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What is gap insurance?

How gap insurance works

When you buy or lease a new car or truck, the vehicle starts to depreciate in value the moment it leaves the car lot. In fact, most cars lose 20 percent of their value within a year. Standard auto insurance policies cover the depreciated value of a car—in other words, a standard policy pays the current market value of the vehicle at the time of a claim.

If, when you finance the purchase of a new car and put down only a small deposit, in the early years of the vehicle's ownership the amount of the loan may exceed the market value of the vehicle itself.

In the event of an accident in which you've badly damaged or totaled your car, gap insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you actually owe on it.


When you might need gap insurance

  • It’s a good idea to consider buying gap insurance for your new car or truck purchase if you:
  • Made less than a 20 percent down payment
  • Financed for 60 months or longer
  • Leased the vehicle (carrying gap insurance is generally required for a lease)
  • Purchased a vehicle that depreciates faster than the average
  • Rolled over negative equity from an old car loan into the new loan


Where you can get gap insurance

Your car dealer may offer to sell you gap insurance on your new vehicle. However, most car insurers also offer it, and they typically charge less than the dealer. On most auto insurance policies, including gap insurance with collision and comprehensive coverage adds only about $20 a year to the annual premium.

Source: Insurance Information Institute
 

When it's time to set the clocks forward in Spring or backward in the Fall for Daylight Savings Time, fire safety officials recommend checking that your smoke alarms and carbon monoxide detectors are in working order. Batteries don't last forever. Vacuum them to remove dust, replace batteries and test the alarms. This small effort could make all the difference in an emergency.

The life expectancy of smoke alarms is generally 8-10 years, after which point their sensors can begin to lose sensitivity. The test button only confirms that the battery, electronics, and alert system are working; it doesn’t mean that the smoke sensor is working. Over time dust gathers in detectors which diminishes sensitivity. You can test sensors using an aerosol can of smoke alarm test spray that simulates smoke. Both hard-wired and battery-operated detectors need to be checked and replaced as needed.

If your alarms are over 10 years, why take a chance? It's recommended to replace all detectors at the same time to ensure that you're using up-to-date technology throughout your home.  It's also easier to keep track of when it's time to replace them.

Most fatal fires occur at night. Thousands of lives are saved each year simply because people have working smoke detectors to alert them. Working smoke detectors decrease the risk of dying in a house fire by nearly 50%. Many fire deaths are caused by inhaling the toxic smoke and gases emitted in the states of a fire, so early warning can make all the difference between life and death. 

Carbon monoxide is a colorless, odorless gas produced whenever any fuel such as gas, oil, kerosene, wood or charcoal is burned. Exposure to CO can produce headache, dizziness, nausea, fainting, and at high levels, can cause unconsciousness and death. Hundreds of people die accidentally each year from CO poisoning caused by malfunctioning or improperly used fuel-burning appliances (EPA data). Therefore, knowing the symptoms and having an alarm to alert you to a CO buildup can be the difference in saving lives.

smoke & carbon monoxided alarms

Smoke alarm and carbon monoxide detector requirements can vary from town to town, so it's a good idea to check with your local fire department regarding local regulations for fire and smoke detector placement and type. Every home needs working smoke alarms to provide an early warning.

Smoke alarms installed in all bedrooms, hallways that lead to sleeping areas, basements, and each additional level of your home. Generally, smoke alarms should be mounted on the ceiling 4” from the wall; wall mounts should be 4-12” from the ceiling. Do not install near windows, vents or other draft areas.

Carbon monoxide detector alarms are required to be located on every level of a home or dwelling unit including habitable portions of basements and attics. On levels with sleeping areas, the alarms must be placed within 10 feet of the bedroom doors. 

prepare and practice your escape plan

If a fire were to occur, how would you get out of your home? You should have an evacuation plan with at least two escape routes. Make sure that everyone in your family knows the routes and practices how to crawl low under smoke. Determine a location where to meet outside so that you'll know everyone is out. 

