Could Hurricane Sandy Cause Your Home Insurance Rates To Rise?

Hurricane Sandy  was a huge and vicious storm that dealt the northeastern US such a severe blow that the clean-up will probably continue for many more weeks and perhaps even months.  Luckily for those of us in North Carolina, Sandy dealt us mostly a glancing blow and for the most part we didn’t suffer huge property losses here.   Despite this though, hurricane Sandy will almost certainly contribute to higher future home insurance rates for you and your neighbors.

   

Property insurance rates for your homeowners insurance policy are promulgated from data gathered from many different sources from your credit score to the construction type of your home to the fire protection in your town.  Weather related past loss experience is also a huge player in this number crunching process.  And as far as weather related losses such as hurricanes go, there are really three ways that you can be affected negatively by these storms.  We can look at each of these three loss impact separately.

The first impact type is really very  simple and direct.  It’s pretty obvious that when your home or property suffers a direct loss from a storm and you have to file a claim that the insurance company is going to review your policy more closely before determining your rate at renewal.  Most insurance companies will allow you to file some number of weather related claims before they take the more drastic step of non-renewing your policy.  Many years ago, some companies might even allow as many as three weather related losses on one homeowners policy if they were all small.  Things have changed quite a bit in the past two years and some insurance companies now won’t tolerate even one weather related loss without at least requiring that you increase your deductible.  Many might just not renew your policy after one weather related loss.

A second, less obvious storm impact on your home insurance rates happens when a storm hits your local area.  Even though your home may be spared the damage, you may still face future rate increases due to this storm.  When insurance companies pay out for a lot of storm losses in one area, you can bet that they start to train their attention on that area and begin to work to get more rate increases there.  So, even when you have dodged the bullet of storm losses, you may not dodge the rate increase bullet caused by that local storm.

The third storm impact for rate increases comes from the fundamental mechanism of how insurance spreads losses around.  Consider that when you purchase home insurance you are substituting a smaller known loss (your premiums) for a larger unknown one (storm damages to your home).  The insurance companies do the same thing with their risks by purchasing reinsurance coverage for their book of policies.  Reinsurance is insurance protection that insurance companies purchase from reinsurance companies on all or some portion of their policies.  For example, an insurance company might sign a reinsurance contract with a reinsurer that says that if they suffer losses from any one storm that exceed $100 million then the reinsurer will pay for all claims over that amount.  Knowing this, you can quickly see that when large storms hit the US and cause extensive damage, the reinsurers have to pay out on their contracts with the insurance companies.  After this has happened, the future costs of reinsurance will be higher as the reinsurers attempt to cover past losses and also make sure that they are profitable going forward into the future.  These higher reinsurance costs are then passed on down to the homeowners insurance consumer.

So knowing all of this, let’s revisit hurricane Sandy.  For most of the North Carolina residents, this storm was a nonevent in terms of damage to their property.  But you can see, this still doesn’t mean that we won’t have to pay for some of these losses ourselves.  The third impact of storm losses tells us that we will see higher rates in our area even though we did not experience many direct losses as a result of this storm.

 At Clinard Insurance Group, we insure thousands of families all across North Carolina.  We are here to help you with your questions and to help you save money on your home insurance, your auto insurance, your life insurance and even your business insurance.    Please feel free to call us toll free, at 877-687-7557 if you have any questions about your personal or your business insurance.  We are here to help you.

Home Insurance And Your Vacation House – Some Issues To Consider

Not many families can afford to own a second home, so kudos to you if you are one of the lucky ones.  If you are beginning to consider the idea of purchasing a second home, or even if you already own one, then I hope the information in this article will help you identify problem areas with this type of home ownership so that you can take care of them before they bite you with an uncovered claim or an insurance unavailability problem. 

Secondary home ownership can create quite a few unique insurance issues.  These problem areas can sometimes be attributed to the location of the house or how the property may be used.  The way the property is titled can also create insurance problems.  In some areas there is a wide discrepancy between the market value of the home and the replacement value of the home.  The personal property which is kept inside the home can also create insurance confusion that is best solved before there is a loss.   Let’s take a closer look at each of these kinds of issues.

