Predictive modeling describes how insurance companies develop rates that match individual risk traits to expected losses. Companies utilizing good predictive models have a distinct advantage over those who don't. For consumers, expect to be asked more questions about homes, cars, and other aspects of your lives; businesses have unique rating characteristics as well. We're headed to a world where rates are unique to every consumer.
Predictive modeling is the insurance industry's take-away from the data mining work that is occurring throughout a broad cross-section of businesses today. Many industries benefit from data mining: bar coded discount tags from the grocery store, pharmacy, sporting goods store, and other places we shop are providing companies we use more information about our buying habits. Data mining yields benefits to many industries.
In insurance, the large volume of data today allows actuaries (insurance statisticians) to seek and test new factors for correlation to insurance losses, then weigh these factors in rating algorithms. Insurance companies have always shared some industry data on losses, though larger companies collect and analyze their own data, and now in many new ways. Mining data for factors that contribute to predictability makes sense.
As an example, "account credits" are a new rating factor here in Massachusetts home and auto insurance, popular since the fix-and-establish system with rates by the Insurance Commissioner changed to a market based system. These account credits provide significant savings off both auto insurance and home insurance. Why? Is it because consumers who buy their home and auto insurance with the same carrier tend to remain customers longer? Or because there are cost savings with billing or other account maintenance items? Or is one indicative of a decent credit score? "Yes" to all of the above. Because it means "yes" to all of these factors, it becomes even more powerful. Mathematically, it's akin to the magic of compound interest. Credits on credits on credits make for deep discounting.
There are other credits (and charges) that are less obvious but contribute to a final rate. One predictive factor that is NOT permitted for rating Massachusetts auto insurance is credit history. But the owners of homes generally have good credit. The bank already knew that when they lent the money. Companies and their actuaries have discovered other indicators of good credit: including buying higher liability limits, shopping and buying ahead of an existing policy's expiration, and paying in full. These proxies for credit are the industry's way of developing a leaner rate while still following the law. Other rating factors contribute too: if you're a member of a motor club, if you've graduated from college, how long you've lived at your current address, if you've had (even) not-at-fault accidents, and other questions that you'd think have nothing to do with auto insurance rates. Combine these with traditional metrics such as annual mileage, years of driving experience, moving violations and at-fault accidents, and auto insurance rates become unique to every driver.
For homeowners, some of the unexpected rating factors include gun ownership, dog ownership (broken down further to breed), existence of home generators, and credit history (which is permitted in home insurance). Combine those with expected rating factors such as age of home, existence of alarms, and proximity to the ocean, and models become more predictive with every piece of relevant information. Businesses are increasingly subject to additional questions for rate development: what insurance professionals know as 'supplemental applications'. These collect more details to find the most competitve and accurate rate. Companies using these have a distinct pricing and product advantage those who don't, and they know it.
The old methods of calculating an insurance rate with a pencil and a calculator are out; multi-variant rating is in.
At Gordon Insurance, we use a library of checklists to aggregate the rating factors from our many companies to ensure you're getting the best rate possible. Many questions we ask will result in: "why do they need to know that?" We don't always know. But some actuary somewhere found a correlation to expected claims. Privacy laws and our national tradition of privacy will push back against this trend. But the trend toward pricing based on multi-variant models is accelerating, as a combination of proprietary calculations and quickly secured public information makes more data available. So to the question, "does it affect me?": Absolutely. By working with Gordon Insurance, you'll find the best fit with the company that likes your profile better than anyone else.
If you have any questions about how insurance works and how it is determined, feel free to contact us. We love answering insurance questions and helping customers find the best possible rates to meet their insurance needs.