Fire officials also recommend

  • Testing smoke alarms monthly by pushing the 'test' button, which activates the alarm.
  • Install fire extinguishers in or near the kitchen
  • Preventative house cleaning to reduce or eliminate fire hazards

 

New England winters are known for their unpredictability. Keeping your business operations running smoothly and safely this winter is dependent on being prepared for whatever winter weather might bring. Below are a few of the steps you can take to address the most common problems that cause property damage in winter.

Cold air in enclosed spaces

  • Visually inspect concealed spaces for gaps in wall materials; water pipes in these areas can freeze if unprotected
  • Keep these spaces warmed to at least 50° F or use certified heat tape

Sprinkler systems and related equipment

  • Keep building temperatures at 50° F for wet-pipe systems, including the enclosures housing a riser equipped with a dry pipe valve
  • Dry pipe systems should be drained at the low point prior to the onset of cold weather
  • Service and inspect all hydrants, tanks, fire dept. connections and sprinkler system accessories before the onset of cold weather

General building protection

  • Inspect vacant properties or unoccupied areas of a building during cold weather to be sure heating systems are functioning properly
  • Identify sources of cold air infiltration and repair leaks or seals
  • Inspect roofs to be sure they can withstand snow loads; remove snow from roofs if roof strength is in question
  • Keep gutters, downspouts and roof drains clear to avoid clogging and freezing

Preventing ice dams

  • Increase insulation above ceilings inside the building
  • Consider the use of heating cables to prevent ice dams
  • Increase ventilation in attic spaces
  • Inspect roofs for evidence of standing water (mold, mildew, vegetation) that might indicate future problems, and address the situation with a roofing contractor
  • SAFELY remove snow with a roof rake or stiff-bristled broom when ice dams have been a problem (always follow OSHA guidelines for worker safety during roof work)

Responding to a heat loss event

  • Drain any equipment that contains water that could freeze if the temperature drops
  • Investigate sources of temporary heat to be prepared for low temperatures
  • Train security or maintenance/facility personnel in how to close automatic sprinkler valves if a leak or break should occur

Taking the above steps and performing routine maintenance of your property can be key to preventing property damage during winter months and throughout the year.

Source:  Hanover Insurance

You Could Be Held Liable If Guests Get Drunk

Halloween can be a fun time of trick-or-treating, jack-o'-lanterns and costume parties, but it can also be a deadly time of increased drunk driving and could be especially worrisome this year since the celebration falls on a Saturday. Anyone hosting a Halloween party should take steps to limit their liquor liability and make sure they have the proper insurance, according to the Insurance Information Institute (I.I.I.).

Social host liability laws vary widely from state to state. Some states do not impose any liability on social hosts. Others limit liability to injuries that occur on the host’s premises. Some extend the host’s liability if the person who was provided the alcohol is killed or injured, or kills or injures another person. Many states have laws that pertain specifically to furnishing alcohol to minors. 

“Most people are aware that serving alcohol to minors is illegal, yet asurvey of young people shows that the most common sources of alcohol are from their own home or from persons over the age of 21 who purchase alcohol for them,” said Loretta Worters, vice president with the I.I.I.“Depending on the jurisdiction, violations of social host laws can lead to civil or criminal fines, imprisonment and monetary damages awards.”

Worters also pointed out if you are throwing a party where alcohol is served, it is your responsibility to make sure that your guests are capable of driving safely. “You don’t want to allow anyone who has been drinking to drive home and possibly kill or injure themselves or others on the road."

In 2008, 58 percent of all highway fatalities across the nation on Halloween night (6 p.m. October 31 to 5:59 a.m. November 1) involved a driver or a motorcycle rider with a BAC of .08 or higher, according to the National Highway Traffic Safety Administration (NHTSA). 

