Archive for the ‘save money’ Tag

Identity Theft, Flood Insurance, and antique coverage – Part Two   Leave a comment

Hello everyone, we’re back again! This time we are going to briefly review the debacle that is flood insurance.  Operated by the National Flood Insurance Program (under the auspices of FEMA) or NFIP for short, flood insurance has gone through quite the upheaval lately.  This is due, in large part, to the fact that the program is about $20 BILLION in debt.

As a result, Congress passed the Biggert-Waters Act in 2012 in an attempt to bring the NFIP’s budget deficit back in line.  This was to be accomplished primarily by removing subsidies from policies in heavily flood-prone areas so the premium reflected the real risk of insuring a homeowner in such an area.  As you can imagine, this created quite a bit of backlash from property owners along the coast, particularly those in Louisiana.

The resultant premium increases imposed by Biggert-Waters were shocking and dramatic, far higher than what was originally predicted.  Instead of removing subsidies over time, as was initially proposed, they were yanked all at once for thousands of property owners nationwide.  For example, one of our clients saw her premium jump from a little less than $500 to nearly $3,000 in one year.

Thus Congress & the Senate recently passed the Homeowners Flood Insurance Affordability Act.  Boiled down, the HFIAA basically sets annual limitations on premium increases to attempt to raise rates in (very small) steps.  However, even a glance at FEMA’s overview page outlining the changes reveals confusing and challenging definitions and procedures.  When I called the company about getting our client’s premium scaled back due to the change, I was told, almost word for word, “We don’t know whether the new act is going to affect her premium, so we are going to wait until FEMA tells us to do something.”

Very simply, I would summarize all the changes to flood insurance this way:  Our government took a program that was quite literally drowning in debt, put together a knee-jerk and poorly executed solution, and reversed it in a similarly ineffective fashion in response to public outrage.  This article puts it all together perfectly.

The government had a chance to fix a broken program that had previously served constituents relatively well.  It had its problems, as most government programs do, but it was completely blindsided by the severity of storms like Katrina and Sandy.  Instead of scaling up property owner premiums over 5 or 10 years to more accurately reflect the risk that they carry, a “NOW NOW NOW” followed by a “LATER LATER LATER” mentality prevailed.  As usual, it will ultimately be the property owners and tax payers who foot the bill.

Sammy is this covered

Sammy thinks these flood changes are all wet….

Christmas Outtakes   Leave a comment

As promised last weeks, here are some of the more amusing outtakes from last week’s photoshoot for our Christmas “card”:

Sammy

She just couldn’t stay awake!

These next three would’ve made an amusing gif.  It appears almost as though she’s singing “Joy to the World!” like Clark Griswold.

Sammy

JOY

Sammy

TO

Sammy

THE WORLD!

This is one of my favorites of all of them:

Sammy / Mork

Nanoo Nanoo
Oh, wait – too young for that joke?

These last pictures show just how hard it is to keep Sammy’s attention, even with treats!

Sammy steps

Who’s upstairs?

Cute bored dog

Are we done yet? Pretty bored over here…

Sammy looking down

What’s that?

Sammy treats

I’m coming to get my treat now!

Sammy housetop

Up on the housetop, click click click….

(for reference on that last one)

A review of Personal Insurance – Home Owners (Part 1)   1 comment

dog blog

Sitting at home, blogging away!

Homeowners coverage.  Where to begin?  With your home, of course!  In this “installment,”  I’m going to review a couple things to keep in mind while reviewing or considering insuring your home – based on the assumption that you own, not rent.

The primary “concern” of homeowners is protecting the actual dwelling itself.  As there are quite a few formats to do this, I’m only going to cover the most common form, called an HO5 policy

Under an HO5 homeowners policy, the dwelling is covered for comprehensive perils at replacement cost valuation.

  • Comprehensive Perils – CP is actually easier to explain by starting with its counter-part, named perils.  A named perils policy means that only claims (causes of loss or perils) specifically named on the policy are covered – if it’s not listed, it’s not covered.  Comprehensive perils is the opposite – if a cause of loss is not specifically excluded, it’s covered.  Every company has its own list of excluded losses, but some common ones are flood, acts of war, intentional acts of the homeowner (arson, for example), and wear and tear (in other words, maintenance is typically NOT covered!).
  • Replacement Cost Valuation – RCV describes how payment for a loss will be made.  When you carry RCV coverage, a loss will be paid out based on the true cost to repair or replace damaged goods (less your deductible).  Actual Cash Value, by contrast, pays based on the cost to repair or replace MINUS depreciation (typically based on age and condition). 

Understanding RCV is what typically causes frustration.  The easiest way to understand how this works is by using an example.  If you have a fire in your home, and the kitchen is destroyed, RCV dictates that the insurance company pay the cost of restoring your kitchen (as closely as possible) to its original condition, REGARDLESS of the age of materials there.  In other words, your cabinets may be 15 years old, but an RCV policy pays for the cost of brand new cabinets (comparable – “like kind and quality”).

