Thursday, May 24, 2012

Prevent Dog Bites—And a Lawsuit; Average Cost of Dog Bite Claims Is On the Rise


Dog bites accounted for more than one-third of all homeowners insurance liability claim dollars paid out in 2011, costing nearly $479 million, according to the Insurance Information Institute (I.I.I.).State Farm Mutual Automobile Insurance Company, the largest writer of homeowners insurance in the U.S., paid out more than $109 million as a result of its nearly 3,800 dog bite claims in 2011.
An analysis of homeowners insurance data by the I.I.I. found that the average cost paid out for dog bite claims was $29,396 in 2011, up 12.3 percent from $26,166 in 2010. In fact, from 2003 to 2011, the cost of the average dog bite claim increased by 53.4 percent. The number of claims rose 3.3 percent from 15,770 in 2010 to 16,292 in 2011. These increases can be attributed to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, which have risen well above the rate of inflation in recent years, according to the I.I.I. 

Dog Owner Liability
There are three kinds of law that impose liability on dog owners; not all the laws apply in every state: 
  1. Dog-bite statute: The dog owner is automatically liable for any injury or property damage the dog causes, even without provocation.
  2. “One-bite” rule: In some states, the owner is not held liable for the first bite the dog inflicts. Once an animal has demonstrated vicious behavior, such as biting or otherwise displaying a “vicious propensity,” the owner can be held liable. Some states have moved away from the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone.
  3. Negligence laws: The dog owner is liable if the injury occurred because he or she was unreasonably careless (negligent) in controlling the dog.
In most states, dog owners are not liable for losses incurred by trespassers who are injured by a dog. However, if a dog owner is considered legally responsible for an injury to a person or property the owner may have to reimburse the injured person for medical bills, lost wages, pain and suffering and property damage.
 
Some people purchase dogs for the purpose of guarding their homes; however, deadbolt locks and home security systems can be safer burglary deterrents, and can often earn you a discount on your insurance premium, the I.I.I noted.
 

How to Protect Yourself—And Your Assets

Homeowners and renters insurance policies typically cover dog bite liability as part of the standard policy’s liability coverage, which can range from a limit of $100,000 to $300,000. If the claim exceeds the policy limit, the dog owner is personally responsible for all damages above that amount, including legal expenses. A liability policy also provides no-fault medical coverage in the event a dog bites a friend or neighbor. This allows for medical bills to be submitted directly to the homeowner’s insurance company. Homeowners can generally get $1,000 to $5,000 worth of this coverage. 
 
Most insurance companies will insure homeowners with dogs. However, once a dog has bitten someone, your insurance company may charge a higher premium or exclude the dog from coverage. Some companies require dog owners to sign liability waivers for dog bites. Others will cover a pet only if the owner takes the dog to classes aimed at modifying its behavior. 
 
A single lawsuit—even if won by the dog owner who is being sued—can end up costing hundreds of thousands of dollars in legal fees and lost wages. The greater a person’s assets, the higher the risk of a costly lawsuit. The personal liability coverage available through a standard homeowners or automobile policy may not be enough. Therefore, the I.I.I. advises homeowners to consider purchasing a personal excess liability policy. Also known as an umbrella liability policy, this protects you against personal liabilities, such as dog bites, that could impact a substantial portion of your assets.
 
Umbrella liability coverage usually ranges from $1 million to $10 million, and covers broad types of liability. Most insurance companies have required minimum amounts of underlying coverage—typically at least $250,000 of protection from your auto policy and $300,000 of protection from your homeowners policy. If you own a boat, you must also have boat insurance with a specified minimum amount of coverage. Personal excess liability insurance is relatively inexpensive. The first $1 million of coverage costs about $150 to $300 per year, the second million about $75, and subsequent increments of $1 million cost about $50 per year.
 
Of course, the best way to protect yourself is to prevent your dog from biting anyone in the first place. The most dangerous dogs are those that fall victim to human shortcomings such as poor training, irresponsible ownership and breeding practices that foster viciousness.
 
National Dog Bite Prevention Week®  (May 19-25, 2012), is an annual event designed to provide consumers with information on how to be responsible pet owners while increasing awareness of a serious public health issue.
 
