INSURANCE DIRECT Blog
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1) Does your mortgage company care who insures your home?
Usually not, however, they may require the carrier be at least A rated (financially stable)
2) You discover rotten wood and mold in an area under your home where it appears a leak has
been occurring-is there coverage?
Probably not due to the continuous and repeated water leak exclusion.
3) You can't live in your home while it's being fumigated for termites-will insurance pay for
Additional Living Expense?
No, termites aren't covered so this is not an eligible expense.
4) After a covered claim, you're unable to live in your home while repairs are taking place and
your pet must be boarded since the hotel doesn't allow pets-is there pet boarding coverage?
There may be since this is a necessary expense.
**side note** This reminds me of a lady who's poodle was injured by hail. She was upset that her homeowners insurance wouldn't pay for Fluffy's vet bill.
5) You learn your home has a foundation crack-is there coverage?
No. Settling, design flaws are excluded.
6) A squirrel gets in your home and damages your furniture?
No coverage under the vermin exclusion.
7)Your own dog damages your furniture? No, but if your neighbors dog did it, there could be
coverage under your neighbor's homeowners insurance.
8) You shoot and kill a home intruder and the intruder's family sues you for wrongful death?
Yes, your carrier should represent you in such litigation with their own team of attorneys.
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Posted Wednesday, January 21 2009 7:59 AM
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1) Are RED cars more expensive to insure?
No.
2) Are Sedans cheaper to insure than Coupes?
Generally, yes.
3) If you fail to notify your carrier that your teenager is now licensed, and they have an accident-
are you covered?
Due to insurance companies good faith, probably, but I wouldn't chance it. Notify them of
any drivers.
4) If you borrow your friend's care and have an accident-which insurance company pays?
Generally, insurance follows the vehicle 1st, the driver second.
5) If you have regular use of your friends car-does that change anything?
Yes, due to the regular use rule, there may not be coverage if you fail to notify the vehicle
carrier that you are a regular use driver.
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Posted Wednesday, January 21 2009 7:39 AM
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Vehicle owners understand that their personal driving record, the type of vehicle they drive and how much they drive influence the cost of auto insurance. Yet rising medical costs, sharply higher vehicle repair costs and soaring jury awards in vehicular liability cases are the principal drivers behind higher auto insurance rates today. In several states, fraud and abuse in pushing up the cost of auto insurance.
Medical costs are an important factor in the cost of auto insurance. Each year there are more than 2 million car accidents involving injuries. Several people are often injured in the same accident. Typical costs for treating an auto accident victim range from $6000 to $9000 but can easily run into the tens of thousands of dollars. The cost of auto injury claims is rising as much as 30 percent in some states. In the event of death due to an auto accident liability claim, it is common to "max out" the liability limits to the victim's family.
The $15 to $20 Billion that auto insurers pay in medical claims each year are a very significant component of auto insurance costs and the upward trend in claims costs is an important cost driver in auto insurance today. Higher costs for hospitalization and pharmaceuticals, state regulations permitting a wide range of dubious treatments and associated legal costs are largely to blame.
Higher repair costs are another significant cost driver today. A recent court decision essentially forced many insurers to suspend their use of aftermarket (generic) crash parts in automobile repairs, giving manufacturers of name-brand parts a virtual monopoly in this multi-billion dollar market. The effective prohibition on the use of generic parts-which are of like kind and quality to name brand parts-in the repair of damaged vehicles is a factor that could ultimately add $4 billion to $5 billion annually to the cost of auto insurance. Name brand parts often cost 30-70% more than their generic equivalent.
Another court decision caused an equally infriendly decision that could have the effect of reaching deep in the pockets of drivers. The Georgia Supreme court, along with other following states, ruled that insurers must compensate drivers for the so-called diminished value that occurs when a car is involved in an accident, even if the car is completely repaired and functions normally. The theory is that a car involved in an accident is always worth less than one that has not, even if repaired to its pre-loss condition. Auto dealers claim that diminished value for cars involved in accidents is typically 10-15% of the vehicle's resale value. If insurers must pay out an additional 10-15% on each claim, then clearly the cost of insurance must reflect that.
Sharply higher jury awards in vehicular liability cases are putting additional upward pressure on auto insurance rates as well. The average jury award in auto liability cases rose from $187,000 in 1994 to $269,000 in 2000-an increase of 44%. Auto liability issues are much more important than people realize. About 60% of auto premiums paid in 2000-nearly $70 billion-were for liability coverages.
Fraud and abuse are major problems in some states such as New York, Florida and Massachusetts. Loopholes in New York's no-fault insurance statutes, for example, are costing the state's drivers nearly $2 million per day!
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Posted Tuesday, January 20 2009 5:09 PM
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The average expenditure on homeowners insurance increased 12% from $593 in 2002 to $668 in 2003, according to the National Association of Insurance Commissioners. Expenditures vary widely by state. In 2003 Texas had the highest average expenditure $1328) followed by Louisiana ($974), Oklahoma ($925), Florida ($810) and the District of Columbia ($806). Idaho had the lowest average expenditure ($433) followed by Wisconsin ($434) and Delaware ($442),
Oregon ($461) and Maine ($462).
Increases in premiums may have taken some homeowners by surprise given that they came after several years of relatively flat prices.
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Posted Tuesday, January 20 2009 4:37 PM
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Why is the cost of homeowners insurance increasing? Homeowners know that the price they pay for homeowners depends on factors like the type of construction, age of the home and the quality of local fire protection services. Nevertheless, it is the extraordinary number of catastrophies, the high cost of home repair, the aging of the U.S. housing stock and the emergence of mold claims that are pushing homeowners insurance rates upwards. Mold claims-which were virtually unheard of just a few years ago, cost home insurers more than $1 Billion dollars annually.
During the 1990's, the frequency and severity of catastrophies began to increase dramatically. Over the past 12 years, insurers paid out more than $100 Billion in catastrophe-related losses which is about 700 million a month-many times more than in prior decades! Catastrophes include well-known events such as Hurricane Andrew and the Northridge earthquake, but also hundreds of smaller disasters associated with tropical storms, tornados, wildfires, hail, ice and snow.
Homeowners rates in many parts of the country continue to rise because of the extraordinary costs associated with paying these claims. In fact, virtually every part of the country is now at risk for billion dollar disasters.
In dollar terms, the numbers are sobering. Homeowner carriers over the past decade paid out $1.18 in losses and expenses for every $1 they earned in premiums. In 2001 alone, carriers paid out $8.9 Billion more in losses and expenses than they received in premiums!
Losses in the homeowners insurance line from 2000 to 2002 are estimated at $19 Billion, rivaling the $20.3 Billion in insured property losses from the September 11 terrorist attack.
Every homeowner knows that home repairs don't come cheap and that home repair and rebuilding costs continue to rise. This phenomenon is a major driver of rising home insurance rates today.
Mold has recently emerged as the dominant cost driver in some states. Mold is certainly not new-it's been around for hundreds of millions of years, but the sharp rise in mold claims is definitely a 21st century phenomenon. Multi-million dollar jury awards, sensationalized reporting in the media and profiteering by some individuals have led to an explosion in mold claims and costs.
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Posted Tuesday, January 20 2009 4:29 PM
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