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Six Lessons from a Fire

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One year ago this weekend, my bedroom phone woke me at 7:00 on Saturday morning – never a good sign. It was my business partner, Tom. “The building’s on fire”, he said as sirens screamed in the background. I quickly dressed and raced to the office to find firefighters crawling all over our office building, battling smoke, water and flames.

We’ve helped so many clients recover from disaster over the years. Now, it was our insurance agency’s turn to be the victim.

The fire wasn’t all that big. It started when the electric sign on the fascia of the building shorted. It burned through the overhang and spread up the roof, where it eventually burned through, setting off the sprinkler system. Three or four sprinkler heads opened, pouring water for about 40 minutes before the fire department shut it off. By 9:30 am, the fire was out and the cleanup and recovery began.

Six weeks later, everyone was back in the building, and 95% of the damage was repaired.

Lessons from an Office Fire

1. Safety Pays.
Even though we’re in the safety business, we’re not that different from anyone else. We curse the fact that we have to punch in our alarm codes when we open and close the office every day. We dread the quarterly visit from the sprinkler contractor, who tests the system, causing screeching alarms while we’re trying to work and meet with clients. We curse the calls from our alarm monitoring system when they call us at night or on the weekend to tell us they’re getting an alarm signal that’s almost always false. We don’t look forward to our annual fire department inspection.

But on that Saturday morning, we were thankful that the alarm system alerted the Fire Department, that the sprinkler system doused most of the fire, and that the South Portland Fire Department responded so quickly and was so helpful in the beginning stages of our recovery. Without all of these safety systems, the fire would have been much bigger, and our recovery many times longer.

2. Relationships are Important. We called ServPro, a remediation contractor that we knew from many fire, water and other disasters that our clients have experienced over the years. They extracted over an inch of water from the floor of our 9500 square foot building, and set up giant fans to begin the drying process.

We hired Maine Properties, another contractor that we knew from their work with many condo associations that we insure, to do the repair work. They were on the scene that day, scoping out what could be salvaged and what would need to be ripped out and replaced.

Our computer network consultant, Tom Vose of BroadSound Technologies, showed up Sunday to help us get our computer network up and running. Like most modern businesses, we’re almost completely dependent upon our computer system to help us serve our clients. The day before, we were picking computers up off the floor and dumping water out of them. We thought they were fried. Miraculously, every workstation but one survived.

As insurance agents, you would expect us to be well-insured, and we are. Of course, our insurance was with one of the companies we represent, Peerless Insurance. They were responsive, cooperative and professional in settling our claim.

Our other insurance company partners were empathetic, too. When they heard of our misfortune, they were quick to offer any accommodation to help us serve our mutual clients. Their response was heartwarming. Even one of our competitors, Dan Haley from Portland, called to offer the use of his office if we needed it.



3. Our team is our strength
Insurance is a people business, and we have some of the best. Many of them have worked with us for decades. They’re professionals who work well together and have our clients’ best interest at heart. We’ve always known how important our staff is to our success, but the fire really emphasized that. They showed up for work on Monday, ready to do whatever they needed to do in a smoky, wet, cold building. For weeks, they tolerated noise, dust, smell, balky equipment and physical upheaval. Perhaps the best testament to their professionalism is that most clients never even knew we had a fire. We prided ourselves that we didn’t miss a minute of regular office hours. Our staff was the key to our continuous operation.



4. Everything’s Bigger Than It Looks
From the outside, our fire looked minor. There were a couple of holes in the roof and a couple of more in the fascia, all of which were repaired within a few days. The fire damage was heavier in the side of the building occupied by Town & Country Credit Union and The HCR Group. But the water discharged from the sprinkler system spread throughout the building. We had to rip up all of the carpet, and cut much of the sheetrock several inches from the floor to allow drying. The cost to repair the damage from our “small” fire was hundreds of thousands of dollars. It took months for everything to get back to normal.

5. Pay Attention to the Little StuffOur fire was caused by a short in an electrical sign on the front of the building. We had noticed a few days before that the lights behind a couple of letters were not lit. We assumed that they were burned out, and put it on our mental “to do list” to check out later. We never got the chance. We learned our lesson. Whenever something’s “not quite right”, we take action. You never know when a little issue can become a big one.

6. Insurance Works
Having enough insurance allowed us to act quickly to repair all of the damage. We didn’t have to worry about how to pay for it all. It was the same for our tenants who had insurance. Those who were displaced were able to set up temporary offices in their homes. Their expenses, including phone, internet and other utilities, were covered by insurance. Those who didn’t have insurance were fortunate that they were able to move back in quickly, with little down time. If they had been in the more heavily damaged part of the building, they may not have been able to continue their businesses.

