At risk: Many companies don’t have enough disaster insurance

By Joyce M. Rosenberg

THE ASSOCIATED PRESS

NEW YORK _ A fire at the gun shop next door never reached Kathy Laurienti’s sausage and specialty food store, but the water and smoke damage was enough to shut her business down. Because Laurienti didn’t have enough insurance, it’s still closed more than a year later.

Laurienti still doesn’t know how much her total losses will be, but estimates she’ll have to pay $30,000 to $40,000 from her own pocket. While she had $10,000 in coverage for lost income, she’ll likely have lost $100,000 in business by the time she can reopen.

“You don’t think about what the insurance might not handle,” says Laurienti, whose store, Paisano, is located in a shopping centre in Denver.

It’s a lesson learned all too often, including by business owners hit by natural disasters like this summer’s flooding in Louisiana that caused an estimated $2 billion in damage to companies. Some businesses in the Southeast are still assessing their losses from Hurricane Matthew, which caused an estimated $10 billion in commercial and residential losses.

The government estimates that 40 per cent of companies that haven’t prepared themselves to be able to operate after a disaster are forced to shut down. And 25 per cent of businesses fail within two years because of inadequate post-disaster revenue or cash flow. Adequate insurance would help them survive.

Small companies frequently either don’t buy insurance at all or don’t have enough to cover their losses when disasters like hurricanes, tornadoes and power outages strike.

Many owners who do buy insurance opt for a standard business policy that covers fire, rain, wind and vandalism. These policies may also include business interruption insurance, which covers lost income when a company cannot operate. But they don’t cover damage from floods or earthquakes, which can be serious threats in many parts of the country.

“Most (owners) are buying it as if it’s a commodity product instead of understanding it needs to be customized to their particular situation,” says Robert Borghese, who teaches law and entrepreneurship at the Wharton School of the University of Pennsylvania.

Many rely too much on insurance brokers who may not have a thorough understanding of the coverage they’re selling, Borghese says. Brokers may not know what a particular company’s needs are.

Owners may also trying to keep their costs down, and don’t think about the “what-ifs,” says Belen Tokarski, a senior vice-president at Insureon, an online insurance broker aimed at small businesses. It can cost thousands of dollars to insure a building and its contents in moderate-to-high risk areas.

“They’re price-focused, so they’re purchasing just what they think they need,” she says.

Walter Coker considered buying flood insurance for his property that included a barn filled with furniture imported from Indonesia and a bait shop. But his broker said the cost of insuring the barn, located on the Matanzas River in St. Augustine, Florida, would be more than Coker could afford. The building is old and in disrepair.

“He didn’t give me any numbers, but said it would be exorbitant to try to insure a barn like that,” Coker says.

When Hurricane Matthew hit, the barn and bait shop had four feet of water from the river. Coker’s furniture inventory was heavily damaged. He was able to sell it at a discount and recover the price he paid, but estimates he had $6,000 to $7,000 in losses.

Coker knows he was gambling, but given the cost of insurance, says he’s comfortable doing so. But for some owners, denial is a factor.

“Their eyes glaze over. They’re busy running the day-to-day operations. They don’t want to think about something bad happening,” says Brian Van Hook, associate director at the Small Business Development Center at Florida International University.

Van Hook recommends resources like checklists posted by the trade group Insurance Information Institute on its website that help companies understand their risks. SBDCs like Van Hook’s are located around the country and can be found at www.sba.gov/sbdc .

Beyond natural disasters, if an owner is unable to work or dies, a company could be in danger.

Erin Jump Fry’s husband, Mike, became ill in 2010, but he didn’t have disability or life insurance. Their business, Fancy Fortune Cookies, didn’t have a life insurance policy for him that would have helped it deal with the financial fallout of the loss of its co-owner. Without insurance money, Erin Fry couldn’t hire someone to help her run it while she also cared for her husband and daughter.

“You can’t hire a replacement because you’re having to pull money from the company to pay medical bills,” says Fry, whose company is based in Indianapolis.

Mike Fry passed away in November 2012, and several months later, his wife discovered that an employee was embezzling money. Business fraud insurance would have helped her recover that cash, she says. Her frustration is with attorneys and other advisers who didn’t talk to the Frys about insurance coverage, some varieties of which she didn’t even know existed.

Fancy Fortune Cookies has recovered, Fry says, and she now has more comprehensive insurance.

People who run businesses out of their homes may mistakenly think their homeowners policy will cover business losses, Tokarski says.

