Insurance Consultants of Maine Newsletter
Scott Simmonds, CPCU
February, 2004
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Feel free to forward this newsletter to your colleagues. Your comments, questions and suggestions are always welcome. Email: scott@icofmaine.com

Equipment Coverage Valuation Issue

Many insurance programs include specific “inland marine” coverage on equipment – backhoes, generators, forklifts and the like. Most such policies value the covered property at a depreciated value basis. So, if vandals destroy your ten-year-old backhoe your policy pays the market value of the equipment at the time of the loss. It is possible to negotiate with some underwriters (before a loss) to have property valued at replacement cost if that fits into your plans better. If your income is dependant on a hard to replace piece of equipment (a boat lift at a marina for example) consider adding business interruption coverage to protect your revenue stream.

Insurance Company Failures

In 2003 twenty-two insurance companies failed. For people and businesses that purchased insurance from these companies the failure resulted in loss of premium, unpaid claims, loss of cash value and interest income from cash value. In all, being insured by an insolvent insurer is a mess. Some say that state insurance guarantee funds eliminate the pain. NOT TRUE. Some have compared guarantee funds to FDIC. NOT TRUE. I recommend diligence in monitoring insurance company financial stability to avoid surprises. Call me if you have a question about your insurance company. I'm happy to look up your insurer's ratings.

Hanover Best Rating Upgraded

Last year the AM Best rating for one of northern New England's largest insurers was downgraded to B+. Hanover weathered the storm and have now been upgraded to A-. This is significant to umbrella insurers and banks that require a rating of no lower than A-.

Directors And Officers Renewals

We continue to see price increases in D&O policies. I'm recommending budgeting for a 10% to 15% increase for most clients. Six months ago I thought we would be seeing coverage restrictions this year. So far, that has not happened. Policies are being renewed as expiring but with increases. Carriers continue to issue renewal quotes at the eleventh hour.

Personal Insurance Hint

Most of the time I talk about commercial insurance issues here. You all buy personal coverage too. Many of my commercial clients ask for help with their personal insurance. Here's an issue that came up recently. Most homeowners policies include coverage limitations for certain property – jewelry, furs, silverware, cash and guns all have restrictions on the amount of coverage. For example, many policies limit the theft coverage for jewelry to $1,000. Talk to your agent about the limitations on your policy.

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Life Insurance
How secure is your life insurance? Do you have the right kind? Is the policy set up correctly? I can help. Call 207.284.0085 or email me at scott@icofmaine.com. Remember, I don't sell insurance so I'm unbiased.

Need A Speaker?
I'm pleased to speak to trade, business or service associations about insurnace topics. Call 207.284.0085 or email me at scott@icofmaine.com. Also check out my speaker's page at www.icofmaine.com/ispeaker.html

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Scott Simmonds, CPCU
Insurance Consultants of Maine, Inc.
Saco, ME 04072
Phone 207 284-0085
Fax 801 991-4027
scott@icofmaine.com
www.icofmaine.com
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Insurance Consultants of Maine, Inc. is an unbiased, fee-only insurance and risk management advisory firm. We don't sell insurance and never accept fees or commissions from insurance companies or agents.

Comments regarding insurance policies or products in this newsletter are for information purposes only and do not constitute an endorsement. We accept no fees or payments of any kind from any insurance organization or any company mentioned in this newsletter.

© 2004 Insurance Consultants of Maine, Inc. All Rights Reserved. We encourage sharing this newsletter in whole or in part if copyright and attribution (including my web address) are always included.