Flood Insurance – Will Your Policy Work For You When You Need It?

People in flood prone areas depend on their flood insurance policies to give them peace of mind and protection if the big one comes and they get flooded.  But very few of these buyers of flood insurance know that there is no guarantee their policy will be renewable when it expires?  Flood insurance is made affordable by a program is sponsored by the federal government.  The laws that created the National Flood Insurance Program and that allow this program to exist are currently tangled  up in other bills and debates that leave some doubt as to whether or not we will have a National Flood Insurance Program after May of this year.

You may be asking yourself why the federal government is mixed up in an insurance program in the first place.  Well, flood insurance is a different creature in the insurance world because with flood insurance, only those that need it most (those who live in flood prone areas) are the only ones who will ever consider buying a policy.  And since homeowners who have no flood risk at all (those who live at the top of a hill) will never want to buy a flood insurance policy, the insurance companies selling flood insurance will always face an adverse selection process when they sell flood policies.  This adverse selection process makes the cost of flood insurance nearly unaffordable as there is no subsidy at all from the lower risk buyers.  So the federal government steps in with a subsidy and the NFIP.

The NFIP must be continually reauthorized by Congress periodically as its charter expires.  The most recent extension for the NFIP was passed at the on Dec 23, 2011 but this extension only authorizes the program through May 31, 2012.  Without a further authorization of the program, the NFIP will cease to function after that day.   Now this kind of congressional deadline is nothing new, in fact the current extension is the 15^th one since 2002.  In 2010 the NFIP was allowed to lapse four different times, creating 53 days in 2010 when you could neither purchase a new flood insurance policy nor renew an existing one.   And I’d bet that most of the homeowners who lost coverage during that time were at best only dimly aware of the new risks they were taking on the day their policies became invalid.

There are several reasons why the NFIP reauthorization is getting this band aid type treatment.  And most of these reasons are unrelated to the NFIP itself.  The debt limit issues that the government ran into in late 2011 led to this current short term extension instead of a multi-year solution.  And the bill to extend the NFIP charter into 2016 is unfortunately tangled up with a few political hot potato items such as tax rates and the Medicare payments to doctors debate. 

Remember that your homeowners policy will not cover flood losses.  This is also true with your businessowners policy for your business.  In order to be protected, you will need to purchase a flood insurance policy.  If you have already bought a flood insurance policy, then you should  keep a close eye on your mail or stay in touch with your agent to make sure that your policy remains in force after May 31^st.  At this point there is no certainty that you will be protected on June 1^st.

At Clinard Insurance Group, situated in beautiful Winston Salem, NC, we can help you with your flood insurance needs.  We can also help you save money on your auto insurance, your home insurance and your business insurance.  Give us a call, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.  

NC Home Insurance Rates Poised To Go Up

If you live in NC , then you have many things to be happy about.  One is that your NC homeowners policy rates are among the lowest of any state in this part of the country.  And relatively speaking, they should remain that way.  But brace yourself, homeowners insurance rates in North Carolina, like most other states in the South and Southeast are poised to increase rather dramatically.  And to go along with these rate increases, the availability of homeowners insurance in NC is going down.

In most cases, insurance companies who sell auto insurance and home insurance in North Carolina, also do the same business in many other states all across the country.  So bad loss years in one state for an insurance company can be balanced out by profits made in other states for that year  In 2011 though,  this formula did not work out well for most insurance companies as 2011 was a year of storms and weather related losses all across the country.  Now, insurance numbers are notoriously slow in being published (what do you think that says about the speed of their claims service?) so we don’t have all the numbers in at this time.  Still, with my ear to the ground and hearing what the company people are saying, it is an easy call to say that insurance rates for homes in North Carolina will almost certainly be increasing in 2012 for almost everyone.  And for those with more risky situations or poor loss history, these changes might even mean it is hard for them to buy insurance for their home at any price.

