There are two primary types of life insurance coverage. These include term and permanent. Within the permanent life insurance category, there are a variety of different plans, each typically offering a death benefit, along with either a savings or investment component in the policy.

Because permanent life insurance policies provide more than just a death benefit, the premiums are usually much higher than those of term life insurance plans with a similar amount of coverage.

Term life insurance is considered to be a type of “temporary” coverage. With a term life plan, the policy holder will typically pay a set amount of premium for a certain stated period of time – or term – in exchange for pure death benefit proceeds that will be paid to a named beneficiary should the insured die within the period of coverage. Policy holders can choose from a number of policy duration options that can range from just one year to in excess of 20 years of coverage.

There are also different term life insurance policy proceeds options from which an insured may choose. These include level, decreasing, or increasing coverage. With a level death benefit, the coverage amount will remain the same throughout the entire term of the policy. However, with increasing or decreasing term life insurance, the death benefit on the policy will either rise or fall over time.

Due to their “pure” death benefit protection with no cash value or investment option, term life insurance will generally start out with very affordable premiums – especially if the insured is young and in good health.

In addition, term life insurance can be easy to purchase and it fills an immediate need without breaking the bank. Knowing that the need for life insurance coverage will only last for a certain amount of time, it oftentimes makes more sense to purchase a lower premium term life insurance policy.

Term life policies can provide a very cost effective way for individuals to cover temporary needs, as well as for those who understand the need for life insurance coverage yet do not have a large budget for the premium expense.

This article was written by Susan Wright, CLU, ChFC, RHU, REBC, CSA, CLTC, CCFC, CSS. Susan possesses over 20 years in the insurance industry with a focus on providing consumers and business professionals with educational content.

Instant Contractors License Bond Quote

A contractors license bond pays claims to customers resulting from financial damages incurred as a result of a contractors services such as faulty workmanship, or to employees of a contractor that are owed unpaid wages or benefits.  The maximum benefit available to a claimant on a contractor’s license bond is currently only $12,500 in California.  Similar to a license bond, contractor’s liability insurance can also provide benefits to a client who has been financially damaged by a contractor assuming coverage is valid for the specific claim and often with limits that approach and exceed 1 million dollars.  While a contractor’s license bond is required of all contractors in California, liability insurance is not.

One major difference between a license bond and liability insurance is that with a license bond, the financial risk remains with the principle (the contractor) while with insurance, the risk of financial loss is transferred to the insurance company.  Contractors should be very aware of this fact as license bonds are fully indemnified, meaning if a claim is paid out on their surety bond, the contractor is responsible for repaying the surety in full.  As a result of the indemnity clause, license bonds are primarily credit based and range from as little as $70 per year to well over $1,300 depending largely upon a contractors credit score.  Contractors with poor credit have diminished financial capacity to indemnify their surety in the event of a claim, and thus have higher bond rates in general.  Put differently, a contractor’s license bond is essentially an arrangement where a surety company posts $12,500 in collateral on behalf of a contractor in exchange for a fee (the bond premium).  If the collateral is paid out, the contractor must repay the surety in full.  This is also why a contractor can post $12,500 cash in lieu of a bond with the state license board, though this is relatively uncommon in practice.

The function of a license bond is to provide a minimum amount of financial protection to consumers, which is why it is mandated by the state of California and not optional as with liability insurance.  On the other hand, liability insurance primarily protects a contractor and his or her personal or business assets from potential claims and as such, it provides contractors with a layer of financial protection.

American Contractors Indemnity (HCC Surety) has an amazing program for newly licensed contractors that have never held a license before.  These contractors have a unique opportunity to obtain a 1 year license bond for $116, REGARDLESS of their credit score.  This is a huge opportunity for newly licensed contractors with poor credit.  The program does have a few other requirements and it’s not eligible for roofers or pool contractors. 

