Water damage — resulting from backed up drains or failed pumps — is one of the most common homeowners insurance claims. It's also the third most costly claim behind fire and liability lawsuits. Many homeowners don't know that water damage incidents like these are often not covered by a basic home policy. That's why it's important to make sure you are protected — from basement to roof — with a water backup endorsement.

Umbrella insurance kicks in where your home and auto policies leave off. With a policy of $1 million of coverage starting at about as little as $20 a month, financial experts agree that umbrella insurance is one of the most cost-efficient ways to protect your family and assets. An umbrella policy typically covers the following:

How big of an umbrella do you need? Use our online umbrella calculator to get an idea and then consult an independent insurance agent for additional guidance. For more information, watch this short video to learn more about umbrella coverage and review the list of 15 every-day activities that suggest you need umbrella coverage.
 

LC 2017-537

This material is provided for informational purposes only and does not provide any coverage or guarantee loss prevention. The examples in this material are provided as hypothetical and for illustration purposes only. The Hanover Insurance Company and its affiliates and subsidiaries (“The Hanover”) specifically disclaim any warranty or representation that acceptance of any recommendations contained herein will make any premises, or operation safe or in compliance with any law or regulation. By providing this information to you, The Hanover does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.

Here's a statistic that may surprise you: over half of homes in the U.S. are underinsured*. This is largely because home insurance policies are often believed to provide coverage based on a home's market value, as opposed to its replacement cost. Understanding the difference between these two concepts is a key factor in making sure your coverage is up to the high standards of your home.

Replacement cost is essentially the amount it would take to rebuild your home from scratch. This figure includes factors like similar materials and the same degree of craftsmanship. But there are non-material costs to consider as well, such as permits, fees, debris removal, contractor labor, overhead and profit. As a result, a home's replacement cost often (and sometimes greatly) exceeds market value. By making sure your home is insured for its replacement cost, you will be getting the coverage you truly need should you ever suffer a total loss.

* Marshall & Swift/Boeckh

Choosing the right car seat, installing it correctly and using it every trip can make all the difference in saving a life. The tips above offer pointers for parents about rear-facing infant, forward-facing and booster seats.

A product recall can have long-lasting and costly consequences for your business – affecting your reputation, productivity, employee morale and bottom line. "Thirty years ago if you had a little problem, you were not going to get discovered. Now the chances of getting caught are significant, and it can be the end of your company," said David Acheson, consultant and former associate commissioner for foods at the U.S. Food and Drug Administration, in a Fortune magazine article.

There are several steps you can take to help prevent a product recall. In addition, having the right insurance coverage in place can help minimize the impact.

Know your industry

Familiarize yourself with product safety standards and regulations within your industry – and remember they may change with evolving trends

• Know the product safety standards and regulations within your industry
• Establish a compliance team to ensure you meet standards and laws
• Train employees to be sure they know product safety is a top priority

Scrutinize and verify all partners and processes within your supply chain

• Fully assess manufacturing partners, particularly foreign companies, before doing business with them, including checking claims and litigation history, requesting references, testing products manufactured for others, and confirming company's financials and insurance coverage
• Inspect all third-party parts, materials or ingredients before using them in your products
• Require that suppliers meet quality standards, pass quality audits by independent third parties, and sign contracts that hold them responsible for errors

Establish and conduct robust quality controls

• Perform quality checks at multiple points of the manufacturing process
• Have the quality control program audited by an independent third party
• Create an open culture so employees feel comfortable raising safety concerns

Be prepared

• Have a plan in place should a complaint or claim be filed against your company
• Retain records that allow traceability throughout the supply chain
• Perform mock recalls to test recall plans
• Consult your independent insurance agent to be sure you have the right coverage in place to help you recover from a product recall

Disclaimer: This article is provided for informational purposes only and does not purport to address every possible legal obligation, hazard, code violation, loss potential or exception to good practice.

Here's a surprising statistic: in our experience more than 80 percent of our clients with professional exposures fail to buy or are declining professional liability insurance along with their business owner's policy (BOP) or commercial package policy (CPP).

While there have been significant changes to the ways businesses interact with customers over the last 15 years — from the birth and explosion of social media to a burgeoning "consulting" class — many businesses have been slow to recognize their professional risks. Some simply choose not to buy it, mistakenly believing their general liability policy will cover their professional service risks.

Professional services create risk

So, who needs professional liability (also known as errors and omissions (E&O)? Short answer – an increasing number of small businesses. These questions can help identify potential vulnerabilities and the need for professional liability coverage:

Assessing the need for professional liability risk:

1. Does the business perform any consulting work, training or provide any advice for customers?
2. Is the business involved in work requiring special licenses?
3. Does the business design, recommend, install or test products?
4. Has the business had any customer allege non-performance of products or services?
5. Have any customers withheld payment due to a contract dispute?

A "yes" answer to any of these questions indicates the business would be best protected by adding professional liability protection to their insurance program.