Summer is one of the best seasons of the year. There's a little something special in it for everyone at any age. Here's just a quick reminder of why we love summer so much:
- Ice cream trucks and local ice cream shops
- Beach trips on weekdays and the smell of the ocean
- Sand castles large and small with moats and decorated with shells and stones
- Swimming in the ocean or in the outdoors pool because that first splash isn't too cold
- Warm weather all day every day
- Long runs in the morning before the heat, or at night when it's cooling off
- No school, no homework, no stress for those hard-working students who deserve a break every now and again
- 4th of July celebrations and feeling patriotic
- Barbeques with the works- hot dogs, cheeseburgers, steak, chicken, kabobs
- Tank tops, shorts, flip flops, sundresses, and that wonderful feeling were you feel comfortable in your clothes
- Fireworks at night for holidays, and sometimes fireworks for no reason
- Outdoor concerts and people making music for the love of it, not for the money
- Water balloon fights with your best friends
- Smell of sunscreen and not getting sunburns
- Movie marathons for those bad weather days
- Thunder storms where you can hear the thunder and falling asleep to the sound of rain
- Sleeping in because you want to and you're tired
- Staying up late because you want to and you're wide awake
- Air conditioning to control those muggy days
- Reading outside in a hammock, at the beach, wherever summer takes you
- Spending more time with family and friends
- Roller blading and biking in your neighborhood or in a park
- Fishing on a pond or a lake with your old man
- Summer carnivals, balloon animals, buying tickets, winning prizes
- Amusement parks and being brave enough to go on that scary roller coaster
- Gathering around fire pits with your friends and throwing in tiny leaves to watch them burn up
- Making s'mores and setting marshmallows aflame
- Lazing around and doing nothing
- Cold lemonade with ice
- Driving with the windows down blasting your favorite song
- Parades through town celebrating everything
- Relaxation and enjoying life
These are only a few of the reasons that summer is great. Remember, with summer comes more freedom for teen drivers, so make sure they're safe!
If you’ve ever experienced the inconvenience of an extended power outage from a storm, perhaps something like Storm Nemo, you’ve probably wondered if you should invest in a generator. Not only is it a huge nuisance, but an extended power outage can result in frozen pipes, food spoilage, and sump pump failures. There is also an additional risk of a house fire when rarely unused fireplaces are put to the test or candles are knocked over accidently.
While portable generators are less expensive, there are a few disadvantages. Portable models do not go on automatically should you be away from your home. In addition, some portable models will only power a few items. The portable models are usually fueled by gasoline. A full tank may only last a day. Oftentimes, there is a shortage of gas during a power outage. This may be due to blocked roads, closed gas stations, or fuel trucks unable to travel and replenish gas supplies. This happened during Hurricane Sandy and the Blizzard of 2013.
For this reason and many others, automatic generators are a better option. A permanently installed generator will supply power directly to your home’s electrical circuit breaker box as soon as the outage commences. After power is restored, the generator will shut down. Permanent generators are safer because the risk of carbon monoxide is lower than a portable generator. Permanent installed units are placed outside a home and are powered by the natural gas or liquid petroleum supply. There is no need to run to the gas station as you must do with a portable generator.
An automatic generator cost varies based on the wattage and features. A small generator with 7-10kw will power just a few basic household appliances. One of those will cost around $1,850 to $4,000.
A large automatic generator with 22-45kw will allow you to power your entire home. This will cost in the $9,000 range. A midsize 12-20kw automatic generator can handle a heating or cooling season. Cost can range between $4,000 and $10,000.
The automatic generator will run as long as its fuel supply remains uninterrupted. A licensed generator installer can install the fuel supply and generator. You should also have the unit serviced annually to assure it is in good working order.
You can determine the right size generator by first identifying a list of appliances that you would want powered during an extended power outage. This may be a few appliances or your entire home. Check how may circuits are used by each appliance. Think about how many appliances you will use at the same time. Some appliances use more when they first start up and less when running. Since a generator is an investment, pick a model that you may add circuits. The permanent generator may also be an investment that pays off when it is time to sell your home. It is becoming a great selling point in areas such as the northeast that regularly experience power loss.
Installation of an automatic generator by a licensed installer should be less than a day. The usually place on top of gravel or concrete pad. The wiring is connected between the generator panel and the circuit breaker panel in the house.
You may be interested to learn that several of our home insurance carriers offer policy discounts if you install a permanent automatic generator. They do this because if the power comes on automatically there is less risk of an insurance claim from fire, food spoilage, frozen pipes, and sump pump failure. In addition, we have several carriers that offer manufacturer discounts for automatic generators. Contact us for an insurance quote and we can check how much a permanent generator will save on your home insurance premium. Simply click the button below.
Vacationing is an exciting time and summer vacations are right around the corner. Part of vacation planning should be used to secure your home while you are away. Some burglaries are random while other are planned out (someone has been watching you and your home to learn your daily routine). Here are some tips that I have personally practiced. Some tips more obvious than others.
- Ensure that all doors and windows are securely locked.
