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  • A Hot Price for U.S. Businesses
  • Summer Grilling Fun
    Every year, what should be a fun outdoor occasion for family and friends instead turns into tragedy at nearly 9,000 homes, causing deaths, injuries and tens of millions in property damage. Your Trusted Choice® independent insurance agents can remind you that fire damage and potential liability for injury to friends will be covered by your […]
  • Home-Buying Tips for the Single Guy and Gal
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    Welcome to the world of food trucks! When you picture building your catering business, is the image more truck than tent? The mobile food industry has a long and tasty history in the U.S.
  • Staffing Your Catering Business
    Like many entrepreneurs, you may have begun your catering business as the sole cook and bottle washer. But at some point, you will discover that going it alone not only impedes growth, but is a recipe for burnout and collapse. And you’ll face the question of every successful catering business: How do I find and […]

Melendez Insurance Blog

Why Is My Home Insured for More Than I Could Sell It For?

May 9th, 2016

ReplacementValueImageWhile the market value of your home is commonly based on tax assessment records, real estate appraisals or the recent selling prices of similar homes in your neighborhood, your homeowners insurance limit is based on what it would cost to replace your home if it was completely destroyed. This is frequently a different figure from what your home could fetch on the open market.

Erie Insurance uses a program called Home Cost Estimator to determine how much it would cost to rebuild a house from the ground up. “The estimator uses information about a dwelling’s characteristics to determine the estimated replacement cost,” says Terry McConnell,vice president, Personal Lines Underwriting, at Erie Insurance. “The information is pulled from several sources to come up with a very close approximation of what it would cost to reconstruct a house.”

Factors affecting a home’s reconstruction value

Many different factors affect how much it would cost to reconstruct a home. Some of the main ones include:

  • The home’s square footage
  • The materials used in the interior and exterior construction
  • The style of the house
  • Any special or custom-built features like fireplaces or exterior trim
  • Any improvements or additions made to the home
  • The local construction costs

It’s common for a house to have a significantly higher homeowners insurance limit when it’s an older home.

“Original building materials common to older homes like plaster, hardwood floors, full-dimensional lumber and trim make the replacement cost of older homes higher than a modern home of the same size and style,” says McConnell.

A better way to insure your home

When insuring your home, the value should be equal to the amount it would cost to replace the home. You’ll also want to make sure your home is covered on a replacement cost basis rather than an actual cash value basis.

Actual cash value coverage makes a deduction from the settlement based on depreciation. Meanwhile, replacement cost coverage pays the actual cost of replacing your home with materials of like kind and quality without a deduction for depreciation.

To illustrate, imagine you paid $10,000 for a new roof. It depreciates $1,000 every year. If your roof was destroyed by a fire in Year Four, you would only get $6,000 to replace it under an actual cash value settlement. A replacement cost settlement would replace the damaged portion of the roof without a deduction for depreciation.

Many homeowners policies automatically insure homes on a replacement cost basis. Melendez Insurance can tell you more about replacement cost and how your homeowners insurance works.

Large Losses Are a Threat to Every Business

April 22nd, 2016

UmbrellaPolicyMany trends in today’s business world are exciting and encouraging. Unfortunately, the number of lawsuits and high-dollar awards in liability cases are not one of those positive trends. Here are a few recent news headlines from around the country:

  • Pennsylvania hotel sued for concussion from shower slip.
  • Fatal two-truck accident case in New York results in $3.97 million settlement.
  • Virginia victims get settlement checks (about $9 million) over toxic drywall.

There’s no way to prevent lawsuits like these entirely, but you can manage the impact. A business catastrophe liability policy serves as financial protection, or a cushion, against a legal judgment for a covered loss, beyond the limits of your underlying insurance policies.

A business catastrophe liability policy functions in a similar fashion to a personal catastrophe liability policy.  Personal catastrophe liability —commonly known as “umbrella” – coverage can provide an extra layer of liability protection over and above your auto and homeowners policies in the event that a covered claim is made against you (or a covered family member).

Like a personal catastrophe liability policy, a business catastrophe liability policy doesn’t replace your present policy. Instead, it bolsters it with an additional $1 million (or more) in liability protection.

