Workers Compensation Insurance Rates Under Stress From 2011 Results

2011 was a tough year for most insurance companies out there.  This is mostly due to the more than $50 billion in property related claims from storms and bad weather events all across the country.  Of course workers compensation claims are not much affected by weather events, yet the 2011 numbers for the workers compensation insurance industry are not good.  And when the insurance industry loses money, that almost always portends higher rates for business owners in the near future.  This article will highlight some of the bad numbers that point to higher workers compensation insurance rates for the coming year.  Then I will show you how you can avoid facing higher rates this year for your business.

First look at some of the numbers.  In 2011, there was a 3% increase in the frequency of lost time claims.  These are claims where the insurance company is paying the injured worker a salary while the worker recovers from an injury.  3% may not sound like much, but this is the first time since 1997 that this measure increased from the previous year.  Is this a one-time blip or a signal for changes ahead in workers compensation lost time claims?  I think it may be the latter.

Compounding this problem is the unsettling result that net written premium for the insurance companies declined by 1.3% in 2011.  Now it doesn’t take a genius to understand that when claims are going up and premiums are going down something has to give somewhere.  I believe the breaking point will be the rates that you pay for your work comp insurance policy.  Insurance companies measure the money that they take in against the money that they pay out for claims.  This calculation is referred to as a loss ratio.  If the loss ratio rises above 100%, then the insurance company has lost money.  In 2011 the industry wide loss ratio for workers compensation insurance in the U.S. increased to an astonishing 118.1%.  This is the highest level since the year 2000 when it was 121%.  This means that in order to break even, the insurance companies need to average 18.1% return on the money that they hold while waiting to pay claims.  There are not many places where you can find a safe 18% return out there.

So what is the cause of these deteriorating results?  There are several of course, and none of them seem to show any signs of letting up in the near future, which is why I am predicting higher workers compensation rates across the board.  The biggest elephant in the room is the rising costs of medicine which now accounts for 60% of the workers compensation total claim payout.  With medical inflation running at 6% this part of the problem is going to be with us for the long haul.  Poor economic conditions are also a factor as there is a greater tendency for fraud in bad economic environments.  Also, the work force is getting older and more obese each year and this puts a strain on the claims costs both from a frequency of loss and a severity of loss perspective.

So what can you do to keep your work comp rates as low as possible in 2012 and beyond?  I suggest that you begin by taking a good look at your work comp policy and your work comp insurance company.  There is a growing market segment of work comp only companies out there today. These are companies that specialize in workers compensation only.   They don’t write auto insurance or home insurance or life insurance, they write only workers compensation insurance.   These companies understand that to make money in this business and to keep rates low for their customers, they need to be much more proactive in the prevention of claims as well as the recovery process.  They typically have loss control programs that can help you prevent claims from happening.  They often have nurses and claims case workers on staff to double check all medical bills for errors and fraud and to help your injured worker heal and get back to work as quickly as possible.

At Clinard Insurance Group we want all insurance buyers to be informed insurance consumers.  We can help connect you with a specialized workers compensation insurance company so that your rates can remain lower even while your competitors face huge workers compensation insurance rate increases.  If you have questions about your work comp insurance, or if you would like a quote to see just how much you can save on your workers compensation insurance, please give us a call, toll free, at 877-687-7557.  We look forward to hearing from you soon.

Frozen Pipes And Your Insurance – Prevention Is The Key

It is estimated that almost a half million businesses and residences experience water damage losses  as a result of frozen pipes each year.  While most homeowners insurance policies and businessowners insurance policies will pay for these losses, this kind of preventable loss is a terrible black mark on your insurance record.  But more importantly, protecting your pipes in advance could save you from the huge problems associated with experiencing this kind of catastrophe.  This article will give you some tips on what to do now, before the cold weather sets in to keep your home or your business safe from this type of loss.

The first step in this loss prevention process is to protect the pipes themselves.  If your pipes are in a vulnerable spot like the attic or the crawlspace, then they need proper insulation.   Be sure to insulate both the hot and the cold lines.  Next study the environment for these pipes.  You should seal any leaks to the attic or space that might allow enough cold air into that space to freeze the pipes.  And don’t forget to  disconnect your garden hoses and drain your  sprinkler system to reduce the chance of freezing at those points in the system.

