Should you purchase Earthquake Coverage? Direct damages due to Earthquakes are NOT covered under the standard homeowner’s policy. The answer for most people is a crystal clear ‘it depends.’
The first, most important and most obvious consideration is location. Do you live in an area prone to Earthquakes? If that answer is no, then you’re probably safe forgoing coverage. If the answer is yes, read on. If the answer is ‘I’m not really sure,’ then here’s a map of the USA’s geological ruminations this past week. The visual should give you a pretty good idea whether you live in a risk zone or not.
This map is available at all times for current data, by the way, just visit the Recent Earthquakes Page (HL http://earthquake.usgs.gov/earthquakes/recenteqsus/)
For those who live in high risk areas (yes, California, we’re talking to you), purchasing Earthquake Coverage is a very important option to consider. Remember that you don’t purchase insurance for things that are necessarily likely; you insure yourself against the unlikely financially devastating event.
Take life insurance, for example. The likelihood of a bacon-bringer passing prematurely is very small, and most families don’t expect to need it. However, they purchase coverage anyway because of the financial nightmare that would ensue IF it did happen.
Of course, there are always those who wouldn’t purchase auto insurance if it wasn’t mandated, or home insurance if they don’t have to; some people much just prefer to roll the dice. Some are wealthy enough to walk away from a destroyed home, and some have so little equity that it doesn’t make financial sense to insure against earthquakes.
But if you don’t consider yourself a member of the groups above, at least considering coverage is a wise idea.
So what does protection entail? That will depend on the conversation you have with your insurance provider. Coverage will vary state to state, but in high risk areas, both basic and expanded coverage is available, having made great strides in the past few years. In low risk areas such as my desk here in Massachusetts, a simple earthquake endorsement will cover damages due to earthquakes, landslides, volcanic eruptions, and other earth movements.
Best of luck in your decision!
Life insurance costs have come down consistently over the past 20 years, reflecting the fact that people are living longer. Medical advances, awareness of the benefits of diet and exercise, and vehcle safety all contribute to this trend. The hardest part about life insurance for most people is initiating the process. Nobody wants to pressured into buying something they don’t need and don’t want. Fortunately today, it’s easier than ever to get a no-pressure quote from us. We use SBLI for most customers needs, since they’re always competitive, and always easy to work with.
SBLI has an online needs calculator to assist you with deciding on an amount. We offer the same great rates and coverage options, but you also get our help with deciding the best match for you, as well as navigating the underwriting process. You choose the time period you want insurance to last, and you’re on your way…
Underwriting is easy too. When you first speak with us, we’ll ask a few questions about your height and weight, family history, and any hazardous hobbies you do to get a realistic sense of your underwitting category, so you can plan on costs that are realistic. Once you decide on what you need, we arrange to have a licensed paramedic meet you at your home or office for the medical part. Getting around to the right amount of life insurance is fast, easy and economical.
The flood maps changes in many Massachusetts communities means your flood risk may become higher or lower. This will affect what you pay for flood insurance.
Here are some scenarios that explain different flood map changes:
Scenario 1: If the flood maps change from a low or moderate flood risk to high risk (flood zone B, C, or X) to zone A, AE, AR, A99, AH or AO).
These requirements and options apply to Scenario 1 according to the National Flood Insurance Program:
- Flood insurance is mandatory for most mortgage holders. Insurance costs may rise to reflect the true (high) risk.
- The PRP Eligibility Extension Program can offer savings. To ease a homeowner's transition from a moderate-to-low risk area to a high-risk area, which would require the mandatory purchase of flood insurance and an increase in flood insurance costs, the National Flood Insurance Program is extending eligibility for the lower-cost Preferred Rate Policy to properties that were remapped on or after October 1, 2008.
- "Grandfathering" can offer savings. The National Flood Insurance Program has "grandfathering" rules to recognize policyholders who built in compliance with the flood map in effect at the time of construction or who maintain continuous coverage. Sometimes, though, using the new flood maps can actually result in a lower premium, especially if the home is high enough above the Base Flood Elevation (BFE). In addition, buildings newly mapped into a high-risk area may be eligible for the lower-cost Preferred Risk Policy (PRP) for two years after a map change, before they grandfather in the lower-risk zone rates.
