Germania Today | Fall 2018

Germania Today | Fall 2018

Fall 2018 Volume 44, Issue 3

Starve a

Page 4 save your home wildfire,

Close your auto loan-to-value gap Page 3 Take steps to reduce your risk of farm equipment fires Page 5

A Message from the President

I n Brenham the other day, there was a bumper sticker that read “Get off your cellphone and watch the road.” I agree with the sentiment: When we’re behind the wheel, for our safety and for the safety of others, the road deserves our undivided attention. A friend was telling me about having to slam on her brakes to avoid a woman in a minivan who turned left across two lanes of traffic while texting on her phone. While her thumbs were engaged texting, the woman was steering the van with her elbows! My friend was amazed this driver didn’t hit anyone. But this begs the question: Why is it so hard for us all to set aside distractions while we’re driving down the road in a 2-ton machine? Cellphones are now the second largest cause of distracted driving, according to the U.S. Department of Motor Vehicles. I suspect most all of us have experienced talking on the phone while driving, even hands free, and not remembering the road we had just travelled. Other common distractions, which increase the risk of an accident, are other occupants in the car or eating, drinking and applying makeup. Distracted driving has been called “an American epidemic.” Eighty-percent of us admit to driving while distracted, and although we know distracted driving endangers ourselves and others, our tendency is to continue until charged with a crime or we become involved in an accident. These consequences can be unthinkably severe. In addition to the tragedy of injuring or killing someone else in an accident, fines and prison

time for a distracted driving-related conviction could be devastating. The good news is that this “American epidemic” is totally preventable if drivers change their habits. Some campaigns raising awareness of distracted driving seem to be working. One recent study showed younger drivers find distracted driving to be “selfish” behavior behind the wheel, according to TeenSafe. These younger drivers couldn’t be more right. We can all do better to protect ourselves and others and to set the right example for our teen and young drivers, who are especially vulnerable to distracted driving. Back to school time is a great opportunity to reinforce this message with them. I pray for the safety of each of you and your families as the summer cools to fall and we start new routines with school and outdoor activities. May we all keep our focus on the road ahead while enjoying the new season. Thank you for your business, and thank you for trusting Germania.

Paul Ehlert President & Chief Executive Officer

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CLOSE YOUR AUTO LOAN-TO-VALUE GAP

What if you drove your new car off the lot and totaled it on the way home? That happens. In 2017, there was one reportable crash on Texas roadways every 59 seconds of every day, according to TxDOT. The accident that totals your car can also wreck your finances. And it hurts even more if you’re still making loan payments. The average new car depreciates 11 percent the minute you drive it off the lot, research shows. In a year, the value has depreciated by 20 percent. In all likelihood, the new car driver in this scenario owes more on their car than the actual cash value. An auto insurance policy covers only the actual cash value of your car at the time of the loss. That’s why many savvy drivers buy GAP (Guaranteed Asset Protection) coverage, which bridges the divide between the actual cash value of your vehicle and the amount you owe on the loan. GAP coverage is important if: • You made less than a 20 percent down payment • You financed for 60 months or more • You rolled over negative equity from an old car loan into a new loan • You have little cash in savings

While you could buy GAP at the dealership, which is often based on the price of the vehicle and rolled into the loan, Germania Credit Union offers an affordable option. “Our GAP plan is a flat $575 one-time payment for everyone,” said JoLynne Goldberg, GCU loan manager. “Anyone who has made a claim has been really happy to have it [GAP insurance], and they buy it every time they finance a vehicle.” Visit www.germaniacreditunion.com for information on auto loans and additional details on the GAP program they offer. This story corrects an earlier version that erroneously stated that GAP insurance is available through the credit union even if the insured did not get an auto loan from the credit union. We regret the error.

Fall 2018 | Volume 44, Issue 3

Paul Ehlert Derrell Krebs

President & Chief Executive Officer

Secretary/Treasurer & Chief Financial Officer

Blake Lovelace Senior Executive Vice President Min Choi

Executive Vice President & Chief Marketing Officer

Laura Popp

Director of Advertising

Germania Farm Mutual Insurance Association 507 Highway 290 East Brenham, Texas 77833 800-392-2202 www.germaniainsurance.com

Contributors: Lisa Trow

Editor Shane Butzow Designer Julia Rosenfeld Contributing Writer

Germania Today (USPS 086230) Published quarterly by Germania Farm Mutual Insurance Association Postmaster: Send address changes to Germania Today at P.O. Box 645, Brenham, TX 77834. Periodical postage paid at Brenham, Texas and additional mailing offices. Subscription price is 50 cents per year included in yearly premium.