How to protect yourself...and your assets

If you plan to host a Halloween party and serve alcohol, the I.I.I. offers the following tips on how to have a successful and safe party:

  • Consider hiring a professional bartender or reliable friend to serve drinks. This will discourage your friends from mixing their own drinks and help to keep track of the size and number of drinks they consume. Most bartenders are trained to recognize signs of intoxication and will limit consumption by partygoers who have had too much.
  • Be a responsible host. Limiting your own alcohol intake will allow you to better determine if a guest is sober enough to drive at the end of the night.
  • Serve non-alcoholic beverages. Always have soft drinks, juices and other non-alcoholic beverages available for those guests who are driving or choose not to drink.
  • Don’t serve alcohol to minors. Period. The legal drinking age in every state is 21 and, as a host, it is your responsibility to abide by it.
  • Don’t force drinks on your guests or rush to refill their glasses when empty. Be a smart host; push the food, not the alcohol on your guests.
  • Always serve food with alcohol. It is proven that food can help counter the effects of alcohol.
  • Don’t admit individuals into your home who are already intoxicated. Access to more alcohol will likely create negative outcomes that you could be held liable for, such as fighting, alcohol poisoning and drunk driving.
  • Stop serving alcohol at least one hour before the party ends. Serve only coffee, tea and non-alcoholic beverages toward the end of your party. As the host or hostess, it is your responsibility to help your guests get home safely, so limit the amount of alcohol served toward the end of the party as guests prepare to go home.
  • Speak to each of your guests before they leave the party. If you think someone is unable to drive, call a cab and pay for it yourself, arrange a ride with a sober friend, drive your guest home, or encourage that person to stay over. This will protect your guest as well as other drivers on the road.
  • Encourage all your guests to wear seatbelts as they drive home. Studies show that seatbelts do safe lives.

 “Talk with your insurance agent about your liability insurance coverage and any exclusions, conditions or limitations your policy might have for this kind of risk,” advised Worters. “Appropriate liability insurance coverage is necessary, but your insurance may not be enough to cover a judgment against you as a social host. If you are also charged criminally, then it is possible that your policy will not cover the civil judgment.”

Worters noted that party hosts should do their part to help reduce the number of DUI-related crashes by taking the necessary steps to help promote responsible hospitality over the Halloween weekend. “It’s not just about the risk; it’s also about the responsibility. Nobody wants to feel responsible for someone else’s injury or death.” 

 

Source:  Insurance Information Institute

Building code changes can create extra expenses not covered by standard insurance. Be sure you’re protected.

Do you know how your home or other property complies with current building codes if you had to rebuild after a fire or other loss? If not, you’re not alone; however, it’s a real concern that you need to consider.  Changes to building ordinances and laws can result in requirements to upgrade your building to new standards during reconstruction, which can result in extra expenses that may not be covered by a basic property insurance policy.  

The MA Board of Building Regulations and Standards is continually working on changes to the building codes related to construction and energy standards. These changes as well as other local ordinances can become an issue when it comes to rebuilding especially after a significant loss.

Ordiance or Law Insurance covers extra expense not covered by a basic policy

Insurance policies only cover rebuilding to the condition prior to a loss, not betterments and upgrades.  Even if you are diligent about making sure your property valuation and coverage limits are appropriate for replacement cost, most property policies only provide minimal coverage to address additional costs resulting from ordinance or law issues. To be protected, you need to purchase Ordinance or Law Insurance, which specifically covers such extra expenses including:
  • Loss to the undamaged portion of the building
  • Demolition and removal costs of undamaged portion of the building
  • Increased costs of repair or reconstruction due to building code changes

For example, your building is 50% damaged in a fire.  Your local building code may require that the undamaged portion of the building be demolished or that you update components of the undamaged structure to current building codes in order to rebuild. The demolition or upgrades to the undamaged portion of the building wouldn’t typically be covered by a standard policy, which only pays for repairs and replacement of the damaged portion of the building.  

There are numerous other examples of situations where laws create extra expenses that will only be covered if you have the option of expanded Ordinance or Law Insurance added to your property policy. The age of your building may not be relevant, so don’t assume that just because your property was recently constructed, you don’t have to worry about ordinance or law situations. 

To learn more about Ordinance and Law Insurance, please contact your Murphy Insurance Agency representative.
 

In the aftermath of a crash, know the right actions to take

No one wants to get into a car crash. But being prepared and knowing what to do if you are involved in an accident can save lives, reduce injuries and make the claims process simpler and easier.

