Fallen Trees – What Does The Insurance Policy Say?

You and I both know it, almost no one actually reads their homeowners policy.   Although if you are having trouble sleeping at night, reading is might help with that problem.   And even if you do read it, you may have some trouble interpreting what is covered and what is not.  In this blog I’d like to tackle a common question and point out an area where no policy provides protection, yet could result in an expensive bill for you: fallen trees.

I love to see large old trees in the yard in front of or behind a home.  But large trees in the yard can pose several risks to homeowners.  The most dangerous of course is that a falling tree could injure someon in the house or on the property.  After that, there is risk to the property itself, from the house to outbuildings to fences, yards, patios and driveways.  Now for the legal disclaimer:  Insurance policy forms vary from state to state and from company to company so I suggest that you consult your own policy for exact and specific coverage.  This blog will try to answer these questions in a general way that should be accurate for the majority of NC homeowners with a North Carolina Homeowners Insurance Policy.

With the disclaimers behind us, let’s move on and talk about what is covered and what is not covered in the area of fallen trees for the standard NC HO-3 policy form.  The damages to your home or your structures caused by a windblown, fallen tree will be covered, subject to your deductible.  In addition, the standard HO-3 homeowners policy form will provide up to $1000 for the cost to remove the tree from your premises.  This applies if your tree was felled by wind, hail, or weight of ice, sleet or snow.  But here is where it gets tricky.  If that tree does not damage your home, outbuildings, or fences, then no removal coverage will apply.  There is one exception to this rule.  If the fallen tree is blocking your driveway, then you will have up to $1000 coverage to clear it from your driveway enough to let you get vehicles in and out of your driveway.

Sometimes when reading the coverage on an insurance policy, you have to look carefully for what is not written in the policy language.  So what is missing here?  Well, think about the $1,000 coverage limitation.  While generally $1000 seems like plenty of money for removing a fallen tree, if you have large trees, or if several come down at one time, then $1000 might fall far short of what you need.  I have seen situations where a tree fell in a difficult place between two houses  and while it didn’t hit any structures, a crane was required to remove it.  Those costs can run up into the $10,000 range in a big hurry.  I’ve also seen cases where one tree falling brought down a couple more trees with it, generating cleanup costs well beyond the $1000 mark.  So if you have large trees around your home, you might have a rather large loss exposure that simply won’t and can’t be covered by an insurance policy.

If you are a perceptive reader, then you may have noticed that lightning was not mentioned in the list of covered perils that can trigger the removal coverage.   There is good news on that front.  The Standard NC HO-3 policy form includes some direct coverage for trees, shrubs and other plants that are damaged by lightning.  The policy will pay up to 5% of the coverage limit on your dwelling for lightning damage to trees, shrubs, plants or lawns.  But, no more than $500 will be paid for any one tree, shrub or plant.  But here’s the good news, if that tree is hit by lightning, it is now considered covered property and is eligible for removal coverage as well.  So if that huge tree in your yard falls and hits nothing on the way down, you might find yourself hoping for some evidence that it was hit by lightning.  Otherwise, you are going to be writing some big checks to tree removal service companies.

Here at Clinard Insurance Group, located in lovely Winston Salem, NC, we want all insurance buyers to be informed consumers.  If you need any help with your home or auto insurance, or with your life insurance or even insurance for your business, we hope you will call us, toll free, at 877-687-7557.

Safety Technology For Cars – Which Ones Are Working, Which Ones Aren’t?

A recent study was done by The Highway Loss Data Institute to determine how well some of the new safety technologies installed on some new car models are doing in terms of preventing accidents.  The results showed that some of these technologies were clear winners while some were not performing as well.   Anyone who is considering purchasing a new car, could very well find themselves having to make a choice about which of these new safety systems to have installed  in the new vehicle.   This study can help you decide which ones might be worth the costs and which may not.

To find out more about which of these new technologies is doing its job, researchers looked at collision, property damage and bodily injury claims on vehicles with model years between 2000 and 2011.  They studied automobile insurance claims occurring between January 2008 and August 2011.  They decided to study insurance claims instead of just looking at fatal accident data because of the sheer number of insurance claims.  This large number allowed them to find statistically significant sample sizes to draw better conclusions than if they had just focused on fatality data.   

