May-June 2011 | ARE YOU COVERED?

Insurance Management Group owner Reese Cropper, III
Insurance Management Group owner Reese Cropper, IIIThe IMG team



IMG’s Reese Cropper discusses topics to consider to ensure you and your family’s assets are properly insured

Written By: Nick Brandi | Photographer: Stephen Cherry

Reese Cropper, owner of Insurance Management Group, takes a different approach to running an insurance agency than most. For him, it’s all about good communication. He feels the best role his associates can play is that of trusted advisor instead of high-pressure salesperson. IMG’s focus is primarily business and personal insurance for homes, condominium units and associations, as well as hotels, restaurants and other resort businesses.

“Unfortunately, it’s commonplace in a down economy for some people to forgo certain types of coverage or reduce the amount of coverage they have,” said Cropper, who founded his company in 1994. “And let me say, a bad economy is actually the worst time to scale back or go without coverage. A claim during these poor economic times can be more devastating if you don’t have income to overcome the loss.”

A third-generation insurance agent with roots firmly planted in the Eastern Shore, Cropper and his staff at IMG are experts at knowing the risks we coastal dwellers face, especially during this time of year. We were glad, then, when Cropper sat down with Coastal Style to share his wisdom and explain some common exposures we all need to be aware of.

“Most owners of rental property realize if one of their renters gets injured while on that property, chances are the owner will be sued by the renter,” said Cropper, “even if the suit is frivolous. What most don’t know is that depending on the kind of insurance policy they have, they may not be covered against the suit. If someone occasionally rents part of their beach house or rents their condo unit to others and does not advise their agent of the exposure, they cannot safely rely on the liability portion of a standard homeowners’ policy to protect them. They need a separate coverage called “Rental to Others,” which would assume the risk. Fortunately, the additional coverage is very inexpensive and affordable by virtually everyone. The important thing is to be straight with your agent so that they can determine if you are at risk.”

“On a related issue,” Cropper added, “there is a recently passed Maryland law that allows a condo association’s board of directors to assign the master policy deductible to the unit owner where a loss originated. If you are the owner of the unit they’ve decided is the point of origin, you are responsible for paying the association’s deductible, which can be up to $5,000. It is critical to review your condo unit homeowner’s policy with your agent to be sure you have Master Policy Deductible Assessment coverage, as well as coverage for items in your unit that are not covered by the master policy.

“You don’t have to be a millionaire to be sued like one,” Cropper offered, “so that means everyone should be considering umbrella liability coverage, which would protect you against financial loss arising from legal liability at the point where your primary liability coverage has been exhausted. Lives and families can be ruined because of exceedingly high awards and judgments, and considering how dirt-cheap umbrella liability policies are, it is not worth the risk to go without it. In my opinion, umbrella liability is probably the single most overlooked essential coverage there is.”

“Many don’t realize what some of their possessions are worth, often because we are concerned mostly if not only with their sentimental value. But lots of people own fine art, have jewelry, go antiquing or have inherited heirlooms that actually have some value on the market. Well, standard homeowners’ policies have limits on what an insurance carrier will pay in the event of such a loss. It’s always a good idea to have precious or high-value items scheduled separately on what’s called a “personal articles floater” (or inland marine policy), which not only offers better, broader protection but also facilitates the settlement process because the value of the lost, damaged or destroyed item has already been established and scheduled.

“Because of our proximity to the coastline, damage to property due to wind tends to have a separate and higher deductible than the standard policy’s basic deductible. Especially with the kind of winds we get here on the Eastern Shore, it might be a good idea to review that deductible with your agent. And by the way, that provision applies to nor’easters, too, not just hurricanes.”

“What many people who grew up in this area have come to know is that flood is absolutely, unequivocally excluded from standard property coverage, so those folks are not likely to get caught by surprise. But there are, however, more and more people coming to this area every year who are from areas where this is not common knowledge because floods are not realistic risks where they’re from. So, it’s important to keep a couple of things in mind. First, flood is a standard exclusion to a homeowners’ or standard business-owners’ policy. Second, the loss valuation on a standard flood insurance policy for “primary residences” is based on the cost to replace in the current market, whereas the loss valuation for a secondary residence is what’s called “actual cash value,” which deducts the amount the property has depreciated over time from what it would cost to replace today. As you can well imagine, the potential difference in amount between “replacement cost” and actual cash value can range anywhere from substantial to astronomical, so owners of secondary residences need to be very aware of the loss valuation on their flood insurance policies. “Also, please keep in mind that not every square inch of real estate is eligible for federal flood insurance,” Cropper added. “In fact, there is an area of coastal Delaware, south of Rehoboth and north of Fenwick, that doesn’t qualify for the National Flood Insurance Program, so if one is considering buying property there, please review this situation with a qualified insurance agent.”

Ultimately, Cropper said the most important thing is to be totally forthright and communicate often with your agent, for that is the surest way of all to properly protect what matters to you.

“Insurance is not always easy to understand,” he said, “so spend time with your agent now, discussing what you need, before you have a claim this summer.”

Insurance Management Group, 410-524-5700

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