Changes Coming To Your Next NC Homeowners Insurance Policy Renewal

Effective April 1, 2014, every homeowners insurance policy in NC is changing as it renews.  No, this isn’t an April Fools joke, but for a few unwary homeowners, this will be no joking matter.  And while most of these changes are minor, there is at least one big reduction in coverage that could affect many people.  Here’s a summary of the changes to this form but as always, my advice is that everyone read their policy carefully and consult with their agent for any questions they may have.   

·         A sublimit of 10% of your personal property coverage amount will now apply to any personal property located in a storage facility.  This is the most significant change and could catch some homeowners by surprise should they have valuable items stored in a storage unit.  If you have personal property stored in off premises storage units, then you should contact your insurance agent before your next renewal and make arrangements to protect that property.

·         The new NC homeowners form has a new sublimit of $250 that applies to antennas, tapes, wires, records, disks, and other media in or upon a motor vehicle.  For those of you with valuable CD collections traveling around in your car with you each day, just know that you are now going to be unprotected.  Might I suggest you convert them to mp3 files and put them on a jump drive or perhaps subscribe to a streaming service? 

·         For business personal property located away from your residence premises the sublimit  is increasing from $500 to $1500.

·         The theft peril as regards Personal Property located in student housing  is being modified to allow coverage to apply as long as the student has been there in the past 90 days instead of the previous 60 days.

·         The incidental low power recreational vehicle liability coverage has been modified to expressly exclude motorized scooters used off of your residence premises.  If you are one of the many intrepid souls saving gas by driving your scooter to work take note; you will now need to purchase liability coverage for your scooters.

At Clinard Insurance Group, we want every insurance buyer to be an informed consumer.   We insure thousands of families all across North Carolina, helping them with their homeowners insurance, auto insurance as well as business insurance and life insurance.   If you would like help with any of your insurance needs, please give us a call at 877-687-7557.

Are You Managing Your Certificate of Insurance Process Carefully?

It is no secret that the larger companies with big budgets and teams of lawyers often lead the way over smaller companies when it comes to risk management and safety issues.  Still, smaller companies can learn by watching the behaviors of the large companies in their trade group. This blog is designed to share with you some of what the big boys already know when it comes to insurance certificates.

Most small contractor companies understand the need to obtain certificates of insurance to prove that their subcontractors are insured.  But what often gets lost is a clear understanding of just why you need that certificate and how your certificate processes might impact your company’s risk profile.

If I were to randomly survey the small contractors that call our office to request an insurance certificate on one of our clients, and ask them why they need this certificate, the lion’s share of them would say that they need it for their insurance company when their policies are audited.   And while I understand that this is the most pressing issue; you don’t want to have to pay for insurance on your subcontractors if you don’t have to; this mindset completely overlooks the risk management component of this process.  In fact, the real reason that you want a certificate of insurance is to make sure that you are not taking on the risks of an uninsured subcontractor on your job site.  Look at it this way; you’ve put a lot of thought, time and care into your insurance protection. Do you want to let an uninsured subcontractor put all of that in jeopardy? 

Focus now on the risk management side of this equation.  You are relying on this certificate of insurance to protect your company from dangerous or uninsured subcontractors.  With that in mind, take a look at this short list of issues to keep in mind regarding the insurance certificates that you request from your subs. 

Make your certificate request to the insurance agent, not the subcontractor.  Several years ago it was reported that people were offering blank and/or fraudulently completed certificates of insurance for sale on ebay.  If your uninsured subcontractor wants to find a way to fake a certificate of insurance, it is not going to be that difficult to do.   So, to help insulate your process from this risk, ask your subcontractor for the contact information for his or her insurance agent and then contact the insurance agent directly to request the certificate.

Carefully review the certificate information.  So many contractors simply file away certificates of insurance without even glancing at them.  This is a dangerous practice.  You should take a minute to check the names of the insurance companies listed as providing coverage.  Do they look legitimate?  Are they names that you recognize?  Now take a close look at the policy effective and expiration dates.  If a policy will be expiring soon, especially if the expiration date is before you expect that the subcontractor will be finished at your job site, then you will need to get another certificate, one that shows that the policies were renewed.  Last of all, check the limits of coverage shown for each policy.  You want to be sure that your sub has limits high enough to keep your insurance from having to respond to a large loss.

Remember, with an insurance certificate you are looking at a snapshot in time.  Keep in mind that any information shown on the insurance certificate is just a record of the coverage in place on the day that the certificate was created.  If your sub fails pay his next insurance bill then he could be working on your job site with cancelled coverage, exposing your company to a huge unknown risk of loss.  And don’t be fooled by the idea that you will receive a notice of cancellation if your sub gets behind on his insurance payments.  The ugly truth is that most insurance companies do not even want to see copies of certificates issued by their agents and they have no intention of letting you know if a policy is cancelled.  The truth is, they couldn’t notify you of a cancellation, even if they wanted to as they have no record of the certificate in their files.

The Additional Insured option provides better security for you.  The larger contractors have taken this route and small contractors who care about their risk management should consider it as well.   In addition to asking for a certificate of insurance from your subcontractors, you might also consider asking that your company be added as an additional insured on the subcontractor’s policies.  Some companies charge for this but generally the charge will be pretty low.  As an additional insured, you will now receive an endorsement to the policy from the insurance company, so you know that they know about you.  This also solves the snapshot problem as you hold a position on the sub’s policy that entitles you to receive cancellation notices or notices of nonrenewal should any of those be triggered.

Don’t fall into the trap of focusing only on the audit requirement of an insurance certificate while forgetting that you need protection from your subcontractors and their behavior on your job site.  Don’t let your certificate of insurance procedures become a simple rule following process, instead take action to be certain that your company is getting the protection that it needs from the risks of uninsured subcontractors. 

At Clinard Insurance Group, located in lovely Winston Salem, NC, we want all insurance buyers to be informed consumers.  We have different types of contractor insurance programs, from landscapers insurance, plumbers insurance, electricians insurance to painters insurance programs and many others.  We insure contractors in North Carolina, South Carolina, Georgia, Tennessee and Virginia.  Should you need any help with your commercial insurance policies, I hope that you will feel free to call us, toll free, at 877-687-7557.

