Living on the coast of New England has always had its advantages: proximity to the beaches, the memorable sunrises/sunsets, and cool ocean breezes in the summer. Offsetting these advantages, however, are new challenges in insuring a home wherever these breezes keep you cool during the dog days of summer.
Why do they cost more?
Insurance companies’ concern with coastal homes is not about floods (flood damage is excluded, and needs to be insured separately). It’s the wind. Wind can knock down trees, phone and electrical lines, and damage roofs, exposing the rest of the house to rainwater and related problems. Wind poses a “severity” concern too, since one storm can generate large losses for many companies throughout a broad region. Not surprisingly, reinsurers (who provide catastrophic insurance for insurance companies) are demanding new restrictions on how coastal property owners participate in their own losses.
How are insurance companies dealing with this?
To moderate severity geographical concentrations, and to provide incentives to homeowners to protect against wind damage, most companies are imposing mandatory wind deductibles, near the coast. These are distinct and separate from your standard deductible. There are two categories, and the distinction can be important: “Named Storm” deductibles apply only to claims arising from a Named Storm (i.e. Class 3+ Tropical Storms & Hurricanes). A broader “Wind/Hail” deductible, applies to any wind/hail loss. When given the choice, a Named Storm deductible is preferred, simply because it won’t apply as often, such as on damage from winter nor’easters or summer thunderstorms… or the notorious “No-Name” perfect storm.
How much is this costing me?
These new deductibles are usually expressed as a percentage of your dwelling (house) amount, and range from 1% to 5% depending on location and a company’s existing exposure. For example, a 2% wind deductible on a home insured for $250,000 translates to $5,000, a significant amount to “self-insure”. Distances generally dictate the amount you share: less than 1000 feet from the shore (3% – 5% wind deductibles common), 1000’ —2500’ (2% common), 2500’ to 1 mile (“named storm” deductibles become available), and 1– 5 miles (more markets, more choices become available).
Can you avoid a wind deductible if you’re within these ranges?
Sometimes. Contact Andrew Gordon Insurance for home insurance solutions that fit your budget and your tolerance for risk at our website.
A Breakdown of Each Coverage on Your Policy
Chances are if you look at your Massachusetts auto policy and don’t understand what the coverage amounts mean, you are not alone. However, you should familiarize yourself with your coverage so you can determine if you have enough financial protection. So get out your policy and follow along as I describe what each coverage means below.
Part 1. Bodily Injury to Others.
This pays for medical expenses and other damages to anyone injured or killed by your car. This required amount is $20,000 per person and $40,000 per accident (max). Meaning, the total amount paid out to the people you hit is $40,000 combined($20,000 for 1 person, $10,000 for 2 other people; or $10,000 for 4 people, etc). This only covers accidents in Massachusetts.
Part 2. Personal Injury Protection (PIP).
Pays up to $8,000 in medical expenses for you or anyone who is driving your car (legally) during an accident. It also covers any passengers or pedestrians for medical expenses once the individual’s own health care expenses reach $2,000.
Part 3. Bodily Injury Caused by an Uninsured Auto.
Protects the driver and passengers (unless covered by their own auto policy) against medical expenses caused by an uninsured or unidentified driver. This covers any “hit & run.” The minimum limit required is $20,000 per person and $40,000 per accident. Recommended Amount: $100,000/$300,000
Part 4. Damage to Someone Else’s Property.
This amount pays for damage you cause to another person’s property such as an automobile or building. The minimum limit is $5,000. Recommended Amount: $100,000
Part 5. Optional Bodily Injury to Others.
This optional amount is added onto the Part 1 minimum of 20K/40K to extend your liability against injury to others. This coverage also protects you against damages suffered by guests in your car during the accident. This covers accidents in the entire United States and Canada. Chances are, if you get into a serious accident, you will owe more than $20,000 per person and $40,000 total, leaving you on the hook for the difference. Recommended Amount: $250,000/$500,000 or $100,000/$300,000
Part 6. Medical Payments.
Medical expenses for you and your passengers over and above the amounts covered by Part 2, no matter who is at fault in the accident. Recommended Amount: $5,000
Part 7. Collision.
Collision coverage pays for the damages to your car when involved in an accident, regardless of fault. You may need to pay the deductible. Recommended Amount: $500
Selecting Your Deductible.
The deductible set under Part 7 and Part 9 is your choice. The standard deductible is $500. You can save on your premium by selecting a $1,000 deductible. This is the amount you will have to pay in the event of an accident which is your fault or if the other driver is unidentified (“hit & run”).
Waiver of Deductible.
Having a “Waiver of deductible” means that you will not need to pay the deductible if the accident is caused by another driver that is identified.
Part 8. Limited Collision.
This coverage is for people who do not wish to carry full Collision coverage, Part 7, but still want to be covered if they are hit by an identified driver who was at fault. If you are at fault, you will not be covered. Recommended Amount: Get full Part 7 Collision
Part 9. Comprehensive.
Pays for damage to your vehicle resulting from non-collision events such as theft, fire, striking an animal, or falling tree damage. You will be responsible for the deductible. Recommended Amount: $500
Part 10. Substitute Transportation.
Reimbursement for a car rental or transportation while your vehicle is being repaired (after a breakdown or accident). You will receive a daily stipend and total stipend that cannot be exceeded. Options are $15 a day up to $450 (30/900. 45/1350. 1000/3000). Recommended Amount: 15/450 if you have AAA. 30/900 if you do not have AAA.
Part 11. Towing and Labor.
Pays up to a certain amount to get your car towed from the accident/breakdown scene or fixed at the scene (parts not included) so it runs again. Options are $50, $100, $150. Recommended Amount: $100
Part 12. Bodily Injury Caused by an Underinsured Auto.
Protects the driver and passengers (unless covered by their own auto policy) against medical expenses caused by an underinsured driver. The accident must be caused by someone without enough bodily injury coverages (Part 1 & Part 5). Recommended Amount: $100,000/$300,000
If you do not have any of the recommended coverage amounts above, you are putting yourself at financial risk everytime you get behind the wheel. It may be time to have your policy quoted with the proper amounts. Send us a copy of your policy today, and we will quote it with several different carriers, ensuring you get the best product at the best price. Go to our website www.agordon.com for more insurance resources.