We hope that sharing these six lessons we learned helps you in your own disaster planning, whether for your business or your family. We also hope that you never have to pull such plans off the shelf and put them into action.


Car Sharing? Protect Yourself First!

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A Valuable Service

Car sharing is an economical way for people who don’t own a vehicle – or who need an extra one periodically – to access a private vehicle. Led by Zipcar, the service have been extremely popular in urban areas and at colleges – including Bates College in Lewiston. Now, it’s finally come to Portland, Maine – thanks to UCarShare, a division of Uhaul.

Zipcar logo

Car sharing is often seen as environmentally friendly, because it can reduce the overall number of vehicles on the road, cut down on the demand for parking, and allow people who prefer to use alternative transportation (public transportation, bicycle, scooter, walking), but still need to use a private vehicle from time to time. It encourages density, and helps to reduce sprawl by making city living more convenient. We support the idea, and have blogged about it before. Ucarshare logo

One Big Issue

There’s just one aspect that we think you should think about before joining a car share service: liability. Car share companies provide insurance for members while driving the car. But how much? Zipcar says they provide $300,000 of liability coverage (less for members under 21 years old).

The problem is, you can get into a lot more trouble than that. Maine’s Wrongful Death Statute allows up to $1,000,000 in damages per person, PLUS punitive damages. If you’re driving a Zipcar and cause an accident that kills someone, you could be looking at at least $200,000 of responsibility, out of your own pocket. Even worse, you’d have to pay your own legal defense expenses once Zipcar’s $300,000 limit was exhausted.

UCarShare appears to offer even less liability coverage. Their web site says that they offer state minimum limits: $50,000 per person, and $25,000 for property damage (They haven’t responded to my email to clarify this). Many cars on the road are worth more than $25,000, and it’s easy to imagine a highway accident that would involve several vehicles. Never mind that $50,000 of bodily injury coverage is only 10% of the wrongful death damage limit.

And, Maine’s minimum limits are higher than most. If you cross the border into New Hampshire, you’re packing protection of $25,000 per person. And, don’t get us started on Florida, with their $10,000 bodily injury limit per person and $10,000 of property damage.

You Can Protect Yourself

If you have a Maine auto insurance policy with liability coverage, it will cover you after the car share service’s policy limits are exhausted, provided that your liability limits are higher than the service’s.

If you don’t have a vehicle of your own, you can buy “named non-owner’s” insurance to protect you. Talk to an insurance agent – including us – about this.

One More Thing…

The car share services typically make you responsible for the first $500 of damage to the shared vehicle. Your Maine insurance policy probably won’t help you out with that. Also, read your car share contract carefully. You’re probably restricted to listed people driving the vehicle, and on certain types of roads and situations. Know the rules before you get behind the wheel!

Good News to Start 2009: Maine Highway Deaths Reduced

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Gasbuddy.com chart
Last year was the least deadly on Maine roads since 1959, according to the Maine Bureau of Highway Safety. Several reasons were cited, some of which showed a possible bright side to 2008's historically high gasoline prices. including fewer miles being driven and people slowing down to conserve fuel. Officials also point to increased seat belt use and safer cars on the road as factors in the positive result.

Will Insurance Rates Drop?
If traffic fatalities are down, then insurance rates will follow, right? We think the answer is a definite "maybe." Here are 3 reasons why:
  • Insurance companies use multiple years' experience when they set rates. This avoids wild swings due to one year's particularly bad – or good – experience. Accident fatality statistics have been generally favorable over the last few years. And insurance rates are generally lower as a result (chart below is from III.org).Auto ins rates  
  • Other accident-related costs are increasing. Car insurance can pay for lots of things: medical bills for injured parties, repair costs and body shop storage charges for damaged vehicles, car rental, and repair for other damaged property (utility poles, buildings, etc.). Many of these costs have increased faster than the overall rate of inflation, which insurance companies have to factor into their rates.

 

  • Accident rates haven't decreased, only fatalities.  In a recent Bangor Daily News article, a Maine State Police spokesman said "we've had the same number of crashes.". Of course, insurance companies usually have to pay larger claims in the case of fatalities, but it's the frequency of accidents that drives claims experience (and insurance rates) more than severity.  

Fewer people died last year on Maine roads, and that's great news for everyone. If the trend continues, overall auto insurance rates might continue to drop. Even if it doesn't continue, the good experience should have a calming effect on Maine auto insurance rates. 

Welcome to High Deductible Health Insurance…Ready or Not!

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Our company recently joined the ranks of employers switching from traditional health insurance plans to high-deductible, HSA compatible plans. We switched from our HMO plan for two reasons: First, the fourth or fifth consecutive year of double-digit premium increases was driving our benefits expenses beyond the palatable. The new model allows us to reduce our premiums. We plowed the savings back into assisting employees with their health care expenses (more about that later).

