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Hurricane Earl Threatens East Coast: Do You Have Home Insurance?

Posted in Home Insurance , Hurricane Insurance

September 1st, 2010
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Home insurance should be the order of the day for homeowners on the East Coast bracing for Hurricane Earl’s arrival. While the storm has been reduced to Category 3, it is bringing dangerous rip currents and large swells that could severely damage coastal homes in North Carolina, Virginia and more states up the coast.

Earl is On His Way

For homeowners living on Okracoke Island on North Carolina’s Outer Banks, mandatory evacuations have already been ordered. The same goes for all visitors to Hatteras Island. The storm, which lost some of its punch early on Wednesday, is still a major threat with winds near 125 mph. It is expected to hit North Carolina’s coast by Friday morning.

Some other cities that are on course with the storm include Virginia’s Parramore Island and Virginia Beach with other states along the coast like Massachusetts possibly being affected as well.

Are You Insured?

With Hurricane Earl on course to hit within a day or two, it’s important to make sure that you have secured quality home insurance as well as flood insurance to know you’re covered for wind damage, as well as any subsequent flooding that could occur.

In addition to securing the right policies, it’s good to take steps to protect your home from wind damage. Some include:

• Securing your roof: By nailing your sheathing down, you increase your chances of the roof still being there when you return to your home.
• Guarding your windows: To guard your windows, you could fit them and your glass doors with impact-resistant laminated glass, or purchase impact-resistant shutters to reduce damage from debris.
• Securing your doors: You could fit your doors with at least three hinges and install a deadbolt lock with a bolt throw of at least one inch to keep it from flying open.

Protecting your home both physically and financially from hurricanes are important steps in securing your investment and safe haven. As Hurricane Earl draws closer, review your policies, call your insurance agent for questions and take time to secure your home as quickly as possible before evacuating.

Did Hurricane Katrina Cost More Than the BP Oil Spill?

Posted in Home Insurance

August 31st, 2010
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Recently, lawmakers in the House of Representatives proposed to pull back $400 million from the Louisiana Road Home Program–a program created largely to help rebuild areas affected by Hurricane Katrina–because they felt the money wasn’t being used and could better be applied to a $26 billion House spending bill.

While the Senate was able to stop the proposal and keep the money with the program, the idea that the money could be taken away made some question the commitment to rebuilding Katrina damage. This is because some of the funds would have gone instead to cleaning up waters affected by the BP oil spill, which some think may have been a more affordable cleanup.

What is the Louisiana Road Program?

The Louisiana Road Home program was created to provide compensation to homeowners in Louisiana who were affected by Hurricane Katrina or Rita and needed help repairing the damage to their homes. It is currently the largest single housing recovery program in United States’ history.

Homeowners are eligible to receive up to $150,000 to compensate for their losses and help get them back into homes if they had little-to-no home insurance. The program also offers assistance to those who are rebuilding and relocating.

How Much is Required to Help the Katrina Victims?

The victims of Hurricane Katrina were forced to endure a lot, but those who were not holding enough homeowners insurance suffered even more. Unable to pay for the damages to their homes, many were saved by the Road Home program, which allowed them to make home insurance claims to the program itself.

As of Aug. 2009, the program had provided almost $8 billion to an estimated 125,000 homeowners. However, thousands more still need help. In fact, nearly 20,000 families were still living in temporary trailers and apartments and in need of a permanent solution in June 2009.

With the average homeowner receiving around $60,000 for assistance, which in actuality isn’t enough, the $400 million that was recently returned to the program would only help roughly 6,600 residents. In other words, to help the 20,000 families, even with minimal assistance, there would need to be over $1 billion available to help.

Maybe this is the reason that the House thought it would be best to take back the unused funds held by the program and allot them to a more suitable cause.

Does the Oil Spill Cleanup Really Cost Less?

It’s ironic the BP spill just happened to affect the same area that Hurricane Katrina did–the Gulf of Mexico–giving the area something else to clean up. In the House’s argument to add more funds to the House spending bill, it found it appropriate to retrieve the funds from the Road Home program.

However, was there a greater reason to allocate the funds toward the spill?

A recent estimate of the cost to clean up the BP oil spill was around $4 billion, which is slightly higher than Hurricane Katrina would cost to rebuild. So how exactly would the $400 million have helped with the cleanup?

In actuality, $300 million would have been allocated to the cleanup while $100 million would have been dedicated to other aspects of the House spending bill, including financing the war in Afghanistan and replenishing FEMA’s disaster relief fund.

While some of the funds would have gone to other causes, according to the House, at least the funds would have been used for something.