So you'll be prepared at the scene:

Keep critical, relevant documents in your car, such as registration, proof of auto insurance, your leasing agent's name. It's also a good idea to carry important medical information (allergies, doctors names) for you and your family members.

Ensure that your car is emergency ready. Flares, orange cones, emergency signage can help keep your loved ones and your vehicle from more harm after an accident. And, while we rely on technology, there's a chance it might fail when you need to record a phone number or license plate details—keep a pad and pen in your car.

Make sure to have the right amount of auto coverage to fit your needs. While an insurance policy is not a substitute for health and safety, knowing you'll be covered in the case of an accident can reduce the stress.

In the event of an accident, immediately:

  • Take care. Pull the vehicle to the side of the road, if possible. If the accident was triggered by road rage, take extra cautions when engaging with the other driver. If you are bumped from behind and think you might be the intended victim of a carjacking, make sure to pull off in a safe place.
  • Assess possible injuries. Tend to people first—make sure everyone is okay. Call 911 if anyone is injured.
  • Assess damage to the car. Once you're assured everyone is okay, review the extent of the damage to the vehicle. If possible, take pictures.
  • Don’t leave the scene of the accident. If you run into an unattended vehicle, try to find the owner. If you can’t, leave a note with your name, address and phone number. Record the details of the accident, including the make and model of the car and the address where the accident occurred.
  • Collect as much information as possible. Get the names of and contact information for everyone involved in the crash, including witnesses. Ask the other driver or drivers (if you are involved in a multi-car accident) for a license, car registration and insurance ID card, and get the makes and models of the cars involved. Note of the location of the accident, time of day and the weather conditions. Smartphones are a great way to record driver and car documentation (as well as accident details).
  • Alert the police or highway patrol. If you are involved in a serious accident, let law enforcement know, especially if anyone is hurt. If necessary, the police will notify the nearest medical unit. Get the names and badge numbers of the officers on the scene and ask where you can get a copy of their accident report. 
  • File an accident report, even if the police can't come to the scene. Head to the nearest police department (or their website) to file an incident report. Having an official report can help in case the other driver decides to sue for damages or medical injuries, or there is more damage done to your car than initially thought. And you will need to have the report when making your insurance claim.
  • Get the claims process started. Notify your insurance professional about the accident as soon as possible—the longer you wait, the harder it will be to remember the details. 


Don't let a bad situation turn out worse—protect yourself against uninsured motorists.

Source: Insurance Information Institute

A Trusted Choice® survey shows that many homeowners lack basic financial protections to withstand unexpected disasters.

As disaster season peaks, a new national consumer survey commissioned by Trusted Choice® and the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”), reveals that many homeowners lack adequate insurance coverage, do not fully understand their homeowners policies and do not have enough savings to support their households in the event of a disaster.

The August 2016 homeowner survey found:

  • At least 73% of respondents don’t have a flood insurance policy that is separate from their homeowners coverage;

  • More than 40% of those surveyed don’t have or don’t know if they have coverage that will fully replace their belongings and home in the event of a disaster;
  • At least 28% of homeowners polled do not have enough savings to support their households for even one month after a disaster if they had to leave their home. Only one-third said they could support their household for more than three months in this circumstance.
  • Less than one-third of respondents have an up-to-date and complete home inventory stored away from their premises.

“Most people think that a basic homeowners policy will cover them in the event of a disaster, however these new findings highlight that a startling number of homeowners have not taken some of the most basic steps to adequately prepare for a disaster such as a hurricane, flood or fire,” says Robert Rusbuldt, Trusted Choice® president and Big “I” president & CEO. “This is disturbing as hurricane and wildfire seasons are about to peak, affecting many parts of the country.”

With almost three-quarters of respondents lacking proper flood insurance coverage, they are completely vulnerable and have no protection from damage caused by rising water or flooding including common problems such as seepage of underground water into a home, leaky roofs and toppled trees from saturated soil. According to FEMA, floods are the leading disaster in the United States, and people outside high-risk flood areas file more than one-fifth of all National Flood Insurance Program (NFIP) flood insurance claims.

