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Personal Insurance Blog

Hurricane Definition for Insurance

Posted by Gordon Atlantic Staff

Thu, Sep 19, 2019 @ 01:06 PM

Prepare yourself for storms with hurricane insurance from andrew gordon incIn the aftermath of Dorian, the question remains: what makes a storm a hurricane?

The answer to this question is a significant indicator as to how claims are handled by insurance carriers.

So, let us determine what constitutes a hurricane.  Here are some of the conditions that must be met:

1) Low pressure system.

2) Warm temperatures over the ocean.

3) Moist environment (precipitation).

4) Tropical wind patterns over the equator.

Once these conditions are met, a hurricane must have sustained winds of 74 miles per hour or more. The eye of the storm is usually 20 to 30 miles wide and may extend over 400 miles. The inherent dangers of this type of storm are torrential rains, high winds and storm surges. A hurricane can last for two weeks or more over open water and run a path the entire length of the Eastern seaboard.

On average, 100 tropical storms develop each year between May and November over the Atlantic Ocean.  Only six eventually develop into hurricanes and of these six, two are likely to strike the coast of the United States. The Atlantic Hurricane Season begins on June 1 and ends on November 30 of each year, with the most active time being from mid-August through mid-October.  The winter hurricane threat is virtually non-existent.

If you have any insurance questions, feel free to contact us here at Gordon Insurance. We'll help you understand any confusing definitions or tricky aspects of insurance. 

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Tags: personal, hurricane, insurance, definition, storm, wind, sandy

Wind Deductible vs. Hurricane vs. Named Storm Deductibles

Posted by Geoffrey Gordon

Thu, Aug 15, 2019 @ 09:40 AM


You call the insurance company after a big nor'easter or hurricane, with a tree sitting on your house, and they tell you that you have a "wind deductible."  What's that?  

It's a separate deductible from the one that applies to everything else to lower the cost of storms to insurance companies in wind-prone regions.  There are a few variations beyond just "wind," and we'll look at which are better (if your address demands that you have this provision).

House damaged by tree-927040-edited.jpgWhen a storm hits, the distinction between Named Storm deductibles, Wind storm deductibles and Hurricane deductibles can become important, and can be worth thousands to tens of thousands of dollars. The distinction is particularly important if you live or own property in a coastal county in Massachusetts, such as Plymouth, Dukes, Barnstable, Bristol, Suffolk and Essex, because all are generally available and choosing the right one might make a huge difference in the cost to repair your home after a storm. 

Here's how it works:  these deductibles are applied separately for a higher dollar amount than your standard deductible, known as “all other perils” (AOP) deductibles.  For example, if you have a $1,000 deductible for fire, theft and all other perils and you live on the coast, you may have a $2,000 or higher deductible for windstorm and hail losses.

More common than dollar amounts however, wind deductibles are often expressed as a percentage of the coverage amount on your home. For example, a 1% wind deductible on a $300,000 home would be $3,000 and a 2% wind deductible would be $6,000.  A 5% wind deductible on a $700,000 home is $35,000!!  Here in coastal Massachusetts counties, 1%, 2% and 5% wind deductibles are common if your property is within 0-5 miles of the coast.  

These deductibles are part of an effort by the insurance industry to limit their storm losses by having homeowners share more of the repair costs when the wind blows.  Informed property owners - that's you - can take steps to protect homes when especially vulnerable to wind damage.  After all, if you have a 5% deductible on half a million dollar house, you’ve got 25,000 good reasons to consider storm shutters, a generator, the highest quality shingles, fewer trees in the yard, and other protections. 

If you have a wind deductible it normally will appear right on the "declarations" (first) page of your homeowner’s insurance policy.  Yup, it pays to look at your policy - and if you're reading this blog, you've probably seen this on your policy.   Different insurance companies use different metrics for these specific peril deductibles. The three most common approaches are:

  1. Windstorm deductibles (the broadest, meaning it will affect the most people)  
  2. Named Storm deductibles (common) and
  3. Hurricane deductibles. 