So which safety systems provided the best results?  Well, the two big winners in terms of reducing the number of crashes were adaptive headlights and forward collision avoidance systems.  The collision avoidance systems that worked best were those that allowed the car to activate the brakes, independent of the driver. 

 Adaptive headlights are able to bend with the road and shine around the curve that you are approaching.  As you approach a curve in the road, adaptive headlights will be aimed where you are headed as opposed to straight out in front of the car. This also minimizes the shine of headlights in opposing driver’s eyes.  These headlights manage this trick by using electronic sensors to detect the speed of the car, how far the driver has turned the steering wheel, and the yaw of the car.  Adaptive headlight systems were shown to reduce accident frequency by 10%.

Forward collision avoidance systems are systems that scan the road ahead taking measurements of the cars speed in order to either alert the driver or apply the brakes if an accident is imminent.  Researchers found that vehicles made by Acura and Mercedes Benz with a forward-collision avoidance system with autonomous braking had 14% fewer claims under property damage liability than the same models without this feature.  Volvo’s system reduced these types of wrecks by 10%. 

There were some safety systems that may not be worth the money.  The big surprise was with lane-departure warning systems.  These systems can alert drivers if they cross the center line or are in danger of running off the road. Some such as the Lexus system will even correct the steering to prevent the car from drifting out of a lane or from drifting off of the road.   The data studied showed that these systems actually increased claims.  Perhaps they were distracting the drivers.    While the increased chance of a wreck with these systems is not statistically significant, the researchers did draw the conclusion that these types of systems were not reducing accidents. 

A few other systems, like blind spot detection and park assist will require more study.   There was not enough data for the research to determine one way or another if these systems were reducing claims. 

At Clinard Insurance Group, located in Winston Salem NC, we insure thousands of families all across North Carolina.  If you would like an agent who will take the time to know you and your particular situation, and be here in the future when you need to speak to him or her again, then Clinard Insurance Group is the place for you.  We are an independent insurance agency so we can give you choices about pricing, coverage and which insurance companies to use.  We would love to be your helpful consultant for your auto insurance, your home insurance, your life insurance, or the insurance for your business.  Please call us, toll free, at 877-687-7557 and let us get to work helping you today. 

Auto Insurance Marketing Costs – The Ad War Continues….

If you watch any television these days then you know that as soon as an ad sequence starts, you are very likely to see at least one ad for car insurance.   It is no accident that you seldom see specific appeals for you to buy home insurance in NC.  But that is simply because most insurance companies are losing money on NC homeowners insurance.  But auto insurance is different.  The profit margins for this product are much higher, thus you see so many ads offering to save you money.    These ads must work though, since the insurance companies just keep upping the ante and spending more and more each year.    But just how much is being spent to try and convince you to switch your auto insurance policy?

The numbers are shocking.  In fact if you are one of those who would like to see more money spent on solving world problems rather than advertising, you may even be offended.    The insurance company that is currently spending the most money on marketing expenses is Geico.  Last year they spent $993.8 million dollars on marketing.  That’s almost a billion dollars!  Geico increased its expenditures in 2011 by 10% compared to what they spent in 2010.    And yet, this 10% increase, as amazing as that seems, is far below the 15% average increase in marketing spending industry wide.  Geico’s marketing budget amounted one sixth of all the marketing spent last year by the entire property and casualty industry.

You’ve heard the saying that bigger is not always better and I think it comes into play here.  The more ads they put on television, then the less impact each one has.  But this arms race that the largest insurance companies have joined in simply requires them to spend more and more each year to overcome the noise that the others have created trying to keep up with them.  Where it will end is not clear but at some point in time the return on investment will fall and this trend will slow down or stop completely. 

You may be interested to know that while auto insurance represents about 1/3 of the total of all property and casualty insurance sold, the advertising and marketing budgets for car insurance represent more than half of the total spent on property and casualty insurance marketing.  This is evidence to me that these direct writer insurance companies with their faceless call centers believe that the average television watcher is probably the biggest sucker for them to approach.  And they are probably right.  They boil the complicated process of protecting your hard won assets down to saving money.  Look, saving money on car insurance is easy, just reduce your coverage.  But doing that of course flies in the very face of why you would buy car insurance in the first place.  But hey, if they can distract you with comedy and talking reptiles, why not?  They surely won’t spend this same amount of money trying to reach commercial insurance customers because commercial insurance customers are too savvy to fall for the idea that all insurance policies are the same and that the lowest price is the only goal when buying insurance.  And people who buy car insurance should be just as careful as business customers because after all, you are buying car insurance to protect your assets that you have worked so hard for over the years.