The survey also showed a lack of basic understanding regarding standard homeowners insurance coverage. More than one-fifth of survey respondents didn’t know whether they have replacement cost coverage for their belongings and home (which allows them to replace lost possessions with new items) or if they have actual cash value coverage (which takes depreciation of the structure and personal items into consideration). In most standard homeowners policies actual cash value is the default coverage.

“The risk of financial ruin in the event of a major disaster is significantly higher for those homeowners who have only actual cash value coverage because they cannot fully recoup their losses,” continues Flannagan. “Sadly, this survey shows that only 58% have replacement cost coverage. Trusted Choice® recommends homeowners purchase replacement cost coverage and take a hard look at their finances to ensure they are prepared.”

Unfortunately, this new research shows that more than half of those surveyed (56%) have just enough savings to support their households for three months or less if they had to temporarily move away as a result of a disaster to their property. Notably, 28% said they couldn’t sustain for even a month. Most alarming, 14% of those surveyed reported that their savings would be drained in less than a week. For off-premises living expenses in these cases, a standard homeowners policy provides only limited protection (usually 10% of the coverage on your home) and a flood policy provides NO COVERAGE.

The survey was conducted for Trusted Choice® and the Big “I” by MFour Mobile Research, Inc. using MFour’s Surveys on the Go® Smartphone Application Panel which includes Apple and Android mobile device users. MFour is an independent research company headquartered in Irvine, California. Interviews of a nationally representative sample of 1,000 U.S. homeowners were conducted in August 2016 and weighted by age and gender to represent the general U.S. population over age 18.

Source:  Massachusetts Association of Insurance Agents

Halloween liabilityHalloween can be scary but having the right insurance coverage can take some of the fright out of the night, according to the Insurance Information Institute (I.I.I.).

“If you’re worried about Halloween partyers who may cause damage to your home, there’s probably little to fear,” said Michael Barry, vice president, Media Relations, I.I.I. “But do contact your insurance professional with questions or concerns about your homeowners or renters insurance policy.”

Your insurance policies provide financial protection for a host of disasters whether they occur on Halloween or any other day.

The I.I.I. points out that standard homeowners and renters insurance will provide coverage for the following.

  • Vandalism - In the event your home or your personal possessions are damaged by neighborhood tricksters, homeowners and renters insurance policies provide coverage for vandalism and malicious mischief. You are on your own, however, when it comes to removing the toilet paper from your front yard….
  • Fire - If a jack-o-lantern, or other decoration, goes up in flames and damages your property, your homeowners or renters policy will cover fire-related losses. And, should the blaze make your home uninhabitable, additional living expenses (ALE) coverage will pay for alternate accommodations, such as a hotel, while your home is being repaired.
  • Injuries - The liability portion of a homeowners or renters policy comes into play if a Halloween party guest, or a trick-or-treater is injured while at your house or apartment. These policies also include no-fault medical coverage so the injured person can file their claim directly with your insurer.And if Fido gets a little skittish from all the commotion and accidently nips a trick-or-treater your liability coverage includes damages or injuries caused by pets.


Of course, the best solution is to avoid trouble altogether. Check out Safe Kids Worldwide and the Centers for Disease Control and Prevention (CDC) for helpful Halloween safety tips. 

Source:  Insurance Information Institute

Differentiating between an employee and an Independent Contractor can be complicated, but making an error can also be costly.  The Massachusetts Department of Unemployment Assistance (MADUA) recently issued guidance to help clarify the requirements of an Independent Contractor as outlined in the 3-Prong ‘A-B-C test.’  

Proper classification of workers, and subsequently paying applicable unemployment insurance, is at the forefront of maintaining the Unemployment Insurance Trust Fund. Unemployment Insurance was implemented to stabilize the economy by providing temporary income assistance to eligible workers that have lost their jobs through no fault of their own.  Appropriate contributions by employers is vital to the success of the program.  Additionally, misclassified workers do not receive other rights and benefits they are entitled to as employees.   

