is often referred to as “Dwelling coverage” or “Coverage A – Dwelling”. It refers to the amount required to completely reconstruct your home in the unfortunate event of complete destruction.

 Why is insurance to value different than the value of my home?

A home’s market value reflects current economic conditions, taxes, school districts, the value of the land, location, and other factors that have nothing to do with the actual cost of rebuilding a home and replacing all of its contents. With ITV, you will have the proper amount of coverage to reconstruct your home – not what it was worth on the current market.

 Why is reconstruction more expensive than new construction?

New-home builders typically build many homes at once, and bid out the jobs to receive the best pricing. Their business model is based on economies of scale. For example, they may purchase 20 bathtubs at once, securing a lower unit cost. Reconstruction cost for a single home is more expensive since there are no savings when buying just one replacement bathtub.

 How ACBI can help.

Selecting the right ‘Coverage A’ amount is your responsibility. Sound like a big obligation? Luckily, we are here to help. ACBI has access to industry leading underwriting tools to estimate what it would cost – including materials and labor – to rebuild your home from the ground up. Like any estimation this will not perfectly capture every specific building item in your home. You should use it as a starting point and add to it depending on your home’s specific features. We will work together and provide you with helpful information to make the right ‘Coverage A” selection.

The Cost Drivers of Directors & Officers Liability Insurance

Directors and Officers Liability (D&O) insurance is a fundamental component of any company’s risk management program. A lack of D&O insurance may dissuade talented individuals from seeking an executive position at your company, as they don’t want to put their personal assets at risk in the event of a lawsuit.

As a savvy business owner looking to protect your bottom line, how do you weigh the cost of insurance to protect your senior leadership with the potential risk of a lawsuit? As regulatory investigations and defense expenses increase, prices for D&O insurance have gone up as well. Corporate indemnification provides the first line of liability protection; but certain circumstances—most notably, if the company goes bankrupt— necessitates that additional protection is offered to directors and officers.

A variety of factors determine the price of a company’s D&O insurance. Some low-risk companies pay pennies on the dollar; others pay a lot more, but they understand it’s a lot less than the expenses they’d incur in a lawsuit. Recognizing the cost drivers of D&O insurance—a company’s exposures, legislation and trends in D&O lawsuits—can help you decide what coverage your company needs to mitigate its unique exposures.

Company Characteristics and Exposures

Public, private and nonprofit corporations with assets of all sizes purchase D&O Liability insurance. To determine the cost of premiums and the limits of coverage, insurers review several facets of the company’s structure and price D&O insurance accordingly. Some of these attributes include the following:

  1. Is the company mature or young and developing? Companies with less experience and a shorter history of proven effective management can be a riskier policy to underwrite than well-developed companies that have experienced directors and officers.
  2. Is the company planning on going public soon? Initial public offerings, the most common way to  the company’s performance fails to meet expectations, are significant risks for directors and officers during this process.
  3. Does your company have employees? From nonprofits to large, publicly held companies, employment-related claims are the primary cause of lawsuits against an organization’s directors and officers.
  4. Does the company operate in foreign markets? Conducting business internationally can complicate the D&O insurance needed. For example, in addition to domestic laws, European countries have their own set of regulations to follow.
  5. What is the company’s history of past litigation?  Insurers will analyze a company’s history of pervious lawsuits and any adverse business developments and executive management changes.
  1. What industry is the company involved in? Operating in certain industries, such as investment banking and securities, may expose their executive management to more risks than those for the board members of a small nonprofit.
  2. Is the company financially stable? Insurers consider the amount of debt a company has. Corporate indemnification usually protects directors’ and officers’ personal assets. However, if the company’s finances are unstable, they have an increased chance of becoming insolvent during a lawsuit.

Current and New Legislation

Securities Exchange Commission (SEC) regulations continue to impact the cost of D&O insurance. Publicly held companies especially must be cognizant and keep current on SEC disclosure obligations and provisions in the Sarbanes-Oxley (SOX) Act of 2002, which was enacted in response to the corporate scandals of Enron, Tyco, WorldCom and others.

Also recent changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act have caused a spike in whistleblower reporting, bringing to light many D&O claims and increasing the need for D&O insurance. The new whistleblower provision in the Act now gives whistleblowers a “bounty,” or monetary compensation

if the lawsuit results in more than $1 million in monetary sanctions. Given this new incentive, there has already been an increase in the number of whistleblowers that have emerged since the Act added the provisions in early 2011.