Scenario 2: The flood maps show a change from high flood risk zone to a low or moderate risk (flood zone A, AE, AR, A99, AH, AO to X or shaded X)
These requirements or options apply for scenario 2:
- Flood insurance is optional but recommended. The risk has only been reduced, not removed. Flood insurance can still be obtained, and at lower rates. Even though flood insurance isn't federally required, anyone can be financially vulnerable to floods. People outside of high-risk areas file over 20% of NFIP claims and receive one-third of disaster assistance for flooding. When it's available, disaster assistance is typically a loan you must repay with interest.
- Conversion offers savings. An existing policy can be easily converted to a lower-cost Preferred Risk Policy, if the building qualifies. Note that lenders always have the option to require flood insurance in these areas.
Scenario 3: The flood maps show an increase in the Base Flood Elevation (BFE).
These requirements or options apply to scenario 3.
- An increase in BFE can result in higher premiums; however, "grandfathering" can offer savings. The National Flood Insurance Program grandfathering rules allow policyholders who have built in compliance with the flood map in effect at the time of construction to keep the earlier base flood elevation to calculate their insurance rate. This could result in significant savings.
Scenario 4: No change in flood zone risk level .
These requirements or options apply.
- No change in insurance rates. However, this is a good time to review your coverage and ensure that your building and contents are adequately protected.
Our agency www.agordon.com is happy to assist with securing or reviewing flood insurance coverage.
-Reckless Driving in MA
What is reckless driving, what are the penalties, and how will it affect your insurance?
I’ve found that very few people have actually put time into answering these questions on the internet; so here’s a guide about the basics of reckless driving in Massachusetts.
Reckless driving is legally defined as a mental state in which the driver displays wanton disregard for the rules of the road. The standards of reckless driving in Massachusetts are not specifically defined, but subjectively noted as a manner that shows you are indifferent to whether someone could be seriously injured or killed. Here are some things that will generally constitute a reckless driving charge:
- An egregious violation of the speed limit (this usually means driving 20-30 mph over the limit or on the highway or in a residential area)
- Unsafe lane changes (we’ve all seen this happen; people weaving in and out of lanes on the highway to pass as many people as quickly as possible)
- Drag Racing
- Passing on a solid line or passing on a curve.
- Passing a stopped school bus.
- Leaving the scene of an accident
Reckless driving also usually goes hand in hand with impaired/drunk driving charges.
-Reckless Driving Penalties
Reckless driving by itself is a misdemeanor in the state of Massachusetts and is generally handled on a case-by-case basis. Because it is a criminal charge, there will be a fine and not more than two and a half years of incarceration in extreme cases. There is also the possibility of your license being suspended or revoked again depending on your offense.
The harsher penalties are going to come from your insurer.
-Reckless Driving and your Insurance
Reckless driving not only carries with it legal costs and time in court: it also upends your insurance. The cost is only the first part; losing your choice of an insurance company is the real kicker. We rated a 2008 Ford Taurus, with $100,000 / $300,000 liability limits, and including collision and comprehensive coverage, driving 12,000 miles per year, living in Pembroke. Of our dozen or so companies that we represent, Peerless Insurance offers the best rate for our rater, at $543 per year.
Then she gets caught and pinned with a Reckless Driving charge.
Hello MAIP, the Massachusetts Auto Insurance Plan, aka, the Pool. Because insurance companies don’t want to insure someone with a reckless driving charge, MAIP is a state run mechanism that assigns a carrier to take that driver. MAIP is subject to a ceiling rate, meaning whoever gets the assignment can only charge as high as the MAIP rate, which in our case is now $1,489. Same coverages, same Pembroke home town, but one Reckless driving.
Thus, not only did your auto insurance cost nearly triple, you lost your choice of insurance companies as well. Two hands on the wheel!
Last Friday (June 29) Congress overwhelmingly passed an extension of the federally underwritten National Flood Insurance Program (NFIP), with the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012. Passing the bill was part of a broader effort by Congress to fund Transportation spending, student loans, and other deadline provisions before the end of June. President Obama has signed the bill.
What does the bill do?