FALL 2018 | 3

Starve a

Main story: How to protect your property from wildfires save your home wildfire, s h Most of Texas is under a burn ban, and many areas of Texas that typically are not susceptible to wildfires are under threat now. This story will tell people what to do to keep their property safe. A wildfire burns through your neck of the woods. Your house is still standing, but your neighbor’s house is charred rubble. Why? It’s all about taking precautions, said

According to the Texas Forest Service, 90 percent of all wildfires in Texas are caused by people, most often the result of carelessly burning debris. In August, 153 counties in Texas were under a burn ban due to widespread drought and extreme summer temperatures – two dangerous triggers for wildfires. The National Fire Prevention Agency’s Wildfire Division offers several prevention tips, applicable no matter where you live or how susceptible you believe your property is to wildfires. 1. Fireproof your roof: Select a fire-resistant roofing material like tile, steel and asphalt shingles, and good insulation. Focus on siding material, too, opting for stucco and fiber cement, all with a low- or non-flammable underlayer. Inspect your roof and siding regularly and repair cracks and missing or damaged areas. Routinely clear your roof, eaves and gutters of leaves and debris.

Jeremy Hardwick, Germania catastrophe claims manager, who has worked in the aftermath of wildfires in California and Texas for 15 years. “The goal is to limit the fire’s ability to turn your home into a fuel source. There are a number of strategies to do that, and I have seen firsthand that they work in reducing extreme damage,” Hardwick said. “In many cases, you can see one house still standing because they planned ahead, and the house next to it in ashes because they didn’t.” This summer, with its extreme temperatures as a heat wave settled over the continent, has been an active one for wildfires. Texas is second only to California as the most dangerous state for wildfires.

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2. Seal out embers: Cover all exterior vent openings with 1/8-inch hardware cloth, close and seal doggie doors, and be sure your windows are made of tempered or double-pane glass. If they can’t get in, embers can’t catch carpets, beds, wood furniture, floors or curtains on fire. 3. Clear a 5-foot perimeter: Move stacks of firewood and any other combustible materials at least 30 feet from the house. In adjacent planting beds, replace organic mulch with gravel or stone mulch, and keep bedding plants watered and healthy. Rethink your choice of plants, too, and stay away from those with oils and resins, such as juniper and pine. 4. Clear the deck: Keep attached wooden decks clear of debris and clear out any dead vegetation under the deck. Avoid attaching wooden fences to the house itself, but if you must, use a masonry or metal barrier where it is affixed. 5. Create a defensible space: If you live in a wildfire-prone area, a 5-foot safety perimeter isn’t enough. Maintain the area between 30 and 100 feet from the house as a “reduced fuel zone” where trees are spaced 10 feet apart and regularly pruned; no branches touch the roof; pine needles and leaves are regularly raked up and disposed of; and the lawn is mowed. 6. Be prepared to evacuate: Know your community’s evacuation plans and escape routes and establish a meeting place for your family to reunite if you become separated. Build an emergency kit well in advance and include everything you might need for up to a week away from home. Cleaning up After the smoke clears from a nearby wildfire, you may have some repairs to make. For example, have your regular air conditioning maintenance company professional clean your AC unit. Inside the house, you may see a thin layer of soot on your walls, or what looks like spider webs everywhere. In most cases, you can claim this smoke damage on your Germania property insurance. It’s also easily cleaned up. “Be careful of price gauging by predatory cleaning services that show up after a wildfire,” Hardwick said. “Reasonable and necessary costs are covered, and you can usually rely on a local housecleaning service to do a good a job wiping everything down.”

