An Insurance Policy That Monitors Your Driving – Are You Willing To Trade Your Privacy For Discounts?

No one likes an annoying back seat driver.  But could you stomach one that stayed quiet and just used observations of your driving habits to determine your auto insurance rates?  Well that time may be coming soon.   Insurance companies are beginning to build momentum in the field of using telemetrics as the primary actuarial data source for auto insurance rates.  Telemetrics, the science of measuring data created by your driving habits has the goal in mind of a more accurate auto insurance rate for each driver.

Insurance industry executives and underwriters have long wished for a better way to predict which clients will cause losses on their insurance policies.  In the world of auto insurance, the tools that insurance companies have had at their disposal in the past have been relatively crude.  Decisions about your driving ability and safety are currently based on information such as the kind of car you drive, your age and number of years driving, your past traffic violations and past auto insurance claims.  For instance, get a few speeding tickets and even though you’ve not filed a claim, in N.C., your auto insurance rates will skyrocket.  And yet I’ve seen quite a few clients with a high number of speeding tickets who never had an accident or filed an insurance claim.  Or take the example of teen drivers.  Not every new driver has accidents, but the insurance company simply has no way of knowing which child carries the greatest risk so they just have to charge huge inexperienced operator rates to all new drivers..  But what if the insurance company could watch young driver every time they head out in the car?  Would they then be able to make better decisions about which young driver is most likely to cause an accident and thus charge each a fairer rate?

Enter telemetrics, the newest underwriting science in auto insurance rates.  While this science has been around for a few years already, very few insurance companies have studied or adopted it.  That may be about to change.  State Farm Insurance, one of the largest auto insurers in the country is testing the use of telemetrics in several states and has indicated that they plan to roll this out to all states soon.  This strategy, should it succeed for State Farm, is bound to push this trend amongst all auto insurers much more quickly.  So what is telemetrics exactly?  Well, telemetrics is the gathering of data about your driving habits via small telemetric devices which plug into the car’s diagnostic ports.  This data is then sent to the insurance company and analyzed to determine if your driving habits indicate that you deserve  a discount refund on your rates for safer driving.  Right now these programs are focused on offering cash back discounts for good driving behaviors but are not designed to generate additional rate increases for the drivers who don’t make the grade.   That approach is almost certain to change should this form of auto rating, often referred to as usage rating become more common.    For now, this new technology is still in a testing phase and insurance companies would be hard pressed to get people to sign up to be monitored if they risked higher rates for doing so.

So what data are insurance companies collecting with telemetric programs?  Generally speaking they claim to monitor your speed, the number of miles your drive, the times of day that you drive, as well as your acceleration and deceleration habits and how hard you take turns.  What they currently claim not to monitor is seat belt usage, the exact vehicle location the car’s speed relative to the posted speed limit at that location. 

Telemetrics as a car insurance rating and underwriting tool is not without its critics.  The fears and complaints deal primarily with privacy issues in this data collection process.    Collecting this much data on U.S. drivers certainly puts insurance companies in a powerful position.  While they don’t currently plan to collect detailed data about where you have traveled, as telemetrics become more commonplace it can be assumed that more and more data will be collected.  This does create a slippery slope scenario where once you have given over your privacy to insurance companies, over time the data they collect on you could become more detailed and broader.  And once the data is compiled and collected, it could fall into the hands of law enforcement or even your separated spouse’s divorce lawyer or some other civil liability suit attorney.  And what about hackers gaining unauthorized access to insurance company data and using this information to harm you in some way?  And one other aspect of the slippery slope theory says that as more and more people accept the loss of privacy in order to try for more discounts, those who wish to maintain their privacy may have to pay higher insurance rates just to do so.  Would this be fair? 

Clinard Insurance Group is an independent insurance agency, located in Winston Salem, NC.  We insure thousands of families and businesses all across North Carolina, South Carolina, Tennessee and Georgia.  If you would like help with your auto insurance,  home insurance, life insurance or business insurance needs, please feel free to call us, toll free, at 877-687-7557.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Homeowners Insurance And Dog Bites

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Certificates of Insurance And Your Contractors Insurance Policies

Contractors work often involves close coordination with other entities from other artisans to general contractors to even banks and architects involved in a project.   Keeping the information flowing freely between all of these parties on the same job is critical but does require some front end knowledge and planning on your part.  The more hurdles you can jump before you start the job, the easier it will be for you to get your work done without interruption and the easier it will be to get paid once the work is done.

General contractors, or any other contractors above you in the food chain who hire you will need to be able to prove that you have the necessary levels and types of insurance protection.  Failing to do so could mean that you can’t get on the job site in the first place or it may mean you have difficulty collecting payments for your work once it is completed.   So anything you can do to smooth out this process should be done before you start trying to collect the pay for your work, or better yet, before you sign the contract itself or take the job in the first place.

Every construction job is different and each one will carry different requirements for insurance for subcontractors.  If your general contractor is organized and efficient, then they will probably want to have all of your insurance proof documented before you are allowed on their job site.  Typically these general contractors will need details about your commercial auto insurance policy, your general liability insurance policy, your workers compensation insurance policy, and sometimes even require you to carry a commercial umbrella insurance policy.  Your contract with them will likely spell out exactly how much insurance coverage is required for each line of insurance.  So, one step you can take in advance is to share the contract wording relating to insurance requirements with your insurance agent.  This way your agent can help make sure in advance that you will be able to satisfy these requirements.  Once this has been done, have your agent send a certificate of insurance to your general contractor before you start work.

Now let’s take a quick look at this process from the perspective of your communication with your insurance agent.  In order for your agent to issue a certificate of insurance to the general contractor or some other party, you will need to be able to provide them with the name and address of the certificate holder.  Have this information in hand before you call your agent to request the certificate of insurance.   Also, look through your contract to check and see if any special wording is required on the certificate of insurance.  Some contracts will require that you add the general contractor as an additional insured to each policy.  This may be something that your insurance company is willing to do or they may require an additional premium from you for this policy change.  In some cases your insurance company may even say that they will not add this additional insured to your policy.  Other contracts may require or request special wording that may change the nature of one of more of your insurance policies.  These special wording certificates often require the approval of the insurance company underwriter.  No matter which way this goes, you can speed up the process if you discover any special wording requirements ahead of time and let your agent know about them when you first call.

By doing this advance work on your insurance certificate requests, you may be able to save yourself time and often a lot of trouble in the certificate ordering process.    You don’t want to find out, late on a Friday afternoon, that you don’t have the correct insurance policies in place to satisfy your contractual obligations to your general contractor.  Failure to do so could delay when your general contractor is able to pay you. 

At Clinard Insurance Group, in Winston Salem, North Carolina, we insure hundreds of contractors of all stripes, located all across North Carolina, South Carolina, Georgia and Tennessee.  We have insurance programs in place for carpenters insurance, plumbers insurance, landscapers insurance, electricians insurance, painters insurance and many others. We work very hard to fulfill all certificate of insurance requests from our clients in under 30 minutes.  We also have a free phone app for your Android or Iphone that will allow you to request certificates of insurance from us with a few keystrokes on your phone.  If you need help with any of your business insurance policies, please give us a call, toll free, 877-687-7557.