Fischbein Insurance

  • About
  • Comm. Insurance
  • Comm. Property
  • Apt. Owners
  • Newsletter
  • Contact
You are here: Home / Archives for Home

August 4, 2014 By admin Leave a Comment

Renters Insurance Checklist

The questionnaireRenters insurance includes three important types of financial protection:

  • Coverage for Personal Possessions
  • Liability Protection
  • Additional Living Expenses

The following checklist can help you choose the right coverage when you are shopping around for renters insurance or speaking with your insurance professional.

A. Coverage for Personal Possessions

  1. How much insurance should I buy? Make sure you have enough insurance to replace all of your personal possessions in the event of a burglary, fire or other covered disaster.The easiest way to determine the value of all your personal possessions—including furniture, clothing, electronics, appliances, kitchen utensils and even linens—is to create a home inventory. This is a detailed list of all of your personal possessions along with their estimated value. An up-to-date home inventory will also make filing an insurance claim faster and easier. The Insurance Information Institute offers free Web-based home inventory software, available at www.knowyourstuff.org.
  2. Should I get replacement cost or actual cash value coverage? An actual cash value policy pays to replace your possessions minus a deduction for depreciation whereas a replacement cost policy will pay the cost of replacing your possessions without accounting for depreciation. The price of replacement cost coverage is about 10 percent more but can be well worth the extra expense as the value of most items tends to depreciate quickly.
  3. What disasters are—and are not—covered? Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and certain types of water damage (such as when the tenant upstairs leaves the water running in the bathtub and floods out your apartment or a burst pipe). Most renters insurance policies, however, do not cover floods. Flood coverage is available from the federal government’s National Flood Insurance Program (888-379-9531, www.floodsmart.gov) and from a few private insurers. You can get this coverage from the same agent or company representative who sold you the renters insurance policy. Earthquakes are not covered either. You can either get a separate policy or have it added as an “endorsement” to your renters policy, depending on where you live.
  4. What is my deductible, and how does it work? A deductible is an amount of money you pay out-of-pocket before the insurance coverage kicks in. Deductibles are available as a specified dollar amount, typically $500, $1000 or $2000, though higher deductibles are available. The larger the deductible, the lower the premium charged for the same amount of coverage, so if you can afford a deductible of at least $1,000, you may get as much as 25 percent off your premium. Remember though, that you will be responsible for paying the deductible each time you file a claim.
  5. What is a “floater” and do I need one? If you have expensive jewelry, furs, sports or musical equipment, or collectibles, consider adding a floater to your policy. Most standard renters policies offer only a limited dollar amount for such items; a floater is a separate policy that provides additional insurance for your valuables and covers them if they are accidentally lost. You will need to present receipts and/or appraisals for the items covered by the floater. It is important that expensive items be appraised properly as you will pay a premium based on the appraised value and in the event of a claim, be compensated for this dollar amount. You can ask your insurer to recommend a reputable appraiser. For some items, like laptop computers, a stand-alone policy may also be an option. Check your renters policy first to see whether your laptop is covered and what the deductible is.

B. Liability Protection

  1. Do I have enough liability insurance in the event someone sues me?Renters insurance provides liability protection that covers you against lawsuits for bodily injury or property damage done by you, your family members and even your pets. This coverage pays for both the cost of defending you in court and court awards—up to the limit of your policy. Most standard renters insurance policies will generally provide at least $100,000 of liability coverage, but additional amounts are available. Consider whether the amount of liability coverage provided by your policy is sufficient to protect your assets. Did you know you also have no-fault medical coverage as part of the liability protection provided by your renters policy? This coverage is only for injuries sustained by others and is not a substitute for your own health insurance. Medical payments coverage allows someone who gets injured on your property to simply submit his or her medical bills directly to your insurance company so the bills can be paid without resorting to a lawsuit. Most policies include about $1,000 to $5,000 worth of this coverage.
  2. Do I need an umbrella liability policy? If you need a large amount of liability protection, you can purchase a personal umbrella liability policy. An umbrella policy kicks in when you reach the limit on the underlying liability coverage provided by your renters or auto policy. It will also cover you for things such as libel and slander. For about $150 to $300 per year, you can buy a $1 million personal umbrella liability policy. The next million will cost about $75 and $50 for every million after that. Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your renters policy before selling you an umbrella liability policy for $1 million of additional coverage.

C. Additional Living Expenses

  1. If I can’t live in my home after a disaster, will I be covered? If your home is destroyed by a disaster that your policy covers and you need to live elsewhere, renters insurance provides additional living expenses (ALE). ALE pays for hotel bills, temporary rentals, restaurant meals and other expenses you incur while your home is being repaired or rebuilt. It is important to know out how much coverage you have, and what the limits are. Some companies provide coverage for a set amount of time, while others have a financial cap.

D. Other Coverages

  1. I run a business out of my home; do I need supplemental coverage? A typical homeowners or renters policy provides only $2,500 coverage for business equipment which is generally not enough to replace all of the equipment required by even a small home business. You may also need coverage for liability and lost income. Insurance companies differ considerably in the types of business coverages they offer. Some may meet the specific needs of your business, while others may not. So it is wise to shop around for coverage options as well as price.
  2. Am I covered if I am traveling or away from home? Most renters polices include what is called off-premises coverage. This means that belongings that are outside of your home are covered against the same disasters listed in your policy. For example, property stolen from your car would be covered. However some companies may limit the amount of off-premises theft to 10 percent of the amount of personal possessions insurance. If you think you need additional off-premises theft coverage—for example if you travel a lot—shop around for a policy that has the insurance protection you need.

E. Discounts

Insurance companies often offer discounts on renters insurance if you have another policy with them for your car or business. You can also get discounts if you:

  • Have a security system
  • Use smoke detectors
  • Use deadbolt locks
  • Have good credit
  • Have multiple policies
  • Stay with the same insurer
  • Are over 55 years old

Companies offer several types of discounts, but these can vary widely by company and by state, so review your options carefully. Also, some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere.

