When most people hear the word “insurance,” the things that come to mind may be home, auto or life. However, the scope of what can be covered by insurance extends far beyond everyday needs.
Unfortunate as it may be, the news is often filled with natural and man-made disasters. The role insurance plays in these situations may not make the headlines, but when something goes wrong, insurance can make recovering from a setback less stressful.
Here’s a look at some national headlines you may have heard about over the past few months, and how insurance came into play in the aftermath:
• When a rocket blows up on takeoff, like the multimillion dollar SpaceX rocket did at Cape Canaveral in September, is all lost? The answer is no, thanks to the coverage of space insurance policies. The space insurance industry receives around $750 million in premiums each year to cover about 50 space launches, with a one in 20 failure rate. Interestingly, despite the fact that it’s an expensive and volatile business, premiums for space rockets are actually dropping, closing in on the lowest rates in history.
• Sadly, people in Louisiana are learning the hard way that flood damage isn’t covered by standard policies such as property or business interruption insurance. Many people mistakenly believe that if you don’t live (or own a business) in an authorized flood zone, you don’t need flood insurance. The reality is about one-third of flood claims are made by owners who are not in flood zones.
• As technology use becomes increasingly regular in our everyday lives, so has the frequency of cyberattacks. To address this issue, specialized “cyber” insurance has become popular for businesses to cover the fallout from cyberattacks and data breaches. Because it’s a relatively new facet of the industry, there is no standard policy. Therefore, these policies can range from targeted incidents to broad-based business coverage that could overlap with other types of insurance.
• As if cyberattacks aren’t enough cause for concern, imagine feeling the need to purchase terrorism insurance -- an issue business owners in Europe are currently dealing with. While some business insurance policies cover building damage, terrorism is becoming its own distinct coverage. One aspect is destruction of property, but business owners are seeing long-term ramifications of terrorism in terms of economic losses as well.
• Businesses aren’t the only ones worried about terrorism. International Travel and Healthcare became the first company to offer a terrorism travel insurance policy. The “Safe Journey” policy costs about £4.60 for a single two-week trip and covers the “disinclination” to travel should your vacation plans fall within six weeks of a terrorist attack in your destination. It also makes it easier to cut your visit short if an attack happens while you’re there. The insurer offers the policy as a supplement to its regular traveler’s insurance policy.
Interested in reading more? Here are some articles that may be of interest to you:
[CLICK HERE to read the article, “When a Rocket Blows Up, Space Insures Pay for It,” from CNBC. Sept. 1, 2016]
[CLICK HERE to read the article, “Flooded Business Owners Realizing Business Interruption Insurance Won’t Do Any Good,” from Greater Baton Rouge Business Report. Aug. 18, 2016.]
[CLICK HERE to read the article, “5 Tips for Buying Cyberinsurance,” from Corporate Counsel. Sept. 1, 2016.]
[CLICK HERE to read the article, “Europe Terror Attacks to Increase Insurance Demand,” from Business Insurance Magazine. Aug. 8, 2016.]
[CLICK HERE to read the article, UK’s First Terrorism Travel Insurance Launched,” from Insurance Business Magazine. June 8, 2016.]
Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app.