Let’s start with location issues.  Many vacation homes are found at the coast, or in the mountains or near rivers and lakes.  Each of these kinds of places can present geography based insurance issues.  Beach homes of course face huge property risks to wind and flood loss from hurricanes.   Vacation homes located in the mountains may have poor fire protection.  Many mountain homes face the prospect of waiting on a fire truck full of water to climb the mountain to save them as they are burning. Homes located near  rivers or lakes need to be aware of flood zones and understand their flood risks very carefully.  All of these geography risks can mean a huge insurance price tag and might even lead to insurance unavailability at any price.  Carefully review these risks with your agent before you purchase your secondary home.

The way that a vacation property is used must also factor into the insurance equation.  Is the property going to be rented to others?  If so, then a dwelling fire policy might be more appropriate than a homeowners insurance policy to insure this property.  Dwelling fire insurance is generally more restrictive in coverage and often more expensive to buy than homeowners insurance.  But more importantly, buying the correct policy here might mean the difference between being paid and facing a denied claim after a loss.

A more recent insurance problem with vacation homes is caused by the way in which they are titled.  The latest trend is for several families to purchase a property together and own it through an LLC.  At this time, most insurance companies are not willing to write a homeowners policy for an LLC so this structure could limit your marketplace choices and thus force you to pay more for insurance on this secondary home.

Then there is the problem of market value versus the replacement value of the home itself.   Many vacation homes sit on land that is much more valuable than the house itself.  A great example of this is a NC beach house sitting on land that could be valued at more than $2,000,000 per acre.  Imagine that you want to build a $500,000 beach house on a lot that costs $1,000,000 to buy.  Say you need to borrow $1.3 million to do the deal.  The bank might want you to have more than $500,000 insurance since your loan is way above that amount, but the insurance company will not insure the house for more than its replacement value.  These issues will be easier to resolve if you get your insurance agent involved early in the process.

Last of all, consider the personal property left in the vacation home.  Who actually owns it?  Are the renters allowed to use it?  How will you insure it?  Special care should be taken to make sure that the insurance company understands the answers to these questions and that the insurance is set up to handle this situation correctly.

Insuring your vacation home is best done with an independent insurance agent who understands these issues and how to help you through them.  At Clinard Insurance Group, in Winston Salem, NC, we insure hundreds of vacation homes all across NC from the mountains to the sea.  We understand these issues and we have access to the marketplace that you need to make sure that you don’t pay too much for your vacation home insurance.  We can also help you with your auto insurance, your life insurance and even your business insurance.  Just give us a call, toll free, at 877-687-7557 and let us go to work for you today.

Facebook And Your Personal Insurance Policies – Is There A Connection?

Most of us would agree that what you say and do on Facebook should have no effect on your insurance policies or your rates.   But the truth is more complicated.  Your Facebook actions can have an effect on your insurance rates and coverages in some circumstances.  And my guess is that the impact will only grow over time.

I want to begin by assuring you that as of this moment, I am not aware of an insurance company that using Facebook as an underwriting tool for personal insurance policies such as home insurance and auto insurance.  There may come a time when they automate that process and if so, will begin to use it if they can.    Insurance for businesses though is a very different scenario.  Businesses want to attract people to their FB pages and so their Facebook information is easy for anyone to see.   Commercial insurance underwriters will routinely study a business Facebook page to be sure that they are comfortable insuring that enterprise.  Here is a list of some of the things you want to consider vis-à-vis your personal insurance and your safety on Facebook.

Start by understanding that Facebook data is a rich source of opportunity for crooks and thieves.   Once again, one bad apple spoils everyone else’s fun.  But you can still have a great time but not give up the information so easily.  The thieves are out there looking for the easy targets.  So here are some ideas to help keep you from being the low hanging fruit for the bad people out there who are looking for ways to steal from you. 

You should start with a very strong password.   Obviously you don’t want to share that password with anyone.   The strong password will help prevent a thief from guessing your password based on the information that can be publicly obtained.  Also, while it is ok to show your birthday, don’t show the year you were born.  That is just an invitation for identity thieves to go to work on you. 

Take the time to understand just how the privacy controls work  and try and limit as much access about yourself to just your friends.  Restrict access to photos, birth date, family information and religious views.  Remember, the more pieces of the puzzle you give out, the easier it is for a crook to steal from you.  It is also a bad idea to post your children’s names in photos as tags.  If someone else does this, you should ask them to delete the tag.    Your children are the weakest link in the information protection game and letting a thief link your information to theirs just makes their job all the easier.