The numbers aren’t all in yet, but the insurance industry has suffered 4 straight years of record losses in the area of home insurance.  The losses have to be recovered somewhere and you know the most direct way to do so will be to increase the rates that you pay for your home insurance.  Take a look at some numbers that indicate the trends that the insurance industry has been fighting against for the past 4 years.  The average cost for a homeowners policy in the United States in 2008 was $791.  In 2009 that number climbed to $799 and in 2010 it went to $807.  The 2011 number is estimated jump to about $840.  For 2012 we can expect a national increase of about 5%.  But that doesn’t tell the whole story for those of us who own homes in NC.  Here we had heavy hail losses last Spring, and that combined with the underfunded beach plan and the risks of beach plan assessments on NC insurance companies, means that you can probably expect rate increases of more than 5% as well as an increasingly tighter market for homeowners insurance in our lovely state.

It is already game on for some insurance companies who are starting to place limits on the number of homes they will insure in 2012.  Many insurance companies are now requiring that you buy your auto insurance from them or they will not insure your home.  Others have even stopped writing new homeowners insurance policies.  There are a few companies that are actively reducing the number of homeowners policies that they sell in NC by non-renewing policies in their book of business.

So what does this mean for you and what should you do to protect yourself and your home from this troubled insurance environment?  First of all, I would suggest that you use an independent agent to help you procure your home and your auto insurance policies.  If you are buying your insurance from a  direct writing company such as a State Farm, Nationwide, Allstate or Geico, remember that if your insurance company takes drastic action towards NC and home insurance, then your agent will probably not have an alternative solution for you.  This could leave you scrambling for coverage in tight marketplace.  Also, you should always keep your home and auto insurance insured with the same insurance company.  This will save you money of course but it will make you a more important client to that insurance company.  If your insurance company starts taking  action to reduce their homeowners exposure in NC, then your account is less likely to be affected.

At Clinard Insurance Group in Winston Salem, NC, we insure thousands of homes and thousands of cars all across North Carolina and South Carolina.  We are an independent agent and we have many insurance companies that still have a good appetite to write home insurance in NC.  If you would like the personal help and attention of one of our trusted agents, please call us, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.  We will take as much time as you want and need to be sure that you are buying exactly the protection that you want for the lowest possible cost to you.

5 Mistakes That Most Of Us Make When Driving

After you have a bit of experience, driving a car becomes a sort of second nature activity, like walking or chewing gum.  We can do it pretty well even without realizing that we are doing it.  Over time, especially without an accident or mishap to get our attention, we can all develop an overconfidence about driving and our skill set whether we do it well or not.   Here then, is an opportunity for you to honestly and fairly evaluate your own driving skills with the one person that you can’t lie to: yourself.  Take a quick look at these top 5 driving mistakes that we all make from time to time, and perhaps  it can serve as a reminder to avoid these driving behaviors.

One thing most of us forget is that the process of driving a vehicle is usually the most dangerous activity that we will do in any given day.  Since we go years and years without a mishap or accident it is easy to forget this.  But, whether you take notice of it or not,  every time you get behind the wheel you are at risk for making a mistake that could be catastrophic or even fatal for you.  So taking time every now and then to honestly evaluate your own driving habits with yourself is a practice that might save your life or the life of someone else.

One of the most common driving errors that many of us make is following too closely.    Some drivers use tailgaiting as a way of emphasizing their hurry to the driver in front of them.  Some people drive too closely to the car in front of them simply as a matter of habit.  I’ve seen drivers who move right up to the next car in front of them, regardless of their speed,  not because they are in a hurry, but because this is their default setting for how fast to drive in any situation.  When faced with an open road ahead, these drivers are probably not sure just how fast they should go.  If you who commute to work on a highway, and are forced to spend an extra half hour in traffic on the way home, most of the time it is because someone ahead of you was following too close.

Stopping instead of yielding.   This is a case of overly cautious behavior generating risk.  Drivers make assumptions about what other drivers will do based on assumed behavior.  Deviation from assumed behavior then puts other drivers at risk.   The most common place we see this is on the acceleration ramp for entering a highway.  Inexperienced drivers often have trouble with this and simply come to a stop instead of blending into the flow of the traffic on the highway.  This is dangerous, not only for the stopped car, but for the cars behind that are not expecting a car in front of them to stop.  This is also sometimes a problem at traffic circles where a driver’s attention should be on the cars to the left in the circle as opposed to the car in front of them which they assume will not stop if the way is clear.