The replacement cost valuation of your home is commonly found by entering in the characteristics of your home into software designed for this purpose – how many square feet, how many stories, year built, updates, style, construction, etc etc.  A common source of confusion is that the RCV of your home is often greater than the market value of the house – this occurs because the cost to rebuild per square foot is almost always higher than the actual market value per square foot – but this works in your favor!  If a home policy were written based on market value, and you had the kitchen fire described above – guess what!  The cost to repair would not be paid in full: unless your kitchen were brand new, it’s virtually impossible that it’s market value would be anywhere close to what the replacement value is!

Contents Coverage – Another important component of your homeowners policy is contents, or personal property, coverage.  This is for the actual contents of your home – simply put, anything that’s not permanently attached.  So all of your clothing, furnishings, appliances/electronics, decorations, etc etc.  This is almost always calculated as a percentage of your building limit – 60, 70, and 80% are the most common levels. 

Something important to remember – if you have high-value, unique, antique, or difficult to replace items, it’s generally a good idea to schedule them on the policy.  Most policies have limitations or exclusions for these items that generally mean that you are only going to get a fraction of what they are actually worth.  In addition, by scheduling items, you can typically get minimal or zero dollar deductibles, which drastically reduces your out of pocket expense in the event of the loss.  The coverage tends to be more expensive than general contents (PP) coverage, but in the long run is far more beneficial!

Liability Coverage – The last of the major coverages I will review today is liability coverage, which covers damage or “injury” for others.  The most common example of a liability situation would be if a person (NOT a guest of yours, who are covered by “Medical Payments” coverage) were on your property, slipped and fell, and required you to pay for their injury and rehab costs.  This would be covered by the liability coverage on your policy.   Other examples of common liability claims would be if you happened to accidentally damaged someone else’s goods – knocking over the TV in their house, hitting a baseball through their picture window, etc.  It would also cover injuries caused if your dog bites someone.  Contact your agent if you have questions about what would and wouldn’t be covered by your liability coverage. 

A common situation that often causes consternation – what if your neighbor’s tree fell over onto your property and damaged your home?  Would that be covered by your neighbor’s liability coverage, or your dwelling coverage?  Everyone’s favorite answer:  That depends.  If the tree is long since dead and your neighbor has been negligent in removing it, then his liability policy would cover your damages.  HOWEVER, if the tree is still alive, and was simply blown over by the wind, or some other similar “unforeseeable” incident, then the damages would be paid out of your dwelling coverage (and subject to your deductible). 

Some other coverages to consider:  Loss of Use, Other Structures, Medical Payments, Inland Marine Floater (see Scheduled goods)

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Tuckered out after a long day of writing!

Concerns about the Affordable Care Act   2 comments

Some of the reasons why the Affordable Care Act (ACA) gives me a great deal of concern about it’s potential economic impact:

  • Employers are required to provide coverage if they have 50 or more full-time employees, or face paying taxes and fines
  • Individuals are required to carry coverage, or face paying taxes and fines
  • A 5% Affordable Care Act tax to subsidize uninsured individuals
  • Limits employer contribution to flexible spending account to $2500
  • Confusing definitions on who is an employee vs sub-contractor
  • An excise (read: sales) tax will be charged on “Cadillac” health plans starting in 2018

The two really serious kickers to the whole program:

  •  Health insurance companies will be required to spend at least 80% of premiums collected on the provision of care, drastically limiting how much revenue can be used for administrative costs and profit.  This will likely create incentive for companies to reduce overhead expenses, such as customer service and claims-processing employees.

AND THE MOST CONTROVERSIAL POINT OF ALL:  

  • Starting in 2014, health insurers cannot charge higher rates to those who will use more medical services (and thus costing insurers more money)!!  This creates a subsidy situation where customers who don’t use medical services very often will still pay increased premiums to pay for the medical services of those who use them more often.

In other words, forget underwriting, forget being able to charge more for the customers who will cost more.  EVERYONE is going to have to pay more in order to subsidize those who are more expensive to the insurance companies – for example, people who have pre-existing conditions and, usually, women.  I certainly have nothing against women.  But if the reality is that insuring a woman is more expensive that insuring a man, then a comparable plan for a woman should cost more than a man’s.  That, unfortunate though it may be, is how insurance works – if you cost more, you pay more.  This will no longer be the case under the Affordable Care Act.

Not charging more for those with pre-existing conditions would be comparable to an auto insurance company not being allowed to charge more for drivers who have prior claims.  So even though people with pre-existing conditions will cost carriers more money than those without pre-existing conditions, they cannot be charged more.  Top that off with the 80% premiums-for-care requirement, and we are facing a situation where a health insurer cannot hire the most qualified individuals (because they are not allowed to divert the money from revenue for care), cannot provide the best services (by hiring more customer service representatives, adjusters, billing employees, etc), and cannot charge people based on their potential cost to the company.