Related Links: Homeowners and Renters Insurance

 

Source: Insurance Information Institute, “Renters Insurance Checklist” http://www.iii.org website. Accessed November 30, 2015. http://www.iii.org/articles/renters-insurance-checklist.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Home, Personal, Theme 18

July 31, 2014 By Julian Aston Leave a Comment

IN: Assess Your Personal Insurance Coverage On An Annual Basis

Dear Valued Customer,

In this issue of the “————————” we focus on annual insurance planning for you and your family. Most of us lead busy lives and our circumstances are always changing, which is why an annual assessment of your personal insurance coverage is vital.

There are many types of insurance coverages that may be right for you, from homeowners to renters; healthcare to disability; term to whole life, and; umbrella to auto insurance, so consider this just a summary review. We urge you to please contact us for a total review and for our professional recommendations.

We appreciate your continued business and look forward to serving you.

Kind regards,

Filed Under: Home, Personal, Theme 100

July 31, 2014 By Julian Aston Leave a Comment

IN: How Can I Save Money On My Home Insurance?

Dear Valued Customer,

In this issue of the “———————“ we focus on how you can save money on your home insurance.

There are smart ways to save on home and auto insurance; however, there are also mistakes that can result in being dangerously underinsured. Mistakes like:

1. Insuring a home for its real estate value rather than for the cost of rebuilding.
2. Selecting an insurance company by price alone.
3. Dropping flood or earthquake insurance
4. Only purchasing the legally required amount of liability for your car
5. Neglecting to buy renters insurance

Please read on to understand this topic fully so you can avoid costly mistakes that can harm you and your family.

We appreciate your continued business and look forward to serving you.

Kind regards,

Filed Under: Home, Personal, Theme 99

July 31, 2014 By admin Leave a Comment

Five Insurance Mistakes To Avoid… & Still Save Money

Money_MoneyTreeWe are all concerned with saving money and it is important to shop around when looking for insurance coverage. However, simply reducing your coverage or dropping important coverages altogether can leave you dangerously underinsured in the event of a disaster.

Following are the five biggest auto, home, flood and renters insurance mistakes consumers can make, along with suggestions to avert those pitfalls while still saving money:

1. Insuring a home for its real estate value rather than for the cost of rebuilding. When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings.
A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your premium payments.2. Selecting an insurance company by price alone. It is important to choose a company with competitive prices, but also one that is financially sound and provides good customer service.
A better way to save: Check the financial health of a company with independent rating agencies and ask friends and family for recommendations. You should select an insurance company that will respond to your needs and handle claims fairly and efficiently.
3. Dropping flood insurance. Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. Many homeowners are unaware they are at risk for flooding, but in fact 25 percent of all flood losses occur in low risk areas. Furthermore with the significant snow fall this winter, spring related flooding may be particularly severe, thus increasing the importance of purchasing flood insurance.
A better way to save: Before purchasing a home, check with the NFIP to determine whether the property is situated in a flood zone; if so, consider a less risky area. If you are already living in a designated flood zone, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance. Additional information on flood insurance can be found at www.FloodSmart.gov.
 
4. Only purchasing the legally required amount of liability for your car. In today’s litigious society, buying only the minimum amount of liability means you are likely to pay more out-of-pocket if you are sued—and those costs may be steep.

A better way to save: Consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

5. Neglecting to buy renters insurance. A renters insurance policy covers your possessions and additional living expenses if you have to move out due to an insured disaster, such as a fire or hurricane. Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.
A better way to save: Look into multi-policy discounts. Buying several policies with the same insurer, such as renters, auto and life will generally provide savings.

Related Links
RELATED LINK
  • What Is Covered by a Basic Auto Insurance Policy?
  • What Is Covered by a Standard Homeowners Policy?
  • Flood Insurance
  • Avoiding Insurance Mistakes: Five Tips

Source: Insurance Information Institute, “Five Insurance Mistakes to Avoid And Still Save Money” http://www.iii.org website. Accessed December 2, 2015. http://www.iii.org/article/five-insurance-mistakes-avoid%C2%85-and-still-save-money

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Home, Personal, Theme 99

July 31, 2014 By admin Leave a Comment

How Much Homeowners Insurance Do I Need?

People_QuestionManYou need enough insurance to cover the following:

  1. The structure of your home.
  2. Your personal possessions.
  3. The cost of additional living expenses if your home is damaged and you have to live elsewhere during repairs.
  4. Your liability to others.

The structure

You need enough insurance to cover the cost of rebuilding your home at current construction costs. Don’t include the cost of the land. And don’t base your rebuilding costs on the price you paid for your home. The cost of rebuilding could be more or less than the price you paid or could sell it for today.

Some banks require you to buy homeowners insurance to cover the amount of your mortgage. If the limit of your insurance policy is based on your mortgage, make sure it’s enough to cover the cost of rebuilding. (If your mortgage is paid off, don’t cancel your homeowners policy. Homeowners insurance protects your investment in your home.)

For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local building costs per square foot. To find out construction costs in your community, call your local real estate agent, builders association or insurance agent.

Factors that will determine the cost of rebuilding your home:

  • Local construction costs
  • The square footage of the structure
  • The type of exterior wall construction–frame, masonry (brick or stone) or veneer
  • The style of the house (ranch, colonial)
  • The number of bathrooms and other rooms
  • The type of roof and materials used
  • Other structures on the premises such as garages, sheds
  • Fireplaces, exterior trim and other special features like arched windows
  • Whether the house, or parts of it like the kitchen, was custom built
  • Improvement to your home–adding a second bathroom, enlarging the kitchen or other additions that have added value to your home

Standard homeowners policies provide coverage for disasters such as damage due to fire, lightning, hail, explosions and theft. They do not cover floods, earthquakes or damage caused by lack of routine maintenance.