Here are just a few scenarios of when this coverage would have protected the professional and the business:

• Wedding planner who ran out of food halfway through the reception.
• Local hardware store thats demo resulted in a customer damaging his house.
• Software developer whose code was hacked.
• Retirement adviser whose consultation caused a client to lose 10 percent of her life savings.
• Interior designer who ordered the wrong materials, delaying the project.
• Travel agent booking the wrong type of accommodations for honeymooners.
• A public notary whose expired stamp prevents an adoption from going through.
• Nutritionist whose program failed to help a client lose weight as implied.
• Real estate agent who provides incorrect information about a listing.

The most expensive cost of liability insurance? Not having any.

It is more important than ever for small business owners to understand the tremendous need to carry professional liability insurance. As many as 52 percent of all civil lawsuits target small business professionals. In today's highly litigious world, small business owners simply can't be without this coverage.

The fact is, with annual premiums typically costing between $500 and $1,500 for a small business owner, professional liability coverage is certainly less expensive than a lawsuit. A study done by the Institute for Legal Reform found a frivolous lawsuit can cost from $2,000 to $5,000 in legal fees alone, well more than the cost of protection.

The Hanover’s Professional Advantage offers broad protection for a wide range of personal, business, and professional service providers.

About the author

Chip Hamann serves as The Hanover's small commercial chief underwriting officer. In this role, he leads a team responsible for determining the underwriting strategy, state management, product and point of sale offerings. He also oversees the field underwriting teams. He and his team partner with actuarial, product, technology, corporate underwriting and marketing to continually assess and evolve The Hanover's underwriting strategy and best practices to help position The Hanover as a carrier of choice for agents in small commercial.
 

Sources:
Court Statistics
U.S. Chamber of Commerce
Forbes

This material contains suggested guidance and is provided for informational purposes only. It does not guarantee any particular outcome and is not intended as an endorsement of any of the entities mentioned therein.

It’s one of the most commonly asked questions in insurance. Many will tell you that if you have auto insurance, buying coverage from the rental company is redundant and a waste of money.

And, it’s a lot of money. Consider that the basic insurance (or “damage waiver”) averages up to $19 per day¹, not including upsells. In some cases, you are looking at almost doubling the cost of your rental.

Is it worth it? The real answer isn’t that simple, but a real solution is: before you rent, talk to your insurance agent or insurance company to review your auto policy.

For some context, though, here’s a quick check list.

• Basic liability – This protection does not offer any coverage to your vehicle in the event of a crash. Remember that the rental is considered “your” car for insurance purposes, so, if you only have basic liability, it makes sense to purchase rental car insurance.
• Collision – This is what most people are referring to when they mention that your auto insurance policy covers your rental. And it is true, with one big difference: your auto policy has a deductible, whereas the rental company’s plan probably does not. It’s up to you whether the risks of paying a deductible outweigh the expense of the damage waiver. The longer you plan on renting the car, the less sense buying the rental insurance probably makes.
• Comprehensive – This applies to damage that occurs to a car while it was not being driven. For example, vandalism, or a tree branch landing on the roof. Comprehensive coverage protects your rental the same as your own car(s), and also comes with a deductible. Much like with collision coverage, you may not be getting much bang for your buck, but it’s up to you.
• Optional coverage – More and more, rental companies have started charging customers for a loss of use of, or diminished value to, the vehicle, stemming from a crash². Most basic collision policies don’t cover these costs.

Keep in mind, though, that many leading insurance carriers offer optional coverage upgrades (or “endorsements”) for costs such as these. For instance, The Hanover offers coverage for “reasonable expenses” related to an accident as part of our TravelRight, Platinum Auto Elite and Prestige Global Rental packages. This includes coverage for loss of use and loss of value, which is especially valuable for frequent renters, and renters of nicer vehicles.

You may already have such coverage already. If so, you can probably skip the rental car insurance. Otherwise, if you are concerned about the potential cost, purchase rental car insurance.

Other things to consider

Nicer cars – If you have collision coverage, it also applies to rental cars that may be more expensive than your everyday car. However, loss of use and diminished value could prove to be a much more significant dollar figure with a nicer car. If your policy doesn’t cover this additional expense, you might want to purchase rental car insurance.

Business travel – Your auto insurance applies to a car you may rent for business as long as your livelihood isn’t dependent on driving (for instance, a gig as an Uber driver). But for activity most commonly associated with business travel – driving to client meetings, for example – your personal auto policy helps protect you. Depending on how much that policy covers, you can probably skip the rental car insurance.

If you have questions

Talking to your agent or insurance carrier is a good first step, and will probably help you reach a decision. But, if you are still on the fence, your next step should be to talk to your credit card company. They may cover some expenses that your insurance does not – but there may be strict stipulations on who is covered, and where.

Lastly, if you are thinking about purchasing the damage waiver after all, make sure you review the rental company’s policy, as the amount of expenses it protects you against can vary by state, and by company.

Sources:

1. CNBC
2. Consumer Reports

If you are a boat owner, an independent insurance agent, along with The Hanover, can help you find leaks in your current coverage. Here's how you can keep yourself and your watercraft sailing steady all summer long.

Sources: Safe Boating Council