As a farm mutual, Germania understands how risky farming can be. From weather conditions to fluctuating crop and livestock values, the last thing any farmer or rancher wants to deal with is the loss of essential equipment. The U.S. Fire Administration says that on average, 20,000 agricultural-related fires cause $102 million in direct property losses annually. A third of those fires involve vehicles, processing equipment, fixed wiring, heaters and torches. Your Germania agent has experience with insurance coverage for all of your farm and ranch equipment and property. The following steps will help you reduce your risk of a loss: • Maintain equipment on the recommended schedule. • Keep machinery clean and free of combustible materials. Take particular care with engine compartments where machinery fires most often start. Use a pressure washer to remove built-up grease, oil and organic residue. • Ensure the exhaust systems — including manifolds, mufflers and turbochargers — are in good working order and free of leaks. • Replace worn electrical components, bearings, belts or chains as soon as they show sign of wear to avoid sparks caused when metal rubs against metal. • Keep fully charged fire extinguishers on tractors, combines and near all farm machinery. Inspect fire extinguishers regularly and replace older models. • Install automated fire suppression systems on farm machinery when applicable. • Use welders and cutting torches only in clean areas at least 35 feet away from any flammable and combustible materials. Use welding curtains to contain sparks. • Store vehicles and machinery in designated buildings. Post “No Smoking” signs in those buildings and around barns and combustible and flammable materials. • Keep a clean work area. • Contact your area fire department to be sure an adequate water supply is available nearby and that there’s a clear path to your property. Provide the firefighters with a list of the hazardous materials you store and update it regularly. Take steps to reduce your risk of farm equipment fires

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5 things that should be on your INSURANCE TO-DO LIST

CONSOLIDATED BALANCE SHEET As of December 31, 2017 (unaudited)

Admitted Assets Cash and Investments

$489,576,234 4,586,885 127,463,094

Real Estate and Equipment

Premiums Receivable

Accrued Investment Income Reinsurance Recoverable

3,861,384 25,676,064 14,298,610 2,391,360 5,870,377

Net Deferred Tax Asset

Federal Income Tax Recoverable

Other Assets Total Assets

$673,724,008

W hen you’re budgeting for a full life in retirement, every line item is up for consideration, even your property insurance. As you plan for financial necessities, it’s natural to explore everything that could make a long-term difference in your bottom line. The critical thing to do is make informed, wise choices when it comes to keeping your assets secure. • Keep your home insured even if you’ve paid off your mortgage. Your home is probably the largest chunk of your net worth, so protect that key asset by insuring it against loss from fire and other disasters. • Keep your insurance updated. Work with your Germania agent to be sure the value of the buildings on your property is at the current value to ensure you’re covered correctly in the event of a loss. You can pay about $500 for a private property appraisal, which will verify your property’s current value if you have any doubts. • Consider increasing your property insurance deductible. Talk to your Germania agent and see how much you can save annually by raising the deductible on your policy. If you already have a solid emergency fund set aside, you should be able to “self-insure” the cost of a higher deductible if you have a claim. • Obtain an umbrella policy and increase your liability coverage. Buy an umbrella policy with personal liability coverage equal to or greater than your net worth to protect your hard-earned assets from lawsuits. A $1 million policy costs less than $200/year. While you’re at it, check to be sure you have adequate liability coverage within your homeowner’s policy. • Insure valuables. If you have accumulated a collection of valuables — jewelry, artwork, tapestries, china, crystal, antiques — then talk to your Germania Agent about special riders on your property insurance to be sure those precious items are adequately covered. It pays to be sure you are properly insured to the value of your valuables.

Liabilities and Surplus Unearned Premiums

$226,997,645 98,278,431 20,523,855 79,463,727 55,827,152 481,090,810 192,633,198 $673,724,008

Loss and Loss Adjustment Expenses

Notes Payable

Life Future Policy Benefits

Other Liabilities Total Liabilities

Policyholders’ Surplus

Total Liabilities and Surplus

CONSOLIDATED INCOME STATEMENT For the year ended December 31, 2017 (unaudited) Underwriting Income Net Premiums Written

$428,178,829 15,399,590 412,779,239 258,621,541 47,956,441 116,732,422 4,324,929 427,635,333

Change in Unearned Premiums

Net Premiums Earned Net Losses Incurred Loss Expenses Incurred

Underwriting Expenses Incurred Increase in Life Future Policy Benefits Net Losses and Expenses Incurred

Underwriting Loss

(14,856,094)

Net Investment Income

16,087,640

Other Income

1,417,148

Net Income before Taxes Federal Income Taxes

2,648,694 (951,366) $3,600,060

Net Income

CLAIMS PAID BY PERIL Storm

$149,520,308 $26,789,075 $15,535,555 $2,165,463 $4,766,245 $198,776,646

Fire

Water Theft Other

Total

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Is it covered?

