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.

Your Car Has No Insurance And You Loan It To A Friend – Who Will Pay For An Accident?

Not long ago I was buttonholed at a party and asked this question:  If I were to loan out my car with no insurance on it and my friend had a wreck, who would be responsible for paying for the damages?  My first response was to blanche at  the question of course since driving any uninsured vehicle on the road would be counter to any advice I would ever give someone.  But to avoid being rude, I tried to lay out for this person just how this deal might go down.

I want to begin my answer here by stating that I am not an attorney and so I can’t give legal advice.  What follows is just my opinion and thoughts about the answer to this question.  I want to make is clear that I feel that no one ever drive an uninsured vehicle on the roads in North Carolina.  Having said that, I understand that at any given time,  up to 15% of the cars on our NC highways have no valid insurance in force.  This happens inadvertently when people forget to pay their car insurance bill or the payment gets lost in the mail or the check that they sent to the insurance company bounces.  And of course there are also a number of drivers out there that simply choose to be uninsured for all kinds of other reasons.

So, how will it play out if you loan an uninsured car to a friend and they have a wreck that is their fault?  Who will pay for the damages?  Well, keep in mind that different circumstances may generate different results but in general both the driver and the vehicle owner can be held liable for the damages.  Can you demand that your friend pay for the damages and leave you out of the matter?  Of course you can but whether or not you succeed will probably depend on if your friend knew the car was uninsured when he borrowed it, as well as the nature of what caused the accident and the degree to which your car’s condition had an impact on the accident happening in the first place.  Either way, I would advise that both parties hire counsel to help sort this out.

Your friend may have some insurance protection that from his own personal auto insurance policy if he has one in place on his own cars.  If that is the case, then he has protection for himself, but not for you.  If he relies on his insurance company to step in and pay the first dollar damages, then probably his insurance company will sue you for the damages that they paid out on his behalf.

Now, if you are choose not to insure your vehicle and you loan it to others, you should know that you are increasing your own financial risks by adding another driver and his or her skill to your uninsured liabilities.  What I said to the person at the party who asked me this question is that if you are taking the time to worry about this before you loan out your car, then why not  take the time to buy an insurance policy for your car before you loan it or even drive it yourself. 

If you find yourself without insurance on your car, please don’t drive it until you have insurance in place.  If you would like help with your auto insurance policy, or if you just have questions about car insurance in North Carolina, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.  We can also help you with your home insurance policy, your life insurance needs or even your business insurance.

Changes To The NC Personal Auto Insurance Mult-Car Discount

The multi-car discount is one of those discounts that is nearly universal for families and as such, no one thinks much about it.   The savings presented by this discount generally runs in the 20% to 25% range but for the most part, most people won’t notice it unless it is taken away.  And for some families in NC this is just what is about to happen.

There is a strong underwriting logic behind the multi-car discount which has been part of the NC personal auto insurance policy for more than 40 years.  This logic is that when you have more than one car in the household, then there will be times when both of drivers will be riding together in the same car.  That means that the other cars on the policy are not being used at that time and for that you deserve a lower rate than the policyholder who only owns one car and that car is used for each and every errand.

As times have changed and more households have become two income households, one phenomenon that has occurred is that some households wanted separate policies for their own cars so that they could pay their bills separately from one another.  This approach of I pay for mine and you pay for yours has created  the need for two different auto policies in the same household.   If you think about it though,  even when this happens, the underwriting logic of the multi-car discount is still and so this household still deserves the multi-car discount on both auto insurance policies. And  Insurance companies have generally adapted to this new financial reality and happily applied the multi-car discount to both policies even though each policy may only have one car listed on it.   But those rules have now changed.

Effective March 1, 2012, the NC Rate Bureau has issued a revision to Rule 4.D which clarifies the intent of the multi-car discount.  The Rate Bureau now requires that there be two or more cars listed on a North Carolina personal auto insurance policy in order for the discount to be allowed.  So the two budget households with two different auto policies will be in for some sticker shock when their auto insurance policy renews the next time.  Losing this discount will generate an additional rate cost of up to 25% on each policy!  Will the additional costs of insurance force the separate budget households to cozy up a bit more with one another?  I’m betting that it will.

This new rule change does have a few exceptions.  For instance, in NC, state law limits then number of vehicles that you can put on a personal auto insurance policy to 4.  So, households with a 5^th car or even more, will have to purchase a second auto insurance policy.  When this happens, the multi-car discount is allowed to be applied to both policies as one of the rule exceptions.  The other exception happens when one of the cars is co-titled in another name of a policyholder in the household.  If this exception exists, then the multi-car discount can be allowed on both policies.

At Clinard Insurance Group, located in Winston Salem, NC, we insure thousands of vehicles for families all across North Carolina and South Carolina.  We try very hard to keep the insurance buying public informed of changes in the industry so that they can be more informed consumers of insurance.  If you would like help or advice with your auto insurance, your home insurance, your life insurance or even your business insurance, I hope you will call us toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com. 

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.