To counter the argument, Louisiana said it planned to use that money to create a program to help homeowners who couldn’t complete rebuilding their homes despite earlier grants, including those who had Chinese drywall issues or those who had fallen victim to fraudulent contractors.

In other words, Louisiana had plans for it too, which is why the Senate agreed to return the funds and give the very costly rebuilding process in the area another shot.

Speaking of costliness, have we determined whether Katrina ended up costing more than the BP oil spill? Well, it looks as though the overall costs of the Katrina damage was more expensive ($8 billion as of Aug. 2009), though after so many homes have already been repaired and rebuilt, the remaining costs probably wouldn’t total as much as the $4 billion needed for the oil spill.

In any case, the debated on $400 million wouldn’t be enough to help either party fully. At least happy Louisiana residents now have a greater shot at seeing some funds head their way to repair their homes. In the meantime, the Gulf oil spill cleanup has progressed enough that Louisiana fishermen reported finding all clean seafood on their first day back to work.

Private Insurance Market Pulling Back from National Flood Insurance Program

Posted in Home Insurance , State Farm

August 27th, 2010
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A number of private insurance companies are reconsidering participation in the National Flood Insurance Program (NFIP) after a Congressional stall and massive losses. The future of the NFIP has been in question for some time as Congress looks at ways to provide flood insurance to individuals in need. However, after suffering through months of ups and downs in the insurance sector, some insurers think the best solution is to pull out.

NFIP Has Been on Shaky Ground for Some Time

The National Flood Insurance Program has been going through a series of changes for some time that has left it in a semi-fragile state. Lawmakers understood that changes needed to be made because standards were proven unsatisfactory, so when the program expired, Congress simply approved a short-term extension in hopes of getting it on the right track.

Unfortunately, that short-term extension resulted in several more that often left policyholders unable to make claims on their homes after a flood because the program had expired. Now, lawmakers have taken steps to improve the program with a flood insurance overhaul, but for some insurers, it’s already too late.

Insurers Looking for a Way Out

Due to the instability of the NFIP, private insurance companies are now reconsidering their participation. In addition, many insurers simply don’t have the money they need to pay out claims. FEMA, the programs overseer, is currently seeking a $19 billion taxpayer bailout to properly reimburse insurers, but this doesn’t help current shortfalls seen by insurers.

To save its budget, State Farm Mutual Insurance Company, the nation’s largest provider of flood insurance, pulled out of the NFIP in June. The company handled over 800,000 customers and left the NFIP in a position to find them all new policies. Now, another large company, Fidelity National Property and Casualty Insurance is considering other options if the government doesn’t find effective ways to reimburse claims.

With the program already in the red, it is possible that other large companies could follow suit. Hopefully the overhaul will create the funds to keep insurers around and customers covered if their homes are flooded.

Today’s News: More Medicaid Patients Using ER, NFIP in the Red and Teen Drivers Vulnerable to Deadly Crashes

Posted in Auto Insurance , Health Insurance , Home Insurance , Medicaid

August 25th, 2010
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A new report has found that more Medicaid patients are using the ER, the National Flood Insurance Program has run into problems that have put it in the red and the NHTSA has revealed that teen drivers are more vulnerable to deadly crashes.

More Medicaid Patients Using ER

Researchers from the University of California, San Francisco, say that an increasing number Americans, especially adults on Medicaid, are using the emergency room as their “safety net” for health care; the reason being that they must treat all patients regardless of health insurance coverage or ability to pay.

According to their report, five times the number of adults with Medicaid visited the emergency department than those with private insurance in 2007, as compared to only three and a half times the number in 1999. Researchers said many of these visits could have been handled by a primary care clinic, but the patients preferred the speed of the ER (Business Week).

National Flood Insurance Program in the Red

The National Flood Insurance Program (NFIP) is in the red, and “repeat offender,” flooded homes, seems to be the culprit for the massive payouts that have left the program struggling for money.

A new report from the Houston Chronicle found that between 1977 and 1995, the NFIP paid out $806,591 for repeated storm damage to one suburban Houston home that was valued at $114,480. In the report, it was revealed that roughly 1 percent of properties typically account for between 25 and 30 percent of the claims it pays and these “repetitive loss” homes have more than doubled in the past 15 years.

Currently, NFIP owes the Department of Treasury more than $18 billion and is unlikely to be able to pay it back (Houston Chronicle).

Teen Drivers Vulnerable to Deadly Crashes

A recent report from the National Highway Traffic Safety Administration (NHTSA) revealed that teen drivers are especially vulnerable to deadly crashes.