Examples of business liability claims

Research shows that four out of 10 small businesses are likely to experience a claim in the next 10 years. While most of these claims will be covered by an underlying policy, some claims will exhaust a business’s underlying policy. If that happens, the very future of a business could be at stake if applicable coverage under a business catastrophe policy is not in place.

Here are some types of situations that could lead to costly claims:

  • Product liability
  • Customer slip and falls
  • Reputational harm like libel or slander
  • Someone being struck by an object

Protect your business

Not having enough liability coverage for your business could spell trouble down the line. Protect what you worked so hard to build by contacting Melendez Insurance.

Use Just a Tiny Percent of What You Already Spend to Protect Your Kids

March 21st, 2016

LifeInsForKidsDo you know how much it takes to raise a child these days? Are you sitting down?That would be almost a quarter of a million dollars.  It costs $245,000 to raise a child born in 2013 until they hit 18, according to the U.S. Dept. of Agriculture.

This is not about a luxury upbringing. This is no Kardashian-esque baby outfitted in cashmere onesies. This is not about a privileged college education, because these numbers do not include the cost of college. That’s extra. Add on about $18,000 a year for public and $41,000 a year for private college.

This number—$245,000—is a place to live, food, clothes, health care…the basics.

You’re here to take care of these expenses now. But what happens if something were to happen to you? If an average middle-income family is spending around $13,000 a year on their child,that money would have to come from somewhere.

That’s where life insurance comes in. If you take between one and two percent of what you already spend on your child each year—or about $200—it could pay the yearly premium for $250,000 in term life insurance coverage. If something happens to you, your child would be okay financially.

We’ve used a healthy 30-year-old dad or mom (who doesn’t smoke!) who gets a 20-year level term policy for the above example. Age and health will vary the amount of your premium—as your age increases or health decreases, the price goes up.

But the truth is, setting aside one to two percent of what you’re already spending on your child is a small price to pay to protect them. There’s no reason to wait. To help you figure out how much life insurance you might need, contact Melendez Insurance. We can help you decide the amount and type of protection is right for you, and how affordable life insurance can be to protect the ones you love most.

How to Insure Fine Art

February 29th, 2016

InsuringArtMost of us will never own a Picasso or a Rembrandt. But we may own (or someday own) a pricey piece of art. And that brings up the issue of how to insure fine art.

When you think of separately insuring a pricey item, many people think of engagement rings and other kinds of jewelry. But extra coverage can also come in handy for anything from a valuable stamp collection to an expensive fur to—you guessed it—fine art.

Typically, your art coverage is included in your personal property limit on your homeowners policy or renters policy. That should be sufficient for the vast majority of people who own fine art.

Yet maybe you inherited or bought a piece by a real master. If that’s the case, you’ll want to consider a separate endorsement for your fine art.

Even if your fine art is covered under your homeowners or renters policy, you may still want to endorse it under your policy. Doing so can let you choose a different deductible for your fine art than the regular policy deductible, modify the coverage or change how a loss would be settled.

Getting your fine art appraised

When it comes to how to insure fine art, one thing you’ll definitely want to do is get it appraised. An appraisal can help ensure that you’d be properly compensated if your art was stolen or damaged.

An appraiser may authenticate your art to make sure it’s not forged. There are several ways to check a painting’s authenticity:

  • Examine the signature
  • Check the artistic style and ability
  • Look at the construction and back of the canvas (A forged painting often has irregular or uneven paint on the edge of the canvas and is stark white on the back—forgers typically don’t vary the heaviness of paint used.)
  • Assess the past history of sale (known as the provenance) and any certificate of authenticity

A similar process is used if you own an original, limited edition print. An extra step an appraiser will check is the fraction number at the bottom of the print that indicates how many prints were made.

It’s a good idea to get an appraisal every few years since fine art prices can fluctuate. Make sure to save any appraisal documents with the bill of sale, certificate of authenticity and past history of sale. It’s also a good idea to take some photos of your art and include them in your home inventory.

Five Common Tax Breaks for Business Owners

January 29th, 2016

tax-breaks-for-business-ownersMany people today are enjoying the benefits of being their own boss and running their own company. According to the U.S. Census, there are currently more than 5 million companies with fewer than 20 people actively operating in this country. Whether you freelance or you have created a company that employs others, you can take advantage of a variety of tax deductions on your business income.