Dog Blog ACA

The Insurance Dogger is not looking forward to 2014 or the implementation of the ACA….

A review of personal insurance – Auto insurance (physical damage)   3 comments

Dog Blog

I’ve been waiting for a little while now….

OK OK I know that I said I’d be back to finish up auto coverages a few days ago.  Business being what it is, it’s taken me a little while.  But here we are, and off we go!

Last week we reviewed liability and injury coverages.  This week, we are going to review the coverages in place to protect the damages to your vehicle itself and ways to save on them.

  • Collision  – Even though this is “backwards” from how the coverages appear on your policy, it’s easier to explain starting with Collision.  Collision provides coverage for your vehicle when it collides with some other inanimate object, or is hit by another moving vehicle.  In the state of PA, unfortunately, that includes when your car is hit by a shopping cart.  Some examples of collision claims:  if your car is parked and gets hit by another car (or shopping cart!), you hit a patch of black ice and slam into a tree, or you are at fault in a multi-vehicle accident.  Ways to save – see note after Comprehensive
  • Comprehensive (Comp) – Comprehensive is most easily explained as “all other covered forms of physical damage to your vehicle,” hence the name.  In PA, comprehensive coverage does pick up one type of accident that would otherwise be considered a collision – hitting an animal or pedestrian.  These damages would be covered by comprehensive.  Other examples of comp claims:  if your car is stolen, catches on fire, suffers flood damage, a tree falls on it, etc.  Windshield and other glass damage is covered by comp (unless caused by a non-animal collision).  Ways to save – Easiest and most common way to save is by increasing your deductible.  Be wary of two things, though – first is that collision is far more expensive than comp, so it’s far more effective to increase your collision deductible.  Second is that you should be aware that the savings by increasing the deductible will not offset (in one year) the increased out of pocket cost in the event of a claim.
  • Comp or collision pay for a total loss of the vehicle based on the depreciated (Blue Book) value of the car.  All other (partial) losses are paid based on the actual expense of repairs (less the deductible).
  • Rental Reimbursement (RR) – RR provides coverage if you need to pay for a rental car as a result of a covered comp or collision claim.  In other words: you have a covered claim.  Your vehicle will be in the shop for two weeks.  You need a car in the interim.  You pay for a rental vehicle.  RR coverage will reimburse you for the cost, up to specified daily limits and maximum duration (typically, $30 a day for 30 days).  Ways to save – only real way to save here, outside of not purchasing it at all, is to carry lower per day limits.
  • Towing & Labor (T&L) – T&L provides coverage in the event that you need some form of roadside assistance (change a flat tire, charge a dead battery, keys locked in your car) or need to be towed for virtually any reason (mechanical breakdown, run out of gas, etc).  No real way to save here, it’s generally very inexpensive to begin with.  Only thing to consider – if you are paying for this AND AAA or some similar road service, be aware you may be paying twice for the same coverage.
  • Gap Coverage – This provides coverage for new cars that are purchased using a car loan.  As noted above, in the event of a total loss to your car, the policy will only pay for the depreciated value of the vehicle, NOT the loan amount.  Typically, the loan amount is higher than the depreciated value, creating a “gap” in coverage.  Gap coverage fills the void by paying for the difference.  This coverage can be purchased through the dealership or on your auto policy.  Compare BOTH terms and pricing before choosing where to buy the coverage!

That about does it for this review.  There are other liability and physical damage coverages available, but these are by far the most common (at least in PA).

Relax

So just relax and enjoy the ride – knowing you are well covered!

A review of personal insurance – Auto insurance (liability)   Leave a comment

Miss me

Hi everyone! Did you miss me?

Hey everyone!  It’s been too long since we’ve posted anything.  We’ll try to blend the purpose of this post between a good mix of information and ways to save.  Since our prior posts focused on business insurance, we’re going to start in a more widely useful direction – personal insurance.

Auto insurance is, at least in the state of PA, a legal requirement – but probably far less than you think.  In fact, state regulations only require that you carry liability coverage for the bodily injury and property damage of others, as well as your own personal medical expenses.  The limits required by the state are similarly low – only $15,000 per person & $30,000 per accident for bodily injury, $5,000 for property damage, and $5,000 for medical expenses.