Flood insurance is available from the National Flood Insurance Program – NFIP and from some private insurers. Earthquake coverage is available from private insurance companies or, in California, also through the California Earthquake Authority.

Replacement cost policies
Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality. There is no deduction for depreciation–the decrease in value due to age, wear and tear, and other factors.

If you purchase a flood insurance policy, coverage for the structure is available on a replacement cost basis.

Guaranteed or extended replacement cost coverage
After a major hurricane or a tornado, building materials and construction workers are often in great demand. This can push rebuilding costs above homeowners policy limits, leaving you without enough money to cover the bill. To protect against such a situation, you can buy a policy that pays more than the policy limits.

An extended replacement cost policy will pay an extra 20 percent or more above the limits, depending on the insurance company. A guaranteed replacement cost policy will pay whatever it costs to rebuild your home as it was before the fire or other disaster.

Building codes
Building codes are updated periodically and may have changed significantly since your home was built. If your home is badly damaged, you may be required to rebuild your home to meet new building codes. Generally, homeowners insurance policies (even a guaranteed replacement cost policy) won’t pay for the extra expense of rebuilding to code. Many insurance companies offer an Ordinance or Law endorsement that pays a specified amount toward these costs. (An endorsement is a form attached to an insurance policy that changes what the policy covers.)

Inflation guard
Consider adding an inflation guard clause to your policy. This automatically adjusts the dwelling limit when you renew your policy to reflect current construction costs in your area.

Older homes
If you own an older home, you may not be able to buy a replacement cost policy. Instead, you may have to buy a modified replacement cost policy. This means that instead of repairing or replacing features typical of older homes, like plaster walls and wooden floors, with similar materials, the policy will pay for repairs using the standard building materials and construction techniques in use today.

Insurance companies differ greatly in how they insure older homes. Some won’t insure older homes for the replacement cost because of the expense of re-creating special features like wall and ceiling moldings and carvings. Other companies will insure older homes for the replacement cost as long as the dwelling is in good condition.

If you can’t insure your home for the replacement cost or choose not to do so–in some cases, the cost of replacing a large old home is so high that you might not want to replace it with a house of the same size–make sure the limits of the policy are high enough to provide you with a house of acceptable size and quality.

Your personal possessions

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on the structure or “dwelling” of your home. The limits of the policy typically appear on the Declarations Page under Section I, Coverages, A. Dwelling.

To determine if this is enough coverage, you need to conduct a home inventory. This is a detailed list of everything you own and information related to the cost to replace these items if they were stolen or destroyed by a disaster such as a fire (for more information see How do I take a home inventory and why). If you think you need more coverage, contact your agent or insurance company representative and ask for higher limits for your personal possessions.

Replacement Cost or Actual Cash Value
You can either insure your belongings for their actual cash value, which pays to replace your home or possessions minus a deduction for depreciation up to the limit of your policy. Or you can opt for replacement cost, which pays the actual cost of replacing your home or possessions (no deduction for depreciation) up to the limit of your policy.

Suppose, for example, a fire destroys a 10-year-old TV set in your living room. If you have a replacement cost policy for the contents of your home, the insurance company will pay to replace the TV set with a new one. If you have an actual cash value policy, it will pay only a percentage of the cost of a new TV set because the TV has been used for 10 years and is worth a lot less than its original cost. Some replacement cost policies also replace the item and deliver it to you.

Generally, the price of replacement cost coverage is about 10 percent more than that of actual cash value. If you need a flood insurance policy for your belongings, it is only available on an actual cash value basis.

Insuring expensive items with floaters/endorsements
There may be limits on how much coverage you get for expensive items such as jewelry, silverware and furs. Generally, there is a limit on jewelry for $1,000 to $2,000. You should ask your agent or look it up in your policy. This information is in Section I, Personal Property, Special Limits of Liability. Insurance companies may also place a limit on what they will pay for computers.

If the limits are too low, consider buying a special personal property floater or an endorsement. These allow you to insure these items individually or as a collection. With floaters and endorsements, there is no deductible. You are charged a premium based on what the item (or collection) is, its dollar value and where you live.

You can determine the value by providing your agent with a recent receipt or getting the item or collection appraised.

Additional living expenses after a disaster

This is a very important feature of a standard homeowners insurance policy. This pays the additional costs of temporarily living away from your home if you can’t live in it due to a fire, severe storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt.

Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20% of the insurance on your house. Some companies will even sell you a policy that provides you with an unlimited amount of loss of use coverage, for a limited amount of time.

If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

You should talk to your agent or company to make sure you know exactly how much coverage you have and how long the coverage will be in effect. In most cases, you can increase this coverage for an additional premium.

Liability to others

This part of your policy covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by pets. It pays for both the cost of defending you in court and for any damages a court rules you must pay.

Generally, most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available. Increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of coverage of liability protection.

Umbrella or Excess Liability.
You should buy enough liability insurance to protect your assets. If you own property and or have investments and savings that are worth more than the liability limits in your policy, you may consider purchasing an excess liability or umbrella policy.

Umbrella or excess liability policies provide extra coverage. They start to pay after you have used up the liability insurance in your underlying home (or auto) policy. An umbrella policy is not part of your homeowners policy. You have to purchase it separately. In addition to providing a higher dollar amount, they offer broader coverage. You are covered for libel, slander, and invasion of privacy. These things are not covered under standard homeowners or auto policies.

The cost of an umbrella policy depends on how much underlying insurance you have and the kind of risk you represent. The greater the underlying liability coverage, the cheaper the policy. This is becaue you would be the less likely to need the additional insurance. Most companies will require a minimum of $300,000 on your home and your car, if you own one.