GERMANIA LIFE The best way to appreciate the need for life insurance is to listen to the story of someone who was saved from financial hardship because their loved one cared enough to protect them while they were still alive. Allison Finney, a Life agent and owner of Finney Insurance Agency in Belton, acquired a deep appreciation for life insurance when her brother and business partner, Corbett Finney, passed away unexpectedly two years ago at age 50. “My brother and I had life insurance on each other as business partners,” she said. “When Corbett passed away, life insurance allowed me to pay his estate for his half of the business.” At age 13, Corbett’s son was diagnosed with the same hereditary heart condition his father had. Fortunately, Corbett had purchased a Juvenile Life policy with a guaranteed insurability rider for his son. Because of that, his son’s heart condition won’t prevent him from buying additional life insurance when he’s older. It’s understandable that insurance agents would know how much life insurance they need. But what about the rest of us? How do we separate facts from myths? Unfortunately, most of what we believe about life insurance isn’t true. Eight in 10 Americans overestimate the cost of life insurance, according to the 2017 Insurance Barometer Study. Forty-three percent haven’t bought life insurance because they Storm flooding : You’ll need a separate flood insurance policy to cover flood damage even when caused by a hurricane or other natural disaster. Talk to your Germania agent about this reasonably priced coverage, even if you live outside of a high-risk area. Water damage : If a pipe breaks and floods your home, your property insurance policy will only pay for damage that needs to be repaired — like damaged ceilings, walls and floors — but not to fix the broken pipe itself. Termite and rodent damage : Infestations and ensuing damage due to these pests are specifically excluded in most if not all homeowner’s policies.

Worn-out roof : Unless it’s damaged by hail or wind, your well-worn roof is not covered by your property insurance policy. Mold : In Texas, mold is not covered on most homeowner’s policies, even if it is a result of long- term leaks or improperly vented areas where moisture commonly occurs, such as bathrooms and kitchens. Pet damage : If your crazy new kitty knocks over the TV then scratches up the carpet and couch, it’s up to you to fund the repairs.

don’t know what type they need. And a third says they just haven’t gotten around to it. Yet, 25 percent of U.S. households would have trouble paying their living expenses if the primary wage earner passed away. Today, most people live on two incomes, “and if one of those incomes is lost, the other party can lose everything and the way of life they are used to,” Allison Finney said. When it comes to life insurance, procrastinating costs money and could leave your loved ones in terrible financial straits if your income were lost. The younger you are when you buy life insurance, the cheaper your premiums will likely be. And, with Germania Life, if you buy a Whole Life policy in your 20s, the lower premium rates are locked in. If you’re a parent or grandparent, you can give your children or grandchildren a huge head start in life with Germania Life’s Juvenile 10-Pay policy. If you’re one of thousands of Americans who hasn’t purchased Life insurance because you’re not sure what type you need, you can find a Germania Life agent near you by visiting Germania’s website at germaniainsurance.com or call the Germania Life Company at 800-392-2202 Ext. 2060. “Life insurance is one of the most valuable things you can purchase while you’re alive,” Allison Finney said. “It’s the final way to show your loved ones how much you cared for them.”

Secure Love

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PO Box 645 • Brenham, TX 77834-0645

RECIPE Quick Pantry Cake INGREDIENTS: 2 eggs ¾ cup sugar ½ teaspoon salt 1 teaspoon vanilla ½ cup butter, melted ½ cup flour ½ cup of any nuts, seeds, chocolate chips you have on hand Raw sugar

PREPARATION: Preheat oven to 350 degrees. Whisk together eggs, sugar, salt and vanilla until thick and lemon colored, about 45 seconds. Add melted butter and whisk 10 more seconds. Add flour, stirring until smooth. Pour into ungreased pie pan and top with nuts. Sprinkle top with raw sugar. Bake 22 minutes. Serve warm.

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