Electric Shock Drowning – Are You At Risk From This Silent Killer?

Electric shock drowning, referred to as ESD, is a relatively new danger to swimmers and boat owners.  With so many more docks now connected to shore power for lights and other electrical conveniences, more people each year are falling victim to ESD.  And since most people are completely unaware of this risk, we will continue to read about additional innocent victims each year.

Electric Shock Drowning comes about when small amounts of 120 volt alternating current leak into fresh water in places where swimming occurs.  Swimmers can be electrocuted or incapacitated by this AC leaked current.   This is a fresh water phenomenon as fresh water is highly resistant to electrical flow, meaning that a swimmer caught in the flow of escaped electrical current now becomes the path of least resistance for this current trying to return to its source.   It takes very few amps to incapacitate a person and lead to drowning.  Salt water by contrast has a low resistance to electricity so that the current would flow around a swimmer in salt water.

Electric shock Drowning incidents are most common around docks and marinas, but there have also been cases reported at water fountains, irrigation ditches, golf course ponds and other bodies of water.  Many cases may simply be written up as drowning if no one was there to hear the victim cry out before he or she drowned.  Despite these other places for ESD, the most common cause comes from a boat plugged in to shore power that is leaking this current into the water around it.  Before AC current can escape into the water around the boat, two things must happen.  The first is that the boat itself must have some electrical fault on board.   This would be a short circuit of some type or another, a wiring error or a malfunctioning appliance which is sending AC electricity away from its intended path.  Remember that AC electricity travels in a loop, from its source to the load and back again, forming what is called a circuit.  When the circuit is broken, AC electricity will try to find a way back to its source.  Proper AC setup requires that there be a green grounding wire serving as a backup return path for the electricity to complete its circuit if there is a fault in the circuit.   So the second thing that must go wrong is that the grounding system is broken or fails so that the AC current cannot return to its source.

So what can you do to protect yourself and your loved ones from ESD?  The best plan would be to never swim around docks or marinas where shore sourced electricity is present unless that electricity is turned off.  This is also why rough play on docks is so dangerous as it could lead to someone falling into the water around the dock.  Now if you must swim or dive around your boat in order to work on fittings or equipment, you should be sure that all electricity is turned off before you enter the water.  Should you ever feel tingling or shocks while swimming, then you should not return to the dock.  Touching a metal ladder in this case could be immediately fatal.  Instead, swim away from the dock or marina and head to shore 100 yards or more away.  To rescue an ESD victim, do not go in the water as that could make you a victim as well.  Instead, turn off the shore power connection at the meter or unplug the shore power cords, then throw a line to the swimmer or row out to help the victim.  And now that you know more about ESD, please spread the word about these risks to all of your friends and family who have docks or spend time at marinas and might be at risk.

For those of you who own docks with shore power, there are a few additional precautions you should take.  Post no swimming signs at your dock.  Only hire trained marine electricians to install or service the wiring at your dock.  Those trained as land electricians do not have the training or understanding to safely install or service wiring in a marine environment.  You can also purchase testers that can test your dock and the waters around it for electricity leaks.  Please also consider the following protective devices for your dock.

Isolation Transformer – This device transfers electricity from the shore to the boat without the shore wires physically touching the boat’s wires.  If you have a fault, then the current no longer seeks a path through the water back to shore.

Galvanic Isolators – These are designed to help prevent your boat from suffering from or contributing to galvanic corrosion while plugged in to shore power.  Choose a failsafe model that requires that if it fails, it will fail in the off position.

Reverse Polarity Indicator – Can tell you if a neutral wire becomes hot thus removing your protections from circuit breakers that are installed on hot wires.

Growing up around water, I know I have many wonderful memories of swimming and playing around docks.  But we need to rethink this tradition as our docks are changing and becoming more dangerous places.  Please share this information with anyone you know who may be at risk.

At Clinard Insurance Group, located in Winston Salem, NC, we want all insurance buyers to be informed consumers.  If you need any help at all with your personal auto insurance, your home insurance or boat insurance or even your life insurance, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com. 

The Parent’s Role In Teaching A Teenager To Drive

This year, National Teen Driver Safety Week runs from October 20 – 26.  That got me thinking that now might be a good time to review the parent’s role in teaching a teen aged child how to drive safely.  This year, the theme of National Teen Driver Safety Week is:  It Takes Two – shared Expectations for Teens And Parents.

Gaining the freedom that comes with learning to drive and obtaining a drivers license is a life changing process for most teens and their parents.   The public schools in North Carolina take on some of this instruction, but most teens generally only receive about 6 hours behind the wheel in drivers’ education programs.  We know for sure that this is not enough time to learn to drive safely.  We advise our parent clients that they should spend at least 100 hours in the passenger seat with their teen behind the wheel learning from them.  If they can increase those hours to 150, then their child will have an even better chance of becoming a safe driver.   These hours of supervised driving are critical to the success of the driving training that a parent provides for his or her child.  This is a safety issue and the best way to insure that your child will be a safe driver is to practice good driving skills when your child rides with you in the car and to pass on your knowledge as the trainer in the passenger seat while your permitted child drives.   

It will also help if you have a good understanding of the statistical realities for inexperienced drivers.  As an example, a recent study found that 75% of serious teen automobile accidents were the result of driver error and that more than half of these wrecks were caused by one of three mistakes made by the teen aged driver.  These three common errors in judgment were:

1.       Driving too fast for road conditions – Teach your child about speed management, not only following the posted speed limits but also learning to make adjustments in speed for weather, traffic or road conditions that demand slower speeds.

2.       Driving while distracted – First of all, emulate non-distracted driving when you drive and your child rides with you.  Help them understand just how quickly a distraction can kill them.  Make it scary and make it personal if you have to but help them understand this concept.