The bill makes several important changes to the federally underwritten flood insurance program that will affect over 5.5 million policyholders. The most important is a 5-year extension of its authority, after six temporary extensions over the past two years. These temporary extensions missed renewal deadlines several times, creating uncertainty in the real estate market including delayed property closings. This extension for five years will return some predictability to the market, particularly on the coast and along the Mississippi flood plains where lenders require flood insurance protection.
How will the bill work?
A stated objective has been to reduce the exposure taxpayers have to major flooding events through adoption of more actuarially supported rates. After Hurricane Katrina, the National Flood Insurance Program went $18 billion into the red, and has owed this to the Treasury since then. Paying that back is one goal; remaining self-supporting is another. To achieve this, the program will phase in rates that more closely match exposures. Matching rates to risk is routine with for-profit companies, but subsidies have been in place for years to promote coastal real estate development and to support an insurance market where private carriers cannot achieve adequate ‘spread of risk’. These subsidies will be reduced. In one step to make rates more scientific the bill requires the NFIP to create a technical mapping advisory council to take advantage of mapping technology strides already embraced by the private insurance industry.
How will payment factor in?
The bill will reduce subsidies built into the previous models by degrees. Rate increases are targeted especially at secondary homes (vacation homes), so if you have a beach house as a vacation home, your rate increases will be higher than folks who live near the shore full time. The bill also provides for relocation of homes with repetitive claims; it doesn’t make sense to keep rebuilding homes in places that flood regularly. Rate increases, formerly capped at 10% per year will be allowed to rise 20% to achieve this projected financial stability sooner.
Any new features?
There are provisions that affect commercial properties as well. Multi-family properties will soon be eligible to obtain NFIP protection. The bill also calls for the Government Accountability Office (GAO) to study the impact of adding business interruption and additional living expenses to commercial risks, coverage that is considered important, and routinely included, on non-flood commercial policies.
What does the future hold?
Extending stability to the program is a great step, and a trend toward risk-based pricing is long overdue. Some homeowners will see rates rise, especially on secondary homes. But a return to a self-supporting program was an important goal for Congress in this era of fiscal pressure, and the bill appears to include what it will take to do that.
If you're looking for insurance along the coast or just want to learn more, check us out at www.agordon.com
You you’ve just had a fender bender and then find out your insurance company won’t go to bat for you to avoid the dreaded ‘at-fault’ tag for the accident. Aren’t they supposed to? Isn’t that what you’d expect from a risk partner?
Yes they are
and in fact, it’s always in your insurance company’s interest to have the other driver considered at fault. And having your financial interests and the insurance company’s financial interests both trying to find the other drive at fault is the best alignment possible.
Here’s why your interests align:
the insurance company for the at-fault driver ends up paying most or all of the cost of the accident. That’s a big incentive. It you’re at fault, they’ll pay your collision AND the repairs to the other driver’s car, even when the other driver goes through his own insurance. (This is a process known as subrogation where the non-at-fault company gets paid after the fact by the at-fault driver’s company).
So why don’t they fight harder?
In short, legal reality. Massachusetts traffic law has been litigated and argued for about a hundred years. That’s a lot of case law. And even the most skilled lawyering can’t get you ‘not at-fault’ if the case law is against you (excepting documented extenuating circumstances).
Massachusetts traffic law has been summarized in the “Standard of Fault”. Distilled down to the very basics, the at-fault driver was usually in one of these situations:
- Not yielding to oncoming traffic
-Crossing traffic to turn left
-entering a main road from a side road
- Hitting someone in the rear
– not stopping in time
It’s always good to get fresh information at the accident, to avoid ‘description drift’. See out tips on right after an accident to understand how to protect your interests. Or call us at 800-649-3252.
A Guide to Determining What Amount to Insure Your Home For
On nearly every homeowners quote I present to customers, the #1 question I receive is how I determined the amount of coverage to use for the home, or the “Dwelling Coverage” amount.
What is Dwelling Coverage?
The Dwelling Coverage (often referred to as the ‘Replacement Cost’) is not the market value of the home, the assessed value of the home, nor the mortgage amount used to buy the home, but the amount of money it would cost to rebuild the home if it is ever destroyed by a fire. Land is also not a factor in this amount.
How does Dwelling Coverage work?