The broadest of these three, meaning where it will apply to the most consumer claims, is a Windstorm deductible.  These deductibles apply whenever damage is caused by wind; these include not only hurricanes and other tropical storms but also winter nor'easters and summer thunderstorms.   Any kind of wind damage will prompt this higher exposure to the owner.

The next category is Named Storm deductibles.  To illustrate, remember the notorious “no-name" storm?  Damage from that storm would not have been subject to a higher Named Storm deductible, but would have under a Wind deductible.  The regular, smaller AOP deductible would have been used for any damage caused by the no-name storm under a Named Storm deductible.    But damage from Hurricane Irene or Hurricane Sandy, or other named storms would have invoked the Wind and/or Named Storm deductible. 

Finally, there are the most restrictive Hurricane deductibles.  Hurricane Sandy is a particularly good example of the distinction between Named Storm and Hurricane deductibles.  When Sandy made land fall in New Jersey she had been downgraded from a Category I hurricane to a tropical storm. Thus, the lower AOP deductible applied to folks with a Hurricane deductible. Hurricane deductibles have become less common due to the potential for political interference after the fact, as was evident with Sandy.  Some suggested that the downgrade of Hurricane Sandy was precisely announced to shield homeowners from the Hurricane deductible.   Good for consumers with that one event, but insurance carriers want to quantify risk precisely, and after the fact interference prompted changes for the next event.  Thus what were Hurricane deductibles have morphed into Named Storm deductibles in many coastal regions.

Many considerations should factor in your choice of insurance companies for selecting homeowners and other property insurance.  But all else being equal, and given the option between Windstorm vs. Named Storm, choose Named Storm as it is more restrictive. Given the choice between Named Storm and Hurricane deductible, you should choose a Hurricane as it’s the least likely to be invoked.  

For more information on the subject, check out our short but super-informative whiteboard video where we give cost examples of various deductible options near the coast.

If you've just discovered you have a higher wind deductible than you are comfortable with, contact us at 800-649-3252We can also research better offers for you - just click the link below. 

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Geoff Gordon

Tags: insurance, homeowners, storm, deductible, wind, windstorm, Coastal, deductibles, named, all other perils, AOP

Do insurance companies charge for “Not-at-fault” accidents?

Posted by Geoffrey Gordon

Thu, May 02, 2019 @ 10:50 AM

Short answer is yes, most insurance companies do add a charge for accidents even when you are less than 50% at-fault. 

Most national companies have included this as a risk factor for years.  When national insurance carriers came in to Massachusetts, they employed risk factors that improved their models, as long as they didn’t violate existing state regulations.   One prohibited risk factor is the use of credit scoring for pricing auto insurance.  Used in 49 other states, here credit cannot be used as a rating factor for your auto insurance costs.  But “Not-at-fault” accidents can be.

Gordon Truck accident  claimThe practice of charging for not-at-fault accidents Is relatively new in Massachusetts for traditional Massachusetts-only carriers.  But models here have followed the national model more closely ever since ‘managed competition’ was introduced in 2009.  

Why do they charge when I’m not at fault?

“At-fault” in Massachusetts has been the metric where all you need was for the other driver to be 51% or more at fault, and you were good.   They get the points, and you don’t.   This is reflected in the “Standards-of-Fault,  a boiling down of nearly a century of traffic case law, to identify “If XYZ happens, then the driver is assumed to be more than 50% at-fault.”  These standards still matter when at-fault points are assigned, so they’re worth knowing.  What they fail to acknowledge adequately is ‘contributory negligence’.

Contributory negligence acknowledges the reality that most accidents are not completely black and white.  More often we see 70-30, 60-40 or some other variation other than 100% - 0%, such as when someone hits your legally parked car.

What role does subrogation play?   (What is Subrogation?)

Subrogation is the process where, after the accident bills have been paid, the insurance company lawyers settle up.   For example, suppose I run a stop sign and hit your car.    You go to your insurance company; they pay the collision and your rental while your car is being fixed.  Once that claim is paid, your insurance company comes to my company and says, YOUR driver (meaning me) caused this accident where we paid collision and rental.  Here’s our bill.   If my company declines to pay, they go to court and a judge says, ‘Pay the bill’ to my carrier.   Since everybody knows this, they rarely go to court and resolve these issues based on known documented factors.    