3.       Failure to detect a hazard – Teach your child to constantly scan the road and the area around them for possible hazards.  They must learn to get the big picture by taking in data all around them for purposes of spotting hazards.

To help you with this important teaching process, Clinard Insurance Group has created a driver training book that breaks down what your child needs to know and how you can teach it to them into an organized, step by step approach.  If you and your child keep a log of the hours driven under training, this can help give him or her the incentive needed to learn these skills so that your teen will understand where the two of you are in the training process and will know what is required to finish this training.  Learn more about this training booklet here.

Once your child has completed the training while driving with you under a license permit, then the next step is to have your child test for and obtain a restricted driving license.  At this point your job is not finished.  Do not let up in your supervision of your child at this point.  At this point, it is important that you take the time to learn the rules of the graduated license system in your state and make sure that you consistently apply them to your newly licensed teen driver.  If your teen is anything like mine, then he will tell you that no other parents are making their children follow these rules to the letter of the law.  He will be wrong when he says this and it is your job to make sure that he moves through the graduated licensing process step by step, following all restrictions.   Graduated licensing programs have had a major impact in reducing deaths and injuries for teen drivers in states that have implemented them so please follow that process all the way to the end.

At Clinard Insurance Group, located in Winston Salem, NC, we insure thousands of families all across NC, SC, GA, and TN.  We want to help you with the process of turning your child into a safe driver and have many tools on our website for this purpose.  We can also help you reduce the cost of auto insurance for your teen driver while still helping you get the coverage that you need to feel comfortable with this change.  Please call us, toll free, at 877-687-7557 for help.

If You Buy Flood Insurance, Your Next Bill Might Be A Shocker!

In the United States, flood insurance is very much a subsidized product.  You see, flood insurance, by its very nature, runs against the basic rules of the insurance industry.  With flood insurance, only people in flood zones will buy it.  Homeowners insurance and auto insurance are different.  Any house could burn, so every home owner will buy insurance and spread the risk around.  But flood insurance is very different as the risk of loss only applies to those in known flood zones thus removing the ability of insurance to spread the risk.  So, in order to make a market for flood insurance, the federal government created the National Flood Insurance Program (NFIP) and either over time or perhaps even from the beginning and by design, they allowed the rates to be set far below what is needed to pay the losses generated in the program.

These subsidies made the NFIP a real target in these days of federal budget cutting.  And since the NFIP has to be reauthorized from time to time, it’s reauthorization now became contingent on these subsidies going away.  Enter the Biggert-Waters Flood Insurance Reformation Act of 2012, which reauthorizing the NFIP through September 30, 2017, but also included a mandate to eliminate the subsidized premiums.  The result of this legislation is that  many who buy flood insurance can now expect to pay quite a bit more for flood insurance.

This unwinding of subsidies means that rate increases will happen for consumers in one of two ways.  They will either see 25% rate increases each year for an undetermined number of years into the future, or they will see immediately higher rates as their policy is forced into a post-firm conversion to post-firm rates.  Either way, if you buy flood insurance then, you will likely be facing much higher rates for all renewals and changes that take place after October 1, 2013.

Earlier I mentioned pre-FIRM and post-FIRM rating programs and this needs a brief explanation.  These terms simply describe the rating table from which the rates for flood insurance are taken.  Pre-FIRM buildings are those built before January 1, 1975 or built before their community adopted its first Flood Insurance Rate Map (FIRM).  And while there are some exceptions to the rule, if your home is a pre-FIRM home, located in flood zones A, V, or D, then you should expect 25% rate increases on your flood insurance policy each year for the foreseeable future.  I assume that these rate increases will stop once your rates have gradually increased to match post-FIRM rates.  If your building or home is a pre-FIRM building and located in flood zones A, V, or D and the building was not insured on a NFIP policy prior to July 6, 2012, or was purchased by a new owner after July, 6, 2012 or have experienced a lapse in flood coverage on or after October 4, 2012, then that building will be immediately reclassified into the higher cost post-FIRM rating.  If this happens then your policy will take on all of the rate increase needed to remove all subsidies immediately.

If you have a home or building that will need to be moved from pre-FIRM to post-FIRM categorization,  then you will do a few things to make sure that you maintain your eligibility for flood insurance.  This means that you must submit a new elevation certificate on your property along with current photos of the front and back of your building. 

As the federal government eliminates flood insurance subsidies, some homeowners will find themselves facing higher premiums and perhaps even additional paperwork and eligibility issues.   If you buy flood insurance now, then you can expect to receive some notifications of the rate changes, along with instructions on what you must do to remain eligible to continue to purchase flood insurance.  Please read all of this information carefully, and pay attention to deadlines to make sure that you can continue to buy this insurance for your flood risk building.  If you need any help with your flood insurance or have questions about this program, please feel free to call us, toll free, at 877-687-7557.

Clinard Insurance Group is an independent insurance agency located in Winston Salem, NC.  We insure thousands of families and businesses all across NC, GA, TN, and SC.  We can help you with your auto insurance, home insurance, life insurance and business insurance with specialized niche programs for artisan contractors, landscapers insurance, restaurant insurance, used car dealers insurance, painters insurance and auto repair shop insurance.  If we can help you in any way, please call us, toll free at 877-687-7557.

Obesity Classified As A Disease – This Presents New Problems For All Employers

The American Medical Association (AMA) has recently chosen to classify obesity as a disease instead of a medical condition.  This new classification may have implications for all employers.  Now carrying the label of disease, obesity suddenly becomes a major risk liability for employers on many different fronts.  Employers now must better understand what this means vis-à-vis the ADA Amendment,  federal disability law and the Equal Opportunity Employment Commission (EEOC)law suits.  And keep in mind that since one third of all Americans are considered obese, with another one third considered overweight, this dramatically increases the number of people that can now be recognized as disabled with rights under the 2008 amendments to the Americans with Disabilities Act. 

