Our client is a property and casualty insurance agent. He is a 51 year old male and his wife is forty-eight years old. His wife is a retired high school math teacher. They have two children ages twenty-two and seventeen. The twenty-two year old is currently enrolled in college at the University of Mississippi and the seventeen year old is currently enrolled at Tupelo High School. The client lives in Tupelo, Mississippi. He was born and raised in Nettleton, Mississippi and moved to Tupelo after he got his degree and started working as a producer for an independent insurance agency named IFM (Insurance and Financial Managers), he then became an exclusive agent for ALFA. Subsequently he opted to use multiple insurance companies to underwrite his clients, whereas this led to him starting his own independent agency called Insurance Managers Inc. Considering all of the above information, the insured faces many different exposures. His risk management goals are to have adequate insurance limits to cover the exposures he faces. The insured has many exposures that need to be addressed. The bulk of the insurance needs are for the following – auto, home, farm, and watercraft. The greatest risk exposure for this client would be if he had adequate limits of liability insurance if anything were to happen. Auto claims usually involve other people and their property, and can accumulate rather hastily. Carrying high auto limits helps the insured avoid paying high liability claims out of pocket. With regard to autos, the insured faces an exposure of being involved in an accident with another party that doesn’t carry adequate insurance or doesn’t have insurance at all. Furthermore, on the insured’s auto policy he faces the exposure of having two youthful drivers. Youthful drivers have a higher loss frequency so higher limits are required. Another exposure is how and where the insured’s vehicles are garaged. Also the twenty-two year old driver has the vehicle away at school with him which is an increased exposure. The insured’s vehicles are not kept in a locked garage so they face an increased exposure to vandalism and theft. The home is located in Guntown Mississippi. His home was built in 2005. The year of construction is a key component to analyzing risks and the exposures a home faces. Given that the home is a newly constructed home it decreases the chances of outdated products or procedures being used on the home. Moreover, with the home being built within the last 15 years the insured’s roof should be in good condition. The condition of the roof is a major factor because it helps prevent major losses from weather exposures. There are two fireplaces located on the insured’s premises. One fireplace is inside the home, although it is not the primary source of heat and the other fireplace is in the outdoor kitchen. Chimney’s can clog and cause smoke to back up inside the home. They should be cleared frequently by a professional chimney sweep. The insured also has a dog. Dogs are an exposure because they could bite neighbors or people visiting the home. Our insured would be liable for any medical payments or property damage caused by his pet. The insured has a swimming pool at his home which increases the exposures that the home faces. The pool is attractive to children and can cause soaring liability claims. The pool does have a diving board that must meet certain regulations with each company a policy is quoted with. Our insured does have a fence partially around his pool that lowers the chances of unwanted guests e ntering his pool area. With the pool, the insured also faces an increased water backup loss if something were to happen with the pump on the pool. The insured also has a boat that he keeps in a shop on the premises. The insured’s boat faces a lot of the same exposures that a car would. They are liable for any damages they cause while operating the boat whether it be to another boat or a pier. The insured also faces increased exposures while transporting the boat and while their youthful drivers are operating the boat. A RV is also kept on the insured premises in an open garage. The insured faces a liability exposure while traveling in this home and hooking up in RV parks. Vanishing away in the RV would also raise questions on how the vehicles were stored while the family was out of town. Having an RV increases the time the home is vacant resulting in preeminent possibilities of vandalism and theft. The insured also has a small amount of land that he carries a farm policy for. Seeing as how the insured isn’t at the farm as often as his home, making sure his property is properly maintained and that all equipment is not out in the open. These are just some of the major liability and property exposures the insured faces. Looking at our insured’s homeowners policy, he has replacement cost on his property and contents. The home owner’s policy is a special form coverage. The insured’s Coverage A (dwelling) amount is $287,900 which is 100% insurance to value of his home. His Coverage C (personal property) amount is $201,530. The other structure coverage limit is $41,310. He also has loss of use coverage that is $57,580. He carries an all perils $1,000 deductible. Furthermore, he does not have earthquake coverage or flood coverage on his homeowner’s policy. The insured also has a few endorsements. He has loss assessment coverage with a $3,000 limit, mold coverage with a $10,000 limit, and Ordinance or Law Coverage with a limit of $28,790. He has 2010 Chevrolet Camaro, 2004 