Now when you know that a hard freeze is coming, there are some additional things you can do for the short term to protect your pipes.  You can let warm water trickle from the faucets overnight, particularly on an exterior wall, or on a long stretch of unprotected pipe.  Also, you can open cabinet doors to allow heat to reach non-insulated pipes under sinks.  If you do this and have small children don’t forget to put all poisons and dangerous chemicals out of their reach.  And on those hard freeze nights, don’t turn your thermostat down.  You will need as much heat as possible to protect your pipes.  I know this might run up your heating bill a bit but  that cost is nothing compared to damage from burst pipes.

 If your pipes do freeze, don’t panic, it doesn’t mean that they have burst.  There is still a good chance that you can avoid a large water loss claim.  First of all, turn on the faucets and leave them on.  The water pushing against the melting ice in the pipe will speed up the melting process.   Next try to locate where your pipe is actually frozen.  If you can do this, then you can try to safely apply heat to the frozen area.  You can wrap the pipes in towels soaked in hot water, or you can use an electric hair dryer or an electric heating pad.  Do not use a blow torch, kerosene or any other open flame to heat the pipe.  These techniques could leave you with a home destroyed by fire!  If all of this fails, or if you are uncomfortable with this step, then call a licensed, professional plumber to help you.

In NC, the standard homeowners form will almost always cover loss to your home and your contents from water damage as a result of a burst pipe.  But insurance protection should be your last resort.  Preventing the loss in the first case will save you time, money and heartache.    In this case, an ounce of prevention is definitely worth a pound or more of cure.

At Clinard Insurance Group, located in Winston Salem, NC, we want all insurance buyers to be informed consumers.  If we can help you with your home insurance, your auto insurance or even your business insurance, please call us, toll free, at 877-687-7557.

Texting Teens and Car Insurance – A Very Expensive Habit

Car insurance rates for teen drivers are much more expensive than car insurance for experienced drivers.  This is because young drivers need time to develop their skills behind the wheel and to learn good judgment when operating a vehicle.  Texting adds an additional layer of risk for these young drivers.

Many teenagers use texting as their main form of interaction with their friends.  They use texts to chat, make plans and even just waste time when they are bored.  Over time this behavior can lead to what I call chronic texting.    These chronic texting teens are always on the alert for an incoming text.  These incoming texts always trump any other form of communication or activity that the teenager is engaged in at the time.  Who among us has not experienced the frustration of losing your child’s attention in the middle of a conversation as their phone buzzes to announce an incoming text.  Their reactions are almost so automatic that they don’t even know they are doing it.  They look down at their phones and for a moment they have simply forgotten everything else in their immediate environment.  The text takes top priority for all of their attention.  Now this behavior is annoying enough when it happens in the middle of a conversation with you or at a restaurant.  But if it happens while they are driving, then we are dealing with extreme danger for them and all drivers around them.  Combine chronic texting with a teenager’s lack of driving experience and you have a recipe for personal disaster on the highway.

A Miami Dade jury recently awarded $8.8 million to the family of a woman killed in a crash caused by a teenager who was speeding and texting.    The boy’s phone records show an outgoing text from his phone at 8:19 pm.  The paramedics were called to the accident at 8:21 pm.  Think what this means; if your child is driving and texting and causes an accident, the court is going to know that your child was texting while driving.  Do you think this information might influence the judgment amount against your child and by inference you, the owner of the vehicle?  Yes it will.  This information is going to mean a lot more money out of your pocket.  So if the safety angle isn’t enough to get you to establish some hard rules with your teen driver, maybe the financial argument will hold some sway.    This is serious stuff, people are dying out there!

Any parent with assets to lose whose teenager is driving should seriously consider buying higher liability limits on his or her auto insurance policy.  You may even want to add a personal umbrella policy to your portfolio of insurance policies for limits above those allowed on the auto policy.  I would advise every parent with a teen driver to adopt a two pronged approach to this problem.  First of all, talk to your child and help them understand that the phone may not be used at all while they are driving.  Model this behavior yourself; your children learn from your behavior.  If you have young children be aware that they are learning from you now so put down that phone while you drive.  Secondly, have a conversation with your insurance agent and buy as high of a liability insurance limit as you can afford to protect your assets from the risk of your young drivers on your policy.