Before classifying your employees or issuing a Form 1099-MISC, the MADUA strongly suggests that businesses review the relevant statute below for guidance.  

The statute governing Unemployment Insurance, Massachusetts General Law (MGL) c.. 151A, § 2, sets forth the requirements for an individual to be recognized as a legitimate Independent Contractor in Massachusetts for purposes of unemployment insurance. The text of the statute is as follows:

Service(s) performed by an individual shall be deemed to be employment, unless and until it is shown that— 

(a) such individual has been and will continue to be free from control and direction in connection with the performance of such services, both under his contract for the performance of service and in fact; AND 
(b) such service is performed either outside the usual course of the business for which the service is performed[1] or is performed outside of all the places of business of the enterprise for which the service is performed; AND
(c) such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. 

All 3 prongs of this ‘A-B-C Test’ must be met for proper classification of an Independent Contractor, regardless of any agreement between the parties. If the test is not met, the worker must go on payroll with wages reported to the appropriate agencies. Each worker must be analyzed independently, as the facts and circumstances may change from individual to individual.  

Additional information is available online at https://www.mass.gov/unemployment-insurance-ui-online and https://www.mass.gov/service-details/independent-contractors. Businesses that have questions can contact the Massachusetts Department of Unemployment Assistance at (617) 626-5050 or the Attorney General’s Fair Labor Division at 617-727-3465.

------------------------------------
[1] Note that MGL c. 149, § 148B, the Massachusetts wage law, has a slightly different (b) prong, in that it omits the alternative test, and only focuses on whether the service performed is outside of the usual course of business.

Source:  MA Department of Unemployment Assistance

Don't risk financial losses because someone else isn’t covered

Despite the legal requirements in 49 states, many drivers in the U.S. remain uninsured. Don't risk your financial health—make sure you're insured, and learn how to protect yourself in the event of an accident with an uninsured motorist.

Uninsured motorists are relatively common

With the exception of New Hampshire, every state in the U.S. has a minimum mandatory car insurance requirement. Despite that, about one out of every eight drivers does not carry auto coverage; in some states, that number is one out of five.

car crashIf you’re involved in a serious accident with a motorist who doesn't have an auto insurance policy, you could be at risk for substantial financial losses. Uninsured and underinsured motorist coverage is designed to protect against that possibility.

A handful of states require that uninsured coverage be included in all auto policies. Whatever the laws in your state, it's a good idea. Check your policy or ask your insurance professional to make sure you're covered if the other guy isn't.

Uninsured motorist coverage

Specific options for uninsured motorist coverage vary by state and insurer, but in general there are three types of protection:

  • Uninsured Motorist (UM) insurance – Also known as Uninsured Motorist Bodily Injury (UMBI) insurance, this coverage will pay your and your passengers’ medical bills if you’re involved in an accident with an uninsured motorist who is at fault. In addition, UM insurance will reimburse you and your passengers for lost wages. UM coverage also kicks in if, as a pedestrian, you are hit by an uninsured driver, or if you’re the victim of a hit-and-run accident.

  • Uninsured Motorist Property Damage (UMPD) coverage – Uninsured motorist insurance covers bodily injuries but not damage to your car or property. For this, you need UMPD coverage, which, in addition to paying for damages to your vehicle caused by an uninsured driver, generally also covers damage to other personal property such as your house or your fence. Ask your insurance professional or state insurance department whether UMPD coverage is available in your state.

  • Underinsured Motorist (UIM) protection – In some instances, an at-fault driver may have liability insurance, but his or her policy’s limits do not cover the full extent of damage to your vehicle. In such cases, UIM insurance will cover the shortfall.

 

Source: Insurance Information Institute

 

The information provided in these articles are only general descriptions and should not be relied upon as complete, correct or accurate for your specific situation. All coverage informaiton is subject to policy provisions, endorsements and may be  subject to your meeting underwriting qualifications. Murphy Insurance Agency is not engaged in rendering legal, accounting or other noninsurance professional services. Consult an appropriate professional for advice regarding your own situation.