Source: Insurance Information Institute, “How much homeowners insurance do I need?” http://www.iii.org website. Accessed December 2, 2015. http://www.iii.org/article/how-much-homeowners-insurance-do-i-need

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Home, Personal, Theme 100, Theme 99

July 31, 2014 By admin Leave a Comment

Home Buyers Insurance Checklist

Misc_ChecklistShopping for your dream house? There are many considerations when looking at real estate, such as property taxes, school district, available recreational opportunities in the neighborhood, to name a few.

But an important and often overlooked consideration is the insurance implications of your purchase. You will be paying insurance on your home for as long as you own it, so you should factor the cost of insurance into the home-buying process. You don’t want to find out that your dream home is more expensive to insure than you thought—after you own it!
Before You Start Looking for a Home
Thinking through all the costs associated with buying a home will make the process run more smoothly, and it may also save you money. It is important to:
Check Your Credit Rating
A good credit history helps you in many ways. Good credit makes it easier to get a mortgage at a competitive rate, and it may also qualify you for a good credit discount on your insurance. Make sure you know your credit rating before you apply for a mortgage. Get a copy of one or all of your credit reports. Make sure they are accurate and report any mistakes immediately. If your credit is not as good as it could be take steps now to improve it. The I.I.I. has information on credit and insurance to help you with this process
Protect Yourself with a Renters Insurance Policy
If you are currently renting a house or apartment, protect yourself financially with a renters insurance policy. This provides insurance protection in the event a fire, hurricane or other insured disaster damages or destroys your personal possessions. It also covers the cost of additional living expenses if something happens to make your rental home or apartment unlivable. Additionally, renters insurance gives you liability protection if someone is injured in your home and decides to sue you. Disasters happen, and it would be unfortunate to have to use the down payment you saved to buy your new home to pay for losses that could have been covered by renters insurance. Furthermore, having a renters insurance policy provides a useful insurance history to your prospective homeowners insurer when you go to buy your first home.

While House Hunting

As you search for your new home, remember that the physical characteristics of the house—its size, location, construction and overall condition—can affect the cost, choice and availability of home insurance. Following are some factors to consider when shopping for a home:
Quality and Location of the Fire Department
Houses that are located near highly-rated, permanently staffed fire departments usually cost less to insure. This also holds true for homes that have a hydrant nearby. An important underwriting criterion for insurance companies is a community’s investment in fire protection, which includes trained firefighters, proper equipment and adequate supplies of water.
Proximity to the Coastline
Houses located on or near the coast will generally cost more to insure than those further inland. There will also likely be a hurricane or windstorm deductible. This is a percentage deductible based on the cost to rebuilding a home, rather than a flat dollar amount. With a homeowners policy that has a $500 standard deductible, for example, the policyholder pays the first $500 of the claim before insurance kicks in. However, as percentage deductibles are based on the home’s insured value, if a house is insured for $100,000 and has a 2 percent deductible, the first $2,000 of a claim is paid out of the policyholder’s pocket.There are two kinds of wind damage deductibles: hurricane deductibles, which apply to damage solely from hurricanes; and windstorm or wind/hail deductibles, which apply to any kind of wind damage. Percentage deductibles typically vary by state and range from 1 percent to 5 percent of a home’s insured value. These come into effect if certain triggers occur—a deductible triggering event can be, for instance, an official National Weather Service declaration that a storm is generating hurricane-strength winds (i.e., 74 miles per hour, or more) in your community.
In coastal areas with high wind risk, some homeowners may select higher hurricane deductibles to lower their insurance premiums, but that means they pay more if their home is damaged. In some coastal communities, private homeowners insurance coverage may not be readily available. Instead, you may need to purchase insurance through a state-run insurance program, which can provide less coverage, and in some cases be more costly, than private insurance.
Age of the Home
A stately, older home can be quite beautiful, but ornate features such as plaster walls, ceiling molding and wooden floors may be costly to replace and raise the cost of insurance. Plumbing and electrical systems can become unsafe with age and lack of maintenance. So, older homes may cost more to insure. If you are considering buying an older home find out how much it will cost to update these features and factor it into the cost of ownership.
Condition of the Roof
Ask about the condition of the roof. A new roof matters to insurers and keeps you and your family safer. Depending on the type of roof and whether or not you use fire and/or hail resistant materials, you may even qualify for a discount. Talk to your insurer about qualifying discounts.
Is the Home Well-Built and Up to Code?
Find out whether the house has been updated to comply with current building codes. Homes built by careful craftsmen and those built to meet modern engineering-based building codes are likely to better withstand natural disasters. Consider hiring a licensed home inspector who is knowledgeable about the latest building codes to inspect the property before you sign a mortgage.
 
Risk of Flooding 
Damage from flooding is NOT covered by standard home insurance policies. If you are buying a home in an area at risk from flooding, you will need to purchase separate insurance. Insurance for flooding is available from the federal government’s National Flood Insurance Program (NFIP), which is serviced by private carriers, and from a few specialty insurers. People often underestimate the risk of flooding. Ninety percent of all natural disasters in the U.S. involve flooding, according to the NFIP. More important is that 25 to 30 percent of all paid losses for flooding are for damage in areas not officially designated as special flood hazard areas. If you are not in a high-risk flood zone, NFIP coverage is available at a lower premium.
History of Earthquakes 
While earthquakes are most frequently associated with California, they have occurred in 39 states and, like flooding, are not covered under standard home insurance policies. Earthquake insurance is available from private insurers as an endorsement to a homeowners policy, and in California from the California Earthquake Authority, a privately funded, publicly managed organization.  The cost of earthquake insurance differs widely by location, insurer and the type of structure being covered. Generally, older buildings cost more to insure than new ones. Wood frame structures may benefit from lower rates than brick buildings because they tend to withstand quake stresses better. Regions are graded on a scale of 1 to 5 for likelihood of quakes, and this difference is reflected in insurance rates.
Swimming Pool or Other Special Feature
If the house has a swimming pool, hot tub or other special feature, you will likely need more liability insurance. You may also want to consider purchasing an excess or umbrella liability policy to provide added protection in the event someone gets injured on your property and decides to sue you.