At Clinard Insurance Group we do things differently.  We don’t have billion dollar ad budgets so we have to get it right with every person that calls us.  We do this by offering you an experienced, well informed agent who will take the time to listen to you, hear your story and then help you find the right policy for your needs at the lowest possible cost to you.  We insure thousands of families all across North Carolina and would love to have the opportunity to show the difference between huge ad budgets and one on one consistent, professional help.  Give us a call today; toll free, at 877-687-7557.

Do Higher Speed Limits Cause More Accidents?

The Texas Department of Transportation is in the midst of a debate about increasing the speed limit on a stretch of highway to 85 mph.   If this happens, then this section of road will hostthe highest speed limit in the United States.  Should Texas then expect to experience more car accidents on this highway then?

What is the relationship between speed limits and accident frequency?  Will higher speed limits always lead to more accidents?  In nearly every study made, the answer is no.  However, when accidents happen at higher speeds, the damages and injuries are much more severe.  Fatality rates in high speed accidents are always higher than in those at lower speeds.  Given that, how do traffic engineers determine the safest speed limit on any given stretch of highway?

Well, the formula that is most commonly used now is to set the speed limit at a speed  at which 85% of the drivers would drive at any given location in optimum weather conditions.  This is because the real factor in determining the likelihood of an accident is the speed disparity between the fastest and the slowest cars.  The majority of drivers rarely drive faster than their speed comfort zone.  This might seem ridiculous given how many drivers you see risking their life and everyone else’s by texting and talking on the phone while they drive.  These behaviors are much more dangerous than driving fast, but people understand intuitively that speed can kill them and so they rarely drive faster than they can control their vehicle.  Texting and talking on the other hand are activities that few drivers recognize as deadly at this time in our cultural development.  That will change in time.  When traffic engineers choose a speed limit that suits 85% of the drivers, then the police can then more easily spot the speeding outliers who need to be controlled by ticketing.

But wait, isn’t driving slower always safer?  Well no.  It turns out that in  both state and federal studies it is consistently shown that the drivers most likely to get into accidents are those traveling significantly below the average speed of the other drivers on the road.  If you are on the highway driving 10 mph slower than the average vehicle speed  then you are more likely to be involved in an accident than if you were driving 10 mph faster than the average speed. 

One thing that everyone should remember when driving at higher speeds is that that you need to allow significantly longer stopping distances between you and the car in front of you.  It will take you nearly twice as far to stop at 85 mph as it will at 60 mph.   So increased speed limits need to be accompanied by some changes in driver habits and that doesn’t always happen.

If those driving on highways at speeds above the speed limit are less likely to get into accidents than those traveling at speeds below the speed limit, then why do auto insurance companies charge you higher rates if you have speeding tickets on your driving record?  In my opinion this is an example of archaic rules still on the books.  Here in NC it is a bit ironic that you can get your ticket reduced to less than 10 miles over the speed limit and have your insurance points waived.  However, if you get a speeding ticket for going more than 75 mph in NC, which in some cases might be only 6 mph over the speed limit, then you could face a 4 point surcharge which would increase your insurance costs dramatically.  You can quickly see that this approach flies in the face of all research and does not make any actuarial sense at all.  I think with the increased use of on board monitoring systems for auto insurance rates, that eventually some of the speeding ticket insurance surcharges will be changed or removed from the books completely.

Clinard Insurance Group is an independent insurance agency located in lovely Winston Salem, NC.  We insured thousands of families all across North and South Carolina.  If you need any help with your auto insurance policy, your homeowners insurance policy, or your life insurance, please call our office, toll free, at 877-687-7557.  We look forward to answering your questions and helping you.

NC Workers Compensation Insurance Standoff – the Industrial Commission Blinks

Workers compensation insurance was designed as a compromise to keep businesses running and to more quickly return injured workers back to the job.  The simple agreement took away most of the employee’s rights to sue the employer and in response they were guaranteed certain benefits if injured, made sick or killed on the job.  The rules of the North Carolina Workers Compensation System have been presided over by the NC Industrial Commission.  These rules have favored the employer over the employee for quite some time now and this month the Industrial Commission showed once again that their sympathies lie with the employer over the injured employee. 