Owners of large corporations have accountants and tax experts working for them, but many small-business owners and freelancers cannot afford that added expense. If you complete your tax returns on your own each year, make sure that you are aware of the tax deductions you can use to save. Some of the most common business deductions are listed below.


Home office

According to Entrepreneur Magazine, approximately 52 percent of all businesses in America are operated out of the business owners’ homes. The home office deduction, therefore, is one that may be useful to many.

Of all available business-related tax deductions, this one is the most complicated. You can deduct a portion of your heating, cooling, home insurance, and rent or mortgage costs from your taxable income, based on the percentage of your home that is used for business purposes only. Recent changes in the tax code have simplified the calculation of this deduction by allowing business owners to opt to deduct $5 per square foot of office space, up to 300 square feet.

To be eligible for this deduction, you must have a room that is used for work-purposes only. If your computer is set up in a guest bedroom, for example, you may not deduct the entire room as a home office.

If the portion of your home that is used for your business is very small, many tax advisors will recommend that you forego this deduction. This is because the amount of money you will save will be minimal and not worth the complications that may arise because of an audit. If you are uncertain whether this business deduction is right for you, speak with a lawyer or tax advisor before making a decision.


Office Supplies

Whether or not you are deducting a home office from your taxes, you may deduct the cost of office supplies that you use in the course of your business. This includes everything from pens and pencils to toner cartridges for your printer. Be sure to save all your receipts. Many people find it very helpful to have a credit card that is used strictly for business purposes.

Some examples of things you may deduct include:

  • Writing materials including pens, pencils, markers and highlighters
  • Paper, notebooks, file folders, binders and notebooks
  • Business cards, stationery and promotional items with your business name on them
  • Office furniture, file cabinets and desktop telephones
  • Computers, flash-drives, recordable CDs and software
  • Envelopes, postage and packing supplies

Internet Connection and Phone

If you rely on email and internet use as a part of your daily business operations, you may deduct the cost of your internet service from your taxable business income. The same holds true for your land-line or cell phone service if your phone number is your business line. This includes cell phones that have a data plan.

Unlike a home office, it is not necessary that you use your internet or phone service for business purposes only. This is because your service most likely comes at a flat fee, regardless of usage.


Health Insurance Premiums

The Affordable Healthcare Act requires business owners who have more than 50 full-time employees to provide them with affordable healthcare options. Policies may be purchased by business owner or individuals at lower group rates through the healthcare exchanges set up by each state. For information about this is being offered by the SBA through scheduled webinars.

Whether you are providing health insurance to your employees or you are simply purchasing a policy on your own, you may be able to deduct 100 percent of the incurred expenses from your business income. However, there are some caveats:

  • If your healthcare expenses exceed your business’s net profits, you may only deduct an amount equal to net profit.
  • If you are eligible for healthcare coverage through your spouse, you may not deduct the cost of purchasing your own coverage.

If your spouse works for you, you may deduct 100 percent of the cost of insuring him or her as well as your children, but your spouse must be an actual, documented employee of your company and you must offer the same health insurance coverage plans to all of your employees.


Mileage

People who drive frequently in the course of business are most likely to be aware of this deduction, but those who drive only on occasion often overlook it. If you make trips for supplies or to make deliveries, or if you drive somewhere to meet with a current or prospective client, you are entitled to deduct the mileage you have accrued while doing so.

If you plan to take this deduction, it is imperative that you keep extremely good records of your business-related driving. Record the date, your destination, the exact number of miles driven, and the purpose of your trip in a log or journal. When compiling your taxes, add up the number of miles driven. For tax purposes, you are entitled to deduct 56.5 cents per mile driven. This deduction includes fuel costs so you may not deduct the cost of gasoline as well.


Business Travel Expenses

If you take a business trip, such as to attend a conference or to meet with an important client who lives out of town, you may deduct the associated costs from your business income. These costs include:

  • Mileage driven
  • Airfare, train or other transportation costs
  • Hotel charges
  • Meals
  • Entertainment costs, if entertaining a client

Be aware that travel and hotel costs are 100 percent tax-deductible, but meals and entertainment costs are only 50 percent deductible. Also, you are permitted to deduct the cost of a gift to a client or employee but only up to $25 per person.