- Not everyone has burglar alarms. But if you do, notify your alarm company that you will be on vacation. Notifying your local police department is also advisable.
- Outdoor lights – while your porch lights & exterior lighting do provide great security, they can also be a dead giveaway that you are on vacation if they’re left on 24/7. The use of timers or automatic light sensors gives a more realistic look that you are home. On at dusk, off at dawn.
- Interior lights – Use light timers in a few rooms. Stagger their on/off times. A radio or television on a timer is also a great deterrent.
- Stop mail and newspaper deliveries or have someone take them in for you.
- Mow your lawn or have it mowed before you go away. In the winter months, arrange to have your driveway shoveled.
- Have a trusted person check the inside of your home daily. Reciprocate when it’s their vacation!
- Empty driveways are a tell tale sign that you are away. Your car that’s parked in the same stationery position for a week is also a dead giveaway. When on vacation, regardless if I leave my car at home or not, I ask a neighbor to park their car in my driveway. I reciprocate when they’re on vacation.
- Large objects that can be used as a platform to gain entrance through your windows should not be left out in the open. I once returned from vacation to find that my wheelbarrow had been propped up against my rear window in an attempt for someone to gain access to my home.
- Voice mail – your message should never imply that you are not at home or away. It’s better to say that you can’t come to the phone right now. This tip should be practiced 365 days per year!
- Facebook, Twitter & other social media - Never, ever post your vacation plans or post your vacation while you are on vacation! As excited as you are to share your vacation, wait to post until you arrive home.
Vacations are few and far between. Relax more during them, knowing that you have taken security measures to return to a safeguarded home.
If you have any other questions or want advice on home safety and secuity, contact us by clicking the button below.
Pure Insurance, the reciprocal exchange for high net worth customers, now offers auto insurance in Massachusetts. Pure has added this line to its existing members with home insurance as a way to complete their concierge level risk partnering with its members; Pure has been in Massachusetts for homeowners since 2010. Massachusetts has unique automobile regulatory requirements, so the policy tries to combine the best from its nationally offered private passenger auto policy with unique Massachusetts rating and underwriting.
In order to obtain Pure auto insurance, the auto policy must be written with a homeowner's policy. However, with the joined policies, there is a discount of approximately 10% for the auto policy, and another separate discount also applies to the homeowner's policy. Essentially, you save more, enhancing the overall value of all policies. If you expect to add the auto policy, you may include an upfront account credit when insuring a home. We can expect Pure to be particularly competitive with multiple-vehicle/multiple driver households with good driving records. Pure also does not limit the number of vehicles that can be on the policy, and can include motorcycles and collector cars right on the same policy.
Highlights of the Pure auto coverage:
- Worldwide coverage
- Agreed value- amount remains fixed throughout the year regardless of depreciation
- Lease gap coverage
- OEM parts
- Accident Forgiveness for first incident included
- Extended transportation up to $5k
- Unlimited roadside assistance
Discounts include:
- More cars than drivers discount
- Clean loss history
- Multiple policy discount
- Seasonal use discount
- Good student (There is not an away from school discount.)
The policies are issued by Pure, not by an outside vendor. Also, the Massachusetts auto bill is included on the one bill with the home and excess policy. If you have any questions regarding the new Pure auto insurance, contact us or visit our dedicated Pure page.
Tree roots and sewer lines- never the twain should meet.
But if they do, will a homeowner's policy respond to the damage? Following is a scenario involving damage by tree roots and the responses from some of the experts.
Say a person had tree roots punch through the sewer lines buried in her yard leading to/from the house. This has interrupted her water and sewer service, and it will be quite an expense to replace the piping. The problem, however, has not caused any resultant water or sewer damage to her home. She calls and asks if this is covered under her homeowner's policy. While there doesn't appear to be a specific exclusion, is the sewer line considered part of the dwelling?
The experts weigh in as follows:
Expert 1
Examining damage to the sewer line itself caused by tree root intrusion, the key issue revolves around the facts of the claim... did the tree roots cause the damage? If so, the consensus is that there is no exclusion in the ISO HO form that precludes coverage, thus, this should be covered. However, if the roots simply enter though a break caused by pressure/earth movement, then there is no coverage, as earth movement is excluded. (You must buy earthquake coverage separately.)
