Spring is Here-Motorcycle Insurance!

Courtesy of http://www.iii.org/article/motorcycle-insurance. Choosing the right insurance policy is much like choosing the right motorcycle. You want it to fit your needs and lifestyle, but at the same time be within your budget. Although most states require you to carry a minimum amount of liability coverage, other types of coverage are usually optional. Always ask your insurance agent or company representative which laws apply in your state.

In order to find out what coverage is best for you, it is important to understand all theoptions available.

Liability coverage

Liability insurance covers bodily injury and property damage that you may cause to other people involved in an accident. It doesn’t cover you or your motorcycle. Find out if your coverage includes Guest Passenger Liability, which provides protection in the event that a passenger is injured on the motorcycle. Whether or not this is included depends on the laws of your state and the company issuing the policy.

Collision coverage

Collision insurance covers damage to your motorcycle if you are involved in an accident. Your insurance company pays for damages, minus your deductible, caused when you collide with another vehicle or object. Collision insurance usually covers the book value of the motorcycle before the loss occurred.

Comprehensive coverage

Comprehensive coverage pays for damages caused by an event other than a collision, such as fire, theft or vandalism. However, just like collision coverage, your insurance company will pay for damages, minus your deductible, and will cover only the book value of the motorcycle.

Keep in mind most comprehensive and collision coverages will only cover the factory standard parts on your motorcycle. If you decide to add on any optional accessories such as chrome parts, a custom paint job, trailers or sidecars, you should look into obtaining additional or optional equipment coverage.

Uninsured/underinsured motorist coverage

Uninsured/underinsured Motorist Coverage covers damages to you and your property caused by another driver who either doesn’t have insurance (uninsured) or doesn’t have adequate insurance (underinsured) to cover your damages.

This coverage typically pays for medical treatment, lost wages and other damages. If your uninsured/underinsured motorist coverage includes property damage, then your motorcycle would also be covered under the same circumstances. Check with your insurance professional to see if property damage is included or needs to be purchased separately.

Tips for the cost-conscious rider

Many factors can play a role in determining what your insurance costs will be such as your age, your driving record, where you live and the type of motorcycle you own, or being a graduate of a rider-training course.

  • Many companies offer discounts from 10 to 15 percent on motorcycle insurance for graduates of training courses, such as the Motorcycle Safety Foundation (MSF) rider course. Riders under the age of 25, usually considered a higher risk, may see some savings by taking this course. It?s also a good idea for cyclists who have already had accidents.
  • Maintaining a good driving record with no violations will also help reduce your premiums.
  • In many northern states, riders may save money by buying a “lay-up” policy. With a lay-up policy, all coverage except comprehensive is suspended during winter months.
  • Find out what discounts your insurance representative offers. Multibike discounts for those insuring more than one bike, organization discounts, if you?re a member of a motorcycle association, and mature rider discounts for experienced riders, are just a few possibilities. Discounts can range anywhere from 10 percent to 20 percent, depending on the company and your state. Availability and qualifications for discounts vary from company to company and state to state.
  • Keep in mind that the type, style (such as a sports bike vs. a cruiser) and age of the motorcycle, as well as the number of miles you drive a year and where you store your bike may also affect how much you pay for your premium.

Women Business Owners & Insurance

Courtesy of http://www.iii.org/press-release/what-do-women-business-owners-want-credible-accurate-insurance-advice-022616

Women have made great strides in the business world in the past few decades. And business insurance is essential to protecting their hard-earned capital, according to the Insurance Information Institute (I.I.I.).

Forty years ago women owned just 5 percent of all small businesses in the United States. Today, they own one-third, generating nearly $1.5 trillion in revenue and employing over 7.9 million people. Between 1997 and 2015, the number of women-owned firms increased by 74 percent, according to the 2015 State of Women-Owned Businesses Report. And the majority of new women-owned firms launched in 2014 were owned by minority women.

“Whether launching a new business, growing your business or competing in the global marketplace, it is essential that women business owners get the right type and amount of coverage,” said Loretta Worters, a vice president with the I.I.I. “Without adequate insurance, a natural catastrophe, employee lawsuit or even the death of a business partner could destroy what they’ve built,” she warned.

In recognition of Women’s History Month, the I.I.I. recommends the following six strategies to ensure that your business is financially protected:

1. Assess your risks. What business property, including inventory and equipment, do you own? Do you have employees? What is the nature of your business? This basic snapshot will help an insurance professional provide recommendations about the type of coverage your business needs.