Unfortunately, contractors with an existing license are not eligible for this program, which understandably is a huge frustration.  After all, why would a newly licensed contractor with no experience and poor credit represent a lower risk that an experienced contractor with no claims and the same credit?  We feel your pain and although this particular HCC program will not be of much help to experienced contractors, we do have many other awesome contractors’ license bond programs to choose from.  In any event, just because your renewal rate is significantly higher does not mean it’s the best or only option available.  Significant bond savings can typically be had by shopping diligently with an experienced surety bond provider.

Workers Comp Quotes For Small California Roofers

Roofing contractors who possess a C-39 license are required to carry workers compensation coverage even if they have no employees and the penalties are very severe for non-compliance.  Not only are violating roofing contractors exposed to fines and even criminal prosecution in some instances, the workers compensation requirement is one of the most heavily enforced regulations by the CSLB.  While the workers comp requirements are quite rigid, roofers do have several options discussed below that can help defray some of the costs associated with this law.

Are Self Employed California Roofers With No Employees Covered By Workers Comp Insurance?

Self employed roofers with no employees in California have the option of including or excluding themselves from workers compensation coverage.  For obvious reasons, excluding oneself from coverage will result in a substantial reduction in workers comp premiums at the expense of coverage for the injured owner.  These options are discussed at depth below.

Workers Comp Insurance Option 1

The first option for California roofers is to be included in workers comp coverage.   If the self employed roofer in question was to be injured on the job, he or she would be entitled to the same benefits afforded all employees covered under the California workers compensation system.  Of course, this option is much more expensive than the alternative of excluding coverage.

Workers Comp Insurance Option 2

The second option for California roofers, (and why this option even exists is quite strange), is for the sole owner with no employees to exclude him or herself from coverage.  This option essentially means that while a workers comp policy exists for the owner, no coverage is provided in the event of a claim. Confused? Think insurance policy that does not provide any insurance coverage.  Why would a self employed California roofer choose option two?  Cost.  A workers comp policy for a self employed roofer that excludes himself from coverage can be had for a little over $600 per year in some instances where there has been no lapse in coverage, while to actually be covered by the policy, will usually cost several thousand due to the high frequency and severity of workers comp claims for roofers.

Why Is Workers Comp Required For Roofers With No Employees?

Several years ago, California legislation was introduced and supported mainly by large roofing contractors that were concerned about price competition from smaller roofing contractors who had much lower overhead, especially as most carried no workers comp insurance.  The legislation was designed to greatly reduce the amount of unlicensed roofing construction in the state and level the playing field amongst all roofing contractors large and small.  Caught in the crossfire, however, were legitimate self employed roofing contractors who became forced to buy workers comp insurance, despite having no employees.

How Small Roofers Can Reduce Workers Comp Insurance Costs

As the major market for small California roofers is State Fund Insurance, working with an experienced insurance agent familiar with State Fund can save a lot of money.  Most standard programs for self employed roofers range between $600 and $1300 per year when the owner is excluded, but discounts can be had for roofers that qualify for selected group associations.  Most associations will have prerequisites that require a clear claims history and no lapse in workers comp coverage.  (Newly licensed roofers are generally exempt from the lapse in coverage requirement).

In addition, the following practices can help roofing contractors maintain low workers comp costs:

-Have a written safety program in place.

-Always use safety tie-offs when working on sloped roofs or other dangerous roofing conditions.

-Complete background checks on potential employees to spot dangerous lifestyle characteristics that could lead to dangerous workplace activities.

If you have further questions about workers comp insurance for small roofing contractors, feel free to contact our agency and we’d be happy to answer any questions you may have.

This post was provided for informational purposes only and is not to be construed as legal, technical or industry specific advice.

Jeremy Schaedler

El Dorado Hills, CA

Request A California Contractors License Bond Quote

If you have not done so already, shop your bond renewal and carefully explore your options.  Contractors with poor credit can experience a substantial savings in some situations by utilizing a co-signor with good credit.  In addition, your bond premium with one bond company can often be several hundred dollars less per year than another simply because the credit thresholds between the bond companies may be separated by as few as two or three points on your FICO.  If you have questions regarding your contractor’s license bond, feel free to contact us and a Schaedler Insurance bond specialist would be happy to evaluate your situation.