In defense of this new classification, the AMA says that recognizing obesity as a disease will likely help change the way the medical community tackles this very complex medical issue.  And this could offer hope to those that suffer from this disease.  And while the AMA’s new definition does not carry the force of law, it might make it easier for an obese employee to argue that he or she is disabled.  Disability law says that an impairment is something that affects a major life function.  This could include walking or sitting.   Next up is the EEOC.  Will they change their definition of disability to include limitations caused by obesity?   Currently their definition of disability due to obesity is limited to the category of morbidly obese. 

One more area of concern for employers is the federal disability law.  Under this law, employers’ actions in dealing with an obese employee could come back to haunt them.  An employee who isn’t morbidly obese and who isn’t limited in any major life functions might still qualify as disabled if the employer treats him or her as impaired.  A worker who is passed over for promotions or hiring because of obesity, may be able to show that he was denied work because the employer acted in a way that indicated that the employer considered him impaired.

So what should a business owner do to protect the company from the risk of lawsuits and disability claims due to obesity?  Start by getting a clear understanding of whether or not your company falls under the rules of the ADA amendment.  If so, then keep in mind that by their definitions, you may have a disabled person working for you and you may need to modify the work environment to accommodate them.  Next, remember that if you don’t treat the person as disabled in terms of the work that you give them or the promotions that they receive, then you will have made a step in the right direction in terms of making it harder for them to prove that they are disabled because of the way that they are treated in your company.  And if you don’t carry workers compensation insurance, then get that taken care of immediately.   Last of all, make sure that you have purchased and have in force, an Employment Practices Liability Insurance(EPLI)  policy and be sure that your protection provided by this insurance policy will extend to discrimination against obesity.  Treat all of your employees fairly in all hiring, firing and promotions, without regard to physical attributes and you will have gone a long way toward protecting your business.  But bear in mind that you must stay on top of changes to rules and definitions like this or you may suffer damages for ignoring them.

At Clinard Insurance Group, located in Winston Salem, NC, we insure thousands of businesses all across North Carolina, South Carolina, Georgia, Tennessee and Virginia.  We want all insurance buyers to be educated and informed consumers.  If you would like to discuss an Employment Practices Liability Insurance (EPLI) policy, or any other insurance need for your business, please give us a call.  We will take as much time as you need to help you understand your risks and your options for insurance protection.  You can reach us, toll free, at 877-687-7557.

Cyber Liability Insurance – Can You Afford To Ignore This Protection Any Longer?

These days most every business, no matter how small or what kind, is in the business of collecting data and information about its customers.  We do this for many reasons, from collecting payments from clients to establishing ways to stay in touch with them and help generate repeat business with them.  And these days there are so many client data driven business applications for smart phones and tablets and computers that data collection processes are now showing up in even the smallest organizations.  So what can you do to keep this data safe, and by implication, protect the privacy of your clients?  What will be your responsibilities to them if your database is hacked or stolen?  Have you tried to understand and measure the costs to you and your business if you have to pay for the losses and damages from a cyber-intrusion into your network?

Cyber attacks can happen fast and leave behind long lasting negative effects for your company.  A data breach can be caused by something as simple as misplacing or losing a laptop computer, smartphone or a tablet computer.  And while this sounds a bit scary and overwhelming, the good news is that the insurance industry has recognized this risk and has begun to offer insurance protections for this type of loss.     I have listed below a short list of reasons why you need cyber liability insurance coverage in place for your business. 

Here are 5 top reasons why you should purchase a cyber liability insurance policy for your company:

1.        Breach of Network Security/Privacy  -   While we tend to think of a data breach affecting our clients, it can also involve the loss of the personal information of your employees of information about your vendors.  You could also lose company data for your own company such as proprietary information; let’s call it the secret sauce to what makes your business unique and successful. 

2.       Data Recovery Costs – Among the many costs of recovering from a cyber theft will be the costs to recover data that is stolen.  You may have to spend quite a bit to pay for your clients’ or your employees’ costs to rehabilitate their individual financial identities.  This could be a very long and expensive process, depending on what damage has been done by the thieves. 

3.       Breach Notification – You will be required to notify anyone who might be affected by the data breach.  The costs of communicating with so many people at one time could be quite expensive for your company.

4.       Regulatory Fines/Penalties – Different governmental entities may have fines that you will have to pay as a result of the cyber theft of your data.

5.       Your Loss of Income – Don’t discount the damage to your business of this type of theft.  Your reputation will need to be repaired and this will take time.  In addition, the time and effort that you spend in recovering from a data breach loss could completely cripple your ongoing operations and generate a huge loss of income for you.

Cyber liability losses to businesses are increasing in both frequency and scope.  Because this liability exposure is so new, many businesses have overlooked the negative financial impact that this kind of loss might have on their organization.  My advice is that you sit down with your insurance agent and take as much time as is needed to make sure that you have the cyber liability coverage in place that you feel is required to adequately protect the health of your organization. 

Here at Clinard Insurance Group, located in Winston Salem, NC, we want all insurance buyers to be informed consumers.  We insure thousands of small businesses all across North Carolina, South Carolina, Georgia, Tennessee and Virginia.  If you need help with your small business insurance, or if you want to explore cyber liability coverage in more detail, please feel free to call us, toll free, at 877-687-7557.

Homeowners Insurance And Dog Bites

There are a lot of dog lovers in this world.  I know I am one.    And that makes it easy to be blinded to the risks that they pose to me as a dog owner and a home owner.  If your dog bites or attacks someone, either in your home or off of your premises, do you have any insurance protection?    What steps should you, as a dog owner and dog lover, take now to reduce the possibility that your dog will hurt someone else?

In NC, if your dog injures someone and if you are held responsible for that injury, then your North Carolina Homeowners Insurance Policy will pay that loss.  This falls under the liability section of your homeowners insurance policy.  But bear in mind that once the claim is settled, your insurance company may refuse to renew your homeowners insurance policy unless you remove the dog from your home.   And depending on where you live, your local government may require that the dog be destroyed.   So it makes a lot of sense for you to be clear about some of the facts of dog bite claims and injuries.  In addition you should be thinking about things that you can do to keep your loved family pet from hurting someone.

