Highway Safety & You

Courtesy of iii.org

The cost and crashworthiness of vehicles as well as drivers? safety habits affect the cost of auto insurance. Out of concern for public safety and to help reduce the cost of crashes, insurers support safe driving initiatives. The insurance industry is a major supporter of anti-drunk driving and seatbelt usage campaigns.

Lives saved by safety devices

  • Airbags: Airbags are designed to inflate in moderate to severe frontal crashes. The National Highway Traffic Safety Administration (NHTSA) says that as of 2013 there were 202 million airbag-equipped passenger vehicles on the road in the United States, including 199 million with dual air bags. The agency says that frontal airbags saved 2,573 lives in 2015. Airbags, combined with seatbelts, are the most effective safety protection available for passenger vehicles. Seatbelts alone reduce the risk of fatal injury to front-seat passenger car occupants by 45 percent. The fatality-reducing effectiveness for frontal airbags is 14 percent when no seatbelt is used and 11 percent when a seatbelt is used in conjunction with airbags.
  • Seatbelts: Among passenger vehicle occupants age five and older, seatbelts saved an estimated 13,941 lives in 2015. In fatal crashes in 2014, about 80 percent of passenger vehicle occupants who were totally ejected from the vehicle were killed. NHTSA says that when used seat belts reduce the risk of fatal injury to front seat passenger car occupants by 45 percent and the risk of moderate-to-critical injury by 50 percent. For light truck occupants, the risk is reduced by 60 percent and 65 percent, respectively.
  • Child safety seats: NHTSA says that in 2015 the lives of an estimated 266 children under the age of five were saved by restraints.
  • Motorcycle helmets: NHTSA estimates that helmets saved the lives of 1,772 motorcyclists in 2015. If all motorcyclists had worn helmets, an additional 740 lives could have been saved.
  • Helmets are estimated to be 37 percent effective in preventing fatal injuries to motorcycle riders and 41 percent for motorcycle passengers. In other words, for every 100 motorcycle riders killed in crashes while not wearing a helmet, 37 of them could have been saved had all 100 worn helmets.
  • Electronic stability control: The National Highway Traffic Safety Administration (NHTSA) requires all vehicles manufactured after model year 2012 to have electronic stability control (ESC). All new passenger cars, light trucks, SUVs and vans must comply with the requirement. ESC was designed to help prevent rollovers and other types of crashes by controlling brakes and engine power.
  • NHTSA says ESC saved an estimated 681 passenger car occupant lives in 2014 and 899 lives among light truck and van occupants for a total of 1,580 lives saved among passenger vehicle occupants. The 2014 total for lives compares with 1,366 lives saved in 2013 and 1,225 lives saved in 2012. Over the five years from 2010 to 2014, NHTSA says the ESC has saved a total of more than 4,100 lives.
  • NHTSA estimated that about 99 million 2006-model year and newer passenger vehicles (passenger cars and light trucks and vans) were equipped with ESC. This works out to 38.8 percent of the 255 million passenger vehicles on the road in 2014.
  • In May 2014 NHTSA released a report on updated estimates of fatality reduction by electronic stability control (ESC), which found that in single-vehicle crashes of passenger cars, where the first harmful event was a rollover, ESC decreased rollovers by 59.5 percent, relative to a control group. The reduction in rollovers was even more dramatic in LTVs such as pickup trucks, SUVs and vans, 74 percent.
  • In June 2010 the Insurance Institute for Highway Safety (IIHS) released the findings of a study that found that ESC for passenger vehicles is one of the most effective technologies for the prevention of fatal crashes, especially rollovers. IIHS data show that it lowers the risk of a deadly crash by 33 percent and cuts the risk of a single-vehicle rollover by 73 percent. The IIHS examined 10 years of crash data from NHTSA.

Motor vehicle crashes

2017: Traffic fatalities were 1 percent lower in the first six months of 2017, compared with the same period in 2016, according to preliminary estimates from the National Safety Council (NSC). The organization says the decline comes after the steepest estimated two-year increase in traffic deaths since 1964. In addition, the first six months’ tally for 2017 is 8 percent higher than the same period in 2015.

2016: According to data released by the National Safety Council (NSC), in 2016 there were more than 40,000 traffic fatalities in the U.S. for the first time in 10 years. The NSC statistics show a 6 percent increase in auto crash deaths in 2016, and a 3 percent rise in the number of miles Americans drove, compared with 2015. NSC estimates that the cost of deaths, injuries and property damage attributed to crashes in 2016 totaled $432.5 billion, up 12 percent from 2015. Nearly 4.6 million people required medical treatment after crashes, an increase of 7 percent over 2015.

