Remembrance Day and the Poppy

In Flanders Fields

In Flanders fields the poppies blow
Between the crosses, row on row
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.

— John McCrae (1872 – 1918)

The American Moira Michael from Georgia, was the first person to wear a poppy in remembrance. In reply to McCrae’s poem, she wrote a poem entitled ‘We shall keep the faith’ which includes the lines:

And now the Torch and Poppy Red
We wear in honor of our dead.

Many two-minute silences are followed by a lone bugler playing The Last Post, reminiscent of times of war when trumpets were as much a part of battle as bayonets. A poem called ‘For the Fallen’ is often read aloud on the occasion; the most famous stanza of which reads:

They shall grow not old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning
We will remember them.

Fourth stanza of ‘For the Fallen’ by Laurence Binyon (1869 – 1943)

 

 

Insurance Claim tips

 *** We do NOT sell insurance or receive commissions from any products discussed in this forum ***

As you prepare your emergency document box that will allow you to return to life as usual following a disaster -we’d like for you to include the following:

  1. Notify your agent and carrier promptly. Let them know that you have sustained damage and are filing a claim. Even if you did not buy an earthquake, or flood policy or the damages do not exceed the deductible. Always contact your insurance in writing that you have sustained a loss for a disaster and are filing a claim. Most policies have reporting requirements that are time sensitive and you may not be aware of covered items for EQ in an non-EQ policy.
  2. Be ready with your own expert opinion. Have your own experienced contractor or licensed structural engineer once the insurance adjuster has completed their evaluation.
  3. Review your policy again and remind yourself what limits you have per category and also notice the declaration limits since these can change your expected coverage. If you read the policy carefully when you purchased it you should not be surprised regarding your coverage. Note that earthquake policies provided by CEA are standardized (easy to use) but also quite limited. Contact your insurance company and review your expectations and if not satisfied then contact 1-800-927-HELP and report your complaint.
  4. Do NOT agree to a quick settlement with your adjuster or insurance company until you’ve verified and understand your rights and coverage.
  5. Keep track of everyone you speak to with regards to your claim – this is your responsibility as a claimant.
  6. Keep all receipts for expenses if planning to claim additional expenses or loss of use. Remember that most CEA policies do not provide much for this coverage.
  7. You should have carefully analyzed the wording so that during your claim you will be able to receive true replacement of your property – like kind quality.
  8. Estimates by your own contractor should be similar to those given by the insurance contractor otherwise you may agree to less than it will cost you to get your home rebuilt. Care should be taken with inexperienced or out of state contractors who do not know what needs to be part of an EQ estimate. Assisting them by connecting them with a local experienced EQ contractor may provide you with the quickest and most complete estimate.

*** Above all do NOT sign releases or waivers without legal advice — read carefully and have your legal representative do the same — particularly careful if it contains the words “final” or “release” language. ***

All AIKAPA clients are encouraged to contact us so that we can review your policy prior to needing a claim.

*** We do NOT sell insurance or receive commissions from any products discussed in this forum ***

 

Earth Quake Planning Basics

 *** We do NOT sell insurance or receive commissions from any products discussed in this forum ***

 We strongly encourage you to insure against catastrophic risks. Katrina was a recent example of a catastrophic risk as would be a category 7.0 earthquake. The best way to prepare is to plan for both your physical and financial safety.

We address earthquake planning with our AIKAPA Managed clients and AIKAPA Guided clients usually consult with us as they need. If you’d like us to provide more specific and personal discussion feel free to call us. You may also find value in the links provided in the AIKAPA resource page (www.aikapa.com/links.htm).
Here are answers to your most frequent questions on earthquake risk planning:

  1. Can I be denied earthquake insurance? It is mandatory, inCalifornia, that home insurance providers make available earthquake endorsement to all home policies sold in this state. The CEA (California Earthquake Authority) was created after the last major earthquake to assist home insurance companies so that they would be able to offer home insurance inCalifornia. I encourage you to call California Board of Insurance directly if your agent states that you can’t get earthquake insurance but you have your home insurance with them (1-800-927-HELP). The laws to protect you are under the California Insurance Code at section 790.03(h) of the California Code of Regulations at Title 10, Chapter 5, and in judicial decisions.
  2. What is likely to be my premium? This year we’ve found that premiums are more expensive – some as much as 75% more. The actual policy premiums, in the Bay Area, can vary dramatically depending on your home’s location, cost of recovery, and deductible. Insurance rates are calculated based on your zip code and the current cost of rebuilding your home. If you login to the CEA website (link provided via www.aikapa.com/links.htm) you can use their premium calculator to estimate your likely policy premium. Most of our clients have policies in the range of $1,200 to $4,500 per year. These policies do give you credit for retrofitting which you’ll likely want to implement to increase your physical safety.
  3. How much of a deductible should I get? This type of insurance only comes with a fairly large deductible. It is usually in the range of 10-20%. A home that costs $600K to rebuild could have a premium around $1,500 and a deductible around $60 to $120K. This means that you need to self insure the first $60 to $120K in earthquake damage. These funds need to be inflation protected but accessible as part of your ability to self-fund earthquake damage below this level.
  4. What is the risk of earthquake damage? No one can yet predict this with any certainty how your home will fare during the next earthquake. You can review your county and city disaster recovery (earthquake) planning to have a local view of how to plan for your safety and also visit the ABAG and USGS website to find out more about your home and business location with regards to the fault lines and shake areas (see our resource page at www.aikapa.com/links.htm). It is your closeness to the actual fault line and the type of soil (how much shaking and aftershock you experience) that determine the damage you experience.
  5. What is the likelihood of a quake? The probabilities quoted appear to rise each year. The 2008 USGS survey states that there is a 62% chance of a 6.7 quake in the next 30 years. It is also believed that the next quake will strike further north of the Loma Pietra (1989) 6.7 quake. Those who use frequency analysis to make quake predictions rather favor the prediction that we have entered a higher quake activity period resembling that seen around 1911. You can read more about Geologist’s view at the USGS website. (See the AIKAPA resource webpage www.aikapa.com/links.htm)
  6. Should I buy this insurance from my current home insurance provider? You should do a thorough review of many providers. This is a pretty expensive premium that you need to feel sure will be available when and if you need it. First, get quotes from large insurance providers including CEA-backed providers (these are easy to find). Second, get a contractor or structural engineer to review your home’s structural condition in case of an earthquake and secure your home (see www.aikapa.com/links.htm for several useful links). You’ll next need to carefully review each policy – this is not as straight forward as choosing the least expensive policy. You will need to compare the limits and be aware of exclusions. Make sure that when comparing costs you are comparing the same type of coverage, from companies that are either backed by the CEA or are able to withstand the cost of the next big quake.
  7. When does it make sense to self insure? When you are covering risks that are not catastrophic it is our belief that you should consider self funding. You should also consider self funding a large deductible thus allowing you to have enough cash flow to pay for needed catastrophic insurance and also provide for other cash flow needs. Using your current financial statement, cash flow and home equity you can quantitate your risk and life style exposures.

*** We do NOT sell insurance or receive commissions from any products discussed in this forum ***

 

Habits and ruts encourage old age – Edith Wharton

 … the deathly process of doing the same thing in the same way at the same hour day after day, first from carelessness, then from inclination, at last from cowardice or inertia. Luckily the inconsequent life is not the only alternative; for caprice is as ruinous as routine. Habit is necessary; it is the habit of having habits, of turning a trail into a rut, that must be incessantly fought against if one is to remain alive.

                                         — Edith Wharton

Giving and Getting – Alex Haley

 The giving and getting, the sense of belonging and contrbuting to something larger than yourself, to something that began before you were born and will go on after you die, can make it possible for you to accept life in a way that makes you wish the whole world could realize how easy it is to feel as you do, and wonder why they don’t.

                                         — Alex Haley

Tax: First time home buyer credit

First Time Home Buyer Tax Credit and your 2008 tax withholdingsAre you eligible?

This tax credit is limited to those with an adjusted gross income (AGI) of less than $95K and $170K (single and joint filer) and who buy a personal residence between April 9, 2008 and July 1 2009. The credit is disallowed if the property is no longer your principal residence before the close of the tax year. It is also disallowed if you are classified as a nonresident alien, or your financing is from tax-exempt mortgage revenue bonds. You must be a first time home buyer which is defined as having no ownership interest in a principal residence during the three prior years. You must be a US citizen or US resident alien.

How much and how will you receive the credit?

The maximum amount for any Home Buyer Tax Credit is $7,500 and it is a refundable credit (which means that you will get the credit even if you don’t owe taxes). If you owe $5,000 and your credit is $6,000 you will receive a check for $1,000. It phases out at $75K and $150K (single and joint filers). You will receive the credit when you file but if you qualify you may adjust your withholdings or estimate taxes to accommodate this credit.

What is the catch?

The biggest catch for Bay Area home owners is that most do not qualify. If you do qualify for many home purchases you often need to earn enough to cover a fairly large mortgage which will, in many cases, place you above the limits to claim some or all of this credit. In addition, this is not “free money.” It is a 15-year no interest loan that must be paid back at $500 per year.

What should you do?

First determine if you are likely to qualify this year or early next year. If you do qualify, then consult with your tax planner or accountant and adjust your withholdings or estimated taxes either this quarter or early next year.
For the original documents, check the links on our resource page: www.aikapa.com/links.htm

** Please note, this is a Financial Bites column provided for general use by our clients — always check with your tax planner or accountant **

 

Welcome to the Aikapa discussion board (forum/blog)!

Edi Alvarez, CFP®

From time-to-time, there are news items, events or topics relating to financial planning and/or investment mangement that stand out as worthy of special note or comment. I will post them here, along with my own thoughts and analysis. Of course, this is a blog. So feel free to join the conversation, but please, keep it civil! Learn, share, and enjoy! — Edi Alvarez, Principal, Aikapa