In the report, it was revealed that mile for mile, teenagers are involved in three times as many fatal crashes as other drivers. Even more, motor vehicle accidents account for more deaths than both suicide and homicide combined. It’s for this reason that the NHTSA encourages parents to not only teach safe driving but also purchase quality auto insurance for teen drivers (NHTSA).

Today’s News: Medicare Funds to Exhaust in 2029, Higher Mortgage Insurance Fees Approved and Auto Insurance Customer Satisfaction Declines

Posted in Auto Insurance , Health Insurance , Home Insurance , Medicare

August 23rd, 2010
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A new government estimate shows that Medicare will run out of funds by 2029, 12 years later than originally expected. In other insurance news, higher mortgage insurance fees have been approved by Senate and a report from JD Power and Associates shows that auto insurance customer satisfaction has declined.

Medicare Funds to Exhaust in 2029

The Obama administration has released a new report showing that Medicare will exhaust its funds by 2029. While this sounds bad, it is actually 12 years later than a previous report. The administration credits the 12-year extension to the health care reform law and cuts in payments to medical providers that could raise money for the program.

However, Medicare’s chief actuary, Rich Foster, says the numbers are a bit rosier than they should be since cuts aren’t likely to stand—doctors will probably drop out of the program to save their practices instead of accepting the cuts (Wall Street Journal).

Higher Mortgage Insurance Fees Approved

Recently, we reported that mortgage insurance fees were likely to increase in the near future. Now it seems that Congress is taking steps to make this official.

In early August, Senate unanimously approved legislation that would give the Federal Housing Administration (FHA) the power to hike the monthly premiums it charges to consumers. Currently, borrowers who take out loans through FHA to cover the 20 percent down payment on a home loan (also known as mortgage insurance) pay an annual fee of 0.55 percent of the total loan.

Now, FHA has been given the power to increase the rate to 1.55 percent with President Barack Obama left to give final approval (Associated Press).

Auto Insurance Customer Satisfaction Declines

A study released by JD Power and Associates found that there has been a decline in auto insurance customer satisfaction so far in 2010. According to the study, satisfaction declined 10 points from 2009′s numbers to 777 on a 1,000-point scale.

The decline in satisfaction was largely attributed to the cost of coverage, which by itself declined 30 index points from 2009. However, other factors that attributed to overall dissatisfaction included interaction, billing and payment, policy offerings and claims (PR Newswire).

Today’s News: States Push for $16 Billion for Medicaid, Mortgage Insurance Claims Down and You May Own One of the Most Stolen Cars

Posted in Auto Insurance , Health Insurance , Home Insurance , Home Insurance Claims , Medicaid

August 18th, 2010
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State officials are looking to pass a measure that would offer much needed money for Medicaid, mortgage insurance claims have dropped and according to a new list, you may own one of the most stolen cars in the United States.

States Push for $16 Billion for Medicaid

Democrats in Senate are trying to push through a bill that would offer states $27 billion in needed funds, $16 billion of which would be used for Medicaid needs. With health insurance still unavailable to a large number of Americans, the need for Medicaid is still prevalent.

Many states are running out of money to fund the program. As a result, Democrats and President Barack Obama are pushing to pass legislation soon. In order for it to pass, however, it would have to be approved by some Republicans as well (CNN Money).

Mortgage Insurance Claims Have Dropped

Mortgage insurance—which is offered by the Federal Housing Administration (FHA) for homeowners who can’t come up with their 20 percent mortgage down payment and are in danger of defaulting—has performed better than expected this fiscal year.

However, a recent audit of the FHA has found that if housing prices continue to drop and more people take out mortgage loans and then default on them, the administration may be on the hook for more insurance claims. More claims could result in depleted funds, which could result in taxpayers having to foot the bill to cover the losses (Washington Post).

You May Own One of the Most Stolen Cars

If you’re worried about increasing your auto insurance rates then you may want to avoid some cars that the Highway Loss Data Institute has pinpointed as being the most stolen. At the top of the list was the Cadillac Escalade, which had an annual claim frequency of 10.8 out of every one thousand.

Other vehicles that topped the institute’s list include the Chevrolet Silverado, which had an annual claim frequency of 8 out of every one thousand, as well as the Dodge Charger (7.4 out of every thousand), Chevrolet Avalanche (7.4 out of every thousand) and Infiniti G37 Coupe (7.1 out of every thousand) (CNN Money).

Switching Homeowner’s Insurance Can End Up Costing You Big

Posted in Home Insurance , Save on Home Insurance

August 17th, 2010
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There is no shortage of home insurance commercials on television screaming the virtues of switching insurance policies to a new company for large savings on your insurance premiums. However, it may not be as easy as the commercial spokesman makes it out to be. There are a few hidden pitfalls that you need to be careful to avoid in order to make switching beneficial to you and your wallet.