2015: According to NHTSA, traffic fatalities rose 7.2 percent in 2015 to 35,092 people from 32,744 in 2014. In 2015 an estimated 2.44 million people were injured in motor vehicle crashes. The fatality rate per 100 million vehicle miles traveled in 2015 rose to 1.07 from 1.08 in 2014.

What You Need to Know About Claims

Courtesy of iii.org

After a disaster, you want to get back to normal as soon as possible, and your insurance company wants that too! You may get multiple checks from your insurer as you make temporary repairs, permanent repairs and replace damaged belongings. Here’s what you need to know about claims payments.


The initial payment isn’t final

In most instances, an adjuster will inspect the damage to your home and offer you a certain sum of money for repairs, based on the terms and limits of your homeowners policy. The first check you get from your insurance company is often an advance against the total settlement amount, not the final payment.

If you’re offered an on-the-spot settlement, you can accept the check right away. Later, if you find other damage, you can reopen the claim and file for an additional amount. Most policies require claims to be filed within one year from the date of disaster; check with your state insurance department for the laws that apply to your area.

You may receive multiple checks

When both the structure of your home and your personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. If your home is uninhabitable, you’ll also receive a check for the additional living expenses (ALE) you incur if you can?t live in your home while it is being repaired. If you have flood insurance and experienced flood damage, that means a separate check as well.

Your lender or management company might have control over your payment

If you have a mortgage on your house, the check for repairs will generally be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. Similarly, if you live in a coop or condominium, your management company may have required that the building’s financial entity be named as a co-insured.

This is so the lender (and/or, in the case of a coop or condo, the overall building), who has a financial interest in your property, can ensure that the necessary repairs are made.

When a financial backer is a co-insured, they will have to endorse the claims payment check before you can cash it.

Depending on the circumstances, lenders may also put the money in an escrow account and pay for the repairs as the work is completed. Show the mortgage lender your contractor’s bid and let the lender know how much the contractor wants upfront to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment to the contractor.

If your home has been destroyed, the amount of the settlement and who gets it is driven by your policy type, its specific limits and the terms of your mortgage. For example, part of the insurance proceeds may be used to pay off the balance due on the mortgage. And, how the remaining proceeds are spent depend on your own decisions, such as if you want to rebuild on the same lot, in a different location or not rebuild at all. Tthese decisions are also driven by state law.

Your insurance company may pay your contractor directly

Some contractors may ask you to sign a “direction to pay” form that allows your insurance company to pay the firm directly. This form is a legal document, so you should read it carefully to be sure you are not also assigning your entire claim over to the contractor. When in doubt, call your insurance professional before you sign. Assigning your entire insurance claim to a third party takes you out of the process and gives control of your claim to the contractor.

When work is completed to restore your property, make certain the job has been completed to your satisfaction before you let your insurer make the final payment to the contractor.

Your ALE check should be made out to you

Your check for additional living expenses (ALE) has nothing to do with repairs to your home. So, ensure that this check is made out to you alone and not your lender. The ALE check covers your expenses for hotels, car rental, meals out and other expenses you may incur while your home is being fixed.

Your personal belongings will be calculated on cash value, first

You’ll have to submit a list of your damaged belongings to your insurance company (having a home inventory will make this a lot easier). Even if you have a replacement value policy, the first check you receive from your insurer will be based on the cash value of the items, which is the depreciated amount based on the age of the item. Why do insurance companies do this? It is to match the remaining claim payment to the exact replacement cost. If you decide not to replace an item, you?ll be paid the actual cash value (depreciated) amount for it.

To get replacement value for your items, you must actually replace them

To get fully reimbursed for damaged items, most insurance companies will require you to purchase replacements. Your company will ask for copies of receipts as proof of purchase, then pay the difference between the cash value you initially received and the full cost of the replacement with an item of similar size and quality. You’ll generally have several months from the date of the cash value payment to purchase replacements; consult with your agent regarding the timeframe.

In the case of a total loss, where the entire house and its contents are damaged beyond repair, insurers generally pay the policy limits, according to the laws in your state. That means you can receive a check for what the home and contents were insured for at the time of the disaster.

Next steps: We can’t reinforce it enough – claims are easier to make when you have a home inventory ready!