Before You Place a Bid on the Home

Check the Loss History Report
Ask the current owner of the house for a copy of the insurance loss history report, such as a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report from ChoicePoint or an A-PLUS report from ISO, a leading source of information about property/casualty insurance. This is a record of insurance claims on the house that can provide answers to two questions that any savvy homebuyer should ask:
  1. Have there been any past problems in the home?
  2. If damage has occurred, was it properly repaired?
Note that prior claims are not a barrier to getting insurance. In fact, sometimes a recent claim can have positive ramifications. If, for example, a roof was damaged by a wind storm and replaced by a new one, this would make the house more desirable to an insurance company. If there have been no claims within five years, there will be no loss history report on the home.
 
Get the House Inspected
A thorough inspection of the home is very important. The inspector should:
  • check the general condition of the home;
  • look for water damage, termites and other types of infestation;
  • pay special attention to the electrical system, septic tank and water heater;
  • show you where potential problems might develop;
  • double-check that past problems have been repaired;
  • suggest upgrades or replacements that may be needed.
If the inspector raises questions, your insurance company will as well. And, be sure to find out if there is an underground oil storage tank, as many insurers will not provide policies for homes that have one.
 
Determine How Much It Will Cost to Maintain the House
Routine maintenance is your responsibility as a homeowner. Losses caused by failing to properly care for your home are not covered by standard homeowners insurance policies. The yearly cost of taking care of your house is another factor to be included in the overall price of owning the home.
 
Call Your Insurance Representative
Don’t wait until the last minute to think about insurance. Ask your insurance professional if the house will qualify for insurance, and get an estimate of the premium. The sooner you act, the smoother the process will be. Don’t be shy about asking for estimates on more than one house. Insurance is an important consideration when purchasing a home. If you are uncomfortable with the cost of insuring a particular house, keep looking for one that better fits your financial situation. If you do not already have an insurance agent or company representative, get recommendations from family, friends or co-workers, or consult your state insurance department.
 
Purchasing Insurance for your New Home
When purchasing a home insurance policy, work with your insurance agent or company representative to get enough insurance to rebuild the house in the event of a total loss. No new home buyers want to think that their house could go up in flames, but disasters do happen. It’s important to have enough insurance to completely rebuild your home and replace all of your personal possessions. You also need to make sure you have enough liability insurance to protect your financial assets. Ask about additional coverage such as:
  • Replacement cost for personal possessions
  • Extended or guaranteed replacement cost for the structure
  • Building code upgrades
  • Sewer and drain back-up coverage
  • Inflation-guard
  • Umbrella coverage for a pool or other high-risk items
  • Special riders for jewelry, collectibles and expensive items
To save money on your homeowners insurance, shop around and take the highest deductible you can afford. Since most people only file a claim every eight to 10 years, having a higher deductible saves money over time and preserves your insurance for when it’s really needed. You can also ask about available discounts for:
  • Multi-policy (home, car or other policies with the same company)
  • Smoke detectors
  • Fire extinguishers
  • Sprinkler systems
  • Burglar and fire alarms that alert an outside service
  • Deadbolt locks and fire-safe window grates
  • Being 55 years old and/or retired
  • Long-time policyholder
  • Upgrades to plumbing, heating and electrical systems
  •  Earthquake retrofitting to make the home safer
  • Wind-resistant shutters

Additional Resources

  • ChoicePoint
  • CLUE reports
  • Fair Isaac
  • To order a credit report, MyFICO.com
  • For help in determining your credit score, call 800-777-2066
  • Institute for Business & Home Safety
  • ISO
    -To order a copy of your A-PLUS report, call 800-709-8842
    -For up-to-date information on fire protection services throughout the country, see the Public Protection Classification program
  • National Flood Insurance Program
  • Flood
  • Hurricane and Windstorm Deductibles
  • Residual Markets
  • What Is Covered by a Standard Homeowners Policy?
  • Earthquake

Source: Insurance Information Institute, “Home Buyers Insurance Checklist“ http://www.iii.org website. Accessed December 2, 2015. http://www.iii.org/article/home-buyers-insurance-checklist

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Home, Personal, Theme 99

July 2, 2014 By admin Leave a Comment

Get A Kit Of Emergency Supplies

Sign_EmergencyRoom1. Get a Kit of emergency supplies.

The first step is to consider how an emergency might affect your individual needs. Plan to make it on your own, for at least three days. It’s possible that you will not have access to disaster assistance, a medical facility or even a drugstore. It is crucial that you and your family think about what kinds of resources you use on a daily basis and what you might do if those resources are limited or not available.

Basic Supplies:

Think first about the basics for survival – food, water, clean air and any life-sustaining items you require to maintain your health, safety and independence. Consider two kits. In one kit put everything you will need to stay where you are and make it on your own for a period of time. The other kit should be a lightweight, smaller version you can take with you if you have to leave your home.