At Clinard Insurance Group, we are committed to helping our clients become informed insurance buyers.  If you would like help with your teen driver car insurance, or if you would like a quote on your auto insurance, please visit us on the web at www.ClinardInsurance.com, or call us, toll free at 877-687-7557.  We have a number of free tools for parent of teen drivers.  To learn more about them, please visit our teen driver insurance page.

How To Determine Who Is At Fault In An Auto Accident

Auto accidents happen every day.  Hopefully you will never be involved in one but if you are, what you do and say after an accident could have a big impact on who is ultimately found to be at fault. Here are a few tips and ideas to help you better understand the process and what you should do after an auto accident.

Call the police.  I have seen situations where people were so sure that they were at fault that they agreed to pay for all damages, only to be shocked later that the other party’s insurance paid for the damages instead.  I have seen accidents where one person denied even being in a wreck in the first place.  The police report is designed to protect you and to provide the insurance adjuster with enough information to figure out which driver caused the accident.  Make it a rule to always call the police, no matter how small the accident.  The police report will provide the insurance adjuster with the drivers names and contact information, witness information as well as a brief summary from the officer.  If you don’t think the accident was your fault, then tell the police officer why.

Gather the other driver’s information.   Even if the other driver is in a hurry and doesn’t want to wait for the police, make sure that before they leave you get as much contact information about them as you can.  Write down the make and model of the car and the license plate number as well as the driver’s name and contact information.   If it is you that is in a hurry, try to find the patience to wait for the police officer.  Recently one of our clients was hit by a driver who ran a red light.  She was in a hurry and didn’t wait around for the police officer to arrive.  She was shocked to read the police report later as it indicated that she was the one who ran the red light.  

Take as many pictures as you can.  Almost everyone has a camera on their phone.  Include photos of skid marks, debris fields as well as photos of the cars both before and after they are moved from the scene of the accident.  It is hard to know just what might become important later so the more photos you can take, the better.

Make your statement to both the police officer and the insurance adjuster.  Tell the officer what happened in logical step by step order.   You will need to record a statement later with the insurance adjuster.  When you do this, be sure to include everything you can think of, no matter how trivial it may seem to you.  The adjuster will study your statement with the summary provided by the police report and along with that and the other party’s statements and photos will then decide who is at fault.

At Clinard Insurance Group we want all of our clients to be informed consumers.  If you have a claim on any of your policies, from auto insurance to home insurance or even business insurance, we will be there with you through each step of the claims process.  If you need help with any of your insurance needs, please call us, toll free, at 877-687-7557.  We look forward to serving you.

Two Large Insurance Companies In NC Will Now Require You To Tie Your Auto Insurance To Your Home Insurance Policy

For the last several years, insurance companies doing business in NC have lost money on homeowners insurance as a group.  The rates are just too low to pay for all of the losses that occur under those policies.  After a year like 2011, when weather related losses were so frequent and so costly, insurance companies are now beginning to take more drastic action to protect their bottom lines.   Also, although the NC General Assembly slyly pushed a lot of the risks of the underfunded beach plan on to the backs of the homeowners in the state, there is still a substantial risk assessment for hurricane losses to insurance companies who write home insurance in NC.  This is just another incentive for the insurance companies to trim their book of home insurance policies.  All of this adds up to the fact that insuring homes in NC is a good way to lose money quickly.  And we are now beginning to see the various strategies that the insurance companies are employing to protect themselves from home insurance losses.

Recently, two of the 5 largest home insurers in NC announced that they are changing their rules to require that their policyholders also buy auto insurance from them or the homeowners policy will be cancelled at the next renewal.  Between these two insurance companies is it estimated that about 72,000 households will have their home insurance policies cancelled in 2012.

Your first question may be if it is legal to require auto insurance to go with a homeowners insurance policy?  The answer is that this is perfectly legal if morally questionable.  The NC Department of Insurance does not regulate the underwriting rules that each insurance company uses.   There is little doubt that in most cases you will be better off if you combine your home and your auto insurance with the same insurance company since you will generally receive discounts for doing so.  But there are many cases where the insurance company may not be willing to write your auto insurance either because they don’t like your driving record, your claims record or even the type of car you drive.   If this happens to you, then you are going to find it much more difficult to find insurance for your home at the low rates you have been used to in the past.