Here’s a quick review of some recent dog bite statistics.  In 2012, insurance companies paid out an estimated $489 million on dog bite claims.  The US Postal Service reports that in 2012, a total of 5879 postal workers were bitten or attacked by dogs.  The 2012 number reflects an increase of 274 attacks over the 2011 totals.  And the American Humane Society estimates that unsupervised newborns are 370 times more likely than an adult to be killed by a dog.  And consider that the average cost of a dog bite claim in 2012 was $29,752.

So what can you, as a dog lover and dog owner, do to reduce the chance of your dog biting someone?  Well, keep in mind that any particular dog’s tendency to bite will depend on a number of factors such as heredity, training and socialization, as well as the victim’s behavior.  Many people don’t realize this but under the right circumstances, any dog might bite.  Here are a few tips that might help:

·         Remember that a sick or injured dog is much more likely to bite. Stay on top of your dog’s health needs to reduce the chance of a bite due to poor health.

·         While your dog is still young, make an effort to socialize him or her to as many different situations with other animals and people as you can.  If your dog feels at ease in a situation, he or she is much less likely to bite.

·         When you play with your dog, do so with nonaggressive games.  A good example of this would be fetch.  Playing tug of war type games can encourage inappropriate behavior that could lead to a bite later.

Taking a bit of care to work with your dog early might save the dog’s life later.  And it could prevent someone from being hurt by your dog.  And all of that prevention just might preserve your ability to continue to buy insurance for your home by preventing a claim later.

At Clinard Insurance Group, we insured thousands of families, all across North Carolina.  If you would like help or questions answered about any of your insurance policies, either home insurance, auto insurance, business insurance or even life insurance, please call us, toll free, at 877-687-7557.

The Coverage For Your Roof On Your Homeowners Insurance May Be Changing

Scientists tell us that 2012 was the hottest year on record in the United States.  Global warming is here and we are seeing more frequent and more intense storms. This puts a lot of pressure on rates for property insurance in general and homeowners insurance in particular.   In North Carolina that means more frequent and more intense windstorms and hailstorms.  Wind and hail losses in North Carolina in 2011 sent the homeowners insurance marketplace into a tailspin.  One the one hand, insurance companies were taking huge losses in home insurance while on the other hand the insurance commissioner was unwilling to allow them the rate increases that they needed as he was facing re-election.  The result has been a continued chaotic home insurance marketplace in our state.

To protect themselves from further losses and without any chance of getting rate increases the insurance companies started to look at other options.  The first and most obvious move was to require that a client included their more profitable auto policy in order to qualify for home insurance.  Next, the insurance companies drug out an old and arcane technique known as  the consent to rate letter, to try for rate increases on a policy by policy basis.  Along with that came mass cancellations and nonrenewals of existing home insurance policies and a few insurance companies cancelled all of their policies in our state and left the state entirely.

Now we all know the old saying that you can’t squeeze water out of a rock.  So if an insurance company can’t get the rates they need to be profitable but want to stay in the home insurance business, what are their options?   Well the next place they have to look is at the coverage they provide in the policy with an eye toward reducing that coverage.  In North Carolina, the cause of the most losses on home insurance has been wind and hail claims, especially to roofs.  So we are now beginning to see some of the larger insurance companies in our state taking action to reduce the coverage in their policies for these kinds of claims. 

One way to reduce the costs of claims from roof damage is to change the policy language so that when a roof is damaged the amount paid out for the claim is based on the depreciated value of the roof instead of the replacement value of the roof.  At this time, most policies in NC still provide replacement cost protection on roof damage claims but that is changing quickly.  Several big companies have already begun to change their policies to pay claims based only on the depreciated value of the roof.  And as the big boys go, so goes the entire market when it comes to this kind of thing.

Let’s take an example to help illustrate what this might mean for you, a NC homeowners policy holder.  Assume that you have a 20 year roof on your house that is 15 years old when a hailstorm blows through your neighborhood and damages your roof.  With a traditional replacement cost policy your claim would equal the cost of putting on a new, 20 year roof.  For the sake of this example, let’s assume that new roof will cost $20,000.  Now, if your policy coverage has been modified to limit roof claims to the depreciated value of the roof instead of replacement cost, then your claim will be for only $5000.  This is because your roof only has ¼ of its value left on it based on its age so you only receive ¼ of the replacement cost of your roof.  Imagine having to come up with $15,000 right away to repair your roof after a bad hailstorm.

Some insurance companies are taking an alternate approach to this problem.  Their strategy is to have a different, much higher deductible for wind and hail claims while leaving the replacement protection for your roof intact.  Already we see some companies implementing a mandatory $2000 deductible on all home insurance policies for all claims related to wind or hail.  While I find this usually to be better for the consumer than restricting the roof valuation, it is still another bite out of the consumer’s pocket.

For the sake of the consumer, I would prefer that all policies have the same coverage language.  But with these changes, now a consumer must carefully watch his mail for notices regarding changes to his or her homeowners insurance policy.   If your roof is failry new then depreciated value may be better for you than a large wind and hail deductible.  However, if your roof has some age on it then you would be better served taking on a larger wind and hail deductible and keeping your replacement coverage on your roof.

At Clinard Insurance Group, we represent a number of insurance companies that have not changed either their deductible plan or the valuation for roof claims.  But, as the bigger insurance players in our market begin to make these changes, you can bet that those will smaller market share will take notice and start to make changes to their coverage language in their policies.  This makes it more important than ever that you stay in touch with your insurance agent and that you fully understand exactly how your policy will work in a wind or hail claim.  If you would like our help with your home insurance, your auto insurance, your business insurance or even your life insurance, please call us, toll free, at 877-687-7557.

Driving Without Car Insurance In NC Might Soon Cost You Your Car

A bill, recently introduced in the NC House of Representatives by Representative George Cleveland, referred to as house bill 602, proposes to confiscate uninsured vehicles operating on NC highways. Cleveland is frustrated with the number of uninsured drivers on our highways and wants to step up the costs of noncompliance to get drivers’ attention.  If passed into law, then these rules would take effect December 1 2013.