Trends in D&O Lawsuits

Even after a thorough assessment of a company’s risks, D&O insurance continues to be a high-severity product, as carriers are often hit unexpectedly with catastrophic claims. It’s no surprise that as litigation increases, the price of D&O insurance increases as well. In addition, as the litigation process grows lengthier and if multiple lawsuits erupt from a single transaction, a company can quickly exhaust its primary layer of D&O coverage.

Some types of lawsuits occur less often, but result in catastrophic losses. Other types result in smaller payouts, but occur more frequently. Nonetheless, defense expenses can cost millions of dollars, even if the director or officer is not found liable. Some of the types of lawsuits that affect directors and officers include:

  • Breach of fiduciary duty lawsuits
  • Employee Retirement Income Security Act (ERISA) lawsuits
  • Employment-related lawsuits
  • Mergers and acquisitions (M&A) and “merger objection” lawsuits
  • Securities class-action lawsuits
  • Shareholder derivative suits

Within the last few years, there has been an increase in M&A lawsuits. In 2011, there were more than 350 lawsuits regarding M&A. Some M&A cases involve multiple lawsuits and a lengthy litigation process, which can deeply cut into a company’s primary D&O policy.

Know What Your Policy Covers

While many companies usually focus on the cost of their D&O policy, understanding the scope of the policy is even more critical. Most D&O policies are renewed yearly, and the terms and conditions can change. Read through your policy carefully. Be aware of the following:

  • Look at the limits of your liability. Are they enough to cover your exposures? Companies with a lot of risk exposures usually find that they need more than just the primary coverage, and purchase excess insurance as well.
  • Be aware of exclusions; most D&O policies do not cover claims that arise from fraudulent or criminal acts.
  • For some insurance carriers, Employment Practices Liability (EPL) insurance and Fiduciary Liability insurance are policies that are purchased separately from primary D&O insurance. Don’t assume they are automatically included in your D&O policy.

For more information on D&O coverage options for your company, contact Associated Community Brokers, Inc. today.

Obesity Trumps Aging as Top Influencer on Workers’ Comp

ORLANDO — Concerns about the aging of the workforce may all be for naught, suggest two workers’ comp experts. Comorbidities will likely result in more baby boomers leaving the workforce sooner than previously thought.

“This has reached pandemic proportions,” said Robert Hartwig of obesity, diabetes, and other comorbid health conditions. “We are going to face mass premature retirements of baby boomers.”

Hartwig, the president of the Insurance Information Institute, predicts many older workers who become injured won’t be able to reassimilate into the workforce. “”So the aging workforce may not be as strong as people thought,” he said. “Baby boomers won’t be able to come back into the system.”

Speaking at the recent Florida Workers’ Compensation Institute conference, Hartwig and NCCI’s Jeff Eddinger outlined the latest factors impacting workers’ comp and offered their predictions. Some positive labor market developments as well as adverse long-term developments are driving workers’ comp exposure, Hartwig said.

 “While the [economic] recovery has not been anywhere near what we want, it hasn’t fallen back into recession,” Hartwig said. “That’s critical for the labor markets and for workers’ comp.”

Hartwig predicted the economy would grow in 2013 — barring any major actions by Congress. He noted that consumer spending is up, as are auto sales and private sector housing construction. “We’re not too far from seeing an increase,” he explained, “powered in part by rich, foreign buyers.”

But Hartwig noted public sector construction has stalled as municipalities focus their dollars on pensions rather than new buildings. “That doesn’t drive comp exposure,” he said.

Manufacturing has been a bright spot for the economy; something Hartwig said he would not have predicted five years ago. At the same time, there are not a plethora of new jobs in that industry.

“The U.S. manufacturing sector has become much, much more productive,” he said. While that drives foreign investment, it has not resulted in more jobs.

The number of business bankruptcies continues to drop while the number of business starts is increasing, Hartwig said.

Among the adverse, long-term labor market developments harming workers’ comp exposure, Hartwig said, the rate of people unemployed for six months or more continues to be a serious issue, as their skills may atrophy. “I wonder if they have a higher rate of injury,” he speculated.

Hartwig also said the labor force participation rate continues to shrink despite lower unemployment.

NCCI. “We’re seeing some larger policies going to the residual market,” said Eddinger, senior division executive of regulatory services for NCCI. “The market is getting tighter. You want to watch the residual market.”

The workers’ comp residual market saw its first premium increase since 2004. Growth in the residual market grew by 80 percent in the second quarter of 2012 compared to the same period last year.

Overall for the workers’ comp market, Eddinger said underwriting results, flat frequency, and historically low interest rates were the negative factors while premium increases, only moderate growth in severity, and a minimal overall loss cost impact of frequency and severity are the three positives for workers’ comp.