So where do I think the NC homeowners insurance market is headed?  Well, already we see much tougher underwriting guidelines for home insurance.  Many companies will not write a new home policy without the auto insurance.  Of course most are currently willing to leave their stand-alone home insurance policies on the books for now, but that could change and this would mean even more cancellations and nonrenewals for NC home owners.   If you have a large insurance account with several late model cars and a high value home, then you shouldn’t have much trouble finding home insurance, unless you have a poor claims or driving history.  But homeowners rates are going up and will continue to do so for the near future.  The rates that most people are paying today will seem like a real bargain 2 years from now.  Many insurance companies raised their homeowners insurance rates in December and we are likely to see even more rate increases next year.   In contrast, South Carolina home insurance rates are nearly twice what they are in North Carolina.  Our weather systems and home values are similar so I think you can expect steady increases in your NC home insurance rates until they are nearly twice what they are now.  Of course some of this is dependent on the NC Department of Insurance which sets the maximum rates that can be charged for home insurance.  If over time, those maximum rates are not high enough to allow insurance companies to make a profit on homeowners insurance, then you will begin to see a lack of availability in the marketplace which could leave some home owners with no insurance options at all.

If you have a bad insurance claims history or a bad driving record, there are still some good options available to you for your home insurance There are several insurance companies in NC who will write stand-alone homeowners insurance policies without the auto insurance being included.  Over time there will be less and less of these options as the home insurance marketplace begins to tighten up and consumers flock to and then overrun the last  companies to take action to reduce their homeowners policy count.  But for the short run, there is still plenty of availability if you have a good, independent insurance agent who can shop the marketplace for you.

The uncertainty in the home insurance market just serves to underscore how important it is for you to find and establish a relationship with a professional, independent insurance agent that can protect you from the market place gyrations that can create havoc with your insurance budget.    At Clinard Insurance Group, we insure thousands of households all across North Carolina and our homeowners insurance market is healthy and open for business.  If you received a homeowners nonrenewal letter from your insurance company, or if you need any help with your home or auto insurance then please, give us a call, toll free at 877-687-7557.  We will be glad to help you and with us you will have your own, personal insurance agent who is professional, kind and will get to know you and your situation.  We will take as much time as you need to make sure that you fully understand what you are buying and that you are happy with your choices.  And you get all of this and still save money.  You save twice, once on price, once on advice.  Call us now at 877-687-7557.

Does Your Auto Insurance Policy Include OEM Parts Coverage For Your Car?

Most people buying a new auto insurance policy don’t stop to think about the parts will be used to repair their cars if they are involved in an accident.  Most of us assume that our vehicles will be fixed and put back on the road, as good as new.  But in North Carolina, the law and the auto insurance policy language could leave you with some bad feelings after the dust has settled on your claim. 

OEM stands for original manufacturer’s equipment.  This terminology is used for parts that were manufactured by the original car company for your car.  In NC, car insurance companies are not obligated to pay for OEM parts when paying for damages to your wrecked vehicle.   Since OEM parts usually cost more than non OEM replacement parts, most repairs are not done with replacement parts that were manufactured by the original car manufacturer.

Now these non-OEM replacement parts may or may not be as good or even better quality than OEM parts.  But that’s not the point.  The point is that most people have expectations that include OEM parts being used to repair their cars.  Let’s face it, many of us have personal relationships with our cars and don’t want to feel cheated after an accident and repair work.   There is a simple solution to this problem but it requires that you take action before your car is damaged.  Most insurance companies doing business in NC have an OEM parts endorsement that you can add to your auto policy to make sure that the costs of these parts is covered if you have a loss.  Some restrictions apply to the OEM endorsement on the North Carolina auto insurance policy.  For instance, most insurance companies will require that you add this endorsement within 60 days of the purchase of a new vehicle.  Usually you can only add the endorsement to a vehicle that you purchased brand new.  Also, most companies will drop this coverage once your car is over 7 years old.  One company that we represent will let you add OEM coverage at any time and will allow you keep it on the policy until your vehicle is 10 years old, so there are some exceptions to these rules.

The cost of this protection is usually about 5% additional on your comprehensive and collision insurance premiums.  Now, keep in mind this other issue:  Even if you buy OEM coverage for your car, if you are hit by another person and that person is at fault, then your claim will be handled by the other person’s insurance company.   Letting them settle the claim with you will mean your OEM protection will not apply.   You can get around this by filing a collision claim with your insurance company so that you can benefit from the OEM endorsement on your policy.  If you do it this way, then you will have to pay the collision deductible on this claim out of your pocket and wait to be reimbursed by the other party’s insurance company if and when your insurance company files a subrogating claim against them and collects.  This may take some time or might even never happen, depending on the size and complexity  or the claim.