2. Find the right insurance professional. When shopping for insurance most business owners use an insurance broker?you’ll want to find one who is familiar with the risks of your specific business. A qualified broker can help collect all the necessary information and paperwork to apply for a policy, and comparison shop among several options and quotes. Here are some tips for finding the right fit: Finding the Right Insurance Professional for Your Business.

3. Compare rates. As a general rule, you’ll want to get business insurance quotes from at least three different companies. Try to find policies that offer similar coverage so that you can clearly compare prices.

4. Evaluate insurers, policies and services. When purchasing business insurance, price is just one consideration. Make sure a potential insurer is reputable and in good financial condition. In addition, review and compare policies in depth. Does one policy have exclusions that another does not? In the case of litigation, does the insurer provide an attorney or reimburse you for an attorney you choose?

5. Lower your premiums. Choosing a higher deductible can lower your premiums significantly and insurers will often lower your rates for putting in place programs to minimize losses from fire, theft and employee and customer injuries. This is particularly important for start-ups that are low on initial capital.

6. Review your risks and insurance policies annually. Talk to your insurance professional prior to renewing you coverage each year to determine what adjustments should be made to your business insurance policies. If your business is expanding, you have purchased or replaced equipment or have started working with vendors internationally, you may have new liabilities that require higher insurance coverage.

Don’t Overlook These Coverages

Life insurance is vital to any business?both personal and for the company. Should you die prematurely, a personal life insurance policy can replace your income from the business and protect your family. In the event an owner, partner or key employee dies, life insurance will take care of your business.

Another key coverage is disability insurance. More than twice as many people will be disabled during their career as will die before they retire. “Income protection for small business owners is critical for the long-term security of the owner and the company if they cannot work due to an injury or illness,” said Worters.

Flood Insurance & You

Courtesy of http://www.iii.org/fact-statistic/flood-insurance A full moon and high winds caused significant tidal flooding during last weekend’s east coast blizzard.

Flood damage is excluded under standard homeowners and renters insurance policies. However, flood coverage is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers.

Congress created the NFIP in 1968 in response to the rising cost of taxpayer-funded disaster relief for flood victims and the increasing amount of damage caused by floods. The NFIP makes federally backed flood insurance available in communities that agree to adopt and enforce floodplain management ordinances to reduce future flood damage. The NFIP is self-supporting for the average historical loss year. This means that unless there is a widespread disaster, operating expenses and flood insurance claims are financed through premiums collected.

The NFIP provides coverage for up to $250,000 for the structure of the home and up to $100,000 for personal possessions. Private flood insurance is available for those who need additional insurance protection, known as excess coverage, over and above the basic policy or for people whose communities do not participate in the NFIP. Some insurers have introduced special policies for high-value properties. These policies may cover homes in noncoastal areas and/or provide enhancements to traditional flood coverage. The comprehensive portion of an auto insurance policy includes coverage for flood damage.

A 2015 poll by the Insurance Information Institute found that 14 percent of American homeowners had a flood insurance policy. This percentage has been at about the same level every year since 2009. The percentage of homeowners with flood insurance was highest in the South, at 21 percent, compared with 20 percent in 2014. Eleven percent of homeowners in the Northeast had a flood insurance policy, which is unchanged from 2014. Nine percent of homeowners in the West had a flood insurance policy, compared with 8 percent in 2014, while 10 percent of homeowners in the Midwest had flood insurance, compared with 7 percent in 2014.

  • As of October 2015, 79 insurance companies participated in the Write Your Own program, started in 1983, in which insurers issue policies and adjust flood claims on behalf of the federal government under their own names.
  • As of August 2015, 67 percent of policies covered single family homes, 21 percent covered condominiums, and 6 percent covered businesses and other non-residential properties. Two- to four-family unitsand other residential policies accounted for the remainder.
  • Superstorm Sandy,which occurred in October 2012, resulted in $8.0 billion in NFIP payouts as of October 2015, second only to 2005?s Hurricane Katrina with $16.3 billion in payouts.

Superstorm Sandy was the second costliest U.S. flood, based on National Flood Insurance Program payouts as of June 2015. The figures below are preliminary, as claims are still being processed.

What is Covered in a Storm?

Courtesy of iii.org? With blizzard conditions predicted to hit 16 Eastern states this weekend, there will be a high probability of car crashes and property damage so it’s a good time to understand what your insurance covers, according to the Insurance Information Institute (I.I.I.).