In NC car owners cannot renew their license plates without first proving insurance is in place on the car associated with that tag.  However, once past this hurdle, some insurance policies are later cancelled while the driver continues to operate that vehicle on the highways.  The NC State Highway Patrol issued 24,436 citations last year to drivers without insurance.  Some estimates put the number of uninsured drivers on our highways as high as 15% of the total of all vehicles on the road.

As an aside, when I first became an insurance agent in the early 1980’s, uninsured motorists insurance coverage cost the average driver about $3 per year per car.  Now, that number has skyrocketed to nearly $150 per vehicle.  Part of this explosive increase in costs has been related to the introduction in the mid 1980’s of underinsured motorists coverage, but there is no doubt that the costs of uninsured drivers in our state is something that everyone who buys insurance here has to bear. 

The bill says that the confiscated vehicle will be placed under the possession of the sheriff of the county in which the violation occurred.  It goes on further to state that the sheriff shall restore the motor vehicle to the owner, only after proof of insurance is obtained.  In addition, this bill would require the owner to pay the sheriff for costs actually incurred by the sheriff towing, processing, and storing the vehicle.  There is no mention of limitations on these fees and expenses so we could see widely differing costs for uninsured motorists from one county to the next.

One other area of consideration in this bill deals with the rights of the lienholders to a confiscated vehicle.  After all, they actually hold title to the car until the loan is paid off.  Section 3 says that the lienholder may petition the court to reclaim the vehicle for sale to satisfy the lien.  The allowance of this reclamation is up to the discretion of the court however and if the vehicle is returned to the lienholder then that party has to return to the state any proceeds of the sale over and above the balance remaining on the loan on that vehicle. 

This bill is a drastic measure and may seem a bit heavy handed but there are some additional provisions in the bill that will soften the blow for some violators.  There are exceptions that can be made for technical errors that may have led to a lapse in insurance coverage.  Also, there is a grace period that allows the driver to obtain insurance in order to avoid the vehicle being sold by the state though during that time they will not have access to their vehicle.  I think it is clear that the state of North Carolina would rather not get into the used car or car auction business so they will hope that most people will purchase insurance right away to get their car out of the impound lot.  But I think it is a useful consideration that a violator that has no insurance is not allowed to just drive off from the traffic stop and endanger others with no means of paying for the accident that he or she may cause.

You have to believe that if the bill does become law, and if its successfully force more uninsured drivers to purchase insurance on their vehicles, then over time the rest of us will see reduced uninsured motorists insurance rates.  And that is only fair.

At Clinard Insurance Group, located in Winston Salem, NC, we help thousands of families each year with their NC auto insurance.  We would love to help answer any questions you may have about this or your home insurance.  We can also help you with your life insurance and business insurance, so feel free to give us a call today at 877-687-7557.

NC Auto Insurance Modernization Act – An Interestingly Political Fix

Right now there is a bill that is under debate in the NC House of Representatives.  This bill attempts the change the way that auto insurance rates in NC are made, allowing each insurance company to come up with their own rates as opposed to the current system of having the NC Rate Bureau propose maximum rates to the insurance commissioner for approval or denial.  This bill, called House Bill 265, in my opinion, is a step in the right direction and would allow for more of a free market approach to rate making but also includes some proposed changes that might generate huge problems for the auto insurance consumer down the road.  And I am left wondering why our legislature is working so hard to fix our auto insurance system that is stable and competitive, while ignoring the exact same rate making problems for home insurance that is actually causing homeowners in our state such difficulty when they try and buy or even renew home insurance.  Trying hard to fix something that isn’t broken while ignoring a crisis going on around them must just be a talent found only in politicians.

House Bill 265 has at its heart a more free market approach to auto insurance rate making in North Carolina.  And I can certainly support that.  Currently our system of rate making is a two-step process.  First of all, the NC Rate Bureau, an entity owned and supported by all of the insurance companies that do business in our state, proposes maximum rates that could be charged for auto insurance.    These proposed maximum rates are sent to the insurance commissioner who can approve them or partially approve them or even modify them or reject them entirely.  Ultimately then, the insurance companies can charge the maximum rates, or provide discounts from these rates to charge something below the maximum rate.  This works just fine as long as the maximum rates are nowhere near the break even point for the insurance company on that kind of insurance.  In auto insurance the rate that you pay is almost certainly somewhere far below the maximum.  But with home insurance in NC right now, the maximum rates are just too low for most insurance companies to make money.  And if they can’t make money then they leave or they start trying to find ways to reduce coverage.  And getting a rate increase out of an elected commissioner during an election year is nearly impossible.  So the current system can hamstring itself sometimes. 

Right now, the NC, our homeowners insurance marketplace is in crisis. Weather related losses have left insurance companies losing money on home insurance.  Rates have been held down by the insurance commissioner and some insurance companies have left the state entirely while others are cancelling huge blocks of homeowners policies from their books.   To prove a point regarding which rate making process should actually be under the legislature’s wish list for change,  a homeowner in NC will find it very difficult to buy home insurance in North Carolina without also purchasing auto insurance from that same insurance company.  Why?  Well because the insurance company knows that it will make money on the auto while losing it on the home insurance.    

I can support the portion of this bill that allows insurance companies to make their own rates, whatever they may be, for North Carolina Auto Insurance.  I trust that a free and open rate making marketplace will probably generate much better results for all consumers than will one that is dependent on the political will of an elected insurance commissioner.  But I have one huge concern with this new bill.  The current wording would allow insurance companies to develop their own coverage forms for auto insurance.  This could be a huge change from our current law which requires all insurance companies to sell the same auto insurance form.  Differing policy forms could make comparing one auto policy to another unreasonably complicated for the average consumer.  Apples to apples quotes will be a thing of the past, though the real problem could be that most consumers may not realize this.  The dark side of this kind of change is that at least some auto insurance buyers will purchase their insurance based solely on the lowest price offered.  This might mean that they don’t have the protection that they need after an accident happens.  I have been advised by some insurance company personnel that in the states where differing policies are allowed, most insurance companies tend to sell the same basic coverage to everyone.  So this may not be a big concern though the risk to the consumer seems pretty large from my perspective.

