One of the occupational hazards of being a journalist who happens to cover the insurance industry is you start becoming a risk manager yourself. You spot hazards no one else pays attention to. You see exposures lurking everywhere. And you instinctively take steps to limit any risks you identify, as well as make sure you have the proper loss control and coverage programs in place should the worst-case scenario occur. Today, I share with you a recent column by Senior Editor Caroline McDonald, who notes how the lessons she's learned writing about risk management helped save her property on a dark and stormy night.
RM Lessons Hit Home
BY CAROLINE MCDONALD
It was a dark and stormy night. That may be a hackneyed old joke, but it’s a perfect description of the night a major storm hit our home and I had to put the lessons I learned from covering risk management to the test.
We live in a tree-filled suburb north of New York City. The forecast was for severe thunderstorms—with tornado warnings. At 4:00 p.m., my husband called to tell me a ferocious storm had hit, with very high winds, and the area was littered with fallen trees. Oh, and our electricity was off.
OUR ELECTRICITY WAS OFF!?!
To most, that’s an extreme inconvenience—to us it’s a nightmare, since we have two sump pumps in the basement. The last time the electricity went out, six inches of water accumulated before we could find a plumber. That flood meant a lot of boxes full of various small appliances, pictures, bedding, clothing, books, records (remember vinyl records?) and other personal items had to be thrown out. And it meant submitting a claim to our insurer.
This is where risk management lesson number one came in: Develop a long-term plan to prevent another flood. First, we purchased a generator as a back-up, to keep both sump pumps running in case of a power outage. Next, we had three medium-size trees removed from the backyard—with shallow root systems and overhanging limbs that could damage the roof.
Another upgrade occurred by accident after a recent three-day rain. The constant amount of water being pumped caused the sump-pumps to shut down. Here was risk management lesson number two: Even when you think you have thought of everything, something else can go wrong. Luckily, we found a plumber in time, had very little water in the basement and a solid new pump.
So, with a contingency plan in place covering both wind and water, I was about to learn lesson number three. Now the power was out, and like many risk managers, I had a plan in place—but an untested plan. The generator had never been started. Would it start at all? Would we be able to hold off rising waters until the power was back? Stay tuned.
I hurried home, praying the generator would start. While en route, my husband called to say he had the generator going and had the pump plugged into it! When I got home, I plugged the refrigerator into it as well. What a relief! We were safe—this time. I lit some candles—time to celebrate with a good game of Scrabble!
But I kept thinking about all the things risk managers of businesses and municipalities have to consider on a daily basis, projecting anything that could possibly go wrong. I also thought about the experts I’ve spoken to, who caution about the importance of testing a contingency plan before an event occurs—where risk managers most often fall short.
Here brokers can play a key role. They possess much knowledge about how contingency plans can best be tested and what can go wrong. Agents, likewise, are in a position to help their homeowner clients minimize damage—and reduce claims.
The “dry” run for our contingency plans was a real storm, but fortunately, everything worked out. And now for lesson number four: Get that Scrabble game finished before the lights come back on. Unfortunately, I missed my chance. All of a sudden the power was on and favorite TV shows took precedence (and I was ahead!).
NU Senior Editor Caroline McDonald invites readers to share their war stories by either posting her on Sam's blog, or by e-mailing cmcdonald@nuco.com.
Comments (2)
May I suggest lesson number five?
Fill in that darn basement!
Posted by Mick Matheson | June 29, 2007 3:42 PM
Posted on June 29, 2007 15:42
Ms. McDonald,
I enjoyed your column. I run a small insurance company (League of Wisconsin Municipalities Mutual Insurance) that insures only cities and villages in Wisconsin.
As a result, I see probably over 200 sewer backup liability claims a year. Most are denied and our claim denial sticks.
What amazes me is that the vast majority of homeowners do not have their HO policy endorsed with the extended sewer/water coverage—about a $50 item.
I believe most personal lines agents are merely “order takers” rather than insurance professionals.
I have attached a handout I use at seminars-—personal risk management tips. Thought you might enjoy them.
P.S. Do you still have personal property in boxes on the basement floor, or is everything at least 18 inches off the floor?
***
Personal Risk Management
Life Style Issues:
1. Does your spouse know where all of your important papers are? Do you?
2. Have you discussed investment strategies with your spouse, attorney, and banker in the event of your death?
3. What spread of risk does your investment portfolio have?
4. What part does Medicare/Social Security play in your retirement planning?
5. Make a copy of the important items in your wallet or purse--driver's license, Social Security card, credit cards, etc.
6. Do you have a living will/health care proxy?
7. Do you have a durable power of attorney?
8. How often do you have a physical exam?
9. What are your sunscreen use habits?
10. Are you overweight?
11. Do you smoke/drink in excess?
12. Have you mastered stress relief techniques?
13. Have you addressed the source of stress?
14. Do you and one other family member know CPR?
15. Do you exercise regularly?
16. Do you allow family members to use trampolines?
17. Are bike helmets mandatory gear?
18. Does your family know how to swim?
19. Do you discuss alcohol, drugs and sex with your children?
20. Do you sleep on the 1st floor?
21. Do you use safety goggles when working with power tools, hammers, chisels, axes, etc.?
22. Do you wait for a lawn mower engine to cool down before refueling?
23. Have you taught family members how to use a fire extinguisher?
24. How many ladders do you own?
25. When severe weather sirens are sounding, do you go outside to see what is happening?
26. What schedule do you have for checking fire alarm batteries?
27. Have you cleaned your basement lately? Thrown old volatiles?
28. Do you read contracts before signing?
29. Do you know the rules in your state regarding injury to domestics?
30. Do you use a cell phone while driving?
31. Do you identify and walk through hotel escape routes?
32. Do you drive the safest car you can afford?
33. On an airplane, do you count the rows to the nearest exit?
34. Does your family have a cell phone for each vehicle?
35. What “disaster plan” do you have if you lose your job next week?
36. Finally, do you have a will?
37. Final "finally"--What are you going to do next week? You could:
a. Review your list with family.
b. Go to a copy machine and make a copy of all important papers and cords in your wallet or purse.
c. Buy a blank videotape and record your contents this weekend. Take the video back to your office for safe keeping.
d. Call your homeowners/auto insurance agent and ask for a two-hour appointment to discuss coverages, lifestyles, collections, and other personal hobbies. Full disclosure to your agent is the only way he or she can help you.
e. Make an appointment with an attorney well-versed in estate planning.
f. Make an appointment with your physician.
Posted by Dennis Tweedale | June 29, 2007 3:55 PM
Posted on June 29, 2007 15:55