In early May, 2012, Governor Bev Perdue ordered a swift reform of our system.  She was made aware of a number of claims filed by injured employees against their uninsured employers that have gone unpaid for years.   In a show of strong action, the North Carolina Industrial Commission rounded up about 100 delinquent employers and threatened them with jail time should they not pay their injured employees what they are due.  It was beginning to look like the unpaid injured employees were finally going to be treated fairly by their government.

But let’s back up a bit.  If the employer’s part of the work comp bargain is to carry a workers compensation insurance policy, then how did we end up with so many uninsured employee injuries?  This can happen in several ways.  An employer could fail to make a payment and have its work comp insurance policy cancelled.  Or they could just decide to drop the coverage or never buy it in the first place since the NC Industrial Commission has never set up a system for finding the uninsured employers out there.  Or, they may simply not have to buy a policy due to a crazy rule in North Carolina.  This rule states that if you have less than 3 employees, you don’t have to purchase a policy if you don’t want to.  If you don’t buy a policy though, you still have to pay for all loses that occur to your employees just as if you were the insurance company.  This rule makes no sense to me.   Why should a small employer be more able to pay for on the job injuries of its employees than a larger employer?  I would think that a small employer is even less likely to have the assets needed to pay a claim.  NC is one of the few states with such a silly rule and to go along with this, NC also has one of the most lax enforcement of the workers compensation rules that you will find.  It is estimated that in NC there are as many as 10,000 employers with no insurance coverage at all.

With Governor Perdue’s new initiative to find the scofflaws and make them pay or go to jail, there was a glimmer of hope that someday we might not hear any more of these sad stories where an employee is maimed for life and the employer, not having purchased any workers compensation insurance, claims that he has no assets to pay the claim.  But now, as we saw this week, when push came to shove, the North Carolina Industrial Commission chose the welfare of the employers over the injured employees.  No employers were thrown in jail, those that couldn’t or wouldn’t pay what is owed to injured workers were granted extensions to make good on their settlements.  Businesses can now flaunt the law and not purchase work comp insurance and do so with impunity.  Will the Industrial Commission find ways to identify them and force them to obey the law like other states do?  Will they change the law to force all employers with any employees at all to purchase a policy to protect what they don’t have the assets to protect?  I doubt it.

Clinard Insurance Group, located in Winston Salem, NC insures thousands of small businesses all across the state.  We urge every business with any employees at all to buy a workers compensation insurance policy to protect their assets and their employees.   If you would like help with your workers compensation insurance, please call us toll free, at 877-687-7557.

Fatalities For Teen Drivers Are Spiraling Downward Thanks To Tougher Licensing Rules

For parents of teenagers nearing driving age, there should be great comfort in the report released last week by the Insurance Institute for Highway Safety and Highway Loss Data Institute.  The results of this study indicate a very positive step forward for nervous parents.  This report, which studied the time frame from 1996 through 2010 indicates a dramatic drop in automobile accident death rates for teen drivers of all ages.

The drop in fatality rates for teen drivers over the past 15 years can be directly attributed to tougher licensing restrictions by many of the states.  Teens are having to wait longer to become eligible for a license and are also being required to show that they have received more practice driving with a supervisor as well.   As you would imagine, this report proves that states with the toughest graduated licensing rules have experienced the greatest drop in teen driver fatalities.  Here in NC we have pretty stringent requirements both in terms of licensing age and in terms of hours of practice required for a teen to be eligible for a license.  By contrast, South Dakota allows a teen to obtain a license three months after his or her 14^th birthday.  If that state were to increase the driving age to 17, it is estimated that the state would see a 32% drop in fatal crashes among young drivers.

The graduated licensing rules typically aim at 5 specific areas of training or privilege.  They are the age at which a teenager can obtain a driving permit and start practicing with a parent or other driving supervisor, the number of hours of driving practice that must be completed before a teen is eligible, the age at which the teen can test for and receive a license, the restrictions on night driving, and the restrictions on passengers in their age group allowed in the car.  North Carolina, for instance, has steadily increased their restrictions in each of these categories over the past decade.

The numbers from this report are very encouraging.  The death rate fell for each age group studied.  16 year old drivers had a drop of 68% in fatalities.  17 year old drivers had a 59% decrease while 18 year olds had a 52% decrease.   Even 19 year old drivers show a positive change as well with the death rate for 19 year olds dropping by 47%.