What Road Salt Does to Your Car

December 8th, 2015

roadsaltdoestocarThe Chicago Winter is here. And with it comes difficult driving conditions like whiteouts and black ice.

Road salt definitely helps makes the roads safer. A study conducted by Marquette University found that de-icing winter roads with salt reduces accidents by 88 percent and injuries by 85 percent. Each year, state and local agencies spend more than $2.3 billion on snow and ice control operations.

Yet there are some definite downsides to road salt when it comes to your car. Read on to learn exactly how road salt works—and what road salt does to your car.

How road salt works

Salt—a.k.a. sodium chloride in scientific terms—lowers the melting point of water. So while water normally freezes at 32 degrees Fahrenheit, water needs colder temperatures in order to freeze when it’s exposed to salt. The more salt you add, the lower the temperature needed to freeze water is.

The water that results after salt is applied to ice is known as “brine.” This water needs a temperature lower than 32 degrees Fahrenheit in order to freeze. If there’s a lot of snow and ice on a road, the brine will seep into the bottom layers, breaking the bond between the ice and the road. The remaining snow and ice will then float along the top of the brine, making it easy for any passing traffic to break it up for good.

What road salt does to your car         

While road salt is doing good things for road safety, it’s doing something very different when it comes into contact with your car.

Salt creates chemical reactions that can corrode your car. This is especially true if you have any exposed metal on your car.

Two car parts that are especially susceptible to corrosion and rust are the brake and fuel lines. That’s because they’re close to the undercarriage of the car, which takes the brunt of the road salt damage.

So what’s a motorist to do? Fortunately, there are some tried-and-true ways to help protect your car from road salt damage.

  • Take measures in the fall. Give your car a good wash and wax. For the best protection, apply a wax sealant over your wax.
  • Have any scrapes, chips or rust spots repaired before the first snow falls.
  • Refrain from driving behind trucks spreading ice or brine.
  • Get regular car washes. Spray your car down at least once a week if you live in a snowy area. Invest in a wash that cleans the undercarriage of the car at least every few weeks or after a heavy bout of snow and/or ice hits your area.
  • Give an older car some extra TLC.  The National Highway Traffic Safety Administration says that cars are especially susceptible to corrosion after being exposed to road salt for eight years or more.
  • When spring arrives, consider a thorough exterior detailing job.

One way you can protect your car in any season is with the right auto insurance. Talk to an insurance professional at Melendez Insurance to learn more about getting the right coverage at the right price.

How to Organize Your Important Paperwork, Once and For All

November 26th, 2015

The Ultimate Guide to Organizing Your Important Paperwork

First things first:

  • Invest in a good shredder. Identity thieves have been known to comb through trash (gross) to find bits and pieces of your discarded personal information. Shred any documents with personal information in them so they don’t get the opportunity.
  • Invest in a sturdy safe deposit box. On the other end of the spectrum, there are records you want to hold on to forever–so buy something solid to keep them protected from theft, water damage or fire. Also keep an inventory of what’s in there, and review it once a year.
  • Establish a trusted system, and stick to it. What good is an organization binge if the papers will just pile up in another week because you don’t know where to put them? Find what works for you–a bill box, a filing cabinet, a desk drawer–and stick to it.
  • Think about going digital. Consider receiving your bills and statements electronically to reduce the paper pile-up. Bonus: Many owner’s manuals and mail-order catalogs can be found online, so don’t feel too bad about tossing those.
  • Get organizing. Your financial paperwork can be divided into two big categories:
    • Short-term storage is for those papers you need to access fairly regularly, so keep them in a filing cabinet, drawer or accordion file. That includes stuff you keep for a year or less (like your insurance policies) and stuff you shred when you get rid of the item it relates to (think big purchases, like a car or a laptop).
    • Deep storage is for the stuff you need to access less frequently, but should still keep. These things are better off in a safe-deposit or fire-proof box. They include tax records (save these for seven years) and official documents (like your birth certificate and Social Security card).