Let’s look at a more common example.  Suppose I come through a ‘yield’ sign; but it’s dusk and you don’t have your headlights on.    Assuming the same damage as in the previous example, my company could argue that you were 30% at fault for driving without headlights at dusk.  So they pay only 70% of the bill.   This process involves lots of dollars, so both sides take these negotiations seriously.   Some insurance companies do a better job than others.

One of our carriers only makes a risk charge if the at-fault cost share is greater than $1,000.  We like this approach as it ignores smaller accidents especially when you contributed less to the accident.

What can I do as a driver?

Practice defensive driving.    If you’re in an accident, document it.  Get a picture of the other driver’s license and registration.  Take pictures of damage to both vehicles, and note the time (especially dusk or dawn), and road conditions.  Complete your operators report as quickly as possible so you remember details, and document them.  Imagine your insurance company subrogation advocate looking for reasons to pay the other carrier less. This might result in no effect on your future rates.

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Tags: car accidents, reducing risk, subrogation, contributory negligence, Not-at-fault, fault

Home Safety Reminders for the Holidays

Posted by Geoffrey Gordon

Tue, Nov 20, 2018 @ 02:54 PM

holiday luminaries pic 2018

The holiday season is a busy time, and that busy-ness can make us unaware of dangers that lurk in plain sight. Here's a partial list of things to be mindful of in the season of lights and cold weather.  We've seen these conditions turn bad, and we want you to enjoy all this particular time of year offers.

While electrical fires are less common today than they were before circuit breakers and GFI plugs, let's be reminded that electricity does generate heat. Thus:

  • Don't leave candles unattended. Melting wax is an accelerant, and every year over the holidays the local news has a story or two of a burned out home from forgotten candles left lit.
  • Turn off Christmas tree lights whenever you leave the house.
  • Don't pile too many lines into a single socket; overuse of a socket can generate too much heat.

Fireplaces warm the room, and our hearts, but a friendly fire and a hostile fire are two very different things.  Our old house has seven working fireplaces, so these tips come from real experience:
  • Never vacuum ashes from a fireplace unless they are fully cold to the touch. If you've ever sucked up a single small spark into a vacuum you've seen how oxygen being blown through a bag of dust can turn that spark hot and hostile in seconds (and the smoke it emits smells really bad – this one from an early lifetime, memorable, fireplace experience).
  • When cleaning ashes, don't collect when warm to the touch, NEVER in a paper bag,and never leave them the house or garage. Store in a metal container and place it outside  (ashes spread over packed down snow improve footing, by the way).
  • If the fireplace does not have a safety door or fireplace screen to prevent sparks from escaping, stay close. Nothing like a burning log rolling out onto the floor turning friendly to hostile.

We cook and bake a lot over the holidays. Checklist items from the kitchen include:

  • Is the oven off when you leave the house?
  • Are children around? Turn pot handles in and move knives safely out of reach. 
  • Are the kitchen smoke detectors operating properly? If battery operated, go ahead and change those batteries now.

Finally, is your best friend during an emergency fire nearby and quickly located? We're talking about fire extinguishers here. Now is a good time to check the expiration date or pressure charge indicator.  A First Alert fire extinguisher is about $20 on Amazon or your local hardware store.

Now go and enjoy the best of the season, be with friends and family, and be thankful for all we have.

To discuss any of the above with respect to your own insurance program, please don't hesitate to call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252. Prefer to type versus talk? Use the form at the left of this blog.

