By the numbers: Common summer safety hazards
Summer can be a challenging time of year for the insurance industry. These seasonal statistics tell the story.
For many, summertime can be the most exciting time of the year. School is out, barbecues abound, and vacations fill the calendar.
But celebrating summer is not without its perils, including severe thunderstorms, extreme temperatures, and all manner of backyard accidents.
As a result, this can be a challenging time of year for the insurance industry, as many of these potential summer hazards can lead to a spike in certain types of claims from unusual circumstances that consumers are not familiar with.
Here are some of the most common summer safety hazards and statistics providers need to consider.
Making a splash
Swimming pools can provide endless hours of fun for kids and relaxation for adults. They can also be deadly. From Memorial Day through Labor Day 2017, at least 163 children under age 15 fatally drowned in swimming pools or spas, according to the USA Swimming Foundation.
Rachel Griffiths, communications director at Aquatic Safety Research Group (ASRG), says the key to backyard pool safety is layers of protection.
“Aquatic Safety Research Group strongly believes in our concept of Note & Float — identifying if children can comfortably and competently swim (‘note’ with a wristband) and requiring those who can’t yet ‘float’ in properly-fitting United States Coast Guard approved life jackets,” Griffiths says.
Pools are considered an “attractive nuisance,” meaning the owner of the pool is liable for anyone who uses it, invited or not. Though most liability provided by homeowners’ insurance policies covers pool-related incidents, Hitchens says the standard amount of liability protection — approximately $100,000 — may not be sufficient. This is particularly the case if a homeowner is hit with a lawsuit for the death of a child, for example.
“I have a lot of clients with pools, and I always encourage them to purchase a separate umbrella policy, because that’s going to be the best way to increase their coverage,” says Hitchens. “I would encourage all agents and brokers to do the same.”
Another common water hazard during the summer is boating. Whether fishing, skiing on the lake, or just taking a relaxing jaunt up the coast, boating presents an increased risk of negligence.
Boat owners are liable for any injuries that result from of a collision with another boat or land, or if the boat’s owner didn’t provide proper safety equipment. But here’s the thing: Many boat owners don’t actually have the insurance they need to cover these losses.
“I encounter a shocking number of people who think their basic auto policy covers their boat, but it doesn’t,” says Hitchens.
What’s more, unlike auto insurance — which is mandated in almost every state — boat insurance is not a requirement for recreational owner-operated water vessels. But this certainly doesn’t mean people should go without it.
“People are usually shocked to find out that boat insurance is on a voluntary basis,” says Beth Davis, vice president of personal lines at The Graham Company and specialist in watercraft insurance coverage. “If you’re taking out a loan to buy the boat, the bank will require that it be insured. But other than that, it’s up to you. Nonetheless, if you’re going to buy a boat, you definitely want insurance.”
Weathering summer storms
Analysts predict an average hurricane season for 2019. According to the National Oceanic and Atmospheric Administration, the U.S. should expect nine to 15 named storms, with between four and eight of them becoming hurricanes. Two to four of those named storms may evolve into major hurricanes.
Hitchens notes that agents and brokers who do business in coastal states should be prepared to talk to homeowners about hurricane deductibles.
According to the nonprofit Insurance Information Institute (III), hurricanes and tropical storms caused $158.6 billion in insured losses between 1996 and 2015. In order to “limit their exposure to these losses,” insurers in 19 states and the District of Columbia now sell homeowner policies that include a percentage deductible that kicks in whenever a property experiences damage from a hurricane. It’s a separate deductible from all other potential perils like fire or vandalism, and it has its own unique quirks and nuances.
“Hurricane deductibles help lower the cost of what people pay for property insurance on a year-to-year basis because they assume more of the risk,” says Lynne McChristian, Florida representative and catastrophe response director for the III. “In other words, you pay less today but more in out-of-pocket costs if a hurricane hits.”
If a policy has a hurricane deductible and a named storm makes landfall in (and sometimes around) your state, the homeowner will have to pay anywhere between 1% and 5% of the home’s insured value before coverage for any damage kicks in. This is more costly than a standard $500 or $1,000 homeowners’ deductible, which kicks in for all other property losses.
For example, if a home is insured for $300,000 with a 2% hurricane deductible, the policyholder would be responsible for the first $6,000 in repair costs for any damage caused by the storm.
It’s important to note, says Hitchens, that a hurricane deductible can only take affect if the home’s damage results from a storm officially named by the National Weather Service. The distinction, she says, is critical.
For example, when Superstorm Sandy hit the East Coast in 2012, the National Weather Service never officially designated it a hurricane since it lacked the sustained 75 mph winds necessary for that classification. As a result, homeowners in Sandy-hit states were not saddled with the financial burden of a hurricane deductible.
“The criteria for triggering a hurricane deductible is pretty specific,” says Hitchens. “So they don’t come into play all that often.”
Playing with fire
It’s impossible to consider summer insurance hazards without taking a moment to consider fireworks. Celebrations heat up weeks before July Fourth, and pyrotechnic festivities often extend throughout the summer.
Unfortunately, fun sometimes comes at a high price. Approximately 13,000 Americans were injured in fireworks-related incidents in 2017, according to the U.S. Consumer Product Safety Commission (CPSC).
What’s more, homeowners’ properties also are at risk, and something as simple as a misdirected flare can cause significant fire damage to one’s home or a nearby structure.
“As long as the community complies with legal safety standards, fireworks can be a safe, enjoyable and family-friendly entertainment experience,” says Julie L. Heckman, executive director of the American Pyrotechnics Association (APA).
And legislators agree. As of May, only one state — Massachusetts— continued to ban all consumer fireworks, according to the APA.
Heckman says industry revenue for 2017 was $1.2 billion, with consumer fireworks revenues representing $885 million of that figure. What’s more, she anticipates 2018 revenues will continue to surge with the continued relaxation of state and local fireworks laws.
“In the summer, agents and brokers should be prepared to answer consumer questions about coverage for fireworks-related damage and injury, because it’s going to come up,” says Florida-based insurance agent Tracy Hitchens. “Safety should be the primary concern when it comes to even small backyard fireworks, and knowing what is and isn’t covered is part of that safety-first mindset.”
To that end, Hitchens notes that most homeowners’ policies will cover most fires set in your home. The most important consideration is whether or not the fireworks were being used legally. For instance, Illinois, Ohio and Vermont only allow sparklers, so everything beyond that is illegal.
“In other words, if you start a fire because you were setting off fireworks that aren’t permitted in your state, insurance isn’t going cover the damage,” says Hitchens. “So know the nuances of your state’s laws before hand.”
According to Hitchens, underwriters see about $43 million in direct property costs each year from fireworks, so agents and brokers should encourage consumers to check their homeowners or renters insurance policy as well as their state and local laws. Additionally, the CPSC publishes important safety tips to prevent injuries.
To be sure, fireworks aren’t the only flammable hazard associated with summer. There’s also the grill and the favorite American pastime of the backyard barbecue.
According to the latest National Fire Protection Association (NFPA) report, firefighters responded to an average of 9,600 home fires involving grills, hibachis or barbecues annually between 2011-2015, which Hichmans estimates could add up to more than $100 million in direct property damage each year. The report also reveals that gas-fueled grills caused the majority of fires.
Homeowners insurance policies typically cover consumers if a backyard grill accidentally sets fire to the property. And coverage usually includes liability protection should a guest suffer burns or injury from a grill. NFPA publishes the following safety tips for grilling that agents and brokers may want to share with clients.
Jason Hargraves (jason.hargraves@allwebleads.com) is managing editor of insuranceQuotes, which allows consumers to shop and compare policies online.
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