Prepare Kansas

Insurance Considerations for Farm Families and Small Business Owners

September is National Preparedness Month. It is also our annual Prepare Kansas online challenge. Prepare Kansas 2017 will provide tips on getting financially prepared ahead of disasters and emergencies. This year’s program will be conducted through the K-State Research and Extension Facebook page. No registration is required, so Kansans and anyone interested in planning ahead for emergencies can follow on Facebook and this blog at any time during September, pick up handy information and interact with K-State extension specialists and agents. Today’s post is written by Debra Wood,CFP®  K-State Research and Extension – Central Kansas District Family Resource Management Agent.

Most of the focus of #PrepareKansas has been around preparing yourself and your family ahead of a disaster.

Photo credit: Reed Koop

Farm families and other small business owners have another element they should consider when preparing that inventory and reviewing insurance coverage.

My story

Our home and farm was hit by an EF4 tornado on May 25, 2016. Everything was totally destroyed. Ten buildings were wiped out down to the concrete slabs. Machinery was ground up into little pieces. In addition to coming up with a list of household contents, we had to think through what was in all the sheds, the office and the shop.

Photo credit: Linda Roskens

The machinery was scheduled on an insurance policy. We did not have some items insured, such as trailers and older equipment deciding to retain that risk, knowing we could cover that expense if something happened to them. We never thought it would all disappear at once, in an instant. One or two items, though, we discovered had not been added to the policy. This demonstrated to us the importance of having an emergency fund for the household, and also for the business to cover deductibles and things you decide to self-insure.

One thing we had underinsured was shop contents. We had coverage, but it was not nearly enough to cover the cost of all that was lost. Think of how much you have accumulated over the years of your farming or business operation. Has the value on your policy kept up with the value of the buildings, equipment and contents? Reviewing insurance coverage annually is as important for your business as it is your home and auto, to make sure you have adequate coverage in case something happens.

Take a look in each shed and make a list of contents. Do the same for your shop, store, or office contents. List each item, along with the date purchased and cost, if known. Don’t forget items you have stored in a different location. Make sure if you are not insuring an item that it is an intentional decision and not an oversight.

Business considerations

When reviewing your insurance coverage, compare your list of machinery, equipment, and inventory to the list of items you have scheduled on your policy. Is there anything you have forgotten? Are all buildings adequately insured? It may not be economically feasible to insure everything without spending all your profits on risk management. You may have to strike a balance. Decide which risks you want to transfer to insurance, and which you want to retain. Cover those items you can’t afford to lose, and those which are leveraged.

In addition to property coverage for buildings, contents and machinery or equipment, some business owners may want to consider business interruption insurance coverage. For those experiencing something the magnitude of the hurricanes in Texas and Florida, this coverage can help provide funds to make up the difference between your business’ normal income and its income during and immediately after a forced shutdown. These funds can be used to pay regular bills such as rent or mortgage, employee wages, and moving and storage expenses.

Another insurance business owners should review each year is the amount of liability insurance coverage they have. Limits can be increased if needed, and umbrella policies are available to cover the business and owners at a higher level than standard property insurance will cover.

Thanks Deb for sharing your story!

#PrepareKansas — Week 2 Challenge, Reviewing Insurance Coverage

September is National Preparedness Month. It is also our annual Prepare Kansas online challenge. Prepare Kansas 2017 will provide tips on getting financially prepared ahead of disasters and emergencies. This year’s program will be conducted through the K-State Research and Extension Facebook page. No registration is required, so Kansans and anyone interested in planning ahead for emergencies can follow on Facebook and this blog at any time during September, pick up handy information and interact with K-State extension specialists and agents. Today’s post is written by Elizabeth Kiss, Family Resource Management Specialist.

Things change. Circumstances change. This week’s challenge is to review your insurance coverage. Why does this matter?

The purpose of insurance is to cover major losses, such as can occur with storms and other weather-related disasters. It is important to have adequate coverage on your home, vehicles, and possessions so that they can be repaired or replaced if damaged. It is recommended to review your insurance coverage at least annually. Every few years you may want to schedule a face-to-face review with your insurance agent.

Last week’s challenge was to create, or update, a home inventory. With that information you now have an accurate picture of your home and its contents in the event of damage or loss.

Review your homeowner’s or renter’s insurance to be sure you have adequate coverage and understand the terms of the policy.