 Jeremy Schaedler

What is State Fund Insurance?

State Fund insurance is a non-profit entity that was established by the California state legislature in 1914 following the passage of the Boynton Act, which mandated that all California employers provide workers compensation benefits for injured employees. The California State Fund was established to provide a source of workers comp insurance when business owners are unable to purchase insurance in the private marketplace, yet are required by law to have coverage. While established by the legislature, State Fund is actually a private enterprise that operates without financial assistance from the government. As a private venture that must generate an underwriting profit to stay above water, yet unable to turn away even the highest risk ventures, State Fund generally must have workers comp rates among the highest in the industry. However, higher than average base rates should not imply that State Fund is a poor alternative for workers compensation insurance. To understand why, we need to discuss the critical role State Fund plays in the California contractors workers comp marketplace.

What role does State Fund play in the contractor’s insurance marketplace?

Contractors as a group are one of the highest risk employers of any occupation. Given the highly competitive nature and slim profit margins for workers compensation insurers, insurance companies enter and leave the marketplace on a regular basis. At times, State Fund has insured well over 50% of all California contractors, while today, that figure is dramatically lower.

State Fund plays the important role of being an insurance backstop when the private insurance marketplace fails to provide competitive insurance options for some employers. With this in mind, State Fund can be a quality alternative for employers that have few employees, adverse claims history, or very high risk occupations combined with any of the previously mentioned factors that could prevent other workers comp carriers from actively seeking the business. However, even if an employer possesses one or more of the aforementioned high risk characteristics, each employer’s situation is invariably unique and it’s advisable to explore all insurance options available before making any final decision on a workers comp program.

For small contractors, what is the best option for workers comp insurance?

The best option for small contractors is to work with a quality insurance advisor that can help identify the best insurance options available based upon all characteristics of an employer. If you are with State Fund or are considering them as your workers comp carrier, it’s advisable to consider obtaining a “broker of record” letter from an agent you trust and is appointed with State Fund. The cost of State Fund insurance is the same going direct as through your own agent, but a quality agent can reevaluate your account on renewal to make sure you’re getting the best value in your workers comp program as circumstances change over time. In addition, a quality agent will also help implement loss prevention programs for small businesses that don’t have the luxury of an in house HR department. The value added by a quality agent can help reduce workplace injuries and in the process, implement safety procedures that will also reduce workers compensation premiums.

Though not discussed at length in this article, several factors aside from price influence the value each workers comp insurer brings to the table. While insurance rates are important, there are many other factors to consider when purchasing workers comp insurance such as a carriers loss prevention programs, adjuster workloads and claims administration guidelines. Each of these can have a dramatic impact aside from price in the final value obtained from your workers comp investment.

When Do Professional Liability Claims Arise For Consultants?

Often times, professional liability claims arise when a consultant provides a highly specialized service that a client does not fully understand, but is heavily reliant upon for various reasons.  When things do not go as planned for the client, often times for reasons outside of the consultant’s control, the blame often falls back on the consultant, regardless of whether or not an error actually occurred.  In instances such as these, adequate professional liability insurance often means the difference between financial solvency and bankruptcy for the consultant.  Also, it should be noted that any claim concerning a possible error or an omission in professional advice will not be covered by general liability insurance, which typically covers bodily injury, advertising injury or property damage.

Get a Professional Liability Quote

How Do I Know If I Need Professional Liability Insurance?