Second, the high deductible plan encourages us to be more informed consumers of  medical services. In the past, we paid a co-payment for every office visit or prescription, regardless of the real cost of the product or service. Because we’ll be paying 100% of the first $2,500 per person for “sick office visits” and prescriptions, we’re bound to pay more attention to the cost of these things. I know I’ll be more likely to see if there’s a generic alternative to a brand-name drug for example.

Even though I’m in the insurance business, my experience with health insurance is strictly from the consumer side. And, I’m quick to admit that I don’t quickly grasp the concepts of embedded deductibles, co-pays and maximum out-of-pocket expenses. It gives me more sympathy for our clients trying to understand insurance terms that we carelessly toss around every day.

Going from a plan with a $500 deductible to one 5 or more times higher was  a bit scary for me. It took a while to get my head around. As one of the decision-makers, I was also concerned that the plan would work well for our employees. Fortunately, our agent was very patient in explaining the plan repeatedly, and in answering our (ok, mostly my) questions.

How does one absorb such an increase in deductible? Plan participants establish Health Savings Accounts (HSAs), into which they can deposit pre-tax dollars for medical expenses. We decided to deposit $750 in each participant’s account at the beginning of the year, to front-end load their expense account. To further encourage employees to fund their own accounts, we agreed to match the first $750 that they deposited via payroll deduction. So, if they contribute $750, they’ll have a total of $2,250 in their HSA. That goes a long way towards the $2,500 deductible.

My HSA debit card arrived in today’s mail. The plan starts on January 1. I’ll post more occasionally during the year to explain how the plan’s working, and how I’m adjusting to having a high-deductible plan.

“Wanna go for a Ride”?

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This is not new, but it’s still cool. A little over a year ago, Progressive began to include pet injury coverage in their auto policies. If you buy collision coverage from Progressive, they include up to $500.00 of veterinary bill coverage in case your pet is injured in an accident. There’s no charge for this coverage, and you don’t get a discount if you don’t “drive with dogs”. We’re not aware of any other company that does this.

Progressive’s web site also includes some useful safety tips for driving with pets, ranging from the no-brainer (“never leave a pet unattended in a car”) to the easy-to-forget (“make sure that your pet has identification”) to the buzz-killing (“don’t let your pets ride with their heads out the window”).
This is different from “pet insurance”, which is offered by companies like Embrace and Pets Best Insurance. Those are essentially health insurance policies for animals – much broader – and more expensive coverage.
If you’re an animal lover who takes your pet in the car with you, it may be worth getting a Progressive quote. If you’re in southern Maine, our agency would be happy to help you evaluate if this is a good option for you. Wanna go for a ride?

You Never Know Who’s an Uninsured Driver

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Here's an interesting twist to our recent post about uninsured drivers, and the need to adjust your insurance accordingly.

If you're stopped at a traffic light, and rear-ended by a $140,000 Mercedes, you probably don't expect that the driver is cruising around without insurance – but you'd be wrong if that driver was troubled Giants' wide receiver Plaxico Burress. Check out the details, courtesy of the Orlando Sentinel. 

Bottom line: you never know what kind of insurance "the other guy" has – so you need to need to protect yourself. 

Now, if that didn't scare you enough, think about this for a second: what if YOU hit a $140,000 Mercedes, and had only bought state minimum liability limits  of $25,000 property damage?

Heating Giveaway Warms 11 Families

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Warmhand2
Good news! Eleven of our clients were winners in Concord Group's A Warm Hand heat lottery. That's $1,100 worth of oil, gas or other heating fuel assistance, courtesy of Concord Group. We worked hard to notify all of our Concord Group homeowners clients about the lottery, including post cards, blog posts and web site links. I think that played a part in so many of our clients being winners in the first round. 

More good news! It's not too late to sign up! Concord will draw more names on the 15th of January, February and March. If your homeowners policy was provided by Concord Group on October 31, whether you're a client of our agency or not, you're eligible. Sign up today! 

Good luck!

Beware: More Uninsured Drivers on the Road

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M.P. McQueen reported in Wednesday’s Wall Street Journal on the national trend of more drivers are letting their car insurance lapse because of the faltering economy. Doing this puts themselves and others – including you – at risk.

McQueen did a good job highlighting the irresponsibility of not carrying liability insurance, and the importance of matching  your own liability insurance to the value of your assets.

Are Minimum Auto Liability Insurance Limits Enough?

Maine law requires all drivers to carry at least $50,000  per person / $100,000 per accident of Bodily Injury coverage, and $25,000 of Property Damage coverage. It doesn’t take much imagination to picture this limit as being inadequate to handle even a moderately severe accident, or replacement of even a mid-priced late model car.
Once you blow through your insurance coverage, your assets are fully exposed.