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Tags: home safety, fires, Christmas tree lights, holiday safety, fireplace safety, oven safety, smoke detectors, candle safety

2018 California Fires

Posted by Geoffrey Gordon

Tue, Nov 20, 2018 @ 02:25 PM

The devastation in California has already taught us a few hard lessons. First, some statistics as of Tuesday, November 20th, 2018:

  • The Camp Fire has consumed over 150,000 acres and is now 70% contained. Over 12,620 residences have been destroyed and over 480 businesses have burned down. Loss of life is at 77.
  • The Woolsey Fire in southern California has burned over 96,000 acres and over 1,500 structures. Loss of life is at three.
  • Insured losses stand now at about $14 billion, and are expected to exceed 2017's record number (also $14 billion).
  • Many homes are inadequately insured, particularly as "demand surge" has driven up construction costs about 30% since the fire. Required code upgrades are often overlooked in calculating insurance values.

CA Wildfire Pic_Firefighter 2018

While these losses will affect earnings of large insurers like AIG and Chubb, analysts don't expect the fires to affect capital ratios significantly. This means their financial stability should remain secure.

Given these losses are on the heels of the 2017 season, insurance costs will indeed rise in California and underwriting standards will become more stringent. We don't expect much effect on rates here in the northeast that are not already baked into reinsurance rates (the insurance that insurance companies buy).

Local businesses in the affected regions won't fare well. Beyond loss of buildings there will be significant loss of inventory, lost income, and major labor disruptions. The areas affected will take time to rebuild and many people will simply move.

California's utility company PG&E has been cited as the source of the Camp Fire. Their potential liability was cited as $20 billion in a recent report in BusinessInsurance; with a market value of $22 billion how that liability plays out will take time.

The human displacement is similar to the Caribbean or southern or coastal United States after a major hurricane.  Among the commercial buildings destroyed was a hospital. When we hear on the news that people have lost everything, this can mean homes, personal effects and memorabilia, cars, jobs...and most tragically, loved ones.  

If you are inclined to make a donation to help, there are several reputable organizations helping, including the American Red Cross and the Salvation Army.

To discuss any of the above with respect to your own insurance program, please don't hesitate to call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252. Prefer to type versus talk? Use the form to the left of this blog.

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Tags: California fires, home loss, devastation, forest fire, life loss

Halloween (the movie) & Minimizing Risk

Posted by Geoffrey Gordon

Thu, Oct 25, 2018 @ 05:09 PM

Halloween Pumpkin Pic

The latest remake of the 1978 original “Halloween” horror flick surprised a few people with its opening weekend sales of $77 million! This was more than double the formerly highest grossing “Halloween” movie ($26 million its opening weekend in 2007). Looking at these large dollar figures, it seems that people like to get scared more in a group (such as in a theatre) than at home. What’s the appeal? When things go wrong…when things get scary…there is comfort in numbers.

Numbers provide a measure of predictability and certainty to a situation. On the other hand, unpredictability and uncertainty are at the core of risk, which causes us stress. With theatres under tremendous competition from streaming providers such as Netflix, Amazon and Hulu, the horror theme seems to be well positioned to scare a bunch of people together.

In our homes, we can minimize uncertainty of seasonal changes by preparing our homes for cold weather beginning in the fall, and prompted by setting our clocks back. Here's a short list for a Saturday after Halloween:

  • Clean gutters (or hire a handyman for this)
  • close all sill cocks (outside water faucets) from inside (to prevent freezing)
  • inspect the chimney liner if you burn wood - let a chimney company do this)
  • change air filters for air based heat,
  • check around windows for any caulking needs

Also, review the checkups we should do twice a year (when we put our clocks forward or back):

  • Check tags and location of fire extinguishers (can you locate a fire extinguisher right now?)
  • Change out the batteries on smoke and CO2 detectors
  • Has your family makeup changed such that a review of your family's disaster exit plan should be updated?

There's also value in numbers, including the number of people at Gordon Atlantic standing behind your insurance, and who have experience with risk reduction, claims mitigation, and claims handling. Always let us know how we can reduce the cost of risk (uncertainty and unpredictability) in your world.

Call to speak to a Gordon Atlantic Insurance professional by calling 1-800-649-3252. Prefer to type versus talk? Click below.