  • Policy limits. If your home and contents are not coverage for at least 80 percent of its replacement cost, rather than actual cash value, it is likely that the full cost of rebuilding after an insured loss is not covered.
  • Coverage. It is important to be clear about what disasters (perils) are covered. For example, not all policies cover damages caused by earth movement, flood, or sewer back-up. Some policies exclude certain types of property.
  • Deductibles. Insurance policies typically require that the policy holder pay a specific amount of money before the insurance company will pay a claim. This is the deductible. If possible, set aside emergency funds equal to the amount of the deductible. This can speed up the recovery process.

Review your auto insurance too. Vehicles depreciate and there is no reason to cover the car for more than it is currently worth. Comprehensive coverage pays for damage to your auto resulting from events other than collision such as windstorm, hail, or fire. Collision coverage is limited to damaged caused to your car from a collision.

Want to learn more? Download this fact sheet from the K-State Research and Extension bookstore https://www.bookstore.ksre.k-state.edu/pubs/MF3055.pdf

Another informative resource is this new guide: Disasters and Financial Planning: A Guide for Preparedness and Recovery. The National Endowment for Financial Education® (NEFE®) partnered with the American Red Cross and the American Institute of Certified Public Accountants (AICPA) to produce the guide. Chapter 2, Protecting Your Property, is a good place to start.

Advisory, Watch, Warning? Understand these important terms!

September is National Preparedness Month. It is also our annual Prepare Kansas online challenge. Prepare Kansas 2017 will provide tips on getting financially prepared ahead of disasters and emergencies. This year’s program will be conducted through the K-State Research and Extension Facebook page. No registration is required, so Kansans and anyone interested in planning ahead for emergencies can follow on Facebook and this blog at any time during September, pick up handy information and interact with K-State extension specialists and agents. Today’s post is written by Mary Knapp, Climatologist and Associate Specialist Weather Data Library.

When we think of severe weather, it is important to understand the terms used.  The National Weather Service uses three specific terms to indicate the severity of the event.  Advisory means that hazardous weather is expected and likely to be an inconvenience, but not life threating if normal precautions are taken.  It is often used with heat events, floods or winter weather.  Watch means to WATCH for changing conditions.  The National Weather Service may indicate that they are expecting to issue watches several days before the storm’s arrival allowing more time for preparations. Warning means that the severe event is actually occurring.  Take action NOW.

In addition to the severity of the weather expected, the type of weather is also indicated.  These include heat waves, dust, high winds, thunderstorms, floods, winter weather, blizzards, ice storms, and, of course tornadoes.

What is meant by some severe weather events is usually self-explanatory.  Here are some of the definitions for less easily understood events.  A heat wave is defined as” A period of abnormally and uncomfortably hot and unusually humid weather.”  Typically, a heat wave lasts two or more days.  Thresholds temperatures for a heatwave vary by location and season.  A severe thunderstorm, rather than a regular thunderstorm, is one that can produce a tornado, winds of at least 58 miles per hour and/or hail at least 1″ in diameter.

A blizzard is a winter storm where the following severe conditions are expected to last 3 hours or longer: more sustained wind or frequent guest of at least 35 miles per hour, falling or blowing snow that reduces visibility to ¼ mile or less.  Ice storm is used to describe times when damaging accumulations of ice are expected during freezing rain situations. Significant accumulations of ice pull down trees and utility lines resulting in loss of power and communication. These accumulations of ice make walking and driving extremely dangerous. Significant ice accumulations are usually accumulations of a quarter of an inch or greater.

Whatever the weather expected, preparation can reduce the risk to you and your family.  Have an emergency plan and emergency kit available.  Review that plan and refresh the kit on a regular basis.  Monitor conditions more frequently if severe weather is in the forecast.  And, take action when necessary.

What are your plans for this weekend, how about working on your household inventory?

September is National Preparedness Month. It is also our annual Prepare Kansas online challenge. Prepare Kansas 2017 will provide tips on getting financially prepared ahead of disasters and emergencies. This year’s program will be conducted through the K-State Research and Extension Facebook page. No registration is required, so Kansans and anyone interested in planning ahead for emergencies can follow on Facebook and this blog at any time during September, pick up handy information and interact with K-State extension specialists and agents. Today’s post includes a link to a video by Jamie Rathbun, Midway District Family and Consumer Sciences Agent.

TGIF and happy weekend! While it might not be the first item on your weekend to-do list, how about starting or updating a household inventory this weekend?

Not sure how to get started? This video from Jamie Rathbun, K-State Research and Extension Midway District family and consumers agent walks you through the process step-by-step with lots of helpful information.

Starting from scratch can be a big job. Start small and break it down room-by-room. Here is a link to the Kansas Insurance Commissioner’s Personal Home Inventory that Jamie talks about in the video http://www.ksinsurance.org/documents/department/publications/personal-home-inventory.pdf