Insurance Claims and Irma FAQ

Courtesy of iii.org

In the aftermath of Hurricane Harvey and Hurricane Irma, policyholders may have questions about how insurance works following a natural disaster. Here are some answers to many of these common questions.


Q. Are flood losses covered under my homeowners insurance policy?

A. Standard homeowners and renters insurance policies do not cover flood damage, including damage from a storm surge. Flood coverage requires a separate policy from the federal government’s National Flood Insurance Program (NFIP), or from some private insurance companies.

More information about flood insurance.

Q. Is property damage from a storm surge considered flood damage?

A. Yes, it is?and, therefore, storm surge is covered by your flood insurance policy. A standard homeowners insurance policy does not cover damage from floods, such as flooding from a storm surge.

Q. What is the “official” definition of a flood? If there is only water on my property in my neighborhood, is that considered a flood?

A. Flood damage is caused by an overflow of inland or tidal waters and is defined as a general and temporary condition of partial or complete inundation of two or more acres and two or more properties of what is normally dry land. So if only one property is damaged, then that is not considered flood related.

Q. Is wind damage covered under my homeowners insurance policy?

A. Property insurance covers damage from windstorms, such as hurricanes and tornadoes, to the “residence premises,” whether it is a single-family home, a duplex where the policyholder lives in one of the units, or any other building where the policyholder resides as shown on the insurance declarations page. A standard homeowners policy also applies to attached structures, such as a garage or deck, and “other structures” that are unattached, such as a separate garage building or shed and swimming pools. The policy includes coverage for damage to contents.

More information about homeowners coverage.

Q. Does my renters insurance cover damage from wind?

A. A renters policy covers personal belongings that are damaged by wind from the storm. Damage from flooding may be covered under some, but not all, renters policies. A separate renters flood policy can be purchased from the NFIP. Damage unrelated to your personal possessions, such as part of the apartment’s structure like the walls and floor, is covered under the building owner’s policy.

More information about renters insurance.

Q. I live in a condo. Am I covered for wind damage to my unit?

A. If you have purchased a co-op or condominium policy for your apartment or townhouse, you are covered for damage to the interior space of your home. The condo association’s insurance might have coverage for your fixtures, wiring or plumbing, or it may only provide coverage from the “bare walls” and not what is behind them. You can obtain a copy of the master policy to better understand what is covered.

More information about co-op/condo insurance.

Q. My car was flooded in the storm. Is it covered?

A. Flood damage to vehicles, including flooding from a storm surge, is covered if you have purchased comprehensive coverage, also known as “other than collision” coverage, which is optional with a standard auto policy. Four out of five drivers choose to buy comprehensive coverage.

More information about auto coverage.

Q. If I make temporary repairs to my home, will I get reimbursed?

A. Yes. Do not wait until a claims adjuster arrives to make temporary repairs that will prevent further damage. Most insurance policies will reimburse you for the expense of making such reasonable and necessary repairs, up to a specified dollar amount. In fact, most policies require you to take these preventive steps. Be sure to save all the receipts from purchases related to your repairs so you can be reimbursed.

Q. The power went out during the storm and food in the refrigerator and freezer were spoiled. Is that covered?

A. Following a hurricane, some insurance companies may include food-spoilage coverage, usually for a set amount that can range from $250 to $500 per appliance. Check with your insurance professional.

Q. I have a percentage deductible for hurricane damage. How do I know what my out-of-pocket costs are?

A. The declarations page of your insurance policy details the exact dollar amount of your hurricane deductible. Whether a hurricane deductible applies to a claim depends on the specific “trigger”, which can vary by state and insurer and may be linked to wind speeds.

More information about deductibles.

Q. Should I file a claim if the damage is less than my deductible?

A. Yes. Sometimes there may be additional damage that becomes evident in the months following a significant storm. Filing a claim, even if the damage total is under your deductible, will protect you in the event further repairs are needed. And if your home suffers damage from more than one storm in a single season, the damage from the first storm may apply toward the deductible amount.

Q. My home was not damaged, but can I file a claim for the large tree that fell in my yard?

A. Homeowners insurance policies do not pay for removal of trees or landscaping debris that did no damage to an insured structure. If a tree hit your home, that damage is covered; if your tree fell on your neighbor’s home, his or her insurance company would pay for the damage. However, if the felled tree was poorly maintained or diseased and you took no steps to take care of it, their insurer may seek reimbursement from you for the damages.