Expert 2
This clearly is an "open perils" type of loss, thus, direct damage is covered, unless excluded. The closest thing to an exclusion in the HO3 is "wear and tear," although that usually involves gradual deterioration through use. There is no specific exclusion for damage to covered property by tree roots.
Expert 3
The consensus is that since the HO3 policy provides "open perils" coverage for building items, this would include pipes, drains, and sewer lines. The homeowner's program doesn't have an exclusion for items like "underground pipes, flues, and drains" as a commercial property program does. However, remembering that the HO policy covers "risk of direct loss" there must be actual damage. If the lines are just clogged up and not actually damage, there may not be any coverage.
Expert 4
Based on the "open perils" or "direct risk of physical loss" wording in the policy that does not specifically exclude the actions of tree roots, we argue that there is coverage as long as it is fortuitous. The problem with root claims is that they take so long to occur and most insurers include that there must be a "sudden and accidental" element. The requirement doesn't appear in today's homeowner's policies, so the only exclusion that might apply is the unwritten fortuity (accidental) exclusion. Not much for an insurance company to go on. Again, we argue that this should be covered.
There are several other possible scenarios involving tree roots. As noted in the experts' opinions, coverage depends on the facts of the loss. Was there damage to the sewer lines? Was there damage to the home? Obvious, if there's no damage, there's no coverage. Will such damage even be covered?
This is the kind of loss where you need an advocate who understands the nuances of the policy contract, and knows the difference between the general practice and the letter of the contract.
For more information about open vs named perils, click the link here. Any other questions? Simply click the buttons below.
Have you been asked to have your home inspected for a new home insurance policy? Don't be alarmed. The primary reason is to make sure your home is insured properly and that the insurance policy's dwelling coverage reflects the cost to rebuild the home in the event of a total loss. When you receive an insurance quote, replacement value calculation software is used by your insurance representative to determine the home's replacement value. The software is very good but every property is unique in some way so the best way to validate the cost to rebuild for the homeowner is to conduct an insurance inspection.
It has become more common in recent years for home insurance companies to conduct insurance inspections within 30 days of the new policy. Previously, insurance companies or the agent may have taken exterior pictures and or measurements of the property. Now many of the inspections take a look at the interior of the residence as well. The home insurance companies hire licensed independent insurance appraisal companies such as Mueller Inspections that specialize in insurance valuations. The home inspection company will contact you and arrange for the inspection. The inspection typically takes 30 minutes. You will need to be home for the inspection and should expect that the inspector will ask to see each room along with the basement and furnace. They will also take pictures of your home from both inside and outside.
1. To validate the replacement estimate calculated with a combination of public information and information you’ve provided, and,
2. To identify conditions where a loss might occur: safety items such as a deck with no handrails, or susceptibility to loss, most commonly water.
The inspector will generally measure the home as sometimes property tax information is not accurate. They will also ask you questions regarding the age of the roof, furnace, electrical system, and plumbing. If you have a dog, they may also ask questions about his temperament and may even take a picture of the pup if he is photogenic (dogs account for about 30% of liability claims payments).
Along with the roof condition, they will also take a look at the gutters and downspouts to see if they are all connected properly. They will also take note if there is debris in the yard.
If you are buying a house, be honest with your insurance agent if you are moving into the home right after the closing or if you are planning to remodel the home. Both situations can be addressed by our agency but it is always best to take this into consideration while setting up the policy. The insurance company can cancel a policy for misrepresentation if there is major remodeling and/or you have not moved into the property. Honesty is always the best policy.
Other benefits of a home insurance inspection can be that discounts are identified by the inspector that the customer was not aware. For example, some customers with central fire and burglar alarms do not realize their system also has a low temperature sensor. This is an additional discount with some companies.
When the home inspection is complete, it is sent to the home insurance company. They review and confirm the accurate dwelling coverage and also outline any concerns that need to be addressed and forward to the agent. The agent communicates any changes or concerns to the customer.
Having your home inspected helps to keep the cost of reinsurance down. Reinsurance is the insurance that companies buy to protect the company from large individual losses or many catastrophic losses. You pay towards the reinsurance as part of your premium. Companies that conduct these inspections get discounted rates on reinsurance and this is passed along to the customers.
The home insurance inspection can be a very simple process that provides peace of mind that your home is insured properly and that avoidable losses can be avoided.
If you have any other questions about insurance or would like a free quote for a homeowners policy, simply click the buttons below!