This next reminder should be obvious but people break this rule all of the time.  Don’t post the dates you will be out of town.  If you must share the pics from your recent trip, just wait until you get home to share them.  If you are talking about a future trip online, be as vague as possible about the actual dates you will be gone.

Right now, my experience tells me that the things you say and share on your personal Facebook page are not a threat to your home insurance rates or your auto insurance rates.   I hear rumors out there, which I cannot confirm, that some life insurance companies may be trying to track applicants on Facebook to help decide, based on lifestyle choices, which applicants should get the preferred rates and which should be charged more.  However, at this point in time, I think the biggest threat to you at this comes from theives.  Please use good common sense with your Facebook account.

Clinard Insurance Group is an independent insurance agency located in Winston Salem, NC.  We try very hard to pull back the curtain on the insurance industry so that you can be an informed insurance buyer.  If we can help you with your home insurance, your life insurance, your auto insurance of even your business insurance needs, please call us, toll free, at 877-687-7557.

NC Homeowners Insurance Policy – Sewer Backup Insurance Is Changing

Many North Carolina homeowners will be losing coverage on their homeowners insurance policy over the next few months. Most won’t bother to read the fine print in their renewals so they won’t even know what they lost. Hopefully, for those of you astute enough to follow this blog, this won’t be the case.

What has changed in NC regarding the homeowners insurance policy is that the coverage for backup of water or sewer, which is an add on endorsement that you can purchase, is going to have new limits on how much will be paid out in the event of a claim. Let me start by saying that this coverage is not included in your home insurance policy unless you add it by endorsement. Some people don’t need this endorsement at all, and others absolutely should not be without it. To learn more about the sewer backup endorsement and who needs to buy it, please read my blog about back of sewers and drains coverage.

If you have this endorsement on your policy, then in the past this protection had the same limit of coverage as your home itself. So, for instance if you have $200,000 coverage on your dwelling, then with this sewer back up endorsement, then you would have $200,000 coverage for this type of loss. For all renewals with an effective date of June 1 2010 or later, this changes. Now instead you must choose a limit of coverage. The available limits are $5000, $10,000, $15,000, and $25,000. Probably in most cases one of these limits will be high enough to pay off the loss but there is really no way to know before the claim happens. It’s also fair to note that the cost of this protection is going up on a per dollar basis. That’s because where you used to have the same limit of coverage as your dwelling for around $25 per year cost, now that same $25 will probably buy you between $5,000 and $10,000 of protection, depending on which company you are insured with.

I urge everyone to read the letter that will come with your next renewal if you have this endorsement. Every company will handle this change differently but by and large, most of them will move your protection down to the $5000 coverage level. This is fine if you are confident that this is enough coverage to handle any claims you may have. But if not, then you will need to be proactive and contact your agent and ask for a higher limit.

At Clinard Insurance Group, in Winston Salem, NC, we work hard to help all of our clients become informed insurance consumers. Whether you are looking for auto insurance, home insurance, life insurance or business insurance, please feel free to contact us for help and advice. You can call us, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

Much of the source information for this article can be found at our blog website which is www.InsuranceAnswerGuy.com.

If You Are A Landlord You Need To Make This Change To Your Home Insurance Policy

It’s amazing just how many people in this world are landlords of some type. And most of them are not really in the business of being landlords, they just happened on to it through inheritance, divorce or maybe even a chance investment. But very few occasional landlords have taken the time to cover a hidden liability exposure that comes along with the territory. And the saddest part of all is that the fix is so easy and affordable.

Part of the reason that the small time landlord leaves off this protection is that adding liability coverage for rental dwellings is deceptively easy. All you need to do is call you agent and tell them to add the liability coverage for your rental property to your home insurance policy. And this fix takes care of 95% of the risk. But the other 5% could ruin you.

What needs to be done is to add the personal injury endorsement to your homeowners policy. Many agents will forget this tidbit of knowledge, but the personal injury endorsement adds protection for some intentional or even unintentional acts that can get a landlord in trouble. The most likely of these is wrongful eviction, wrongful entry into or the invasion of the right of private occupancy of a room or dwelling occupied by a lessor. The standard homeowners policy does not include coverage for wrongful eviction and invasion of privacy and even if you extend the liability coverage of your homeowners policy to the location of your rental property, without this endorsement, you won’t have protection for these acts.