More information about trees and insurance.

Q. My home is uninhabitable. How can I cover temporary living expenses?

A. Most homeowners and renters policies cover additional living expenses?any costs over and above your customary living expenses?when you are displaced from your home by a covered loss (such as wind damage) and need temporary shelter. The amount is generally 20 percent of the total insurance you have on your home. Some insurers pay more than 20 percent; others limit additional living expenses to an amount spent during a specific time period. Keep all your receipts to document your expenditures.

Q. If I evacuated due to the storm, are my evacuation expenses covered?

A. Generally, expenses related to evacuation are only covered if there is also damage to your property. This is because the coverage is part of the property policy.

Q. I’ve heard that Texas has a new law that affects prevents me from filing a lawsuit in a claims dispute. Is that true?

A. No, it is not. Texas law has strong protections for consumers, and those protections remain in place. A law that will effective Sept. 1, 2017 (HB1774) simply requires that an insurance company be given written notice of legal action before a lawsuit is filed. It does not bar any individual from having access to the courts nor does it prevent consumers from seeking legal counsel.

Q. Advertisements and social media traffic are suggesting that I need a lawyer or public adjuster. Do I need to hire someone to help me with my claim?

A. You have a right to hire outside claims help; however, be aware that it comes at a cost as public adjusters are paid a percentage of your claim and legal assistance is often charged at an hourly rate. The insurance premiums you pay include the services of a claims adjuster when it comes time to file a claim. Their job is to serve you and help you recover and rebuild?if you’re not satisfied with the results, you can contact the claims manager. Every natural disaster gives insurers an opportunity to do their best for you, and that should be your expectation.

Money Raised for Hurricane Harvey by Insurance Industry

Courtesy of iii.org

In addition to settling insurance claims the insurance industry is also strongly committed to raising charitable funds for victims of Hurricane Harvey.

The Insurance Industry Charitable Foundation (IICF), a nonprofit organization that unites the insurance industry in helping communities and enriching lives through grants, volunteer service and leadership, has established a Hurricane Harvey Disaster Relief Fund to assist victims affected by this catastrophic storm.

Within 24 hours of establishing the IICF Hurricane Harvey Disaster Relief Fund, nearly $80,000 has already been committed by those in the insurance industry. John Vasturia, President, Specialty Markets, Munich Reinsurance America and IICF Board of Governors Chair, noted that, “Through IICF, we are able to very quickly unite our efforts in collecting donations, and distribute to local nonprofits in the Texas communities who will be able to help families across the region in a very real and meaningful way.”

IICF will collect and report on the total of all donations made through this fund, and forward 100% of these insurance industry contributions to the local nonprofits assisting victims in the area, including the American Red Cross and specifically its Hurricane Harvey disaster fund. Donations can made by clicking here.

The USAA Foundation, Inc. has pledged to assist the Hurricane Harvey rescue and recovery efforts with a $1 million grant. In addition to the grant from the Foundation, USAA introduced a donation program for its 32,000 employees worldwide, committing to matching their contributions, dollar for dollar, up to a total of $150,000. That total was met in less than six hours, so the matching grant was boosted Wednesday to $500,000, raising the potential contribution from USAA and its employees to at least $1 million, on top of the $1 million pledge from The Foundation.
Other insurance companies that are raising funds for Hurricane Harvey victims include: The Nationwide Foundation, which is giving $500,000 to Red Cross Disaster Relief and State Farm which is matching employee donations through its Matching Gift Program.

If you work for an insurance company or trade group that is raising funds for Hurricane Harvey victims please let us know about it by emailing marias@iii.org

Insurance After the Storm-Part II

Courtesy of iii.org

Other factors

Compliance with current building codes: Building codes require structures to be built to certain minimum standards. In areas likely to be hit by hurricanes, for example, buildings must be able to withstand high winds. If your home was damaged and it was not in compliance with current local building codes, you may have to rebuild the damaged sections according to current codes.

In some cases, complying with the code may require a change in design or building materials and may cost more. Generally, homeowners insurance policies won’t pay for these extra costs, but insurance companies offer an endorsement that pays a specified amount toward such changes. (An endorsement is an addition to an insurance policy that changes what the policy covers.) Information concerning this coverage is found under ordinance or law in the Section I exclusion part of your policy.