The first step in determining what, if any professional liability insurance may be needed is to determine what assets for the consultant are at risk in the event of a claim.  For most professionals, personal and business assets that may be exposed in a lawsuit greatly outweigh the short term costs of purchasing adequate professional liability insurance.  Aside from personal or business assets at risk from a claim, the other side of the equation means taking an honest evaluation of the risks inherent in the services provided by the consulting practice.  As an example, our agency was recently contacted by the company that provides VOIP phone service for our office regarding professional liability insurance.  When evaluating the risks facing this firm, the first thing that became apparent was the catastrophic impact a server crash that brings down phone service for their clients could have on their business.  A single event that dropped phone service for only an hour or two could be enough for one of their customers to loose a major client who may be unable to reach them at a critical juncture.  This single, seemingly insignificant event may be enough to trigger a major lawsuit that would be uninsured without professional liability insurance.  While each scenario will vary, it’s very important to consider even the mundane portions of a business that could lead to a catastrophic professional liability exposure.

How Much Does Professional Liability Insurance For Consultants Cost?

Most professional liability insurance starts at about $2,000 per year for small to medium size consultants.  The cost of coverage will dependent upon a number of factors relating to the consulting practice, as well as the coverage’s included with a particular policy.  Underlying coverage’s and exclusions can vary greatly from one policy to the next.  According to a 2005 survey by Marsh Inc, the average national cost for professional liability insurance was $3.29 for every $1,000 in business revenue.

Conclusion

Determining whether or not your consulting practice needs professional liability insurance will come down to a number of factors including how much revenue is generated by your consulting practice, your personal and business assets that may be exposed in the event of a lawsuit, as well as the cost of professional liability insurance.  In addition, smaller firms will need to weigh the opportunity cost of foregone contracts from employers that require professional liability insurance as a condition of employment.  If you have any questions or would like to schedule an appointment with a Schaedler Insurance advisor to discuss professional liability insurance for your business, please visit our California Errors & Omissions page and complete the contact form.

Jeremy Schaedler

El Dorado Hills, California

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Related Pages:

California Business Insurance: General Liability vs. Professional Liability

Professional Liability Overview

Related Material: 

The Wall Street Journal- “Small Talk” October 26^th, 2006

Why did you choose to become an agent?

My choice to become an agent was born out of a combination of inspiration and obsession!  I have always had an interest in real estate and with the housing market but it was truly my real estate broker, Bob McKiernan, who inspired me to join their team.  I met Bob in 1996 when he worked diligently with me and my husband to find our first home.  I thought we were challenging clients but he took great care of us.  His patience and work ethic never made us feel like we were working with a “salesman”; rather, a teacher or a counselor.  He guided us through every step.  His genuine care and knowledge inspired me tremendously.  We worked with Bob and the team at Better Homes buying, selling and referring for 12 years before I finally decided to jump in head first; I believed in the way he did business and I wanted to be a part of it.

Have you always lived in the Folsom area?

Actually, I moved to Citrus Heights from the Bay Area in 1990; I have moved a few times since and I have lived all over the area but I currently have roots in Rocklin.

Tell us about you; where did you go to school, and where have you worked?

I graduated from San Juan High School in 1992 and from there I went to a vocational school and then to American River College where I received my AA degree in liberal arts.  After working as an office manager for many years with a neurological office, my husband and I decided that I would stay home with our two children.  I stayed home with them full time until they were school-aged and then I worked part time at their school as an instructional aid and a campus supervisor.  All the while, I felt the pull to real estate, so, at the urging of my husband and the support of Better Homes, I began to study for the Real Estate exam in early 2008.

If you moved here from somewhere else, what attracted you to this area?  Or, what has kept you here?

In 1990, my family was drawn to the area for the slower pace and affordability.  I have stayed in the area for the same reasons.  I also think this area is a great place to raise our children.