Elizabeth Crouch sells cupcake racks out of her home, and kept inventory in a building on the property. A fire in April destroyed the building and melted 1,500 racks, wiping out $5,000 in inventory that would have brought Crouch $37,000 in revenue. She discovered that the racks weren’t covered.

“I had liability insurance just in case someone got hurt,” says Crouch, who lives in Sheridan, Oregon. “Never did I ever think there was a chance of losing my inventory.”

Crouch is trying to be certain she won’t suffer similar losses again.

“Everything else in my business I’m re-examining to be sure I’m covered for anything,” she says.

Nearly half of Canadian homeowners aren’t prepared for emergency expenses

Press Release:

Almost half of Canadian homeowners don’t have enough money set aside to deal with a financial emergency, while four in 10 have some difficulty managing common expenses associated with home ownership, a new survey by Manulife Bank of Canada shows.

About one quarter of those polled have $1,000 or less set aside for an emergency, and another quarter of respondents don’t know how much emergency savings they have.  Millennial homeowners (those aged 20 – 34 years) report the lowest median amount of emergency funds among the respondents, at just $3,500. Among homeowners with mortgage debt, 38 per cent said they have some difficulty affording their mortgage, utilities and maintenance.

“It’s undoubtedly stressful living paycheque-to-paycheque,” said Rick Lunny, President and Chief Executive Officer, Manulife Bank of Canada. “If you don’t have extra cash at the end of the month, it’s very difficult to build a rainy-day account. For those who find themselves in this situation – a good place to start is working with an advisor to create a budget.  Many people are surprised at how much of their money is going toward things that they don’t consider that important.”

On average, Canadian homeowners with a mortgage reported $174,000 in mortgage debt, and more than one quarter of their net income goes towards making mortgage payments. However, almost three in 10 homeowners spend more than 30 per cent of their net income on mortgage payments.  The average price of a Canadian home in July was $480,742 according to the Canadian Real Estate Association.

In addition, more than one third of mortgage holders would have difficulty making their regular mortgage payment within three months if the main income earner in their household lost their job. Manulife Bank recommends homeowners have enough emergency savings to cover three to six months of expenses.

“A financial buffer is an important part of a financial plan,” said Lunny.  “A high-interest savings account is a good option.  Or, if you’ve got a home equity line of credit, you could use your savings to reduce your debt and save interest – and still have access to that money if an emergency arises.”

One third of mortgage holders say they could manage a mortgage payment increase of up to 10 per cent without encountering any financial difficulty and about 40 per cent could manage an increase of 20 per cent or more. However, one in six respondents would encounter financial difficulty with any increase to their mortgage payment.

According to Manulife Bank’s mortgage calculator, a homeowner with a mortgage balance of $174,000, an interest rate of 2.89 per cent and a 20-year amortization period would have monthly payments of $954. For payments to increase 10 per cent to $1,049 per month, the interest rate would need to increase by just over one per cent.

Many are taking advantage of low interest rates to reduce debt
More than four in 10 homeowners say they are taking advantage of the low interest-rate environment to pay down their debt more quickly while just one in 10 are using low rates to place less focus on debt repayment. Almost half of Millennials and Generation X (those aged 35 to 51 years) are using low rates to accelerate debt repayment, while just one third of Baby Boomers (52 to 69 years) are doing so.

Millennials and their money
Millennials were more likely to say that mortgage rates are currently too high, with 36 per cent of them feeling that way, compared to just 11 per cent for Baby Boomers.

“The survey results may be more reflective of monthly mortgage costs – which are a function of debt and interest rates,” said Philip Petursson, Chief Investment Strategist, Manulife Investments. “Perhaps the emphasis is misplaced on interest rates, given the fact that interest rates are at decade lows, as opposed to the real driver of higher mortgage costs, which is housing prices.”

The average chartered bank posted five-year fixed mortgage rate was at 4.64 per cent in June, a 40-year low, according to Statistics Canada. By comparison, the rate was 21.75 per cent in September 1981.

In addition, almost four in 10 Millennials indicated their home needed repairs that they couldn’t afford, higher than Generation X and Baby Boomers.

Millennials are also more comfortable than other generations with carrying a credit card balance. Thirty-one per cent of millennial respondents felt it’s not a “big deal” if they carry a balance on their credit cards. By comparison, only 24 per cent of Gen X respondents and 21 per cent of Baby Boomers felt the same way.

Among those surveyed, 17 per cent of Millennials have no mortgage debt. That compares to 24 per cent for Gen X respondents and 57 per cent for Baby Boomers.

Gen X concerned about saving for retirement
About one in three Gen X respondents expressed confidence in their ability to maintain their lifestyle in retirement, compared to 41 per cent for Millennials and 45 per cent for Baby Boomers.  Not being able to save for retirement was noted as the top source of stress for Gen X respondents (41 per cent), followed closely by not having enough time for everything (40 per cent).