Standard homeowners policies provide coverage for damage caused by wind, snow, severe cold and freezing rain,” said Jeanne M. Salvatore, senior vice president and chief communications officer of the I.I.I. “Car accidents caused by slippery road conditions are also covered under standard auto insurance policies.”

The I.I.I. offers the following information on insurance coverage:

Auto Policies

Standard homeowners insurance covers:

  • Vehicle crashes between two or more drivers caused by snowy and slippery roads?under liability insurance, which is required by most states.
  • A car that crashes into an object, such as a light post or median?under the optional collision portion of an auto policy.
  • Physical damage to a vehicle caused by heavy wind, flooding or fallen ice or tree?under the optional comprehensive portion of an auto policy.

Homeowners Policies

Standard homeowners insurance covers:

  • Wind-related damage to a house, its roof, its contents and other insured structures on the property. Also, wind-driven snow or freezing rain that gets into the home because the home was damaged by wind.
  • Tree limbs that fall on a house or other insured structure on the property?this includes both the damage the tree inflicts on the house and the cost of removing the tree, generally up to about $500.
  • Damage from ice and other objects that fall on the home.
  • Damage to the house and its contents caused by weight of snow or ice that creates a collapse.
  • Freezing conditions such as burst pipes or ice dams, a condition where water is unable to drain properly through the gutters and seeps into a house causing damage to ceilings and walls. However, there is generally a requirement that the homeowner has taken reasonable steps to prevent these losses by keeping the house warm and properly maintaining the pipes and drains.
  • Additional living expenses (ALE)?In the event a home is severely damaged by an insured disaster, ALE would pay for reasonable expenses incurred by living elsewhere while the home is being fixed.

Damage caused by flooding is not covered by either standard homeowners or renters insurance policies. Melting snow that seeps into a home from the ground up would be covered by flood insurance, which is provided by FEMA’s National Flood Insurance Program, and a few private insurers. Flood insurance is available to both homeowners and renters.

“Consumers who need to file an insurance claim should contact their insurance professional as soon as possible,” said Salvatore. “Let your agent know the extent of the damage and start to document your loss with lists, receipts or photographs. If you have a home inventory, now would also be a good time to access it.”

Information on how to prepare your home against winter-related damage can be found at the Insurance Institute for Business & Home Safety (IBHS).

Life Insurance types Explained

Courtesy of iii.org

Term insurance comes in two basic varieties?evel term and decreasing term. These days, almost everyone buys level term insurance. The terms “level” and “decreasing” refer to the death benefit amount during the term of the policy. A level term policy pays the same benefit amount if death occurs at any point during the term.

Common types of level term are:

  • yearly- (or annually-) renewable term
  • 5-year renewable term
  • 10-year term
  • 15-year term
  • 20-year term
  • 25-year term
  • 30-year term
  • term to a specified age (usually 65)

Yearly renewable term, once popular, is no longer a top seller. The most popular type is now 20-year term. Most companies will not sell term insurance to an applicant for a term that ends past his or her 80th birthday.

If a policy is “renewable,” that means it continues in force for an additional term or terms, up to a specified age, even if the health of the insured (or other factors) would cause him or her to be rejected if he or she applied for a new life insurance policy.

Generally, the premium for the policy is based on the insured person’s age and health at the policy’s start, and the premium remains the same (level) for the length of the term. So, premiums for 5-year renewable term can be level for 5 years, then to a new rate reflecting the new age of the insured, and so on every five years. Some longer term policies will guarantee that the premium will not increase during the term; others don’t make that guarantee, enabling the insurance company to raise the rate during the policy’s term.

Some term policies are convertible. This means that the policy’s owner has the right to change it into a permanent type of life insurance without additional evidence of insurability.

“Return of Premium”

In most types of term insurance, including homeowners and auto insurance, if you haven’t had a claim under the policy by the time it expires, you get no refund of the premium. Your premium bought the protection that you had but didn’t need, and you’ve received fair value. Some term life insurance consumers have been unhappy at this outcome, so some insurers have created term life with a “return of premium” feature. The premiums for the insurance with this feature are often significantly higher than for policies without it, and they generally require that you keep the policy in force to its term or else you forfeit the return of premium benefit. Some policies will return the base premium but not the extra premium (for the return benefit), and others will return both.