There is also one other possible bad consequence of this legislation.   This bill would make insurance company membership into the NC Rate Bureau voluntary.  Might this mean that the large auto only insurance companies would leave the bureau and as a result leave this organization without the funding that it needs to survive?  And if this happens, what then will become of our home insurance market which is currently in crisis due to rates that are too low?  Might  this deepen the homeowners insurance crisis in NC?  These are questions for which I can find no concrete answers.

At Clinard Insurance Group, located in gorgeous Winston Salem, NC, we work hard to help all insurance buyers become informed consumers.  We currently insure thousands of families all across NC and we can help you with any of your insurance needs from home insurance and auto insurance to business insurance or life insurance.  Give us a call, toll free, at 877-687-7557 and we will be happy to put our expertise to work for you to help you find the coverage you want and need at the lowest possible price. 

EFT And Your Insurance Policies – There Are Many Benefits For You!

I was listening to the radio this morning and heard the news that very soon, the Social Security Administration will no longer pay benefits by check.  Right now, 93% of payments now are handled by Electronic Funds Transfer, or EFT voluntarily but now the federal government wants to wean that last 7% off of paper checks.   I have seen a similar trend in the insurance industry with less and less people paying their monthly insurance bills by check and opting for EFT payments instead.  And there are greater benefits to you of signing up for EFT payments than you might initially think.

Let’s begin with benefits that your insurance company may offer you if they don’t have to send out a paper bill and then process your paper check each month.  With your billing process set up on email and EFT, they will save money.  Going back to my original example with social security checks, the federal government says they can save over $100 million per year by converting all social security recipients to a direct deposit system.  Those savings are realized by insurance companies as well.  And some of them will share these savings with you.   For instance, Auto Owners Insurance will apply a $5 credit to your policy if you sign up for paperless processing with them.   And nearly every insurance company will waive the monthly installment fee on your policy if you sign up for EFT.  With some of them charging as much as $5 per installment per policy, this can add up in your favor pretty quickly.

Here’s a big advantage that policyholders who choose EFT billing from insurance companies gain: cancellation protection.  Imagine if you are out of town when your monthly bill comes in or if your monthly invoice just gets lost in the mail and you fail to pay it.  In the worst case scenario, you might have an uncovered loss that could destroy you financially.  But on the other end of the spectrum, you might still have to pay fees to reinstate your policy or you might owe fines to your license tag agency for a lapse in coverage on your auto insurance.   With EFT, you don’t risk a cancellation of your policy for nonpayment of premium, unless of course you don’t keep enough money in your account to cover the EFT payment withdrawal.

One of the most common objections that I hear from customers who are considering EFT for their insurance policies is that they don’t trust their insurance company with access to their bank account.   Or that they will end up with bounced checks because of an EFT charge they weren’t prepared for.   While I understand where this is coming from, I think these fears are mostly without merit.  EFT charge errors are extremely rare and in our experience, insurance companies are quick to correct their errors and pay any bank charges that they may have caused.  The fact is that you are going to have to pay the insurance payment one way or another so you will need to have the money in your bank account either way at some point.  But EFT provides you with one additional benefit to help prevent the overdraft problem.  They will let you choose which day of the month the money will be withdrawn.  So, if you get paid on the 1^st and the 15^th of the month for instance, you might want to choose the 19^th as the withdrawal date so that you are confident that you have money in your account each month to cover the EFT withdrawal.

One slightly different version of the EFT idea that I like even better is the automatic credit card charge for your insurance premiums.  There are two distinct advantages with using your credit card.  First of all, you won’t need to worry about keeping enough money in your checking account to cover the charge as you will be able to just pay it off when the credit card payment is due.  Secondly, if you have air miles or some other perks program on your credit card, you can now apply your insurance expenses to those perks and increase the benefits for yourself.

At Clinard Insurance Group, in Winston Salem, NC, we insure thousands of families all across North Carolina with their home insurance, auto insurance, life insurance and even their business insurance.  We would love to help you and your family find the best protection at the lowest possible rates.  Please give us a call, toll free, at 877-687-7557.

In NC Now Your Auto Taxes and Tags Will Be Combined On One Bill

The way you pay your vehicle property taxes in NC is on the brink of a big change.   The State of NC is now beginning to phase in a new billing program that will combine your license tag renewal bill with the bill for the property taxes due on your vehicle.

Each county in NC charges a property tax for the licensed vehicles in their county.  Before this change was passed, each county would send a separate property tax bill for each vehicle in the county.  These taxes were generally due on the anniversary date of the day that you first registered your vehicle.   In 2013 this is all changing.

With the passage of General Assembly House Bill 1779, the Tax and Tag Together program was created.  This program combines the renewal bill for your license tag with your property tax bill for your vehicle.  By the time this new program is fully phased in, sometime in mid 2014, everyone will receive a combined bill for both license tag renewals and vehicle property taxes.   Both will be due at the same time, both are payable to the NC Division of Motor Vehicles.

This new Tax and Tag Together program will begin phasing in by mid 2013 as the DMV begins sending out registration renewals that will include the property taxes with each bill.  By mid 2014, all vehicles will be included in this program.  The DMV will disburse the property tax funds of your tax payment to your county tax office.  This means that once your vehicle is phased in to the new program, you will no longer be able to pay your vehicle property tax payments at your county office. 

It has only been a few years now since the NC DMV connected your annual vehicle inspection renewal to your tag renewal and this rule has not changed.  This means that you still must have your vehicle inspected before you pay your tag renewal.  With this new program, your vehicle tax will be due at the same time as well.  So, you will have three things that you must do at the same time every year: Get your vehicle inspected, pay your tag renewal and pay the property taxes on that vehicle.