Keep this stuff for a year or less:

  • Bank records, like your monthly checking and savings statements. If you reconcile your deposit and ATM receipts with your statement, you can shred them right after.
  • Credit card bills. Once you’ve paid ‘em, shred ‘em. An exception is when you need a record to support a charitable donation you will be deducting on your taxes.
  • Documents you need for your tax return. There are a lot of different forms and papers that may or may not apply to you. Here’s a list from TurboTax.
  • Insurance policies. Shred the previous year’s policy when your agent sends you a new one. (While we’re chatting, make sure to schedule an annual review with Melendez Insurance to make sure you’re properly covered and getting all the discounts you qualify for.)
  • Annual investment statements. Shred the monthly and quarterly statements from your 401(k) or IRA, but keep the yearly ones until you sell the investments.
  • Pay stubs. Keep these until you reconcile them with your annual W-2.
  • Most receipts. Let’s get real about receipts: If you’re not actually using them to track your spending or to reconcile your statement, you can pitch them right away. But if you plan to return a purchase or itemize a tax deduction, it helps to keep them all together in a folder.

Keep this stuff on file (but review it once a year to keep it up to date):

  • Paperwork from big purchases like furniture, electronics or appliances. This includes warranties, receipts and instruction manuals.
  • Loan documents. Shred closing documents for mortgage, vehicle, student and other loans when you pay them off. (Hooray! No more loan.)
  • Savings bonds. Save them until you cash them in or convert them to electronic form.
  • Vehicle records. Hang on to receipts, titles, registration information, and maintenance and repair records for as long as you own the vehicle.
  • Personal health record(s) for you, your spouse, your kids and– yes, even your pets. Keep a list of important events and information about each person’s medical history, like immunizations, medications, surgeries and lab/X-ray reports. Get started with this checklist from the American Health Information Management Association.

Don’t even think about throwing these things away:

  • Birth certificates
  • Death certificates
  • Marriage licenses
  • Divorce decrees
  • Social Security cards
  • Military service records
  • Pension-plan documents from both your current and former employers
  • Estate-planning documents, like wills, trusts and powers of attorney
  • Life insurance policies. Insider tip: It’s best to keep copies in at least two places to ensure your beneficiaries will find them.

Knowing the basics of what to keep and what to shred gave me peace of mind now that my personal information is under control. I’ll be the first to admit I’m no expert, but my system works for me–even if it’s not Pinterest-perfect. (On that note: Who honestly has a room fully devoted to chic, color-coded filing cabinets? Do these people sleep?!)

What is the City Responsible For?

October 5th, 2015

What_your_City_Will382x189When things go wrong inside your house, you know the burden’s on you (or your homeowners insurance) to get things fixed.

Things can get a little confusing when something is kind of yours and kind of your city’s responsibility. Who pays then?

While there’s usually no clear-cut answer, the following information can give you some clarity around the issue.

Trees

Trees cause more than $1 billion of property damage in the United States every year. Who pays for that damage can be tricky. And that’s true whether your neighbor’s tree falls in your yard or a tree straddles the line between your property and your city’s property.

If a tree is located between your street and your sidewalk, it is typically owned by the city. So it would probably be your city’s responsibility to remove it if it fell or became damaged. Many cities have an arborist on staff who can let you know for sure.

Trees that fall elsewhere on your property are likely your responsibility. Your homeowners insurance often covers the cost of tree removal, so make sure to check in with your insurance agent to see what your policy covers.

Sidewalks

In years past, cities would typically pick up the tab for any sidewalk repairs. Today, nearly every major American city places at least some—or all—of the responsibility on the homeowner. Your city may have a limited amount of funds to repair sidewalks or a shared cost program in place. No matter what your city offers, it’s a good idea to get a damaged sidewalk repaired ASAP—falls are a major source of homeowners liability claims.

Car damage after hitting a pothole

Many—but not all—cities let you file a pothole claim if your car sustains damage from a pothole on a city roadway. The process varies by city, so check with your city’s roads department to see if they accept claims. Keep in mind there’s no guarantee your claim will be accepted and that payments for damages can have a cap.

Snowplow damage

Snowplows (and other city vehicles) perform essential services for communities.