Trends in Insurance

For many Americans, their home is their largest investment. But, according to the Insurance Information Institute?s ( I.I.I.) annual Pulse Survey, understanding some key aspects of homeowners insurance remains a challenge.

In PulsePoints: Home and Auto Insurance, we present findings from a survey of more than 1,000 adults in the United States. We asked homeowners specific questions about their insurance and the protective measures they took to prepare for a catastrophe. In this poll, we also surveyed Americans? sentiments about emerging technologies that could affect their insurance needs and pricing (e.g., telematics devices and self-driving cars).

Answers reveal a wide range of results that point to some interesting (and sometimes surprising) facts and trends, including: that insurers can improve how they engage consumers in helping them to better understand the details of their insurance policies; and that many Americans are quite accepting of emerging, even disruptive, technologies.

Please click on the file name below to view the white paper in PDF format. You will need Adobe Acrobat Reader to view the file.

Download pulse-wp-112415-8-final.pdf

courtesy of iii.org

Flood Insurance Updates

Flooding is the most common and costly natural disaster in the United States, causing an average of $50 billion in economic losses each year. Most U.S. natural disasters declared by the president involve flooding.

There is no coverage for flooding in standard homeowners or renters policies or in most commercial property insurance policies. Coverage is available in a separate policy from the National Flood Insurance Program (NFIP) and from a few private insurers. Despite efforts to publicize this, many people exposed to the risk of floods still fail to purchase flood insurance.

The widespread flooding associated with Hurricane Katrina in 2005, the Mississippi floods of 2011 and Hurricane Irene and superstorm Sandy in 2012 set in motion a debate about how to improve the federal program.

RECENT DEVELOPMENTS

  • Superstorm Sandy Claim Disputes: Beginning in late 2014 some New York and New Jersey homeowners alleged they were underpaid in the settlement of their flood insurance claims after 2012 superstorm Sandy.
  • According to the homeowners, initial engineering reports linked home damage to the surging storm waters but were later modified to blame pre-existing structural problems, resulting in lower claims payments.
  • The Federal Emergency Management Agency (FEMA), which oversees the flood insurance program, ordered all private insurers to turn over claims records in which they retained an engineering firm, approximately 16,000 of 144,000 claims. FEMA also launched a Sandy Claims Review, inviting all 144,000 claimants to have their claim revisited. About 800, or about one-half of 1 percent, accepted the offer as of late May 2015.
  • In May New York Senator Charles Schumer urged FEMA to scrap the Write Your Own program, in which private insurers processes flood insurance policies and claims but FEMA’s National Flood Insurance Program (NFIP) assumes the insurance risk. Write Your Own companies process more than 80 percent of all NFIP policies.
  • Some insurers and engineering firms face class actions that allege racketeering, and New York’s attorney general opened a criminal investigation.
  • A Senate report issued in June 2015 said the process for reviewing claims disputes had many flaws but there was no evidence of insurers’ systematically underpaying flood victims. The report also found that claims that had been re-inspected by a second adjuster had “low overall error rates” and that private insurers settling claims through the Write Your Own program were less likely to underpay claims than the federal government, which settled claims for the program’s Direct business.
  • National Flood Insurance Reform: In March 2014 Congress rescinded many of the rate increases called for by The Biggert-Waters Flood Insurance Reform Act, passed two years earlier. The original act sought to make the federal flood insurance program more financially self-sufficient by eliminating rate subsidies that many property owners in high-risk areas receive.
  • The new law reduces some rate increases already implemented, prevents some future increases and puts a surcharge on all policyholders. The measure also authorizes funds for the National Academy of Sciences to complete an affordability study.
  • The 2014 law prevents any policyholder from seeing an annual rate increase exceeding 18 percent. It calls on the flood program’s administrator, the Federal Emergency Management Agency (FEMA), to “strive” to prevent coverage from costing more than 1 percent of the amount covered. In other words, if the policy offered $100,000 of coverage, the premium would not exceed $1,000.
  • The 18 percent cap will result in refunds in some cases. Refunds began in October 2014. FEMA has a fact sheet on who is eligible for refunds.
  • The law also reinstates a practice known as grandfathering, meaning that properties re-categorized as being at a higher risk of flooding under FEMA’s revised maps would not be subject to large increases.
  • It also ends a provision in Biggert-Waters that removed a subsidy once a home was sold. People who purchased homes after Biggert-Waters became law will receive a refund. Many lawmakers in coastal states were concerned that the higher cost of flood insurance would have a negative impact on the real estate industry.
  • The subsidy will now be covered by a $25 surcharge on homeowners flood policies and a $250 surcharge on insurance for nonresidential properties and secondary (vacation) homes.
  • According to data from FEMA, most current flood insurance policyholders (81 percent, or 4.5 million) pay rates based on the true risk of flood damage and so were not affected by Biggert-Waters or the subsequent rollback. Properties most affected by the rate hikes were in high-risk flood zones; were built before communities adopted their first Flood Insurance Rate Map; were second homes; or are second homes that have not been elevated. Others affected include businesses and those who live in homes that have been repeatedly flooded.
  • More detail appears in the “2014 Changes” section below.
  • In June 2014 Florida enacted a law that encourages private companies to offer flood insurance. The legislation permits four types of flood coverage ? a standard policy, which resembles National Flood Insurance Program coverage, and three enhanced policies. To encourage market growth, the law allows insurers to file their own rates until October 1, 2019. After that, rates will be subject to regulatory approval.
  • Policies in Force: While the number of flood policies in force is growing, a significant portion of the population at risk of flooding still is not insured for flood damage. The latest available data show that in 2013, there were nearly 5.6 million policies in force, compared with 5.0 million in 2005, the year of Hurricanes Katrina and Rita. Premiums grew to $3.5.billion in 2013, from $2.0 billion in 2005. In 2013, 16,864 claims were paid, compared with 148,448 claims in 2012 and 213,290 in 2005. The cost of claims was $441 million in 2013, compared with $8.8 billion in 2012 and $17.8 billion in 2005.