You should receive a notice with the new tax bill and registration renewal by mail.  But keep in mind, if you have recently moved and have not notified the DMV of your new address, then you will likely miss this notice and could be subject to penalties and interest if you are late paying your property taxes.  In addition, if you have moved to a new county and not notified the DMV, then the tax bill that you receive might be inaccurate so you will have more to work out before you can renew your tags.

Last of all, don’t forget that NC law states that if you have a tag in your possession, then you must have auto liability insurance in force as well.  So if you sell your car, don’t forget to take off the tag and turn it in to the NCDMV office before you call your insurance agent to ask them to remove this car from your insurance policy.

At Clinard Insurance Group, we want all of our customers to be informed insurance buyers.  If you have any questions at all about any of your insurance policies, or if you need help with a new auto insurance  or home insurance policy, please call our office at 877-687-7557 and we will be happy to help you.

How Many New Cell Phones Have You Had Since You Last Updated Your Life Insurance Policy?

All of us who are old enough to remember the days before cell phones, will probably agree that how they have evolved over that time is nothing short of miraculous.  If I showed a person from 1982 what I can now do with my phone, they would think I was a magician.  Think back to the early days of cell phones when they were huge, clunky, expensive devices that could really only accomplish one task – making a phone call.  Similarly, the lowly life insurance policy has been evolving on an equally dynamic path, however fewer people have taken notice of these changes.  And as you read on, you will see that it has been in the best interest of the life insurance industry not to tell you quite as much about these changes.   But there is no doubt about it, if you have an old life insurance policy, and if you are also healthy, then you might benefit greatly from an upgrade.

One of the biggest revolutions in the life insurance industry began in the early 1980’s, with a brand new product called Universal Life Insurance.  Universal life policies had an advantage over traditional cash value policies in that they were much more flexible.  For instance, with a universal life policy you could allow the cash value build up to take the place of the death benefit or you could even let it pay your premiums for you for a while if you had enough cash value in your policy.   The next evolution of this tool allowed for the cash value to be invested in funds that mirrored the stock market, generating huge returns in bull markets but of course creating problems for policy holders in bear markets.

If you have a cash value life insurance policy in force, whether it is fully paid up or even if you are still paying premiums each month, please read on, this article could make you a lot of money.   Let’s take a look at some of the issues that make a switch to a more modern policy an important issue for you to consider.

A good place to begin would be with mortality tables.  These are tables which attempt to predict how long the average person will live given their current age. These tables are used to develop the rate you will pay for your life insurance protection. Now, when you purchased your cash value life insurance policy, it is more than probable that your insurance company calculated the premium that they charge you each month using mortality tables that are now out of date.   People are living longer now than they were just a few years ago and longer lifespans will generate lower life insurance rates.  But if your policy is locked in to an old mortality table, then you paying rates that anticipate that you will live a shorter lifespan than now may be the case. If you were to replace that policy with one just like it that used more modern mortality tables then you should see a reduction in your cost of life insurance even though you are older now.

Administrative costs – People who own cash value life insurance policies that are 15 years old or older may be paying for clerical workers who have long since been sent home.  Let me explain.  Older life insurance policies have built in administrative costs to cover the clerical costs of maintaining those policies.   You see, back then life insurance companies, which were very slow to automate operations and embrace computer technology, had not automated a number of their clerical functions, even simple ones like adjusting the growth or interest on the cash value of your account.  Using hundreds and even thousands of clerical persons to handle this was very expensive.  With all of those clerical employees they had to rent office space and maintain premises as well as offer benefit programs to keep these employees.  Most of that is all gone now and computers have taken on these tasks.  But, if you have an older policy, those expenses are still built into your rates and you are now paying for ghost employees and empty office buildings. And these expenses are pure profit to your life insurance company.  I hope your life insurance company is sending you a nice gift each Christmas because they have to love you for hanging on to that expensive policy which has huge profits built into it for them.   A new policy will save you from this expense.

Indexing – the new way to grow your money.  Most of the older, cash value life insurance policies have very rigid investment plan that severely limit how your money can grow.  Indexing, in the context of life insurance, refers to a technique where your money is invested in very safe, low yielding investments for the most part, while the insurance company purchases options on stock market indexes with a small portion of your funds.  When the stock market goes up, they can convert these and capture a nice percentage of the stock market gains.  What this means for you in general terms is that your cash value can now earn a large percentage of any stock market gains while avoiding any losses when the market goes down. When it comes to long term investments like the cash value in your life insurance policy, avoiding losses is often more important to long term success than capturing gains.  Indexing is a powerful tool that can help you end up with a lot more money in the long term inside your life policy.

Long Term Care – some cash value life insurance policies can now allow you to use a portion or even all of your life insurance death benefit before you die to use on long term care for yourself as you age and become unable to care for yourself.  This is a powerful feature because it does not require you to move to a long term care facility to collect the funds.  You can use your life insurance death benefit before you die to help allow you to continue to live in your own home and hire care givers to help you stay there as long as you are comfortable with that.  When you need to move to a long term care facility you can use the money for that as well.  Most long term care policies are not this flexible and besides, their cost is very high.  Here you are just using your death benefit as a living benefit for yourself.

Retirement Distribution Option – this new feature is found on fewer new policies but is catching on and may soon be very much more common.  Some of these new cash value life insurance policies let you to create a bucket where you can dump in money for your retirement, either from a 401k or from non tax deferred funds, for instance if you sell your home or inherit money.  Either way, the advantage is that you will be able to create a lifetime income that you can’t outlive.  This means that as long as you are alive you will receive monthly payments no matter how much that adds up to over your life time.  And the real power of this bucket is that you will be able to generate a much higher monthly dollar amount than any other method of distribution will allow.  This could make a big difference in your retirement lifestyle.

Clinard Insurance Group, located in lovely Winston Salem NC is dedicated to helping all insurance buyers become better informed consumers.  We insure thousands of families all across North Carolina.  If you would like help with your home insurance, your auto insurance, your life insurance or even your business insurance, please call us, toll free, at 877-687-7557.