Here are some of the coverages you can purchase, as well as ways to save on them:

  • Bodily Injury (BI)BI covers your liability for injuries people NOT in your vehicle sustain in the event of an accident for which you are at fault.  BI claims can get very tricky in PA.  If you are responsible for an accident that injures the passengers of another vehicle, typically the medical payments coverage on the policy on the OTHER (non-responsible) vehicle responds first.  It can quickly get convoluted, so in the interest of brevity, contact your agent for additional details of how coverage applies in the event of an injury.  Ways to save – see notes after Property Damage.
  • Property Damage (PD) PD covers your liability for the damage done to the property of others in an accident for which you are at fault.  For example, if you rear-ended a slower moving vehicle, back into a parked car in a parking lot, or take a turn too quickly and end up in someone’s front yardWays to save in general, liability coverages are the most difficult to reduce your costs on – the most convenient way to save is by lowering your limits.  However, especially if your driving record is clean, you won’t save as much by reducing limits as you might think.   Other ways to reduce your rates include changing driver/vehicle assignments on your policy (the youngest driver on the oldest car, for example), purchasing a safer car, or doing something to reduce your daily (commute) or annual mileage.
  • Uninsured/Underinsured Motorists (UM/UIM) – this coverage is similar to BI but in reverse.  If you or your passengers are injured in an accident where another party is at fault, and that party either does not have any BI coverage (uninsured) or they don’t have enough BI coverage (underinsured) to pay for your injuries, UM/UIM will pick up the difference (up to your policy limits).  Ways to save the best way to save without reducing your limits (if you have multiple vehicles on your policy) would be to reduce your limits and add stacking.  Stacking multiplies your UM/UIM limits by the number of vehicles on your policy.  So, if you have two cars on your policy, and carry $50,000/$100,000 unstacked limits, you can reduce your limits to $25,000/$50,000 and stack the coverage.  You will maintain the same total coverage (as long as you have at least two vehicles!) and pay less.
  • First Party Benefits (FPB) I will address these as a group, as they are typically lumped together in a batch on your policy.  Additionally, they can be combined into one large limit for the whole group of coverages, instead of having separate limits for each.  This is typically called blanketing coverage.  I digress – the four FPB coverages are medical expense, income loss, accidental death, and funeral benefits.  Each FPB coverage pays if you or your relatives (residing in your home) are injured or killed in an accident, regardless of who is at fault.  Medical Expenses operates similar to health insurance – covering your actual medical & rehab costs.  Income loss operates similar to disability coverage – covering your lost wages if you are injured in an accident and are unable to return to work.  Accidental Death and Funeral Benefits, similar to life insurance, provide coverage in the event you pass away as a result of an accident.  Ways to save in order to get higher limits for less money, consider purchasing the combination option, where you get one lump sum for all four coverages, which you can divvy up as necessary.  For example, instead of maintaining higher limits on each individual coverage, consider carrying combination coverage of $100,000 or $177,500.  Additionally, if you already have health, disability, or life insurance, consider reducing or removing the applicable coverages from your policy.

In the interest of your sanity and keeping this short, I will stop for today.  We’ll review the physical damage coverages you can purchase on your vehicle itself tomorrow.
In the meantime:

Sammy Dog Blog

Keep on riding!

A review of business coverages – Part 1   Leave a comment

Insurance confusion

Feeling down because you don’t understand your business insurance? The Dog Blog is here to help!

Today is the first part of a series reviewing various business insurance coverages.  Insurance companies will handle the various coverages differently, but some generalities can be made.  Many companies often use standardized forms provided by the Insurance Services Office, but certainly not all do.  Today’s coverages we will review are the Commercial Package Policy and Business Owners Policy.

The Commercial Package Policy (CPP) in its simplest form is the combination of two business coverages – most commonly general liability and commercial propertyThe CPP can be written a la carte to include a variety of different coverages, but is almost always written with GL & property.  General Liability protects business owners from a wide variety of legal exposures, such as a customer getting injured at their location, damages due to a product failure (although the actual product itself is typically NOT covered), or a wide variety of other lawsuits.  Commercial Property protects business owners against a loss to their building, contents & furnishings, inventory, or other goods.   The CPP can also include things like tool coverage, equipment breakdown, professional liability, auto, and crime – it can be built “from scratch” to meet your needs specifically, and is often used for larger or more complex businesses.

The Business Owners Policy (BOP) is a package that automatically includes a variety of coverages to provide a more efficient and competitive method of insuring a business.  The package includes general liability, commercial property, business income protection, and often also includes a variety of coverage enhancements.  Business Income coverage replaces lost income when business operations are interrupted due to a covered property loss.  For example, if there is a fire at a retail store and they cannot operate for 3 months, the income lost for those 3 months is replaced by the insurance company. 

The BOP is meant to streamline coverage for less complex businesses such as small retail operations or a medical or professional office (but the BOP does NOT offer malpractice coverage!).  If a BOP is available, it is often going to be more competitively priced than it would be to try to piece together similar coverages via a CPP. 

As I mentioned previously, each insurance company is going to handle coverages differently, and ultimately if you have questions you should call your agent Thanks for tuning in!

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