BACKGROUND

The National Flood Insurance Program: Before Congress passed the National Flood Insurance Act in 1968, the national response to flood disasters had been to build dams, levees and other structures to hold back flood waters, a policy that may have encouraged building in flood zones.

The National Flood Insurance Act created the National Flood Insurance Program (NFIP), which was designed to stem the rising cost of taxpayer funded relief for flood victims and the increasing amount of damage caused by floods. The NFIP has three components: to provide flood insurance, floodplain management and flood hazard mapping. Federal flood insurance is only available where local governments have adopted adequate floodplain management regulations for their floodplain areas as set out by NFIP. More than 20,000 communities across the country participate in the program. NFIP coverage is also available outside of the high-hazard areas.

The law was amended in 1969 to provide coverage for mud flows and again in 1973. Until then, the purchase of flood insurance had been voluntary, with only about one million policies in force. The 1973 amendment put constraints on the use of federal funds in high-risk floodplains, a measure that was expected to lead to almost universal flood coverage in these zones. The law prohibits lenders that are federally regulated, supervised or insured by federal agencies from lending money on a property in a floodplain when a community is participating in the NFIP, unless the property is covered by flood insurance. The requirement for flood insurance also applies to buildings that receive financial assistance from federal agencies such as the Veterans Administration. However, because the initial mortgage on the property is frequently sold by the originating bank to another entity, enforcement of this law has been poor.

Legislation was enacted in 1994 to tighten enforcement. Regulators can now fine banks that consistently fail to enforce the law, and lenders can purchase flood insurance on behalf of homeowners who fail to buy it themselves, then bill them for coverage. The law includes a provision that denies federal disaster aid to people who have been flooded twice and have failed to purchase insurance after the first flood.

Buildings constructed in a floodplain after a community has met regulations must conform to elevation requirements. When repair, reconstruction or improvement to an older building equals or exceeds 50 percent of its market value, the structure must be updated to conform to current building codes. A 2007 NFIP study on the benefits of elevating buildings showed that due to significantly lower premiums, homeowners can usually recover the higher construction costs in less than five years for homes built in a “velocity” zone, where the structure is likely to be subject to wave damage, and in five to 15 years in a standard flood zone. The Federal Emergency Management Agency (FEMA) estimates that buildings constructed to NFIP standards suffer about 80 percent less damage annually that those not built in compliance.

How It Works: The NFIP is administered by FEMA, part of the Department of Homeland Security. Flood insurance was initially only available through insurance agents who dealt directly with the federal program. The direct policy program has been supplemented since 1983 with a private/public cooperative arrangement, known as “Write Your Own,” through which a pool of insurance companies issue policies and adjust flood claims on behalf of the federal government under their own names, charging the same premium as the direct program. Participating insurers receive an expense allowance for policies written and claims processed. The federal government retains responsibility for underwriting losses. Today, most policies are issued through the Write-Your-Own program but some non-federally backed coverage is available from the private market.