The use of public adjusters: Your insurance company provides an adjuster at no charge. You also may be contacted by adjusters who have no relationship with your insurance company and charge a fee for their services. They are known as public adjusters. If you decide to use a public adjuster to help you in settling your claim, this service could cost you as much as 15 percent of the total value of your settlement. Sometimes after a disaster, the percentage that public adjusters may charge is set by the insurance department. If you do decide to use a public adjuster, first check references and qualifications by contacting the Better Business Bureau and your state insurance department (See back cover for contact information). Also contact the National Association of Independent Insurance Adjusters (www.naiia.com).

Compensation for Damage

Vehicles: If your car was damaged and you have comprehensive coverage in your auto insurance policy, contact your auto insurance company. If your car has been so badly damaged that it’s not worth repairing, you will receive a check for the car’s actual cash value — what it would have been worth if it had been sold just before the disaster. Kelley Blue Book (www.kbb.com) or other such publications can give you an idea of what your car was worth.

Trees and shrubbery: Most insurance companies will pay up to $500 for the removal of trees or shrubs that have fallen on your home. They will also pay for damage caused to insured structures and their contents up to policy limits, but they won’t pay to remove trees that have fallen causing a mess in your yard.

Water: While homeowners policies don’t cover flood damage, they cover other kinds of water damage. For example, they will generally pay for damage from rain coming through a hole in the roof or a broken window as long as the hole was caused by a hurricane or other disaster covered by the policy. If there is water damage, check with your agent or insurance company representative as to whether it is covered.

The Payment Process

Disasters can make enormous demands on insurance company personnel. Sometimes after a major disaster, state officials ask insurance company adjusters to see everyone who has filed a claim before a certain date. When there are a huge number of claims, the deadline may force some to make a rough first estimate. If the first evaluation is not complete, set up an appointment for a second visit. The first check you get from your insurance company is often an advance. If you’re offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can “reopen” the claim and file for an additional amount.

Most policies require claims to be filed within one year from the date of the disaster.

Some insurance companies may require you to fill out and sign a proof of loss form. This formal statement provides details of your losses and the amount of money you’re claiming and acts as a legal record. Some companies waive this requirement after a disaster if you’ve met with the adjuster, especially if your claim is not complicated.

The choice of repair firms is yours. If your home was adequately insured, you won’t have to settle for anything less than you had before the disaster. Be sure the contractor is giving you the same quality materials. Don’t get permanent repairs done until after the adjuster has approved the price. If you’ve received bids, show them to the adjuster. If the adjuster agrees with one of your bids, then the repair process can begin. If the bids are too high, ask the adjuster to negotiate a better price with the contractor. Adjusters may also recommend firms that they have worked with before. Some insurance companies even guarantee the work of firms they recommend, but such programs are not available everywhere. Make sure contactors get the proper building permits.

If you can’t reach an agreement with your insurance company: If you and the insurer’s adjuster can’t agree on a settlement amount, contact your agent or your insurance company’s claim department manager. Make sure you have figures to back up your claim for more money. If you and your insurance company still disagree, your policy allows for an independent appraisal of the loss. In this case, both you and your insurance company hire independent appraisers who choose a mediator. The decision of any two of these three people is binding. You and your insurance company each pay for your appraiser and share the other costs. However, disputes rarely get to this stage.

Some insurance companies may offer a slightly different way of settling a dispute called arbitration. When settlement differences are arbitrated, a neutral arbiter hears the arguments of both sides and then makes a final decision.

How you receive the money: When both the dwelling and the contents of your home are damaged, you generally get two separate checks from your insurance company. If your home is mortgaged, the check for home repairs will generally be made out to you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed.

You should show the mortgage lender your contractor’s bid and say how much the contractor wants up front to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment. If you don’t get a separate check from your insurance company for the contents of your home and other expenses, the lender should release the insurance payments that don’t relate to the dwelling. It should also release funds that exceed the balance of the mortgage. State bank regulators often publish guidelines for banks to follow after a major disaster. Contact state regulatory offices to find out what these guidelines are.

Some construction firms want you to sign a direction to pay form that allows your insurance company to pay the firm directly. The firm then will bill your insurance company directly and attach the form you signed. Make certain that you’re completely satisfied with the repair work and that the job has been completed before signing any forms.

If you have a replacement cost policy for your personal possessions, you normally need to replace the damaged items before your insurance company will pay. If you decide not to replace some items, you will be paid their actual cash value. Your insurance company will generally allow you several months from the date of the cash value payment to replace the items and collect full replacement cost. Find out how many months you are allowed. Some insurance companies supply lists of vendors that can help replace your property. Some companies may supply some replacement items themselves.