The following are three ways switching homeowner’s insurance can end up costing you more than you save:

Missing The Fine Print

If you change homeowner’s insurance, be sure to read the fine print of your new policy. Does it require you to get a home inspection and new improvements made before your policy takes effect?

One North Carolina woman recently switched her homeowner’s policy to a new insurance carrier only to find out that she needed to make over $4,000 worth of repairs to her aging home to begin her new coverage. It would not have been a major issue except for the fact that she had already canceled her original homeowner’s insurance before finding out about the expensive upgrades she had to make to her home.

The upgrades now have all but negated the cost savings she would have enjoyed by switching insurance companies for years to come. You should never cancel your current insurance policy before you have the new one in place which includes any required home inspections the new insurer requires.

Losing Discounts By Jumping Around

One of the biggest discounts that policy holders enjoy is a discount for having multiple policies with the same insurance company. If you begin to chase better insurance rates around the internet and through other companies that have strong advertising campaigns, you could possibly run the risk of missing out on discounts that you used to enjoy from your previous insurance company.

It can really exacerbate the situation if you are moving automotive and homeowners to another insurer. You receive sizable discounts on your insurance policy for having them all in one place.

Different Requirements Between Insurers

Does your current insurer require you to have a permanent fence surrounding your swimming pool? Did your pit bull mix pass the dangerous dog screening from your previous insurance company?

The same might not be true of your new homeowner’s insurance company. You may find yourself on the wrong end of a cancellation letter in a few months if your insurer decides to audit your account and finds you outside of their guidelines.

You can never be too careful when you decide to switch insurance companies. The lure of a cheaper premium may not be as wonderful as you initially thought. Many insurance companies may not even want you back as a customer if you decide to abandon them in search of a cheaper deal elsewhere.

You have to double check the fine print and have your ducks in a row before you cancel your current policy. With a little prior planning and some research, you should be able to steer yourself away from a cheaper insurance policy that will cost you dearly in the end.

Hank Coleman is a personal finance writer and all around money and investing junkie who is currently studying for his CFP credentials. He received his B.S in Business Administration from the Presbyterian College in South Carolina in 2002 and went on to receive an M.S. in Transportation and Logistics from the North Dakota State University in 2007 and an M.S. in Finance from the University of Maryland in 2008. You can read more of Hanks writings on his website HankColeman.net and can also follow him on Twitter.

What’s In the New Flood Insurance Bill?

Posted in Home Insurance

August 12th, 2010
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There’s no doubt that the National Flood Insurance Program has had its share of ups and downs. Over the course of the last year, the program has expired and been extended numerous times. After its last extension, lawmakers decided that it was time to create legislation that would last for years and put an end to policyholders continuously losing their coverage.

The result was HR5114, also known as the Flood Insurance Reform Priorities Act of 2010. This bill is hopefully Congress’ last ditch effort to get the NFIP under control. To understand more about how HR5114 could affect those currently holding flood insurance policies, let’s take a closer look at what’s inside the bill.

A Look Inside HR5114

So what changes could take place as a result of the new bill? Well first, the bill would reauthorize the program, which is now set to expire September 30, so it would not require any new renewals for five years—or the end of 2015. This would be a great help to current policyholders who saw their coverage lapse repeatedly, only to be unable to make claims when flood damage affected their homes.

Here are some other adjustments the bill would make:

• Increased NFIP limits: The bill proposes that coverage limits for both residential and commercial properties be increased from its current limits, which is something that hasn’t changed since 1994.
• Premium increases limited: The bill would limit the premium increases of non-residential, non-primary residences to 20 percent annually until the risk-based, actuarially sound rate is reached.
• Gett rid of premium subsidies: Currently, there are subsidies available for properties built prior to 1974. Those would be phased out in the bill.
• Additional living coverage limited: Language has been included in the bill that would limit coverage to $1,000 for additional living expenses on residential properties. However, you would be able to purchase additional amounts.

A major aspect of the bill that affects those who have recently found that the new flood map created after the Federal Emergency Management Agency (FEMA) developed new flood zones would require them to purchase flood insurance, is purchasing coverage won’t be mandatory for five years.

Adding Wind Coverage to NFIP

In addition to making significant adjustments to NFIP, some lawmakers have considered adding windstorm coverage to the program. This addition was authored by Rep. Gene Taylor (D-Miss.) and would work to remove pressure from state wind insurance pools that have trouble dishing out money to cover claims.