The NFIP is expected to be self-supporting in an average loss year, as reflected in past experience. In an extraordinary year, as Hurricane Katrina demonstrated, losses can greatly exceed premiums, leaving the NFIP with a huge debt to the U.S. Treasury that it is unlikely to b pay back. Hurricane Katrina losses and the percentage of flood damage that was uninsured led to calls for a revamping of the entire flood program.

Flood adjusters must be trained and certified to work on NFIP claims. NFIP general adjusters typically re-examine a sample of flood settlements. Insurers that fail to meet NFIP requirements must correct problems; otherwise they can be dropped from the program.

As with other types of insurance, rates for flood insurance are based on the degree of risk. FEMA assesses flood risk for all the participating communities, resulting in the publication of thousands of individual flood rate maps. High-risk areas are known as Special Flood Hazard Areas or SFHAs.

Flood plain maps are redrawn periodically, removing some properties previously designated as high hazard and adding new ones. New technology enables flood mitigation programs to more accurately pinpoint areas vulnerable to flooding. As development in and around flood plains increases, run off patterns can change, causing flooding in areas that were formerly not considered high risk and vice versa.

People tend to underestimate the risk of flooding. The highest-risk areas (Zone A) have an annual flood risk of 1 percent and a 26 percent chance of flooding over the lifetime of a 30-year mortgage, compared with a 9 percent risk of fire over the same period. In addition, people who live in areas adjacent to high-risk zones may still be exposed to floods on occasion. Ninety percent of all natural disasters in this country involve flooding, the NFIP says. Since the inception of the federal program, some 25 to 30 percent of all paid losses were for damage in areas not officially designated at the time of loss as SFHAs. NFIP coverage is available outside high-risk zones at a lower premium.

Flood insurance covers direct physical losses by flood and losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm drainage systems, levee dam failure or other similar causes. To be considered a flood, waters must cover at least two acres or affect two properties. Homes are covered for up to $250,000 on a replacement cost basis and the contents for up to $100,000 on an actual cash value basis. Replacement cost coverage pays to rebuild the structure as it was before the damage. Actual cash value is replacement cost minus the depreciation in value that occurs over time. (Excess flood insurance is available in all risk zones from some private insurers for NFIP policyholders who want additional coverage or where the homeowner’s community does not participate in the NFIP.) Coverage for the contents of basements is limited. Coverage limits for commercial property are $500,000 for the structure and another $500,000 for its contents.

To prevent people from putting off the purchase of coverage until waters are rising and flooding is inevitable, policyholders must wait 30 days before their policy takes effect. In 1993, 7,800 policies purchased at the last minute resulted in $48 million in claims against only $625,000 in premiums.

2014 CHANGES

Legislative changes in 2014 undid much of a 2012 attempt to put the NFIP on a sounder financial footing. Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 as part of a bill reauthorizing the NFIP. It attempted to make rates charged accurately reflect the true flood risk of each property, thus making the program actuarially sound.

The 2012 law put a 5 percent surcharge on all but the lowest-risk policies to create a reserve fund to cushion against future losses. But the most controversial measure intended to drastically reduce the discount received by insurers of older properties in high-risk areas, a discount generally called a subsidy.

Starting in October 2013, three formerly subsidized groups saw the phase-out begin:

  • Businesses.
  • Non-primary residences (typically vacation homes).
  • Structures with severe repeated flood losses.

Rates for these groups were scheduled to increase 25 percent per year until actuarially sound rates were reached. Other subsidized policyholders would keep their subsidies until the property was sold, the policy lapsed, a new policy was purchased or the property suffered “severe, repeated flood losses where the owner refuses an offer to mitigate.”

The plan was unpopular, particularly in the Southeast, where many subsidized policies existed. Congress responded with the 2014 rollback.

The new law repealed and modified parts of Biggert-Waters, as well as making additional changes to the flood insurance program. Other parts of Biggert-Waters remained unchanged.

Refunds: Refunds applied to policyholders in high-risk areas who were required to pay full-risk rates after they purchased a new policy on or after July 6, 2012. Policyholders who renewed after March 21, 2014, and received an increase of more than 18 percent may also be eligible for a refund.