Unfortunately, city workers who operate these vehicles can cause damage as they perform their duties. Some of the most common incidents include running into a fence or mailbox while snow plowing. If this happens to you, the city’s insurance company will most likely cover the damage. Just make sure to promptly report the incident—some cities only let you report a claim a specified number of days after an incident took place.

These kinds of situations highlight the importance of having the right homeowners insurance and auto insurance. Talk to an insurance professional at Melendez Insurance to learn more about the right coverage and to get a free quote.

Eight Tips to Help Avoid Costly Slips, Trips & Falls

September 22nd, 2015

No one wants to see employees hurt on the job, especially if an accident was preventable. Unfortunately, slips, trips and falls can be major and costly accidents in the workplace.

Nearly 20 percent of the workers’ compensation claims filed last year were due to slips and falls. About one-third missed work for a significant time because of their injuries, which can increase the cost of claims dramatically.

With a proper safety plan in place, you could avoid accidents or reduce the severity of accidents, decrease an injured employees’ time away from work and avoid productivity drops. You could also keep your costs in check.

What are the common causes of slips, trips, falls?

Slips, trips and falls can occur on a variety of walking surfaces as well as on ramps and stairways. Some of the major hazards associated with these accidents can include:

  • Slippery, broken or uneven surfaces
  • Inadequate spill cleanup
  • Poor drainage
  • Weather conditions
  • Loose rugs or wrinkled carpet
  • Clutter, poor lighting or obstructed views

8-question checklist for evaluating floor safety

So are the floors at your business safe? To help you find out, answer yes or no to the following questions, developed from Occupational Safety and Health Administration (OSHA) guidelines.

  1. Has your organization selected a floor material that is appropriate for the environment in which it will be used?
  2. Are the adjacent walking surfaces in your business similar?
  3. Does your business have a program for regularly cleaning its floors? Is your floor cleaner certified by the National Floor Safety Institute (NFSI)?
  4. Does your business use different mops for cleaning and disinfecting?
  5. Are your floors treated with a high-traction finish?
  6. Does your organization strip an old finish following the manufacturer’s instructions before applying a new one?
  7. Does your organization require employees to wear appropriate footwear?
  8. Does your organization use proper warning signs for slip/trip/fall hazards?

Based on your answers to these questions, what are opportunities for improvement? What actions do you need to take?

Don’t slip up

Erie Insurance’s staff of risk control consultants can help you identify slip, trip and fall exposures and solutions to help prevent them. Ask Melendez Insurance about how to develop a customized risk control plan for your business.

What Happens If My Neighbor’s Tree Falls in My Yard?

August 31st, 2015

Trees can be tricky, but for the most part homeowners, building owners and landlords are responsible for what falls into their own yard. So if your neighbor’s tree falls in your yard, your homeowners insurance would typically help cover the cost of removing the tree and remedying the damage it caused, after your deductible.

The same is true in reverse: If a tree on your property falls in your neighbor’s yard, your neighbor should file a claim with his or her insurance company.

In most cases, neighbors are able to work things out without too much trouble. If there’s ever an issue, you can rely on your claims adjuster to help straighten everything out.

The claims process

If a tree falls on your house, make sure to take some photos. Then call your claims adjuster, who will evaluate the damage and explain how your homeowners coverage comes into play. It’s recommended that you call your claims adjuster before you contract to have the tree removed.

Sometimes trees fall on cars. If it’s not safe or possible to remove the tree from the car yourself, you should call a professional to remove it. (Again, talk to a claims adjuster first and take a few photos of the fallen tree on your car.) Depending on the damage, both your homeowners and the optional comprehensive coverage you may have under your auto policy could provide coverage for the loss.

Preventing tree damage

Preventive measures matter when it comes to trees. Start by looking for signs of distress such as dead limbs, cracks in the trunk or major limbs, leaning to one side and branches that are close to a house or power line. Mushroom growth on the roots or bark can also signal trouble.

“A homeowner should be concerned about the health of their trees,” says Gary Sullivan, vice president of Property and Subrogation Claims at ERIE. “The best thing to do is to regularly have large trees trimmed.” (The Tree Care Industry Association lists accredited tree care professionals.)

To learn more and to ensure you have the right coverage for your home, contact Melendez Insurance.