Recommended Supplies to Include in a Basic Kit:

  • Water: one gallon of water per person per day for at least three days, for drinking and sanitation
  • Non-perishable food: Food, at least a three-day supply of non-perishable food and a manual can-opener if kit contains canned food
  • Battery-powered or hand crank radio and a NOAA Weather Radio with tone alert and extra batteries for both
  • Battery-powered or hand-crank cell phone charger
  • Flashlight and extra batteries
  • First aid kit
  • Local maps
  • Whistle to signal for help
  • Dust mask to help filter contaminated air and plastic sheeting and duct tape to shelter-in-place
  • Moist towelettes, garbage bags and plastic ties for personal sanitation
  • Wrench or pliers to turn off utilities
  • Plastic Sheeting and duct tape to shelter-in-place
  • Important family documents
  • Items for unique family needs
  • Pet food, extra water and supplies for your pet or service animal

Include Medications and Medical Supplies:

If you take medicine or use medical supplies on a daily basis, be sure you have what you need on hand to make it on your own for at least a week. You should also keep a copy of your prescriptions as well as dosage or treatment information. If it is not possible to have a week-long supply of medicines and supplies, keep as much as possible on hand and talk to your pharmacist or doctor about what else you should do to prepare.

If you undergo routine treatments administered by a clinic or hospital or if you receive regular services at home such as home health care, meals, oxygen or door-to-door transportation, talk to your service provider about their emergency plans. Work with them to identify back-up service providers within your area and the areas you might evacuate to. If you use medical equipment in your home that requires electricity to operate, talk to your health care provider about what you can do to prepare for its use during a power outage.

Depending on your needs, items for your Go Kit may include:

  • Extra eyeglasses, hearing aids if you have them, or have coverage for them
  • Extra batteries for hearing aids
  • Battery chargers for , motorized wheelchairs or other battery operated medical or assistive technology devices
  • Copies of medical prescriptions, doctors orders, and the style and serial numbers of the support devices you use
  • Medical alert tags or bracelets or written descriptions of your disability and support needs, in case you are unable to describe the situation in an emergency
  • Supplies for your service animal
  • Medical insurance cards, Medicare/Medicaid cards, physician contact information, list of your allergies and health history A list of the local non-profit or community-based organizations that know you or assist people with access and functional needs similar to yours.
  • A laminated personal communication board, if you might need assistance with being understood or understanding others
  • If possible, extra oxygen, insulin, catheters, or other medical supplies you use regularly

If you use a motorized wheelchair, have a light weight manual chair available for emergencies. Know the size and weight of your wheelchair, in addition to whether or not it is collapsible, in case it has to be transported.

Even if you do not use a computer yourself, consider putting important information onto a portable thumb drive for easy transport in an evacuation.

Include copies of important documents in your emergency supply kits such as family records, medical records, wills, deeds, social security number, charge and bank accounts information, and tax records. It is best to keep these documents in a waterproof container. If there is any information related to operating equipment or life-saving devices that you rely on, include those in your emergency kit as well, and also make sure that a trusted friend or family member has a copy of these documents. Include the names and numbers of everyone in your personal support network, as well as your medical and disability service providers. If you have a communication disability, make sure your emergency information includes instructions for the best way to communicate with you.

Also be sure you have cash or travelers checks in your kits in case you need to purchase supplies.

If you have allergies or chemical sensitivities, be sure to include items that you are able to use for personal hygiene and for cleanup.

2. Make a Plan for what you will do in an emergency.

The reality of a disaster situation is that you will likely not have access to everyday conveniences. To plan in advance, think through the details of your everyday life. If there are people who assist you on a daily basis, list who they are and how you will contact them in an emergency.

Create your own personal support network by identifying others who will help you in an emergency. Think about what modes of transportation you use and what alternative modes could serve as back-ups. If you require accessible transportation be sure your alternatives are also accessible.

If you have tools or aids specific to your disability, plan how you would function without them. For example, if you use a communication device, mobility aid, or service animal, what will you do if these are not available? If you require life-sustaining equipment or treatment such as a dialysis machine, find out the location and availability of more than one facility. For every aspect of your daily routine, plan an alternative procedure. Make a plan and write it down. Keep a copy of your plan in your emergency supply kits and a list of important information and contacts in your wallet. Share your plan with your family, friends, service providers and others in your personal support network.

Create a Personal Support Network:

If you anticipate needing assistance during a disaster, make a list of family, friends and others who will be part of your plan. Talk to these people and ask them to be part of your support network. Share each aspect of your emergency plan with everyone in your group, including a friend or relative in another area who would not be impacted by the same emergency who can help if necessary.

Make sure everyone knows how you plan to evacuate your home, school or workplace and where you will go in case of a disaster. Make sure that someone in your personal support network has an extra key to your home and knows where you keep your emergency supplies. Teach them how to use any lifesaving equipment or administer medicine in case of an emergency. If you use a wheelchair, oxygen or other medical equipment show friends how to use these devices so they can move you if necessary or help you evacuate. Practice your plan with those who have agreed to be part of your personal support network.

Inform your employer and co-workers about the assistance you will need in an emergency. This is particularly important if you need to be lifted or carried. Talk about communication difficulties, physical limitations, equipment instructions and medication procedures. If you are deaf or hard of hearing, discuss the best ways to alert you in an emergency. If you have a cognitive or intellectual disability, be sure to work with your employer to determine how to best notify you of an emergency and what instruction methods are easiest for you to follow. Always participate in exercises, trainings and emergency drills offered by your employer.

Develop a Family Communications Plan:

Your family may not be together when disaster strikes so plan how you will contact one another and review what you will do in different situations. Consider a plan where each family member calls, sends a text message or e-mails the same friend or relative in the event of an emergency. It may be easier to make a long-distance phone call than to call across town, so an out-of-town contact, not in the impacted area, may be in a better position to communicate among separated family members. You may have trouble getting through, or the phone system may be down altogether, but be patient. For more information on how to develop a family communications plan, visit www.ready.gov.

Deciding to Stay or Go:

Depending on your circumstances and the nature of the emergency, the first important decision is whether you stay or go. You should understand and plan for both possibilities. Use common sense and available information to determine if there is immediate danger. In any emergency, local authorities may or may not immediately be able to provide information on what is happening and what you should do. However, you should monitor television radio internet or social media news reports for information or official instructions as they become available. If you’re specifically told to evacuate or seek medical treatment, do so immediately. If you require additional travel time or need transportation assistance, make these arrangements in advance.