Policyholders who received typical annual rate increases in 2013 or 2014 or paid the Biggert-Waters surcharge that created a reserve fund would see refunds only if their policy renewed after March 21, 2014, and their total increase (premium plus reserve fund) exceeded 18 percent.

FEMA noted that “only a small percentage of the overall NFIP policy base” was eligible for a refund. Refunds began in October 2014.

Subsidies: The new law stipulated that subsidized policies would receive gradual rate increases. Most of these properties must receive 5 percent annual increases until they are charged the full risk rate. In most cases, rate increases are capped at 18 percent per year. Exceptions include:

  • Older business properties paying subsidized rates.
  • Older non-primary vacation homes paying subsidized rates.
  • Frequently flooded properties paying subsidized rates.
  • Buildings that have been substantially damaged or improved that were built before the local adoption of a Flood Insurance Rate Map (FIRM).

While FEMA developed guidelines on rates, purchasers of subsidized properties were allowed to assume the prior owner’s policy and rates. Lapsed policies receiving pre-FIRM subsidized rates were reinstated with pre-FIRM rates until FEMA developed rates as mandated by the 2014 act.

Surcharges: The 2014 act created surcharges to help fund the subsidized policies. A policy for a primary residence was assessed $25. Other properties were assessed $250. All policies are scheduled to pay the fees until the pre-FIRM subsidies are eliminated.

Grandfathering: Often when the lines on flood maps were redrawn, some properties ended up in higher risk zones than before, but they continued to pay lower rates. The Biggert-Waters Act required 20 percent annual rate increases until these grandfathered properties were assessed full-risk rates. Under the 2014 act, homes and businesses that were built to code, then remapped into a higher risk area will not receive a rate increase. Properties moving into Special Flood Hazard Areas would pay the subsidized premium in the first year, then the rate increases assessed on all such properties would be between 5 percent and 15 percent annually, with no single property receiving more than an 18 percent increase.

Other changes:

  • FEMA is required to perform an affordability study, and it must address flood insurance affordability issues within 18 months of that study’s completion.
  • FEMA was also instructed to begin offering monthly installment payments for policies and make available policies with deductibles up to $10,000.
  • FEMA is required to consider in its rates steps that owners have undertaken to mitigate flooding.
  • New flood maps must be certified as following a technically sound scientific and engineering methodology.
  • Policyholders who successfully appeal FEMA’s rate increases will be reimbursed for the cost of the appeal.
  • The law creates a flood insurance advocate, who will educate policyholders about flood risks.

Road Assistance for Travel

National Overeating Day (aka Thanksgiving) is coming up, and a road trip to the annual food fest is part of the plan for many people. Long-distance holiday travel on Thanksgiving Day increases by 54 percent, according to the U.S. Department of Transportation. The anticipation of getting to the table may be half the fun. But what happens if your car breaks down along the way? Besides being late for dinner, you could wind up with a hefty towing bill if you didn?t plan ahead.

Most drivers already have collision and comprehensive auto insurance coverage. And if you do, you can add roadside and towing assistance from your insurer for as little as a few dollars a month. That?s a small price to pay for getting a tow to the nearest repair facility. This optional protection can also include changing a tire, gas delivery or performing repairs at the site of the breakdown. Without it, the cost of towing is all on you.

Adding this coverage to your auto insurance policy is probably the least costly option. Towing service may also be available from some credit card companies, from auto clubs such as the AAA and even auto manufacturers offer roadside assistance coverage. (However, they may only tow your car to the closest dealership.)

A few tips: Read the fine print for restrictions. If coverage for towing is limited to a handful of miles, then you may be better off having Thanksgiving dinner in the neighborhood. Ask if there are limitations on the number of tows allowed annually. Find out, too, if the roadside assistance plan covers you when you are driving a friend?s car or when you rent a vehicle.

Sometimes, we need a little help along the road. Help yourself by looking into roadside assistance before the trip. And, enjoy!courtesy of iii.org

Test Drive a Car Are You Covered?

Be extra careful whenever you test drive a new or used car. If you’re not working with a reputable car dealer, driving that car could be costly if you have a car crash.

Your automobile insurance policy covers many things, but it doesn’t cover you when you take a test drive. The dealer has a policy for that; it’s called a “garage liability” policy. Your insurance doesn’t provide coverage on a test drive because you don’t own the vehicle. It make perfect sense not to have insurance for something you don’t own, right?