After your claim has been settled and the repair work is underway: Take the time to re-evaluate your homeowners insurance coverage. For example, was your home adequately insured? Did you have replacement cost coverage for your personal property? Talk to your insurance agent or company representative about possible changes.

Find out more about filing an insurance claim after a disaster.

Insurance After the Storm-Part I

Courtesy of iii.org

What you need to know about

  • how to file a claim
  • how the claim process works
  • what’s covered and what’s not

First Steps

Contact your agent or company immediately. Find out:

  • Whether the damage is covered under the terms of your policy
  • how long you have to file a claim
  • whether your claim exceeds your deductible (the amount of loss you agree to pay before insurance kicks in)
  • how long it will take to process the claim
  • whether you’ll need estimates for repairs

Make temporary repairs: Take reasonable steps to protect your property from further damage. Save receipts for what you spend and submit them to your insurance company for reimbursement. Remember that payments for temporary repairs are part of the total settlement. So if you pay a contractor a large sum for a temporary repair job, you may not have enough money for permanent repairs. Beware of contractors who ask for a large amount of money up front and contractors whose bids are very low — they might cut corners and do shabby work. Don’t make extensive permanent repairs until the claims adjuster has assessed the damage.

If you need to relocate, keep your receipts: If you need to find other accommodations while your home is being repaired, keep records of your expenses. Homeowners insurance policies provide coverage for the cost of additional living expenses if your home is damaged by an insured disaster.

Prepare for the adjuster’s visits: Your insurance company may send you a proof of loss form to complete or an adjuster may visit your home first. (An adjuster is a person professionally trained to assess the damage.) In either case, the more information you have about your damaged possessions — a description of the item, approximate date of purchase and what it would cost to replace or repair — the faster your claim generally can be settled.

  • To substantiate your loss, prepare an inventory of damaged or destroyed items and give a copy to the adjuster along with copies of any receipts. Don’t throw out damaged items until the adjuster has visited. You should also consider photographing or videotaping the damage. If your property was destroyed or you no longer have any records, work from memory.
  • Identify structural damage to your home and other structures such as a garage, tool shed or in-ground swimming pool. Make a list of everything you want to show the adjuster, for example, cracks in the walls and missing roof tiles. You should also get the electrical system checked. Most insurance companies pay for these inspections.
  • Get written bids from licensed contractors. The bids should include details of the materials to be used and prices on a line-by-line basis. This makes adjusting the claim faster and simpler.
  • Keep copies of the lists and other documents you submit to your insurance company. Also keep copies of whatever paperwork your insurance company gives you and record the names and phone numbers of everyone you speak to.

Flood damage is excluded under standard homeowners and renters insurance policies. Flood coverage, however, is available as a separate policy from the federal government’s National Flood Insurance Program (NFIP) and from a few private insurers. The NFIP provides coverage up to $250,000 for the structure of the home and $100,000 for personal possessions. Flood insurance claims should be filed with your homeowners insurance company.

Factors That Determine The Amount Of Settlement You Get

Type of Policy

Replacement Cost and Actual Cash Value: Replacement cost policies provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation (the decrease in value due to age, wear and tear, and other factors). Actual cash value policies pay the amount needed to replace the item minus depreciation.

Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. With a replacement cost policy, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a part of the cost of a new washing machine because a machine that has been used for eight years is worth less than its original cost.

Extended and Guaranteed Replacement Cost: If your home is damaged beyond repair, a typical homeowners policy will pay to replace it up to the limits of the policy. If the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be built for an amount within the policy limits.

With an extended replacement cost policy your insurer will pay a certain percentage over the limit to rebuild your home — 20 percent or more, depending on the insurer — so that if building costs go up unexpectedly, you will have extra funds to cover the bill. A few insurance companies offer a guaranteed replacement cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But neither type of policy will pay for more expensive materials than those that were used in the structure that was destroyed.

Mobile Home, Stated Amount: If you own a mobile home, you may have a stated amount policy. With this policy, the maximum amount you receive if your home is destroyed is the sum you agreed to when the policy was issued. If you opt for the stated amount, update your policy annually to make sure that the amount will cover the cost of replacing your mobile home. Check with local mobile home dealers to find out what similar homes now sell for.