Trusting Your Mirrors.  I am guilty of this mistake from time to time.  It takes more effort to look over your shoulder when changing lanes, especially when you have checked all of your mirrors and you don’t see anyone coming.  But if you have had the scary experience of starting to make a lane change, only to hear the honking of the car beside you, then you will understand just how dangerous it is not to take that backwards glance before you change lanes.   This is a habit that takes effort but could save your life.

Failing to Yield on Green.  The green light means go of course, but some intersections seem to be worse than others in terms of cars running the red light.  Experience will help here but you should always be cautious when moving through an intersection.  Intersection accidents often result in terrible injuries and you can avoid this by being more aware of everything going on outside of the green light itself.

Multi-Tasking and driving.  This is one of my pet peeves. These days we think of cell phones but I remember being frightened at all the things my wife would do while commandeering a car with three small, demanding and often hungry children in it.  Now  I personally stopped using my phone in my car about 2 years ago. That’s a personal choice of course but usually when I see someone driving poorly, when I get closer I almost always notice that they have their phone in their hand.   Keeping your focus on the driving that you are engaged in could save your life or someone else’s, so really it is worth the effort.

At Clinard Insurance Group, we want all drivers on the road to finish their errands and come home safely to their loved ones.  I hope these tips will help keep you aware of the importance of staying engaged in your task of driving while you are operating a motor vehicle.  If you would like help with your car insurance, your home insurance, your life insurance or even your business insurance, I hope you will give us a call, toll free, at 877-687-7557.

Volunteer Wrongful Acts Insurance Coverage – Should You Add This To Your Homeowners Insurance Policy?

America is a land of volunteers.   Almost everyone you know has volunteered somewhere at some point in his or her life and many people have regular work as volunteers each week.  But have you ever considered that your volunteer work could  get you into financial  trouble?  There are several areas of liability that can arise from volunteering from acts as a director or officer of a non-profit all the way down to minor clerical errors that could lead to personal liability risks for the volunteer.  Here I discusses a relatively new insurance coverage form that can be added to some homeowners insurance policies called volunteer wrongful acts insurance coverage.

Let’s start with a definition.  What is a wrongful act as defined by the volunteer wrongful acts coverage endorsement?  The endorsement defines this term as an actual or alleged error, misleading statement, act or omission, neglect or breach of duty committed by any insured during the policy period in the insured’s capacity as a volunteer.  If we break that definition down we see that the act must have occurred as the result of your volunteer work and that it can be either an alleged or an actual error.  It could even  be an omission or simply a breach of your duty as a volunteer.

I think an example is a good way to understand this risk and the insurance protection we are discussing.  Assume that you are a treasurer for a local nonprofit and you make an honest error in calculations that indicates that the nonprofit has more money to spend on a project than they actually have in the bank.  The project is approved based on your numbers and contracts are signed and the project gets underway.  Soon it is discovered that your error is going to generate huge expenses for your nonprofit due to the contracts that were signed for the project.  Suddenly you find yourself on the wrong side of a lawsuit with your nonprofit for the cost of these damages.  If you had added volunteer wrongful acts coverage to your homeowners insurance policy, then you would have protection for this loss. 

If this sounds like a coverage that you need, then you should contact your insurance agent and have them add it to your homeowners insurance policy.  Be sure that you understand the limits of coverage that can be provided.  Not every insurance company will allow this endorsement to be added to the policy and most will have limitations on how much protection you can buy.   So even though you may have a $300,000 personal liability limit on your homeowners insurance, this endorsement may limit you protection to $50,000 or perhaps $100,000.   You should also ask if your umbrella insurance policy will pick up coverage where this endorsement leaves off.  In most cases I have found that it will not do so.

Volunteering is a wonderful act of generosity and we should all encourage this kind of behavior as much as possible.  Unfortunately the law can still put you in a vulnerable position when you volunteer so you need to make sure that you have the protection you need to make sure that you are just giving your time and not your personal assets. At Clinard Insurance Group, in Winston Salem, NC we can help you add this protection to your homeowners insurance policy.  Please call us toll free, at 877-687-7557 or visit us online at www.ClinardInsurance.com.   

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.