This is just one illustration of how complex North Carolina auto insurance really is.  There are many things for you to consider when buying your auto insurance policy.   From just this one example you can see that do it yourself car insurance is a bad idea.  Here at Clinard Insurance Group,  we write thousands of auto insurance policies for our customers located all across the state of North Carolina.  We will take as much time as you need to make sure that you understand all of your options and that you are completely comfortable with your choices.  Please give us a call for help with your auto insurance or your home insurance.  You can reach us toll free, at 877-687-7557.

What Are The Insurance Companies Leaving Out Of Their TV Ad Offers?

I am amazed at the number of TV ads that are devoted to convincing you to switch auto insurance companies to save money.  They are almost so common place that we don’t even notice them anymore.   While I think that anyone who shops long enough can always find a lower rate on their car insurance, a 2009 survey discovered that only 14 percent of people who shopped around for a better rate on their car insurance found that they could save money by switching companies.  Still, the ads continue to bombard us with new and interesting gimmicks and twists that will entice you to start shopping.  So what about these gimmicks, do they save you money or are they just marketing tricks?  I want to pull back the curtain on a few of them to give you an idea of what you are up against.

One of the newer gimmicks is the Nationwide Insurance vanishing deductible trick.  It seems like a great idea; Nationwide will reduce your deductible by $100 for each year that you don’t cause an accident or turn in a comprehensive claim like windshield, vandalism or theft of your vehicle.  Of course if you have a claim like that then your deductible will then go back up to the original level, minus a $100 sign up reduction.  No more than $500 of your deductible can ever disappear.  What the blurry fine print on the screen says is that this program will cost you $60 per year per car.  So this means that you would be paying $60 per year for $100 of protection that you will probably never need.   This is a great deal for Nationwide and not such a  good deal for you.  If you are truly a safe driver and have few claims, then I would advise that you take the highest deductible that you can afford and apply some of the savings to making sure that you have very high liability limits.

Another interesting ad is the Progressive Insurance snapshot program.  Right now, this is only available in 39 states and North Carolina is not one of them.   This program installs a big brother like device into your car’s diagnostic system and sends your driving information to the insurance company.  Now in theory, I like the idea of rewarding good drivers for their good driving habits.  But the problem with this program is that your driving habits will have to be the crème de la crème of all drivers in this program for you to see the huge discounts that they project in the ad.  Under a system like this which is voluntary, only the safest drivers will sign up and those drivers are now your competition for the discounts.  Let’s not forget the creepiness of having your insurance company checking out all of your driving habits.  It would be like me riding around in your back seat everywhere you go, making quiet notes on my clipboard and giving you disapproving looks in the rear view mirror.

Another highly advertised program is the accident forgiveness program.  Allstate insurance pushes this program but the details reveal that it may not be such a great deal for you.  First of all, you will have to pay extra to enroll in this program.  And in North Carolina, there is already a first accident forgiveness program built into the regulations.  To learn more about that, click here.   If you are generally a safe driver, then this program usually means that you end up paying for something that you will never need.  And the offered rebates for safe driving have to come from somewhere.  As you may have guessed, the insurance company will need to collect this money from you in advance in order to give it back to you later.  As evidence, Allstate recently reached an agreement with California regulators to stop selling their Your Choice program there after a lawsuit alleged that the program overcharges policyholders and that the costs for this program were deceptive.

A critical view of these programs might lead you to believe that these special programs are not designed to save you money on your car insurance, but rather to get you to call them for a quote in the first place.  I would advise that you take the time to find an independent insurance agent that you trust.  Choose one that will take the time to listen to you and discover your needs and then go out and shop the marketplace of insurance companies to find the program that is best for your unique situation right now, and in the future.  Car insurance is complicated and critical to your financial wellbeing.  You are trying to protect all of your possessions and your income stream and this should not be a do it yourself project.

Clinard Insurance Group is an independent insurance agency.   We insure more than 5000 families all across North Carolina and we want for all of our clients to be informed insurance consumers.  We will take as much time as you need to be sure that you are comfortable and have a full understanding of the insurance policies that you purchase from us.  If we can help you with your homeowners insurance, your auto insurance, your life insurance or even your business insurance, please call our office, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.