Are you covered?

When people think about disability insurance (DI) coverage, most think of the worst case scenario, such as a life threatening illness or a situation that creates a major life changing event.  While that is sometimes the case, most DI situations neither relate to terminal health conditions nor end in a permanently disabled condition.

Following are the top 5 reasons for a DI claim for both short-term (13-26 weeks) and long-term disability claims.*

Short Term:

• Maternity (18.9%)
• Non-back injuries (10%)
• Complications from pregnancy (8.4%)
• Digestive disorders (8.8%)
• Back disorders (7.1%)

 

Long Term:

• Cancer (16%)
• Back problems (15.1%)
• Injuries (9.8%)
• Behavioral health (9.8%)
• Circulatory disorders (9%)

*Source: UNUM 2012 Claims Data

DI coverage could be the most efficient use of your resources as you review your total risk mitigation strategy and budget.   As you can see from the data, most DI claims are for issues that do not permanently inhibit one’s ability to work productively, once the condition is treated properly.  Additionally, having a DI policy in place can be a protective mechanism for your policies and procedures as it relates to how you handle a situation that involves time off.

For instance, assume that you did not have a DI policy in place and you have a 20 year employee who becomes seriously disabled.  Because of the relationship and years of service, you might consider compensating the person, despite the fact that the person is unable to work for an extended period of time.  Shortly after the first situation, a one year employee experiences a serious health situation that requires an absence from work for an extended period of time.  What do you do now?  Can you afford to pay both people?  Better asked, how can you afford not to, after considering the potential for a discrimination law suit if you don’t? 

Disability coverage provides multiple benefits to mitigate the risks described above.  First, it provides compensation for your employee while he/she is unable to work.  Second, assuming that you’re with the appropriate carrier, the DI policy will typically assist in getting your employee back to work more efficiently.  Third, having DI coverage actually provides a legitimate human resource policy for how you handle situations when someone becomes unable to work as a result of illness and/or injury.  This not only provides a clear path for those who need to understand what happens, but also keeps you out of court if a discrimination case enters your life as a result of handling situations inconsistently.  Finally, DI is one of the least expensive risk mitigation products available.  It’s pennies on the dollar as compared to all other forms of health coverage.  As you review your risk portfolio, make sure that disability coverage is part of the plan.  It could be one of the best strategic moves you’ve ever made.

Protecting the Family Jewels

Picture yourself on an airplane, taking a snooze on a transatlantic flight to Europe for a nice weekend.  You decide to take your wedding ring off while you apply some hand lotion and prepare for a long nap.  You place the ring in some tissue and place it on your tray.  Prior to landing, the flight attendant has cleaned the tray and your wedding ring is now basking with hundreds of pounds of trash, quite possibly never to be seen by you again.

While this story might sound a bit far flung, it’s actually based on a true story.  Now, take the story one step farther.  Let’s assume that the ring was actually insured for the $75,000 that it cost back in 2003, when it was purchased.  It now being 2013, the replacement value of the ring would be close to $150,000.  What would the insurance company pay?  If you’re an astute consumer of risk management products, then you would be right to say that you’d be insured for only $75,000 and would have to come up with an additional $75,000 to replace the ring with a comparable replacement.

Between the years 2000 and 2012, the following statistics relate to losses from covered jewelry:

41%        Theft/Deception.
52%        Mysterious Loss.
7%          Breakage/ Accumulated Damage.

So, what steps can one take to avoid such pitfalls?  The following list can be a guide for not only insuring, but mitigating the risk associated with lost or stolen jewelry and valuables.

·         Start with a proper appraisal.  Make sure that your appraisal follows the guidelines prescribed by the Uniform Standards of Professional Appraisal Practice (USPAP).  There are many appraisals that are not considered reliable by the insurance industry.

·         Individual pieces of jewelry that have a significant value should be covered on a separate collectibles policy and should be scheduled with an accompanying appraisal and picture.  Appraisals should be updated every 3-5 years, especially when commodities such as gold and platinum are increasing in value.

·         When covering your valuables, consider the following:

o   Remember to list new items on an existing policy.

o   If you travel, consider worldwide coverage.

o   Make sure that mysterious disappearance , Care custody and control coverage and repair and restoration coverage is considered.

o   In vault rates exist, so read your policy carefully to understand your custodial responsibilities.

·         If you are not an athlete, entertainer or a person who travels with many others, you could present a good “Lifestyle Risk” to the underwriter.  Therefore, make certain that you inform your consultant as to your lifestyle when it can work in your favor.

·         Employ a solid risk management program for home.

o   Guidelines for Safes:

§  Keep a secondary safe location in an obscure location, preferably bolted to the foundation of your home. (The bedroom closet safe is a good decoy, as that is typically the first place that an intruder will go to seek out your valuables.

§  Change the combination frequently.

§  Connect the safe to your alarm.

§  Insure that the fire rating (UL rating of 2 hours or more) and that the sides are rated for tool and torch.

o   Avoid shipping your jewels via a common carrier.  Most jewelry stores and high end merchants will provide a courier service, when absolutely necessary.

·         Employ a solid risk management program while travelling.

o   Store your jewelry in the hotel safe or deposit box.

o   Keep jewelry in a plain case or bag that does not identify the contents as being valuable.

o   Wear or keep your jewelry on your person.

o   Create simple rituals for protection (Don’t become casual with where you place your jewelry while bathing, sleeping, showering, etc.)

In summary, review your coverage and values regularly.  An updated appraisal should occur approximately every 5 years.  Make sure your safe is appropriate for storing your jewelry.  Use the common sense approach to safeguarding your valuables at home and while travelling to avoid becoming part of the statistics.