Tell us about your agency; how many people are in the office, when did you join, why did you join, any interesting stories regarding how the office operates? (quirks, successes, etc)

We are a small family owned and operated office.  We currently have eight agents.  I joined the team in 2008.  Bob McKiernan is our broker, his wife Linda is our office manager and their son Zach is our admin.  We operate as a small cohesive group; the support we all have here is amazing.  Bob and Linda make you want to work as hard as you can and be successful!  They are great at cheering us on, helping us to build on our strengths and not fear our weaknesses.  They are always available when you need help so you never feel like you are going at it alone.  I think the entire office shares the same values; we all believe in building relationships with our clients; we feel it is imperative to deliver excellent service before, during and after any transaction.  There is a sense of camaraderie and synergy in our office.  We are not competitive since we are all working from our private databases to build on relationships we have already established and generate business by referral.   Most importantly, this is a very comfortable yet professional place to be.  I love going in to the office.  We get to be ourselves and it is a lot of fun!

Anything new on the horizon for Better Homes Realty?

BHR is moving!  We just found out that we are going to be relocating our office space!  We are not moving very far; in fact, we are moving to the building right next door.  Our new address will be 49 Natoma Street, Suite A, Folsom, CA 95630.

How have you and your office done with this economy —- any advice?

This has been a challenging period but my broker has weathered three real estate recessions and what he has taught us is that the best way to come through it is to continue working by referral and to keep in consistent contact with your database. We have had to stay intensely focused and intentional with our clients and keep them informed of the current market statistics, loan programs and local trends.  I would have to say that consistency is the key to success!

Do you have a personal success story you would like to share?

I tell everyone I know and everyone I meet that I absolutely love what I do.  Every person I meet who I can help is my personal success story.  I started with a very small database and I have worked hard to build my business.  When I first started out, people always asked me, “Why are you getting in this business now?”  Well, I think change is good and challenges provide growth; if I can survive in this market, then I will truly have earned my place!

What are your interests; hobbies, family, sports, volunteer work, etc?

I must admit that when I am not engaged with my clients, real estate or in the office, I am quite the home-body!  I love to be at home with my family.  We have two teenagers who are awesome young adults.  We enjoy just hanging out with them, playing cards or watching movies.  I am a little old fashioned in the sense that I feel I should have a strong presence with my kids so I try to be home whenever they are home.  To confess though, even in my spare time, I love to go through open houses (I just can’t help myself), as well as browse the internet to see what is going on out there in the marketplace.  My husband is an agent also (not full-time) so we love to do open houses as a team and just talk to people about real estate.  Aside from real estate and family, I enjoy walking.  I am currently training for a three day, sixty mile walk for breast cancer in September.  It will be my fourth time doing this!  My sisters and I participate in the walk with a team up in Seattle, Washington for the Susan G. Komen Foundation.  It is a great experience and I actually enjoy training for it!

Is there a particular topic related to Real Estate that is important to you?

As I mentioned before, I truly love what I do!  I never consider myself a “sales person”, nor do I ever hard sell anyone.  I am in the business of educating my clients so that they can make good informed decisions based on reliable information from a genuinely caring source.  With that said, I think it is important to recognize this incredibly unique, history-making market we are in.  Our office works closely with local lenders who help to educate us about different changes that they are seeing and the one message that rings out loud and clear is that RATES ARE LOW!  It is unbelievably affordable right now to buy a home.

There is still fear out there though.  Buyers are hesitant to purchase because of the concern of the declining market; I can’t blame them for that, it is very scary to buy in a declining market—I know because I purchased a home in 2008.  However, the reality of it is that buyers are buying a “monthly payment” and with each point rates increase, monthly payments can quickly become unattainable.  We expect that the rates WILL go up; that will directly impact the monthly payment much more significantly and faster than a declining home value would!

I am aware that everyone wants to get a deal and no one wants to be a “sucker” but really, I cannot put it any more plainly than this: it is a fantastic time to buy a home – especially if you are in it for the long haul.  So don’t wait to buy real estate, buy real estate and wait!

www.adrianagrieco.com

www.bhrfolsom.com

Chrissie Grady & Jeremy Schaedler

El Dorado Hills, CA

Folsom Home Insurance

What Is An Admitted vs. a Non-Admitted Insurance Carrier?