Boomers confronted with expectations versus reality in retirement
Seventy-nine per cent of Baby Boomers said they would prefer to live in their current home in retirement. Yet, 22 per cent indicate their home will represent more than 80 per cent of their wealth when they retire, and a further 18 per cent say it will represent between 61 and 80 per cent of their wealth.

“Manulife Bank’s survey adds to the evidence that low interest rates and rising house prices in some key cities are permeating the consumer psyche,” said Frances Donald, Senior Economist, Manulife Asset Management.

For more information visit, ManulifeBank.ca/debtresearch

About the Manulife Bank of Canada Debt Survey
The Manulife Bank of Canada poll surveyed 2,372 Canadian homeowners in all provinces between ages 20 to 69 with household income of $50,000 or more. The survey was conducted online by Environics Research between June 28 and July 8, 2016. National results were weighted by province, income and age.

About Manulife Bank
Established in 1993, Manulife Bank was the first federally regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered bank and a wholly-owned subsidiary of Manulife. As Canada’s first advisor-based bank, it has successfully grown to more than $22 billion in assets and serves clients across Canada.

About Manulife

Manulife Financial Corporation is a leading international financial services group providing forward-thinking solutions to help people with their big financial decisions.  We operate as John Hancock in the United States, and Manulife elsewhere.  We provide financial advice, insurance and wealth and asset management solutions for individuals, groups and institutions.  At the end of 2015, we had approximately 34,000 employees, 63,000 agents, and thousands of distribution partners, serving 20 million customers.  At the end of September 2016, we had $966 billion (US$736 billion) in assets under management and administration, and in the previous 12 months we made more than $24.4 billion in benefits, interest and other payments to our customers.  Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years.  With our global headquarters in Toronto, Canada, we trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.  Follow Manulife on Twitter @ManulifeNews or visit manulife.com or johnhancock.com.

SOURCE Manulife Financial Corporation

Canada’s largest earthquake drill just 8 days away!

Join hundreds of thousands of British Columbians as they “Drop, Cover and Hold On” during the 2016 Great British Columbia ShakeOut. The BC Earthquake Alliance and Insurance Bureau of Canada (IBC) are working together to present Canada’s largest earthquake preparedness drill on Thursday, October 20 at 10:20 a.m.

Register today and encourage your family, friends and colleagues to do the same at www.ShakeOutBC.ca.

“More than 3,000 earthquakes occur in British Columbia each year. Most are too small to be felt, but the risk of one big enough to cause major damage is real,” said Dave Cockle, President of the BC Earthquake Alliance. “Participating in the Great British Columbia ShakeOut is an excellent way for your family or organization to take one small step towards preparing to survive and recover quickly.”

“The Great British Columbia ShakeOut provides us with an opportunity to take another step forward in preparedness, an important pillar in emergency management. It’s an event that will remind us all of the importance of drills so that together, we are all prepared if a major earthquake hits. I encourage all British Columbians to register and take part – and Drop, Cover and Hold On,” said the Honourable Naomi Yamamoto, Minister of State for Emergency Preparedness.

“IBC is pleased to be working with Great British Columbia ShakeOut, government officials and British Columbians to create a culture of preparedness,” said Bill Adams, Vice-President, Western & Pacific, IBC. “There are a number of steps you can take to make sure you are prepared both physically and financially, and one step is to participate in the Great British Columbia ShakeOut.”

To learn about all the ways to participate in this year’s ShakeOut BC drill, click here. Listen to the ShakeOut BC drill audio broadcast during the event to make it more informative. Click here to download the drill broadcast. For more information about IBC and the 2016 Great British Columbia ShakeOut, visit www.ibc.ca.

Fortis BC, BC Hydro, BCAA, HEMBC and Ivanhoe Cambridge are also sponsors of this year’s event. For a full list of sponsors, organizers and supporters, click here.

Note to Editors:
If you work for a TV or radio station that will be airing the drill during The Great British Columbia ShakeOut, celebrate your station’s commitment to earthquake preparedness by listing its name on the BC ShakeOut website. Just fill out this form.

A media advisory will be issued on October 19th inviting media to attend London Drugs Headquarters for the main media event, presented by Insurance Bureau of Canada, on ShakeOut BC Day October 20th.