Allergo motor home, 2010 Chevrolet Silverado K2500 and 2009 Nissan Maxima that has liability limits of $250,000/$500,000/$100,000, medical payments up to $5,000 on a no fault basis, uninsured motorists limits of $25,000/$50,000/$50,000. He has comprehensive and collision coverage on all of these vehicles each with a $1,000 deductible. He also has a 2002 Chevrolet Silverado and a 2003 Toyota Corolla with liability limits of $250,000/$500,000/$100,000, medical payments up to $5,000, and uninsured motorists $25,000/$50,000/$50,000. He has extra towing that is called Emergency Roadside Assistance on all vehicles listed above. For his watercraft policy, he has a 2013 Malibu Wakesetter VLX that has physical damage coverage with a $500 deductible. The watercraft liability is $300,000, which is a little higher than usual. He also has boater’s liability for up to $50,000 of coverage. The medical payments for the watercraft have up to $2,000 per person. The watercraft policy is also an all-risk policy. The insured also has forty acres of land. On those forty acres, he has twenty acres of the land planted in trees. The liability limit is $300,000 and the farm liability also has a 2005 John Deere 5205 tractor with physical damage of $20,000 with a $1,000 deductible. He also has a 2010 John Deere 3710 tractor with $35,000 of physical damage coverage with a $1,000 deductible. The farm liability policy is an all risk policy. The insured has adequate limits on all policies. The client has a watercraft all-risk policy, a personal property floater on the farm all-risk policy for both of his tractors and for his jewelry on his homeowner’s policy. The insured has the jewelry scheduled on the homeowners policy. The insured is not covered for earth movement, flood insurance, and does not have an umbrella. The client should purchase the necessary coverage’s to make sure he is covered in the event of a catastrophic loss. The insured might also want to place physical damage coverage on his 2002 Chevrolet Silverado and his 2003 Toyota Corolla, because he might have an accident and would not be able to replace the vehicles. The client is insured with Safeco Insurance, which is a division of Liberty Mutual group that was founded in 1953. Safeco is an A (Excellent) rated insurance company, meaning that they have excellent financial strength for paying all of their claims. The rating comes from AM Best ratings. AM Best is one of the leaders in the nation of rating all insurance companies. Safeco has local claims adjusters to assist their policyholders in the event of a loss. They also provide catastrophic loss teams in case of large losses that hit a specific area. A good example of the catastrophic loss team they provide was on full display after Hurricane Katrina hit the Mississippi Gulf Coast in 2005 and the hail storm that hit Jackson, Mississippi this spring. Our client is very happy with the claims service that Safeco insurance provides for him.
` As we mentioned earlier, the insured faces many different exposures. We feel that the insured’s current policies leave some gaps that could lead to the insured having to pay out of pocket for large liability losses. There are some non insurance measures that can be taken to help lower these risks. We suggested that the insured make his fence completely surround his pool and add a gate with a latch. This would significantly lower the exposure of a neighbor’s child walking over and unintentionally falling in the pool. The insured already has a partial fence; so closing in the rest would be a minimal cost. The insured’s home is also vacant more often than most due to them taking trips in their RV. We looked at quotes for adding a security system to the insured’s home. We found that an alarm from ADT would cost the insured around $795. This is a large cost, but in the long run it does lower than chance of a big theft claim. The insured would also receive a $56 discount from Safeco once he sent in a copy of the alarm certificate. The insured does not currently carry flood or earthquake coverage and due to the geographical area that they live in we feel they can continue to carry on without the coverage. In regards to the insured’s insurance policies we believe that it would be best for him to purchase a new policy. We believe this policy should purchase a $1,000,000 umbrella policy. We were able to obtain a quote from the insured’s current carrier Safeco. The insured current carries $300,000 limits on her home and $250,000/$500,000 limits on her auto which both meet the minimum requirements for underlying policies so they would not have to increase their current policies. This umbrella policy would also extend to cover the farm policy and the boat located on the homeowners policy. We also did a quote increasing the boater’s liability to $500,000 which was an annual premium of $453. The annual premium for this twelve month umbrella policy would be $510. When broken down into monthly installments this policy would only be $43 a month which is a small price to pay to help insure the insured’s financial well being. The main reason we think the insured needs this policy is to cover their selves in the event of a large liability loss. In the event of a large liability loss on one of the underlying polices the umbrella policy would step in and pay the difference once the underlying limits have been exhausted. We believe if the insured’s take these small measures that we have provided it will better protect their family from the exposures they face.