An admitted California insurance carrier is one that submits to specific requirements set forth by the California Department of Insurance (CDI).  Admitted insurance carriers are required to file their rates with the CDI and cannot deviate from these rates without prior approval.  In addition, admitted carriers are required to participate in the California Insurance Guarantee Association (CIGA) which covers the claims of policy holders up to a specified amount in the event an insurer becomes insolvent.

In contrast, a non-admitted carrier (also known as a surplus lines insurer) is not required to file their rates with the California Department of Insurance, which gives them the flexibility to adjust rates in light of fluctuating underwriting performance. In addition to increased pricing flexibility, non-admitted carriers also have greater flexibility in regards to the coverage’s they provide. It should be noted that “non-admitted” does not mean “not-regulated”.  Non-admitted carriers must be approved by showing minimum financial and capital requirements before providing insurance in California.  Once these requirements have been met, California will place the approved non-admitted carrier on a list known as “The List of Eligible Surplus Lines Insurers” (LESLI).

Why Do Non-Admitted Insurance Carriers Exist?

Non-admitted insurance carriers exist to provide insurance when admitted carriers are not able to meet the insurance needs of all insurance buyers.  Many specialized risks, such as California professional liability insurance (sometimes called California errors and omissions insurance) or those with frequent claims such as California contractors insurance, can represent high risk exposures that admitted carriers are not willing to accept for many reasons including constraints imposed by their admitted status.  However, non-admitted carriers are generally well suited to provide these lines because they have greater flexibility in terms of coverage’s and pricing to cope with fluctuating underwriting conditions.  Without non-admitted carriers, individuals seeking some high risk lines of insurance would not be able to purchase it.

Choosing a Non-Admitted vs. an Admitted Insurance Carrier

Contrary to popular belief, non-admitted carriers are not inherently higher risk (or lower quality) insurers than admitted carriers.  In fact, many non-admitted carriers are admitted carriers in another state or are subsidiaries of an admitted carrier.  The most important factor in choosing an insurer is its financial strength as determined by a financial rating company such as AM Best.  AM Best rates both the financial security and the financial capacity of insurers with financial security rated on a scale from best to worst of (A++ to S) and financial capacity (XV to I).  For example, an “A++-XV” non-admitted carrier, while not eligible for California’s Guarantee fund in the event of insolvency, will generally have a much greater chance of financial solvency than a “B-III” rated insurer.  Another factor to consider when deciding between an admitted vs. a non admitted carrier is fees.  Insurance policies written on non-admitted paper are subject to additional cost’s including a surplus lines tax and a stamping fee.

Conclusion

Non-admitted carriers play a very important role in the California insurance marketplace by providing insurance for high risk exposures that otherwise may not be insured by an admitted carrier.   Pay careful attention to the financial ratings of the insurer, whether it is an admitted or a non-admitted carrier.  In addition, non-admitted carriers will be subject to additional fees.  If you have additional questions, please feel free to contact an advisor with Schaedler Insurance and we would be happy to answer any questions you may have.  Also, the CDI’s website is an excellent source of insurance information for consumers.

Jeremy Schaedler

El Dorado Hills, California

The depressed housing market in California has caused many contractors to collapse under increased financial burdens, which in turn, has caused the number of claims paid on contractors bonds to rise dramatically.  Consequently, the premiums charged by insurance companies that issue contractors bonds has risen substantially in recent times, especially for those with marginal credit profiles.

The cost of a contractors bond depends on several factors, with credit score being one of the main determinants of rates.  With this in mind, rates can be as low as $100 per year to as high as over $1,200 depending on your credit profile.  Even still, some contractors with poor credit histories may not be able to attain a bond without a co-signer in some situations.  If you find yourself in this position or would like a second opinion on the rate you are currently paying, contact your local insurance advisor or a bond specialist at Schaedler Insurance.  Schaedler Insurance offers a complete line of competitive California contractor’s bond insurance products for those with great and not so great credit profiles.

Jeremy Schaedler

El Dorado Hills, California