About ShakeOut BC
ShakeOut BC earthquake drills help people at home, school and work practise how to be safe during an earthquake and provide an opportunity for everyone to improve their overall preparedness. By participating, you, your family, your co-workers and millions of others will be better prepared to survive and recover quickly following an earthquake. As of today, 52.5 million people worldwide are registered to participate in the October 20th drill, including more than 650,000 British Columbians currently registered to participate.  Last year over 770,000 British Columbians participated.

About Insurance Bureau of Canada
Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

P&C insurance touches the lives of nearly every Canadian and plays a critical role in keeping businesses safe and the Canadian economy strong. It employs more than 120,000 Canadians, pays $8.2 billion in taxes and has a total premium base of $49 billion.

For media releases and more information, visit IBC’s Media Centre at www.ibc.ca. Follow IBC on Twitter @InsuranceBureau and@IBC_West or like us on Facebook. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.

SOURCE Insurance Bureau of Canada

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SGI: 74 tickets issued to new drivers not following licence restrictions in June

Press Release:

SGI_logo_colour-header

June’s province-wide traffic safety spotlight saw law enforcement issue 74 tickets to new drivers and new motorcycle riders not following the restrictions outlined on their learner or novice licence, including:

  •   51 tickets for driving as a learner without a supervising driver
  •   21 tickets for failing to comply with a licence endorsement or restriction
  •   1 ticket for exceeding zero tolerance for alcohol or drug use
  •   1 ticket for failing to display the proper learner or novice placards on a motorcycleLaw enforcement throughout the province also issued an additional 5,240* traffic violations to other road users throughout June, including 3,985 speeding/aggressive driving offences, 254 impaired driving-related offences, 302 distracted driving offences (192 of those for cellphone use) and 407 seatbelt/car seat/booster seat violations.STEP resultsPolice from all over the province joined forces in Prince Albert on June 21 and 22 for a two-day Selective Traffic Enforcement Program (STEP) event. All traffic safety violations were enforced with a special focus on impaired driving, distracted driving (cellphones), speeding/aggressive driving and seatbelts/child seats. Law enforcement issued 302 tickets during the two-day blitz, including:
  •   91 tickets for speeding/aggressive driving
  •   23 tickets for cellphone use while driving
  •   1 tickets for failing to stop for red light/stop sign
  •   28 tickets related to light vehicle safety
  •   106 tickets related to commercial vehicles
  •   53 other traffic offencesSGI-certified car seat technicians also participated in the STEP event to help ensure and promote child passenger safety. They checked 182 child seats and seatbelts during the check stops and gave away nine car seats and 15 booster seats to encourage child restraint use.With construction season in full swing, motorists are reminded to #SlowDown as police continue to focus on aggressive driving in work zones throughout the month of July.

 

  • Visit SGI’s website at www.sgi.sk.ca for more information relating to new drivers and new riders. Follow SGI on Facebook and Twitter for safety tips on how to #TakeCareOutThere.*Includes all traffic safety focus results for June submitted by police as of July 19, 2016.

For more information, contact:

Marie Schultz
Communications Consultant, Media Relations Phone: 306-751-3516
Cell: 306-527-0787
Email: mschultz@sgi.sk.ca

N.B. insurance broker has news for Twitter: ‘We’re not the real Mitch McConnell’

SAINT JOHN, N.B. _ Mitch McConnell is one of the most powerful men in Washington. Mitchell McConnell is an insurance brokerage in New Brunswick. Both are on Twitter, and regular users know what comes next.

“We’ll get tweets with just blathering profanity without even a coherent thought in there,” Chris Bourque, president of Mitchell McConnell Insurance in Saint John, N.B., said Thursday. “They assume we’re the real Mitch McConnell.”

McConnell is a Kentucky Republican who is majority leader in the U.S. Senate. He tweets as “?SenateMajLdr.”

The Saint John McConnell is one of North America’s leading insurance brokers for fish farmers. The firm tweets as ?MitchellMcConne, with its name displayed as Mitchell McConnell.

“It’s the surnames of the two founding brokers in 1927,” Bourque explained.

Unlike the Royal Newfoundland Constabulary, which this week good-naturedly complained about the blast of tweets that comes with sharing an acronym with the Republican National Convention, Mitchell McConnell Insurance has had a relatively easy ride.

“Depending on what’s going on in the Senate, we might get two or three a day, or one a week,” said Bourque.

Bourque said he tries to handle the tweets with humour promising one Kentucky woman his firm won’t take her guns away, or suggesting to one apparent GOP critic that the Republican presidential race could be a reality show.

“We make it clear up front: We’re not the real Mitch McConnell.”

Bourque said he had a chance to meet the senator in 2002 while in Kentucky for a conference. The senator was very cordial and amused by the firm’s name, Bourque said.

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