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Tags: Halloween, risk, safety, seasonal, safety tips, minimizing risk, scary movie, uncertainty

National Flood Insurance Program (NFIP) Reauthorized through November 13, 2018

Posted by Antonia Clifford

Wed, Aug 01, 2018 @ 02:45 PM

Senate has approved an extension of the National Flood Insurance Program, ensuring it will be operational through November 20, 2018.  All the Program rules and regulations will remain in force and unchanged, and all transactions will continue to be processed.

 

Flood 080118

If the Senate had not acted, the NFIP would have expired on July 31st.  The final vote was 86-12 in favor of keeping it authorized an additional four months.  

To discuss your Flood Policy in particular or the Program in general, call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form to the left of this blog.

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Tags: national flood program, Flood, nfip, flood insurance

May is Massachusetts Motorcycle Safety Inspection Month

Posted by Gordon Atlantic Staff

Thu, May 03, 2018 @ 10:58 AM

Do you own a motorcycle?  If you can answer "yes," there are two dates you need to remember:

  • the month of December is when all motorcycle registrations expire
  • the month of May is when all motorcycles need to have their annual safety inspection done
Rose Motorcycle Image

With the nicer weather FINALLY upon us we will see more and more motorcycles out on the road.  Please look for them and please look out for them!  

If you are a bike owner, May is typically when New England weather allows you to pull that bike out, get a tune up done, and make sure it is road ready.  Here's a list of some of the items to check:

  • tires
  • lights
  • turn signals
  • mirrors
  • horn
  • brakes
  • oil
  • fuel
  • muffler noise

Massachusetts is a helmet state.  When on the bike you should be wearing a US DOT standard helmet.  It is very important that this helmet is the correct size for your head.  In the event of an accident, having a properly fitted helmet can save your life.  Straps need to be buckled at all times.

If your motorcycle does not have a windshield you should be wearing some type of eye protection such as goggles, eye glasses, sunglasses or a face shield.

ALWAYS wear appropriate clothing.  So many times you see a driver or passenger wearing shorts, tank tops and/or open toe shoes.  None of that will help protect you if you go down.  No one expects this to ever happen, but it's far better to be safe than sorry...road rash can be nasty.

To discuss your motorcycle insurance, get a no-obligation quote, or to have any questions on this topic answered, please call a Gordon Atlantic Insurance professional toll free at 1-800-649-3252.  Prefer to type instead of talk?  Use the form at the top left of this blog.

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Tags: inspection, summer safety, auto inspection, motorcycle safety, look twice to save a life

Distracted Driving and Railroad Crossings

Posted by Jeff Helm

Mon, Apr 09, 2018 @ 02:57 PM

Distracted Driving JH Pic

The Red Sox had just won their 2018 home opener in the bottom of the 12th, so to thaw out and celebrate we were on our way to Frank's in Cambridge for the world renowned "Tomahawk Steak."

I was following this person who was on the phone and didn't have a clue that the red crossing warning lights were on and kept driving!  The gates came down on the windscreen/ragtop as the train came whipping through. OMG. The gates went up and off they drove unharmed and apparently unfazed.  

April is Distracted Driving Month.  To learn more about the risks of distracted driving see our partner page at https://driveincontrol.org.  Gordon Atlantic Insurance has preferred pricing with In Control.

I've been and advocate of In Control driving training, and our non-profit In Control Family Foundation, since late 2004.  In Control has helped save lives by training over 30,000 young people and business employees, reducing crash rate percentages by staggering amounts.

In Control, through its fundraising efforts and some generous donors, has scholarships available.  Most insurance companies will give you a credit on your auto insurance for taking part in this program, too.

For more information please call one of the Gordon Atlantic insurance professionals toll free at 800-649-3252.  Prefer to type instead of talk?  Use the form on the left of this blog for an email or return phone call.  

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Tags: distracted driving

OEM Parts vs After Market Parts

Posted by Jane Logan

Mon, Mar 26, 2018 @ 03:01 PM

What’s the difference between OEM and After Market Parts?