Your independent insurance agent will calculate the dwelling coverage by entering the square footage, year built, style of home, foundation type, garage type, # of bathrooms, type of kitchen, material of the interior & exterior walls, type of flooring, and energy infrastructure (to name a few) into a replacement cost calculator provided by the insurance company. The insurance companies keep up to date replacement cost calculators by continually updating the current prices for building materials and labor. The insurance companies create these calculators to ensure that their customers are getting the proper protection and so the insurance company is covering homes to their proper replacement value.
Now, here is the important part. Once the agent presents the quote to the customer, the customer decides if they are happy with the dwelling coverage. I would urge, if you trust your agent, to use the dwelling coverage amount the agent has come up with. After all, this is what an agent is for. This will ensure that you have adequate coverage for your home.
Can't I opt for less dwelling coverage?
In a tough economy, customers try to find savings anywhere possible, and one area is their insurance. Most homeowners believe they can simply lower their insurance coverage (dwelling coverage) to save some money. This is true, but it comes with a heavy cost due to the coinsurance clause.
Insurance companies require homeowners to carry at least 90% in coverage of the dwelling/replacement cost, which is the coinsurance clause. So in our example of $300,000, the insurance company would require at least $270,000 in dwelling coverage to satisfy the 90% or more insured-to-value requirement. Insurance companies offer discounts for homeowners who insure to the full replacement cost. The customer will also sleep easy having full coverage on their home.
What does that mean in a claim?
Now let’s say that the homeowner decided that he/she wants to lower the dwelling coverage to $250,000, which is 83% of the replacement cost. Let’s also say the homeowner suffers a $100,000 claim. The insurance company will penalize the homeowner with a penalty of 17% taken directly from the claim. It is calculated by the following:
($250,000/$300,000) X $100,000 = $83,333.
The homeowner may have saved a few hundred dollars in premium by lowering their dwelling coverage to $250,000, but have now taken a penalty of $17,667 at the time of the loss, vastly eliminating the saving they thought they found earlier. Instead of receiving $100,000 for the claim, the insured is now only receiving $83,333.
In conclusion, it may seem like the obvious area to save money on your homeowners insurance, but lowering the dwelling coverage on your policy can negatively affect you during a time of a claim, or a total loss. That is not the time to realize you made a bad decision.
Use an independent agent to ensure you are getting the best coverage available for your home, and allow the agent to find discounts for you that don’t affect your coverage.
If you find that your property is located in a higher risk flood zone, depending on the year of construction you may be required to obtain an elevation certificate. Homes located in special flood hazard areas that were built after the community began participating in the National Flood Insurance Program are required to provide an elevation certificate within one year of the newly issued policy. For some homeowners, the certificate may save significant flood insurance premiums long-term if the certificate proves a positive relationship between the elevation of the home and the base flood elevation of the area.
What is an elevation certificate?
It provides information on:
- building type
- flood map location
- additional information used to determine the proper flood insurance premium rates for a property.
An elevation certificate measures the difference in elevation between your home and the base flood elevation of your area. It is required in order to properly rate post-FIRM buildings, which are buildings constructed after the publication of the first Flood Insurance Rate Map (FIRM) in a particular community, in zones A1-A30, AE, AH, A (with BFE), VE, V1-V30, V (with BFE), AR, AR/A, AR/AE, AR/A1-A30, AR/AH, and AR/AO. However, an elevation certificate is not required to buy flood coverage for pre-FIRM buildings unless the property owner or insurance agent wants to rate the buildings under the post-FIRM flood insurance rules to determine if the premium rate would be lower.
What are the requirements?
The elevation certificate must be signed and sealed by a land surveyor, engineer or architect authorized by law to certify such information. Most elevation certificates are prepared by surveyors licensed by the state in which the subject property is located.
For questions on your policy and whether or not you need an elevation certificate, shoot us an email; one of our experts here at Gordon Insurance will get back to you.
For many young adults, college is an incredibly liberating experience and a time of emotional and intellectual growth as fledgling freshman adventure further along the path of higher education. Unfortunately, many of the high tech gadgets and electronics that pepper dorm rooms can also find it an incredibly liberating experience… as they adventure out of the dorm in the hands of a thief. The reality is that theft on college campuses does occur, according to the Newton’s 2nd law of theft:
Expensive Electronics + Doors Left Open + The Occasional Dorm Party = Theft
Fortunately, insuring the things your student takes away to college can easily and affordably be insured. Here’s what you should know.