However, there have been many opponents to this bill, including environmental groups, taxpayer watchdogs, consumer advocates, the business community and even the Obama administration who all say that the addition has only been authored to give more money to specific insurers while taking away from those that already offer coverage.

As of August 3, 2010, the House had managed to avoid voting on the addition to the bill before they left for their month-long August break. At the time, there was also a separate bill introduced in the Senate that would seek to address the wind coverage issue by having the wind insurance company and flood insurance program each pay the policyholder 50 percent of a claim.

There is no set deadline as to when the new bill will make its way through Congress. However, everyone hopes that this will occur before NFIP expires at the end of September.

Today’s News: Nonprofit Health Insurers Hoard Cash, State Farm Sheds Home Insurance Customers and Ohio Auto Insurance Stays the Same for 40 Years

Posted in Auto Insurance , Blue Cross Blue Shield , Health Insurance , Home Insurance , State Farm

August 9th, 2010
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Reports show that many nonprofit health insurers have been hoarding cash, State Farm Insurance plans to drop home insurance customers and liability auto insurance in the state of Ohio has remained unchanged for 40 years.

Nonprofit Health Insurers Hoard Billions in Cash

According to a new study from the independent group, Consumer Union, many nonprofit Blue Cross Blue Shield health insurance companies have hoarded $9.1 billion dollars (or $855 per member per year) in extra cash over the last decade. What’s worse, the companies have held on to this money even after proposing double-digit premium rate hikes.

Seven out of 10 nonprofit Blue Cross Blue Shield companies held at least three times the amount that regulators required of them to maintain minimal solvency. With these reserves held, staff attorney from Consumer Union said the nonprofit should be able to reduce prices for consumers (Wall Street Journal).

State Farm Sheds 125,000 Home Insurance Customers

Recently, State Farm announced that it would be shedding 125,000 Florida home insurance customers due to the increased risk of hurricane damage in the state. This news comes only weeks after the company announced that it would be dropping its flood insurance customers nationwide and leaving the National Flood Insurance Program.

What’s unfortunate for the disbanded customers is that their home insurance options are not plentiful with other companies, and many of those who are offering don’t have the same financial backing as State Farm, therefore resulting in them charging more (Naples News).

Ohio Auto Insurance Unchanged for 40 Years

The lucky residents of Ohio have benefited from minimum liability auto insurance limits that haven’t changed since 1970. However, according to the Daytona Daily News, the low minimum limits have not been totally beneficial as they have created gaps between coverage payout and repair costs.

Why such a big gap? Because in 1969, a V-6 Chevy Impala four-door sedan sold for $2,894 while they currently sell for $24,290. With the cost of the car (and hence the cost to repair the car) being significantly higher, the coverage costs would need to increase above the current minimums of $12,500 one bodily injury/$25,000 all injuries/$7,500 property to be useful (Daytona Daily News).

Today’s News: Health Care Overhaul Receives High Marks, Louisianans Don’t Fully Understand Flood Insurance and Young Drivers Make Insurance Claims Most

Posted in Auto Insurance , Auto Insurance Claims , Health Care , Health Insurance , Home Insurance

August 6th, 2010
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The health care overhaul has received some high marks from a surprising party, a study found that Louisiana residents don’t fully understand home insurance and new data has revealed that young drivers have the highest frequency of claims.

Health Care Overhaul Receives High Marks

Democrats and even some Republicans have given President Barack Obama high marks for the way his been able to carry out the new health care law. A new poll suggests that many people are very pleased with the way he’s pushed for health insurance and executed it, especially within the law’s first 100 days of being signed. Since May, favorable reviews have increased; however, since there are still months and years to go, views could change. Most say the November elections will be the real indicator of how the masses feel (NY Times).

Louisianans Don’t Fully Understand Flood Insurance

The Insurance Information Institute recently released a study revealing that people in Louisiana — homeowners in the epicenter of Hurricane Katrina’s destruction — are less likely than others around the country to understand that a home insurance policy doesn’t cover flooding. Specifically, 16 percent of Louisiana homeowners mistakenly believe that a homeowners policy covers flooding, having no idea that a flood insurance policy from the National Flood Insurance Program is how floods are covered (NOLA).

Young Drivers Make Insurance Claims Most

A report from the Highway Loss Data Institute revealed that drivers ages 16-19 have the highest frequency of auto insurance claims, as well as the highest average loss per claim. The types of claims this age group has the highest claims for include collision, property damage liability and bodily injury coverage. On the other end of the spectrum are 30-59 year olds who have three times fewer average claims than the teenage group. However, the drivers with the fewest auto insurance claims, according to the study, are those over the age of 70 due to their increased concern about their own driving skills (Auto Quote Now).