To reduce the chances of a dog biting someone, consider taking the following steps: 
  • Consult with a professional (e.g., veterinarian, animal behaviorist, or responsible breeder) to learn about suitable breeds of dogs for your household and neighborhood.
  • Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home with an infant or toddler. A dog with a history of aggression is inappropriate in a household with children.
  • Be sensitive to cues that a child is fearful of or apprehensive about a dog and, if so, delay acquiring a dog. Never leave infants or young children alone with any dog.
  • Have your dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are NOT neutered.
  • Socialize your dog so it knows how to act with other people and animals.
  • Discourage children from disturbing a dog that is eating or sleeping.
  • Play non-aggressive games with your dog, such as “go fetch.” Playing aggressive games like “tug-of-war” can encourage inappropriate behavior.
  • Avoid exposing your dog to new situations in which you are unsure of its response.
  • Never approach a strange dog and always avoid eye contact with a dog that appears threatening.
  • Immediately seek professional advice from veterinarians, animal behaviorists, or responsible breeders if your dog develops aggressive or undesirable behaviors.
Most dogs are friendly, loving members of the family but even normally docile dogs may bite when they are frightened or when protecting their puppies, owners or food. Ultimately, the responsibility for properly training and controlling a dog rests with the owner.




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Wednesday, May 16, 2012

Life Insurance Provides Essential Financial Protection—and It Costs Less Than You Think


 Term life insurance can provide an essential financial protection for families and its comparatively low premiums make buying enough coverage affordable, according to the Insurance Information Institute (I.I.I.).
However, many Americans are dissuaded from buying adequate life insurance because they overestimate how much it will cost them. A recent study by LIMRA and the LIFE Foundation, two industry-supported organizations, surveyed more than 2,000 Americans in January 2012, and found that 20 percent of those who had some life insurance, and 49 percent of the respondents who said they had no life insurance, acknowledged they did not have enough coverage. Most reported they did not obtain more, or any, life insurance because it was “too expensive.”

The survey respondents who admitted they needed more life insurance coverage estimated it would likely cost around $400 a year for a $250,000 term-life insurance policy that would cover a healthy 30-year-old for a term of 20 years. But the real annual premium is closer to $150 in that scenario, according to LIMRA and the LIFE Foundation. Life insurance is also available for purchase by middle-aged and older prospective policyholders.

Term life insurance provides protection for a specific period of time and typically offers the greatest amount of coverage for the lowest initial premium cost. Permanent life insurance, also known as whole life, offers lifelong protection and the ability to accumulate cash value on a tax-deferred basis, but has higher initial premiums than a term policy for the same face amount. The death benefits paid by life insurers are income-tax-free, allowing beneficiaries to replace an income-earner’s income, or a family caregiver’s services.

“Term life insurance can provide beneficiaries with a very cost-effective form of financial protection,” said Michael Barry, vice president, Media Relations, I.I.I.
The face-amount of a life insurance policy—the benefit payable to a policyholder’s beneficiaries should the policyholder die while the policy is in force—should be sufficient to do three things.

1.     Replace Income: Buy enough life insurance so that, when combined with other sources of income, it will replace the income you, as the policyholder, now generate for your beneficiaries, while also financing the expenses your beneficiaries will incur to replace services you provide within the household (e.g., landscaping, tax preparation). Most families who lose their primary income-generator to premature death, and have children under the age of 18, have potential post-death income sources besides life insurance. The most common is Social Security survivors insurance. The maximum Social Security survivors’ monthly income benefits for a surviving spouse, and two children under age 18, could be about $2,400 per month, which would increase to match inflation.

Stay-at-home parents, and those caring full-time for an adult family member, should also consider purchasing life insurance so that their children, or any adults needing full-time care, have the resources to hire professionals who can perform those tasks.

2.     Replace Employer-Provided Benefits: This is income that you receive through your employment but is not part of your wages. It includes things like the employer’s subsidy of your health insurance premium, or the matching contribution to your 401(k) plan, and is often overlooked. The cost of replacing just your health insurance and retirement contributions could be the equivalent of $2,000 per month or more.

3.     Cover Death-Related Expenses: These include the funeral costs, taxes and administrative fees associated with “winding up” an estate and passing property to heirs. At a minimum, these expenses can total upwards of $15,000.


RELATED LINKS
Facts and Statistics: Life Insurance
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org




For More Information Please Visit: Insurance Information Institute