While this is great news there is some bad news on the horizon.   The preliminary data from the first 6 months of 2011 shows an increase in fatalities for 16 and 17 year old drivers of 11%.  Teen driver fatality data is subject to some temporary swings so this may be a blip on the radar or it may be a trend indicating that fatalities are once again on the rise.  The widespread use of smart phones and texting by teen drivers may be playing a role in this disturbing new upward trend in deaths.

Clinard Insurance Group, located in Winston Salem NC has made it a part of our mission for many years to help parents of teen drivers with training tools, information, and exceptionally low teen driver insurance rates for the new drivers in their household.  Please take a moment to check out our teen driver information web page.  There are some free tools there that might help you save your child’s life.   If you have questions about the NC graduated licensing program or about teen driver insurance, please feel free to call us, toll free, at 877-687-7557.

Is The Consent To Rate Letter Stealing Power From The NC Rate Bureau?

I remember a day, not so long ago when if we ever needed to have a client sign a consent to rate form, then we had to spend some time finding one to use.  This usually happened when someone had such a bad driving record or was considered such a poor risk that the insurance company needed to charge much more than the maximum rates allowed by law on their auto insurance policy in order to be comfortable writing the policy.  Today, with the market for NC homeowners insurance in such disarray, the consent to rate form has become much more common place than any claims forms ever would be.  This new trend has me thinking about how this overuse of a once rare loophole must leave the NC Rate Bureau feeling like they are losing their grip on the insurance rate rules in this beautiful state. 

Let me start with a warning to anyone who may have received a consent to rate form from their insurance company.  Don’t just sign and return this form without taking some time to check out your options.  This doesn’t mean that you should ignore this form completely, because doing that could leave you with no insurance at all.  But I want you to know that in most cases you have other options and that blindly signing this form will almost certainly mean that you will end up paying much more for your homeowners insurance policy than you need to.  To learn more about the consent to rate form and what it means for you and your insurance rates, please read my blog about that by clicking here.

Let’s begin with a bit of background about how insurance rates are created in NC, so that you can understand how this previously benign little form is starting to usurp the power of the NC rate bureau.  In the state of North Carolina, insurance rates are controlled by the NC rate bureau and approved or not approved by the NC Insurance Commissioner’s office.  The rate bureau establishes a maximum rate that can be charged for the different kinds of insurance policies sold in NC.  What usually happens with most insurance products is that the individual insurance companies then file rate credits to offer rates somewhere below this maximum rate.  In NC, insurance companies have been losing money on homeowners insurance policies for so long that the entire marketplace is under enormous pressure to stop the bleeding.  This has meant rate increases for home insurance in NC but many insurance companies are also using the consent to rate form to charge a much, much higher rate to a selected group of their customers while still offering the much lower rates to their more preferred clients.   The consent to rate form, once signed by a homeowner, simply gives the insurance company the power to charge more than the maximum rate allowed by the rate bureau for just that customer who signed the form.

When these forms were only occasionally used for a very small fraction of policy holders each year then it was being utilized in the manner in which the rate bureau intended.  The beauty of this form is that it allowed an insurance company the flexibility to adjust the rates enough to allow it to place insurance for special situations.   But now we are seeing insurance companies mailing consent to rate forms to large blocks of their homeowner customers.  Some may be sending the letter to as many as 25% of their home insurance customers in NC.  When that happens, and when a significant number of them sign the form and return it and then pay the increased rate, then in effect, we have created a new, more unregulated insurance rate making program that effectively makes an end run around the NC rate bureau.  I am openly wondering what the powers that be in the NC rate bureau feel about this technique and what it does to erode their power to make and enforce insurance rates in North Carolina. Are the ok with homeowners rates for some portion of our population turning into an unregulated wild west where the ignorant and the less informed pay as much as 300% more than they would have to with a clearer understanding of their options?

At Clinard Insurance Group, we insure thousands of families all across North Carolina.  We have options for those who are being nonrenewed or who have received consent to rate letters from their insurance companies.  If you receive a consent to rate letter from your insurance company, please don’t simply sign and return it.  Call us, we will help you explore your options in great detail, taking as much time as you need to fully understand your choices.  You don’t have to pay 2 or 3 times the maximum state allowed rate for your home insurance.  We want to help, just give us a call, toll free at 877-687-7557.