Consider Your Service Animal or Pets:

Whether you decide to stay put in an emergency or evacuate to a safer location, you will need to make plans in advance or your service animal and pets. Keep in mind that what’s best for you is typically what’s best for your animals. If you must evacuate, take your pets with you, if possible. However, if you are going to a public shelter, it is important to understand that by law only service animals must be allowed inside. Plan in advance for shelter alternatives that will work for both you and your animals; consider loved ones or friends outside of your immediate area, pet-friendly shelters and veterinarians who would be willing to take in you and your pets in an emergency. For more information about pet preparedness, visit www.ready.gov.

Staying Put:

Whether you are at home or elsewhere, there may be situations when it’s simply best to stay where you are and avoid any uncertainty outside. Consider what you can do to safely shelter- in-place alone or with friends, family or neighbors, also consider how a shelter designated for the public would meet your needs. Work with local emergency managers and others in your community on preparing shelters in advance to meet the access and functional needs of children and adults with disabilities (go to www.fema.gov/about/odic to learn more about functional needs support services in general population shelters) . If you have options and decide to stay put and shelter in place, consider that you may be without electricity, phone service and accessible roads for days or longer, depending on circumstances.

Evacuation:

There may be conditions in which you will decide to get away or there may be situations when you may be ordered to leave. Plan how you will get away and anticipate where you will go. Choose several destinations in different directions so you have options in an emergency. Ask about evacuation plans at the places where you spend time including work, school, community organizations and other places you frequent. If you typically rely on elevators, work with others to develop back-up plans for evacuation in case they are not working.

Fire Safety:

Plan two ways out of every room in case of fire. Check for items such as bookcases, hanging pictures, or overhead lights that could fall and block an escape path. Check hallways, stairwells, doorways, windows and other areas for hazards that may keep you from safely leaving a building during an emergency, Secure or remove furniture and objects that may block your path, if there are aspects of preparing your home or workplace that you are not able to do yourself, enlist the help of your personal support network.

Contact Your Local Emergency Information Management Office:

Some local emergency management offices maintain registries for people with disabilities.

Some registries are only used to collect planning information, others may be used to offer assistance in emergencies. If you add your name and information to a registry, Be sure you understand what you can expect. Be aware that a registry is NEVER a substitute for personal preparedness. Even if the registry may be linked to first responders, assistance may not be available for hours or days in a disaster. Contact your local emergency management agency to see if these services exist where you live or visit www.ready.gov to find links to government offices in your area. In addition, wearing medical alert tags or bracelets that identify your access and functional needs can be a crucial aid in an emergency situation. When traveling, consider alerting hotel or motel workers if you will need help in a disaster situation, as a part of your plan.

Finances:

Arrange electronic payments for your paycheck and federal benefits.
The Direct Express® prepaid debit card is designed as a safe and easy alternative to paper checks for people who don’t have a bank account. Sign up is easy, call toll-free at (877) 212-9991 (phone), (866) 569-0447(TTY) or sign up online at www.USDirectExpress.com. Signing up for direct deposit or the Direct Express card is a simple but important step that can help protect your family’s access to funds in case the unthinkable were to happen. If you or those close to you are still receiving Social Security or other federal benefits by check, please consider switching to one of these safer, easier options today.

3. Be Informed about what might happen.

Some of the things you can do to prepare for the unexpected, such as assembling an emergency supply kit and making an emergency plan are the same regardless of the type of emergency. However, it’s important to stay informed about what might happen and know what types of emergencies are likely to affect your region. For more information about specific types of emergencies, visit www.ready.gov.

Be prepared to adapt this information to your personal circumstances and make every effort to follow instructions received from authorities on the scene. Above all, stay calm, be patient and think before you act. With these simple preparations, you can be ready for the unexpected.

In addition to your personal preparedness, consider getting involved in neighborhood and community emergency preparedness activities. Assist emergency planners and others in considering the preparedness needs of the whole community, including people with disabilities and others with access and functional needs. Communities are stronger and more resilient when everyone joins the team. People with disabilities often have experience in adapting and problem solving that can be very useful skills in emergencies.

Preparing Makes Sense for People with Disabilities, Others with Access and Functional Needs, and the Whole Community.

Get Ready Now. This information was developed by the US. Department of Homeland Security in consultation with AARP, the American Red Cross and the National Organization on Disability and updated by the FEMA Office of Disability Integration and Coordination.

Source: FEMA, “Get a Kit of Emergency Supplies” http://www.ready.gov website. Accessed November 28, 2015. http://www.ready.gov/sites/default/files/documents/files/PrinterFriendly_Disabilities.pdf

© Copyright 2016 intouch Business, Inc. All rights reserved. Certain names and articles used with permission of owners. Trade names mentioned herein are owned by third parties.

Filed Under: Business, Disaster, Home, Personal, Theme 47

July 2, 2014 By admin Leave a Comment

Be Informed

Disaster_EmergencyPreparednessChecklistLearn what protective measures to take before, during, and after an emergency

Myth: I don’t need to worry about disasters where I live.

Emergency preparedness is not only for Californians, Midwesterners and Gulf Coast residents. Most communities may be impacted by several types of hazards during a lifetime. Americans also travel more than ever before to areas with different hazard risks than at home.

Knowing what to do before, during and after an emergency is a critical part of being prepared and may make all the difference when seconds count. Use this site to learn about potential emergencies that can happen and how to prepare for and respond to them.

Basic Protective Measures for All Hazards

Some basic protective actions are similar across many different hazards:

  • Physical safety is a concern for all hazards and may involve sheltering or evacuating.
  • Develop a family communications plan 
  • Make an emergency supply kit to be prepared for any type of disaster.
  • Learn about receiving emergency alerts and local emergency plans for shelter and evacuation, local emergency contacts, and local advance alerts and warnings.
  • When recovering from a disaster, safety as well as mental and physical well-being must be considered.