Under the exclusions section of an auto insurance contract, there is language saying losses are excluded:

To any “non-owned auto” being maintained or used by any person while employed or otherwise engaged in the “business” of selling, repairing, servicing, storing or parking vehicles designated for use on public roads. This includes road testing and delivery.

Last week, a story surfaced about a guy who hit a school bus while on a test drive. He admitted fault, then learned his insurance would not cover the damages. Although the dealer had insurance, they say they are going to sue the driver to get their deductible repaid. Not sure how that will play out, but it sure puts a damper on that guy’s car shopping!

Do you know how your insurance works when you rent a car? Read up here.

Fire Suppression Techniques

FIRE LOSSES

Great strides have been made in constructing fire-resistant buildings and improving fire-suppression techniques, both of which have reduced the incidence of fire. However, in terms of property losses, these advances have been somewhat offset by increases in the number of and value of buildings. In 2014, on average, a fire department responded to a fire every 24 seconds in the United States, according to the National Fire Protection Association. A structure fire occurs every 64 seconds; a residential structure fire occurs every 86 seconds and an outside property fire occurs every 52 seconds.

STRUCTURE FIRES

There are about a half million fires in structures each year, according to the National Fire Protection Association (NFPA). In 2013, 79 percent of structure fires were in residential properties and 21 percent were in non-residential structures, including storage facilities, stores and offices, and industrial properties, and public assembly. Public assembly fires include fires in eating and drinking places and other entertainment venues, houses of worship and other places where people congregate. There are approximately 7,600 structure fires in eating and drinking establishments each year, according to a NFPA report based on data between 2006 and 2010.

According to the NFPA, fires in nightclubs are among the most deadly public occupancy fires, because they contain a large number of people in one main space. In January, 2013 a deadly nightclub fire in Brazil claimed over 230 lives, making it one of the most deadly nightclub fires on record. The deadliest nightclub fire in world history was the 1903 Iroquois Theater fire in Chicago, Illinois in which 602 people were killed, followed by a 1942 Cocoanut Grove fire in Boston, Massachusetts which claimed 492 lives and a fire at the Conway’s Theater in Brooklyn, New York in 1876 which killed 285 people. The 2003 Station Fire in Rhode Island claimed 100 lives, and ranks as number eight. The complete top ten ranking is posted at NFPA: Nightclub Fires.

HOLIDAY FIRE LOSSES

Fireworks

On Independence Day in a typical year, far more U.S. fires are reported than on any other day, and fireworks account for two out of five of those fires, according to the National Fire Protection Association (NFPA). Fireworks caused an estimated 17,800 reported fires, including 1,200 total structure fires, 400 vehicle fires, and 16,300 outside and other fires in 2011, according to a fireworks fact sheet from the NFPA. Key stats include:

  • Fireworks fires resulted in an estimated eight reported civilian deaths, 40 civilian injuries and $32 million in direct property damage.
  • In 2013, U.S. hospital emergency rooms treated an estimated 11,400 people for fireworks related injuries; 55 percent of those injuries were to the extremities and 38 percent were to the head.
  • The risk of fireworks injury is highest for young people ages 0-4, followed by children 10-14.

Home Fires

  • The National Fire Protection Association (NFPA) says Thanksgiving Day is the leading day for home cooking fires, with three times as many occurring on Thanksgiving as any other day of the year. In 2011, there were 1,210 fires on Thanksgiving, a 183 percent increase over the daily average.
  • U.S. fire departments responded to an estimated annual average of 230 home structure fires that began with Christmas trees from 2007 to 2011, according to a fact sheet from the National Fire Protection Association (NFPA).
  • Home Christmas tree fires caused an average of six civilian deaths, 22 civilian injuries and $18.3 million in direct property damage annually from 2007 to 2011.
  • Electrical failures or malfunctions were involved in about one-third (32 percent) of the home Christmas tree structure fires. One in six (17 percent) occurred because some type of heat source was too close to the tree. Decorative lights were involved in 12 percent of these incidents. Seven percent of home Christmas tree fires were started by candles.
  • The top three days for home candle fires were Christmas, New Year?s Day and Christmas Eve, according to another NFPA fact sheet.
  • During the five-year-period of 2007-2011, the NFPA estimates that decorations were the item first ignited in an estimated average of 920 reported home structure fires per year. These fires caused an estimated average of six civilian deaths, 47 civilian injuries and $12.9 million in direct property damage per year, according to an NFPA fact sheet.

For information about Holiday Safety and Preparedness, see our Pinterest board.