- You’re probably already covered: Most students are covered under their parents’ homeowners policy, as long as they still list their primary residence as their home address rather than their dorm room. No need to fear if your student has enough electronics littering his or her dorm room to disrupt aircraft radar within a five mile radius; there is generally a 10% coverage rule that protects 10% of the value of your personal belongings worldwide (which includes hotel rooms, temporary residences, etc). Even so, it’s probably a good idea to call your insurance provider and double check that your college bound daughter or son is covered.
- Yes, that includes Healthcare: A recent change in national law recently superceded the state’s coverage policy. The old law stated that all full time students who are still dependent are covered under their parents’ policy to age 25. The new healthcare legislation further extended this to all non-married children up to 26 years of age.
- The abandoned car: many students go off to college and leave their cars at home. Make sure you aren’t paying top dollar for a car that will sit in your garage all year and only endanger the lawnmower next to it. Call your insurance agent and ask for a discount if the car will not be at school. Furthermore, ask if good student discounts are available should your studious scholar return home to use the vehicle.
- After Graduation: After your college student graduates and takes up residence elsewhere, the rules of the game change. They will no longer be covered under your homeowner’s policy, but will instead most likely need tenant insurance for their apartment or rented house. However, these policies are very affordable and will cover anything in the apartment that would break if someone “turned the apartment upside down and shook it” (Meehan Insurance).
Even with this information, it’s a good idea to call your professional insurance provider and have a conversation about your son or daughter’s coverage before they leave for college. The short amount of time on the phone could save you time, money, and headaches in the future.
Additionally, an ounce of prevention is worth a time honored cliché (or a pound of cure). It’s worth taking the time to prevent the theft of items that your students own. You can protect laptops from theft by purchasing a notebook combination lock (several affordable products are listed here). Another good use of time is to photograph all valuable items and take down serial numbers and other information then store them in a GoogleDocs document; if you have a google account, you already have access to this feature. If you don’t, setting up an account is free, easy, and you can access your documents from any computer with internet access. Taking preventative measures before the next dorm party can keep your son or daughter’s electronics from “walking out” in the middle of the chaos.
For more insurance tips, information, resources, and quotes, visit us at the A. G. Gordon, Inc website.
Are you in the zone? A change in flood maps could result in a change to a high risk flood zone for many unknowing property owners. Many communities in Massachusetts will be experiencing a change in flood hazard maps in July, 2012. The maps are used to determine a property's flood zone.
Flood hazard maps, also known as Digital Flood Insurance Rate Maps (DFIRMs), indicate whether properties are in areas of high, moderate or low flood risk. Towns throughout Massachusetts are receiving these updated flood hazard maps that are scheduled to become effective July 17. This is all part of the Federal Emergency Management Agency's nationwideprogram to modernize Flood Insurance Rate Maps.
Many homeowners may find that their risk is higher or lower than it was prior to the map changes. If the risk level for a property changes so may the requirement to carry flood insurance.
Those who have a federally backed mortgage or plan to refinance with a federally backed lender, will be required to purchase flood insurance if they find that their home is shown in a high-risk flood area known as a Special Flood Hazard Area on the updated maps.
Purchasing flood insurance before the flood maps become effective will lock in the lower-risk zone and could lead to significant savings. In addition, if you plan to sell your property you can "lock in" the current flood zone which can be a significant selling point down the road. If you currently are zoned in a "preferred" flood zone, you could buy into this zone before the new maps become effective in July.
The updated flood maps can be viewed at each community’s Town Hall. Typically, the building inspector is the community coordinator of the flood program. Each community received both a paper copy and a digital copy of the new maps to share with their residents.
Communities affected are: Abington, Bridgewater, Brockton, Carver, Duxbury, East Bridgewater, Halifax, Hanover, Hanson, Hingham, Hull, Kingston, Lakeville, Marion, Marshfield, Mattapoisett, Middleborough, Norwell, Pembroke, Plymouth, Plympton, Rochester, Rockland, Scituate, Wareham, West Bridgewater and Whitman.
If you need assistance understanding how your property may be affected, our agency www.agordon.com can help educate you on flood insurance. Timing is important and it is best to learn before the flood map changes so you have more choices on managing a change in flood zones.