Disaster Specific Preparedness

There are important differences among potential emergencies that should impact the decisions you make and the actions you take.

This site contains the following helpful information for each type of disaster:

  • How to plan with your household and prepare in advance so you are ready
  • Signs of hazardous events that come with very little warning
  • How to protect your household during the disaster
  • Begin recovery following the initial disaster

Learn this information for each type of disaster that could affect you:
•    Natural Disasters
•    Technological & Accidental Hazards
•    Terrorist Hazards
•    Pandemics
•    Home Fires

Source: FEMA, “Be Informed” http://www.ready.gov website. Accessed December 2, 2015. http://www.ready.gov/be-informed

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Business, Disaster, Home, Personal, Theme 47, Theme 86, Weekly Safety Meetings

July 2, 2014 By Julian Aston Leave a Comment

IN: Disaster Preparedness: Simple Steps Everyone Can Take

Dear Valued Customer,

In this issue of the “——————-” we focus on disaster preparedness and the simple, but important steps everyone can take ahead of an emergency.

Emergencies come in many forms, and may require anything from a brief absence from home to a permanent evacuation. Read on to get informed about a kit of emergency supplies. What the recommended basics would include and how to make a plan for what you would do in the event of an emergency.  How you would communicate with your family? The first important decision: whether you stay or go. Looking after your pets, evacuating properly, arranging your finances, and much more.

We trust this information helps ensure the safety of your loved ones. We appreciate your continued business and look forward to serving you.

Kind regards,

Filed Under: Business, Disaster, Home, Personal, Theme 47

June 28, 2014 By admin Leave a Comment

Flood Insurance

Homes-Buildings_Disaster_FloodedHouseFlooding 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 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

  • 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 – discounts that many property owners in high-risk areas receive.
  • According to the New Orleans Times-Picayune, 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, 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 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 non-residential 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; or 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.
  • 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, as the flooding in the Midwest in the spring of 2008 and from superstorm Sandy in 2012 revealed. 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 $2.2 billion in 2005. In 2013, 16,854 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.
  • Flood Re in the U.K.: In June 2013 the British government adopted a new approach to flood insurance, ending a longstanding voluntary agreement with the Association of British Insurers to supply flood insurance through the private market. The private market will continue to write flood insurance, but premiums will be capped. The highest-risk policies will be reinsured by Flood Re, an industry-run, not-for-profit organization. All U.K. household insurers will pay an assessment to fund excess Flood Re losses.

BACKGROUND

The National Flood Insurance Program: Before Congress passed the National Flood Insurance Act in, 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 mudslides 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 zone 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 of flood insurance requirements. Regulators can now fine banks with a pattern of failure 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, now 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 be able to 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 reexamine 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 special flood hazard areas. 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.

Proposals for Change: In a final report published in 2006 by the American Institutes for Research (AIR), which conducted an evaluation of the federal flood insurance program, AIR said that although much had been accomplished, the program fell short of meeting its goals in part because the NFIP did not have the ability to guide development away from floodplains and cannot restore beneficial floodplain functions once they have been impaired. In addition, AIR said, many people still are not covered or not adequately covered for flood damage. AIR also noted that the NFIP was hampered in reaching its goals by insufficient Congressional funding, lack of pertinent data, misperceptions about the nature of the program and the breakdown in coordination among its three major sectors.

A report published by FEMA in 2007 suggests that development patterns should be changed to protect environmentally sensitive areas and that communities in the flood program should be encouraged or required to ban development in these locations.

Another criticism of the NFIP is that it does not charge enough for coverage. Among the reasons for the premium shortfall is that the cost of coverage on some dwellings is subsidized- those that were built before floodplain management regulations were established in their communities. As a result, the premiums paid for flood coverage by the owners of these properties reflect only 30 to 40 percent of the true risk of loss.

Over time. lawmakers considering legislation to renew authorization of NFIP have proposed many changes that would have increased the NFIP’s future income, including making owners of property subject to repetitive flooding pay premiums that more closely reflect the true cost of their losses and gradually eliminating the flood insurance subsidy for vacation and second homes. In addition, they would have allowed higher premium increases to make the program eventually self-sustaining.

Flood Coverage in Other Countries: There are two basic methods of providing flood insurance in developed countries. Under the first, the optional system, insurers extend their standard policy to include supplemental coverage for flood damage on payment of additional premium. The coverage tends to be expensive due to the fact that only those most likely to be flooded, and therefore to file claims, purchase it, a situation known in the insurance industry as adverse selection. Among the countries with optional coverage are Germany and Italy. The other method is “bundling.” Under this system, flood coverage is combined with coverage for other perils such as fire and windstorm, thus spreading the risk of flood losses across a large geographical area and greatly increasing the percentage of the population covered for flood damage. Countries that have adopted this method include the United Kingdom, Spain and Japan. In addition, in some countries such as France and Spain there are government compensation programs for major disasters, including flooding, that take effect when the cost of a disaster reaches a certain level. The system in the United States is unique in that the government underwrites the coverage and private insurers act as administrators bearing no actual flood risk.

KEY SOURCES OF ADDITIONAL INFORMATION

The National Flood Insurance Program Community Status Book

 

Source: Insurance Information Institute, “Flood Insurance” http://www.iii.org website. Accessed November 30, 2015. http://www.iii.org/issue-update/flood-insurance

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Home, Personal, Theme 44

  • 1
  • 2
  • 3
  • 4
  • Next Page »

[footer_backtotop]

Copyright © 2023 Fischbein Insurance Services · All Rights Reserved · SITE DESIGN BY INTOUCH ·