How to Protect Yourself from an Uninsured Driver

Most people don’t realize that the flip side of liability coverage is Uninsured/Underinsured Motorist coverage. This covers your injuries if you’re struck by an at-fault driver who has no insurance, or less than you do.
There’s the rub: if you and the other guy both have state minimum limits, your UIM coverage doesn’t apply, because you didn’t have more than he did. If you suffer more than $50,000 of medical expenses (it doesn’t take all that much – trust me), you’re on your own.
Although we’re in the business of selling insurance, we understand that people have to live within their budgets and prioritize their expenses. If the economy forces you to cut your auto insurance expenses, we suggest:
  • Look at your deductibles first. It might sting to pay the first $500 or $1,000 of repair costs after an accident, but at least it’s a known cost, with a maximum out-of-pocket.
  • If you really need to cut auto insurance to the bone, consider removing physical damage (comprehensive & collision) coverage. If you have a loan or lease on the vehicle, you’re not going to be able to do this. Also, if you don’t have physical damage coverage on at least one car, you don’t have that coverage if you rent a car either. But, desperate times call for tough decisions.
  • If you have more than one car, think about “laying one up”. You can suspend coverage for the time it’s stored. Just remember to call your agent before  you drive it again, because it has no coverage.
  • Try to pay your auto premiums on time. Paying late can jeopardize your coverage, especially if you slip up and your policy actually cancels one time. The Maine Insurance Dept. has an excellent set of FAQ, one of which offers the same counsel.

If you’re fortunate, and in expense-maintenance vs. expense-slashing mode,  make sure that your liability coverage protects your assets, and your UIM coverage is adequate.  And regardless of the law, don’t count on the other driver having insurance.

 

Ice Storm Damage: Another Opinion

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In case you didn't believe our recent posts about ice storm damage, here's corroboration from the State of NH Insurance Department and more from the Maine Emergency Management Agency. See, we wouldn't lie to you!

Remember, you may have purchased coverage that covers some damage that a standard policy does not. Be sure to check with your agent. Whether you had damage or not, now's an excellent time to think about buying such coverage if you haven't yet. 

Ice Storm Damage: Tips for Prevention and Response

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Our last post responded to the most common issues clients called us about following last weekend's ice storm, and whether most insurance policies provided coverage or not. 

Now that the last storm has past, it's time to get ready for the next one (which hopefully isn't any time soon!). Here are a few tips to reduce your chance of an ice storm damaging your property. 

  1. Consider buying a generator. It can take awhile for utility crews to restore your power in times of widespread damage, especially if you live in a rural area. Having a generator to run your furnace, sump pump and refrigerator can be the difference between a minor inconvenience and a nasty loss. Make sure that your generator hookup is done by an electrician; there were cases of improper use of generators causing house fires during this ice storm. It costs about $1,000 for an electrician to rig your house for the generator hookup. The cost of the generator itself varies by size and capacity. This cost can be minimal compared to the time, expense and stress of property damage. 
  2. Keep your trees pruned and healthy. Although several of our clients believed that the trees that fell on their houses, cars, etc. were healthy, some clients admitted that they'd procrastinated on pruning or felling dead limbs or trees. Even healthy tree limbs can succumb to the weight of an ice storm. Reduce the risk of damage by removing limbs that overhang your home, fences or driveway. 
  3.  If you are on well water, fill your bathtub with water in preparation of the storm.  
  4. Keep your chimney clean.  This is good advice for everyone, but especially for those who don't regularly burn wood. Many wood-burners know to have their chimney cleaned at least once a year. Those who only use their fireplaces or wood stoves sporadically often postpone doing that. There were cases of house fires during this ice storm from dirty chimneys. 

In case of an extended power outage:

  1. Keep your refrigerator and freezer closed. Food will last surprisingly long in a closed appliance, especially if the house is cold because the furnace isn't working. If you notice that the temperature of the food is dropping too much, consider storing it in coolers, or even outside. Take advantage of winter temperatures!
  2. Remove items from your basement floor. If your sump pump fails, water can back up quickly – more quickly than you thought possible. Plan ahead by lifting things off the floor.
  3. NEVER run a generator in the house! Carbon monoxide, a deadly odorless, colorless gas, is a byproduct of internal combustion engines. These units should never be run in enclosed living spaces. 
  4. Open kitchen cabinets to allow the warmer air in the house to reach your water pipes. Pipes are often against cold outside walls – even colder when the house has no heat, electricity or hot water running through the pipes. 

We hope you find these tips helpful as you think about the next winter storm.