Policy limits

Most insurance policies provide adequate coverage because they include an inflation-guard clause to keep up with increases in local building costs. If you have replacement cost coverage, your insurance company will pay the full cost of repairing or replacing the damaged structure with a building of “like kind and quality.” In other words, if you were adequately insured and lived in a three-bedroom ranch before the disaster, your insurance company would pay to build a similar three-bedroom ranch.

Most insurance companies recommend that a dwelling be insured for 100 percent of replacement cost so that you have enough money to rebuild if your home is totally destroyed.

You may not be fully covered, however, if you have made significant improvements on your house, such as enclosing a porch to create another room or expanding your kitchen, without informing your insurance company of the changes at the time.

Temporary living expenses

If you can’t live in your home because of the damage, your insurance company will advance you money to pay for reasonable additional living expenses. The amount available to pay for such expenses is generally equal to 20 percent of the insurance on your home. This amount is in addition to the money for repairs or to rebuild your home. Some insurance companies pay more than 20 percent. Others limit additional living expenses to the amount spent during a certain period of time.

Among the items typically covered are eating out, rent, telephone or utility installation costs in a temporary residence, and extra transportation costs. Insurance policies often discuss additional living expenses under the heading loss of use.

Rebuilding and making repairs

If your home was destroyed, you have several options.

  • You can rebuild a new home on the same site.
  • Depending on state law, you can sell the land and build or buy a house in a different place, even another state.
  • You can decide that you would rather rent.

If you decide not to rebuild, the settlement amount depends on state law, what the courts have said about this matter and the kind of policy you have. Find out from your insurance agent or company representative what the settlement amount will be based on.

Concerning repairs, if you downgrade, for example, replace an expensive wood floor with one using a cheaper product, you are not entitled to the difference in cash.

to be continued…

Do College Students Need Insurance

Courtesy of iii.org

With burglaries constituting approximately 50 percent of all on-campus crimes, according to the National Center for Education Statistics, it is more important than ever that college students and their parents review their insurance coverage.

For students who live in a dorm, most personal possessions are covered under their parents’ homeowners or renters insurance policies. However, some home insurance policies may limit the amount of insurance for off-premises belongings to just 10 percent of the total amount of coverage for personal possessions. This means that if the parents have $70,000 worth of insurance for their belongings, only $7,000 would be applicable to possessions in the dorm. Not all insurers impose this type of limit, so check with your insurance professional.

Expensive computer and electronic equipment, sports equipment, and items such as jewelry may also be subject to coverage limits under a standard homeowners policy. If the limits are too low, a special personal property floater or an endorsement can be purchased to cover these items. There are also stand-alone insurance policies for computers and cellphones.

Students and/or their parents may also want to consider purchasing a stand-alone policy specifically designed for students living away at college. This can be an economical way to provide additional insurance coverage for a variety of disasters.

Students who live off-campus are likely not covered by their parents’ homeowners policy and may need to purchase their own renters insurance policy. Your insurance professional can tell you whether your homeowners or renters policy extends to off-campus living situations.

For students going off to college, the I.I.I. recommends the following:

  • Leave valuables at home if possible
    While it may be necessary to take a computer or sports equipment to campus, other expensive items, such as valuable jewelry, luxury watches or costly electronics, should be left behind or kept in a local safety deposit box.
  • Create a “dorm inventory”
    Before leaving home, students should make a detailed inventory of all the items they are taking with them, and revise it every year. Having an up-to-date inventory will help get insurance claims settled faster in the event of theft, fire or other types of disasters.
  • Engrave electronics
    Engrave electronic items such as computers, televisions and mobile devices, such as your smart phone, with your name or other identifying information that can help police track the stolen articles.

The I.I.I. offers the following advice to guard against theft of your personal belongings on campus:

  • Always lock your dorm room door and keep your keys with you at all times, even if you leave briefly. And, not just at night?most dorm thefts occur during the day. Insist your roommates do the same.
  • Don’t leave belongings unattended on campus. Whether you are in class, the library, the dining hall or other public areas, keep book bags, purses and laptops with you at all times. These are the primary areas where property theft occurs.
  • Buy a laptop security cable and use it. A combination lock that needs decoding may be just enough to dissuade a thief.
  • Most campus fires are cooking related so be careful about the types of hot plates or microwaves you to bring to school, and how you use them.

In the event a student is planning to have a car on campus, choose a safe, reliable vehicle and do some comparison shopping to find the best auto insurance rate. You should also check with your own insurance company as it may offer a multi-policy discount. If you decide to keep the student’s car at home, be sure to let your auto insurance company know, as many insurers will give discounts for students who are living at a school at least 100 miles away from home.