What nice weather we've been having! The sun is warm, the sky is clear, and you decide to take your dog to the beach… but first, you need to make a quick stop. You walk in with the intention of buying sunscreen, but that turns into a lot more when you realize you need water, you remember that you’re out of shampoo, and oh hey!- you just ran into your BFF whom you haven’t seen in a million years! Sweet!
More like sweat. Your poor dog is left out in your car, dying. Literally.
Cars are like an oven. Even when parked in the shade, with the windows rolled down, cars gather hot air. The car interior absorbs heat, and the windows help keep the heat in. The temperature in the car can rise to well over 150 degrees Fahrenheit- there have even been cases with degrees over 200 degrees Fahrenheit reported.
If it hasn’t been made clear enough yet, do not leave children and pets out in the car. Not even for a minute.
Every year, children and pets left in cars die from heat stroke. While leaving them out in the car is the cause of the problem, another problem arises from those who do not report it.
If you see a child or a pet left unattended in car on a hot summer’s day, take the initiative yourself and call the authorities. With heat stroke, you don't know how long the child/pet has been left in the car- and time is of the essence. Inform a store manager that “a (color) (car model) with license plate (######) has unattended children/pets”.
This sad story occurs all too often, and these heat stroke deaths can be prevented SO easily. All it takes is a quick call.
If you have any other questions about risk management and/or safety, feel free to contact us.
It seems that as soon as a child starts the process of preparing for a permit and driver’s license, the inquiries begin. Parents and guardians are very concerned with the ramifications of adding their children to their auto policies, and rightly so. This is a very important milestone affecting their insurance.
What surprises most people is that we cannot add an operator who is just on their permit to an auto policy. They can only be added when officially licensed. At that point in time, a discussion will ensue as to how they are to be added to the policy. It needs to be determined whether they are principal operators of a vehicle or, truly occasional operators. If an operator is not properly rated on a policy, a future claim can be denied by the carrier so this is extremely important.
Even though an operator on a permit cannot be added to the auto policy, they may be required to be listed on the umbrella if the parents have purchased this coverage. Therefore, it is always prudent to notify the agent if a child obtains their permit so the agent can verify what coverage, if any, may be affected.
If you have any other questions about auto insurance and adding a child to an insurance policy, contact us at any time. For the best coverage on your car, be sure to click the button below. We'll quote you for free.
Seeing friendly driving is always such a nice change of pace. I can't tell you the number of times somebody has let me go in front of them, but I can tell you that the number is not as high as it should be.
Road courtesy is essentially the exact opposite of road rage. Road rage occurs when drivers' feelings escalate too quickly on the road and lead to aggressive driving. Road rage doesn't always cause accidents, but the road is certainly a safer place without these crazed drivers.
How to Participate in Road Courtesy
1.) Make sure you are driving as safely as possible. Endangering other drivers and passengers on the road certainly does not qualify as road courtesy.
2.) Do not get road rage. Doing a good thing and canceling out with a bad thing does not make things equal. All moments in which drivers have road rage are bad moments. Do not be one of those drivers.
3.) Let others go- if there's a lot of traffic on the road and another vehicle wants to join, but there aren't any openings, then slow your car down, flash your high beams, and let them go. Your driver will most likely thank you with a friendly wave. BUT REMEMBER:
- You should NOT completely stop/brake just to let someone go. If there are other drivers behind you, this quick brake might be too sudden for them to stop.
- If there aren't any cars behind you, stopping for the other vehicle is unnecessary, since the gap to allow them into traffic flow is right behind you.
- It's okay to have good intentions, but realize what your actions might do to the overall traffic flow. If you will be more disruptive than helpful, then maybe let someone go another time.
Other Reminders
If some other driver in the road chooses not to participate in road courtesy, do not get angry at them. Drivers getting angry at each other is the sole cause of road rage. Let them go, and keep your cool.
Road courtesy prevents accidents and keeps everybody as safe as possible. Road rage causes accidents and injuries- even death. It's up to you to decide which you will participate in. Choose wisely.
If you have any questions regarding road safety or auto insurance, feel free to contact us. We'll be delighted to assist you with any insurance questions. If you are the victim of road rage or any other minor accident, we will do our best to help you. Until then, make sure you have the best protection for your vehicle by clicking the button below. We'll quote your vehicle for free, and if any better policies are available, we will inform you immediately.