  • OEM (Original Equipment Manufacturer) parts are “name brand” new parts made by the original manufacturer to meet the specifications of a specific vehicle make and model. Authorized auto dealerships that sell this particular brand of vehicle(s) usually have exclusive distribution rights to sell these parts.
  • After Market (Non-OEM) parts are “generic” new parts made by companies other than the original manufacturer.  Independent auto part stores and independent (not auto dealership) repair shops sell these parts.

 

Why don’t people want After Market Parts used for repairs?

Owners believe After Market parts are inferior or less safe than OEM parts.  Independent safety rating organizations such as The Certified Automotive Parts Association (CAPA) and the Insurance Institute for Highway Safety (IIHS) dispute this concern.   If After Market parts weren't as safe as OEM parts, manufacturers would pay the price in product liability lawsuits.  They compete just fine by selling the same quality parts, same specifications, just with lower margins.

 

Why do insurance companies use After Market Parts for repairs?

  • Parts are easier to get, reducing repair time.
  • Using After Market parts reduces repair costs by 35%, which in 2010 saved $14.08 Billion.
  • Reducing repair costs reduces premium costs that consumers pay.
  • State law either allows or in some cases requires insurance companies to use After Market parts

Damaged Vehicle for OEM Blog-1.jpg

 

What gives insurance companies the right to use After Market Parts?

 The laws in each state regulate auto repairs. In Massachusetts, 211 CMR 133 (https://www.mass.gov/lists/211-cmr) requires the use of After Market parts if the damaged part meets the guidelines:

CMR 133.04: Determination of Damage and Cost of Repair

 (1) Appraisers shall specify that damaged parts be repaired rather than replaced unless: the part is damaged beyond repair, or the cost of repair exceeds the cost of replacement with a part of like kind and quality, or the operational safety of the vehicle might otherwise be impaired. When it is determined that a part must be replaced, a rebuilt, aftermarket or used part of like kind and quality shall be used in the appraisal unless:

(a) the operational safety of the vehicle might otherwise be impaired;

(b) reasonable and diligent efforts to locate the appropriate rebuilt, aftermarket or used part have been unsuccessful;

(c) a new original equipment part of like kind and quality is available and will result in the lowest overall repair cost;

(d) for vehicles insured under policies written on or before December 31, 2003, the vehicle has been used no more than 15,000 miles unless the pre-accident condition warrants otherwise; or.

(e) for vehicles insured under policies written or renewed on or after January 1, 2004, the vehicle has been used no more than 20,000 miles unless the pre-accident condition warrants otherwise.

A part is of like kind and quality when it is of equal or better condition than the pre-accident part.

 

Are After Market parts really as good and safe as OEM parts?

The manufacture of After Market parts is regulated and repair shops need to be licensed.  If After Market parts were indeed inferior they would be causing accidents, ultimately increasing costs for insurers.  Using inferior parts isn’t in anyone’s best interest, but using After Market parts is in everyone’s best interest as it increases competition, reduces repair costs, and ultimately lowers insurance premiums.

 

Is it worth challenging the insurance carrier requiring I use After Market Parts? 

If State law allows using After Market parts, your insurance company will authorize these for repair.  If a consumer wants to pay for OEM parts on their own, that is, pay the higher margin the manufacturers get for these, most body shops will agree to use them.  Even so, this can delay repairing your vehicle as the claim can become more complicated.  The longer it takes to negotiate the claim, the longer you’re without a vehicle and/or you’re paying for a rental.

 

I’m still not convinced.  Can I buy OEM coverage?

Yes!  We represent several companies that offer OEM part coverage for personal vehicles (not yet for business insurance), based on the model year and odometer reading/mileage on your vehicle.   As a rule of thumb, the cost is generally 30%-40% additional to the cost of your collision and comprehensive coverage. 

 

If you'd like to discuss your personal automobile coverage, call one of the Gordon Atlantic Insurance professionals toll free at (800) 649-3252.  Prefer to type instead of talk? Use the form at the top left of the blog for a return phone call or email.

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Tags: auto claims, OEM Parts, After Market Parts, OEM Coverage

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