Floods and You

Courtesy of iii.org

Watches/warnings:

  • Flood watches are issued when rain is heavy enough to cause rivers to overflow.
  • Flood warnings describe the severity of the situation and indicate when and where the flood will begin.
  • Flash flood watches are issued when heavy rain is occurring or is expected to occur.
  • Flash flood warnings are issued when flooding is occurring suddenly. In the event of flash flooding, move immediately to high ground.
  • Educate your family and yourself about your community’s flood warnings.

Evacuation:

  • Plan an evacuation route.
  • Develop a plan for you and your family to communicate if you are separated when a flood comes.

Protecting Your Property

  • If you are moving into a new home, apartment or business location, make sure you have adequate insurance coverage. Your bank, local officials or insurance representative can inform you if your location is at risk of flooding.
  • Flood insurance is excluded under homeowners and renters policies, but it is covered under the comprehensive section of standard automobile insurance policies and some coverage is available for floods under special commercial insurance policies.
  • Flood insurance for homeowners, renters and businesses is administered through the federal government and can be purchased from an insurance agent or company under contract with the Federal Insurance Administration (FIA), part of the Federal Emergency Management Agency (FEMA). Flood insurance is only available where the local government has adopted adequate flood plain management regulations under the National Flood Insurance Program (NFIP). Most communities participate in the program.
  • Flood insurance covers direct physical losses from floods and losses resulting from flood-related erosion caused by waves or currents of water exceeding anticipated cyclical levels and accompanied by a severe storm, flash flood, abnormal tide surge or a similar situation which results in flooding. Flood insurance also may cover mudslides.
  • Coverage for the structure and contents of the home are sold separately. Buildings are covered for replacement cost but content coverage is available on an actual cash value basis only.
  • Maintain a supply of emergency materials: plywood, plastic sheeting, nails, hammer, shovels, sandbags, flashlight, batteries, battery-operated radio, first aid kit, medication, sturdy shoes, emergency food and water, cash and credit cards.
  • Install a system to prevent flood water from backing up in sewer drains.
  • Locate switches to turn off gas, electricity and water.
  • Make a home inventory listing all of your possessions to help facilitate the claim filing process if your belongings are damaged or destroyed.

Deductibles & You

Courtesy of iii.org

This should NOT be a surprise: Your home insurance policy has a separate deductible for hurricane damage. It should be common knowledge because it’s been in Florida statutes on insurance contracts at least since 1997. Yet, when the next hurricane hits, there will be some people shocked to find this out when it has been in plain sight for more than 20 years.

Truthfully, it’s in plain sight if you were actually to READ your insurance policy. You’ll find it in two places. On the front of your policy pages, there is this blaring headline in all capital letters:

“THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.”

This sentence above is in 18-point, bold type not because I’m yelling, but because that is what the legislation requires. Big, bold and rather in-your-face.

The second place homeowners are informed of their hurricane deductible is on the declarations page. This is a one-page summary of what you are paying for insurance, and the hurricane deductible amount is spelled out to the penny. For example, if your dwelling is insured for $325,000, and you have a 2 percent hurricane deductible, the amount is $6,500. That is your share of the repair bill from hurricane damage.

And, the logical next question would be?WHY? Here’s why: Without a hurricane deductible, you would be paying more every year for property insurance. Remember, a hurricane can hit any year, and the threat of hurricanes hangs for 6 full months. Having these higher deductibles means you share in the cost to repair any damage in exchange for lower premiums every year that hurricanes don’t hit. With deductibles in place, insurers are more likely to want to offer coverage. Why? Because if the cost of catastrophic claims is shared, then more insurers will consider entering the marketplace, giving customers more choices.

Florida property insurance policies have had a hurricane deductible since shortly after Hurricane Andrew hit in 1992. Andrew was a game-changer, an eye-opener and a truth teller about the risks associated with living in Florida. We shouldn’t be surprised.

Saving Money on Auto Insurance

Courtesy of iii.org

  • Before You Buy a Car, Compare Insurance Costs

  • Higher Deductibles Could Mean Lower Premiums

  • Reduce Coverage on Older Cars

  • Buy Your Homeowners and Auto Insurance from the Same Company

  • Maintain a Good Credit History

  • Take Advantage of Low Mileage Discounts

  • Ask About Group Insurance

  • Seek Out Other Discounts