The good news is that you can add the personal injury endorsement to your policy by simply calling your agent. And the cost of this protection is rarely more than $25 per year in North Carolina. So if you are a home insurance, homeowners insurance, liability insurance for landlords, NC home insurance quotes online, Charlotte home insurance, Winston Salem home insurance landlord, by all means, call your agent and take care of this coverage gap today.

At Clinard Insurance Group in Winston Salem, NC, we work hard to help all of our clients become informed insurance consumers. If we can help you with your home insurance or your auto insurance, or if you need help with life insurance or business insurance, please call us, toll free at 877-687-7557 or visit us online at www.ClinardInsurance.com.

The source information for this article can be found at www.InsuranceAnswerGuy.com

All North Carolina homeowners now face a personal burden for beach house hurricane losses.

The North Carolina State Legislature is crafting legislation, House Bill 1305, that will push the burden of catastrophic hurricane losses of beach property on to the backs of all unsuspecting property owners statewide. While there are some positive changes in this legislation, it feels like to me that they are sticking it to the people who are not there watching this legislation be made, and that is all the people who own property in North Carolina that is not coastal property.

The good news here is that the NC legislature has finally admitted that the North Carolina Beach Plan is broken and needs a fix. The Beach Plan insures $75 billion worth of property in coastal areas and has a meager $1.5 billion in reinsurance and reserves to pay claims. Clearly if a large storm hits our coast, there will not be enough money to pay the claims. To find out how we got to this point and read more details of this problem, click here.

The major parties working on this legislation are the coastal property owners and their lawmakers and the insurance companies. Right now, if a storm hits and the beach plan goes under, the bill must be paid by all the insurance companies doing business in North Carolina writing homeowners insurance and other property insurance including commercial property policies. This assessment is presently unlimited and this unlimited exposure is scaring the insurance companies in North Carolina into taking dramatic action which impacts all of their policyholders. One drastic example is the consent to rate letters that some major insurance companies are now sending to their homeowners policyholders.

House Bill 1305 which sailed through the house on July 15th will take care of some of the uncertainty for the insurance companies. Right now the insurance companies face the uncertainty of unlimited assessments to bail out the Beach Plan after a major storm. If this bill becomes law, then their assessments will be limited to $1 billion per storm. Still quite a lot of money but now it is a number that they can plan for. So all in all, I think the insurance company lobby did a pretty good job of getting what they wanted.

But if you add another billion dollars to the amount available for a major storm, you will see that we still now have only $2.5 billion to protect over $75 billion in assets. So where does the rest of the money come from? Well the biggest chunk is a new storm assessment that can be added to every property insurance policy in North Carolina. If this bill becomes law, and we have a major storm, then you can expect to see an extra charge added to your homeowners insurance of up to 10%. And it is unclear in the wording of the bill as to whether or not that is a one time charge or can go on and on until the Beach Plan is made whole again. The open ended nature of the wording leads me to believe that this charge could remain on your policy for years and years to come.

Those owning property at the coast, who are insured through the Beach Plan, will have to give up something as well. In the event of a major storm, they will face a deductible of no less than 1% of the total value of the property. There is a clause that allows for even higher deductible percentages if needed.

I disagree with the legislators who say that our coastal property is a state treasure for all of us and all of us living in this state should be on the hook to support the coast. I think that the fairest solution is to raise the rates on beach property to more accurately reflect the risks and let those who own property or rent property at the beach carry the burden. In South Carolina the Beach Plan rates are about 10 times what ours are and their Beach Plan is adequately funded. This is the fairest way to handle this problem. In all cases of insurance, the system works best when those in control of the exposure are the ones who pay for the insurance.

At Clinard Insurance Group in Winston Salem, NC we work hard to make sure that all of our clients are informed insurance consumers. If you have any questions about how this might affect your homeowners insurance policy, or if you need any other help with any of your insurance policies, please call our office, toll free, at 877-687-7557 or visit us online at www.ClinardInsurance.com.

The source information for this article was taken from www.insuranceanswerguy.com.

Credit Protection – Not Always Such A Good Deal

With all the job uncertainty out there, credit card companies are selling more of their “credit protection insurance” to cardholders. The big sell these days is that your card payments will be made if you are out of work. Sounds great, until you read the fine print.

In most cases, the unemployment coverage doesn’t kick in if you voluntarily leave your job or are let go for performance reasons. And just having your hours scaled back won’t trigger coverage either.

In addition, these policies are very costly, ranging from 35 to 99 cents for every $100 of balance on your card each month. So, if you are carrying a $3000 balance on your card you would pay between $10.50 and $30 a month for this protection. In most cases, you would be much better off applying this money to your outstanding balance.

There are those that might argue that at least this is good coverage if you die or become disabled. Again, the fine print might make you change your mind. In most cases the definition of disabled means that you are unable to do any work of any kind. That’s a recipe for never having to pay a claim if you ask me. The standard disability policy will provide coverage if you are unable to do the job that you were doing when you became disabled. At any rate, the cost per $1000 of protection is between 5 and 10 times what you would pay an insurance company for life insurance or disability insurance.

It’s clear that these credit protection plans require the buyer to read the fine print very carefully. They are probably only a good deal for those that are uninsurable due to medical conditions. My advice is to purchase your disability insurance and your life insurance from a company that is in that business instead of from your credit card company.

At Clinard Insurance Group, in Winston Salem, NC, we want all consumers to be informed consumers. If you have any questions about your own life insurance or disability insurance needs, or if you need help with your auto insurance, home insurance or business insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was taken from www.insuranceanswerguy.com

NC Homeowners Crisis Is Brewing – Part I

At Clinard Insurance Group in Winston Salem, NC we try to keep our fingers on the pulse of changes coming down the pipe for our clients. And what we see today is that in North Carolina there is a major homeowner insurance availability crisis brewing and recent actions tell us that this crisis is about to reach a tipping point. By this time next year many people may have trouble finding insurance for their home… at any price.

It doesn’t take much to read the tea leaves on this one. But if you aren’t looking you will miss it. And since no consumers are looking, let me shine a light on this one for you.

Unless you are lucky enough to own a beach house, you probably have never heard of the Beach Plan, or its formal name: The N.C Insurance Underwriting Authority. The Beach Plan is a quasi public insurance program of last resort to insure the wind and hail exposure of homes in 18 counties on the NC coast. You see, insurance companies have had all the losses they can stand from hurricanes and tropical storms on the coast so they have pulled out of these counties. The Beach Plan is now holding the bag on 99% of the wind and hail exposures on our coast.

The problem is that the Beach Plan is under funded. They don’t have anywhere near enough assets to pay the losses of a major storm or hurricane. Here are some numbers: As of last August the Beach Plan was insuring $75 billion in coastal property. Some experts estimate that their exposure has been increasing at $1 billion a month since then. The Beach Plan currently has $650 million in the bank as surplus against a large storm and they have purchased another $1 billion in reinsurance coverage. So you can see, they have funds available for $1.6 billion of losses but they are insuring over $75 billion. One big storm and poof, no more money to pay claims.

So right now you are probably thinking, “I don’t have a beach house so I guess it’s not my problem if the Beach Plan goes belly up”. But if you think that, you couldn’t be more wrong. You see, the Beach Plan, as a governmental organization, has a little trick up its sleeve. The have the power of assessment. What does that mean?

In NC, every insurance company who sells homeowners insurance policies in this state, can and will be assessed for any Beach Plan shortfall according to their market share in NC. That means your insurance company (no matter who you purchase from) is vulnerable to being assessed by the Beach Plan for losses the Beach Plan may experience due to a storm. And now these assessments are estimated to be over $5 million per 1% market share. That will be enough money to put many insurance companies out of business.

In the past, insurance companies have been able to purchase insurance to protect them if they were to be assessed. As of July 1st this year, that will most likely no longer be available. Faced with the risks of crippling assessments in the event of a category 3 or higher hurricane, most companies are waking up to the fact that they have to make changes and either raise their rates or reduce the number of homeowners policies that they have in NC or both. Many homeowners in NC will begin to receive non-renewal notices from their insurance companies and when they try to find a new company to insure them, they will experience much higher rates or in some cases, no insurance availability at all.

So what can you do to protect yourself from this looming crisis? At Clinard Insurance we are keeping an eye on this problem for you as it develops and we have lots of ways to help you through it. Visit our web site at www.ClinardInsurance.com or watch for part II of my blog for specific tips and tricks you can take now to protect keep yourself from being swept up in this crisis.
The source data for this article was pulled from The Insurance Answer Guy.