Friday, March 19, 2010

Spring brings flowers, birds, greenery and oh yeah Flood!

Last Friday evening was a beautiful spring (almost) evening here in Central New York, and flooding was the furthest thing from my mind with the sunny blue skies over head. That was until I ventured up to the new shed I built last year to rescue one of my daughter's bikes from it's winter slumber. You see the ground was literally seeping water around my shoes with each step and that reminded me that its Flood Season.

It is that time of year when the winter melt combined with the spring rains often creates the perfect recipe for flooding and tragically this peril is not covered by any personal property insurance policies (e.g. Homeowner Insurance) nor by 99% of commercial property policies in effect today. Sadly, despite millions of dollars in awareness advertising by the National Flood Insurance Program(NFIP) and written notice in every property policy letting the policyholders know, many insureds do not understand this gap in coverage exists until it is too late.

Let me be perfectly clear now so there is no misunderstanding:


There I said it, now you know. Of course you should understand what is meant when someone calls something a flood. The NFIP defines Flood as follows:

  • A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from: --Overflow of inland or tidal waters; or--Unusual and rapid accumulation or runoff of surface waters from any source; or--Mudflow;or

  • Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

The sad fact is it is not so clearly defined in most property policies out there. In fact the ISO Homeowners policy does not define it at all, but they do exclude it. You may wonder why there is no coverage for the exposure in your traditional property insurance policies, and it lies in the root of the catastrophic nature of this type of loss. For the most part floods are widespread and cause large amounts of damage. Do to this massive exposure it was deemed un-insurable by the traditional insurance companies. In response the federal government created the NFIP, a department of the Federal Emergency Management Agency (FEMA) in an effort to reduce the financial losses of consumers and public entities from the devastating effects of flooding. It was designed to provide a federally backed insurance market to handle the exposure of Flood as defined by NFIP.

The good news is you can buy flood insurance through your local Independent Insurance Agent via the NFIP or one of its approved Write Your Own (WYO) insurance carriers. This access is for both Consumers and Businesses, each in there own unique programs.

There are 2 critical things to remember when making the decision to purchase Flood Insurance. The first is that the only people that can purchase flood coverage through NFIP programs and have it be effective immediately is for a mortgage closing which requires the coverage. Otherwise you have to wait for 30 days from the date of application for your policy to become active. This stipulation was put in to prevent people from only securing coverage when there was an eminent threat of a flood, thus forcing participants to be proactive. The 2nd thing to remember is that contents of the structure are not automatically included in the base flood policy. So you will want to add that coverage in when you purchase the policy.

There are many other considerations when purchasing flood insurance. It is important you talk to an Independent Insurance Agent to discuss the coverages you need and the unique characteristics of your exposures. You will also find more information at the following website -

Its Flood Season....are you ready?

Friday, March 12, 2010

Protect yourself through "No-Fault" of your own.

Many states including New York are known as "No-Fault" states when it comes to coverage under your Personal Auto (PA) policy. This "No-Fault" status was brought on in the 1970's to help ensure that persons injured in auto accidents would have prompt and adequate resources to cover their injuries and subsequent income loss. In New York it came into effect on Feb. 1, 1974 as a result of the New York Comprehensive Motor Vehicle Insurance Reparations Act.

The intent of the law here in NY was to relieve the injured parties of the burden of the time consuming and often fruitless litigation needed to secure the money to pay for their injuries. At the time this law went into effect only 14% of liability premiums were reimbursing victims for their economic loss, and then only after 16 months from the time of the accident.

The law provides for a bundle of benefits to vehicle occupants that are injured as a result of a covered accident. These benefits are known as Personal Injury Protection (PIP) and they came from the promise of Basic Economic Loss stipulated in the legislation. In exchange for these guaranteed and promptly paid benefits, the covered individual gives up some legal rights to sue for what is known as non-economic damages, such as pain and suffering and offset by possible collection under other social programs (i.e. workers' compensation and social security). These benefit are payable regardless of who is at fault, hence the term "No-Fault". There is still the ability to litigate against the negligent party if the injury is one on the "verbal threshold". This is a list of nine injury types, and if the injury meets this definition they injured party may pursue litigation. The threshold list is:

  1. Death;

  2. Dismemberment;

  3. Significant disfigurement;

  4. A fracture;

  5. Loss of a fetus;

  6. Permanent loss of use of a body organ, member, function or system;

  7. Permanent consequential limitation of us of a body organ or member;

  8. Significant limitation of use of a body function or system;

  9. A medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment.

The PIP benefits, the product of the promise of Basic Economic Loss, are a up to $50,000 per person for the following in combination:

  • All eligible medical expenses resulting from the accident, without limit for time;

  • Income lost up to $2,000 per month and no more than 3 years;

  • Other reasonable and necessary expenses (i.e. transportation, cleaning) up to $25 per day and only for 1 year;


  • Death Benefits of $2,000 payable to the estate of the covered person.

It must be remembered that these benefits are guaranteed, however they may also come from other sources such as workers' compensation, Social Security or state disability benefits. They can contribute with your auto insurance to meet your Basic Economic Loss.

Under the law you also have the option to purchase and additional $25,000 of Optional Basic Economic Loss (OBEL) which can be used to cover the same benefits as the base $50,000. However, you or your legal representative are allowed to determine what it is spent on as opposed to the party who 1st demands it (e.g. your physician).

A NY automobile insurance policy holder also has access to purchase what is called Additional Personal Injury Protection. This as an additional amount of PIP of up to $100,000 which not only covers the 3 Basic Economic Loss benefits defined in the law; but also broadens the definition of an eligible injured person to include a NON-Residents of New York if they are a passenger in your vehicle while you are outside of NY state.

No Fault coverage is a complex yet critical component of your automobile insurance policy. It is very important you discuss this coverage thoroughly with you Independent Insurance Agent so that you fully understand how it impacts you and your family; and to determine the proper limits and structure of coverage.

At my agency we strongly encourage all of our clients to carry the maximum PIP benefits available to them. After all, the purpose of the benefits are to be sure you have the means necessary to get the medical care you need if you are injured in an automobile accident and $50,000 in today's health care climate does not go very far. As the additional cost to increase from the basic amount is nominal why not be sure you have the protection you and your family deserve.

Why expose yourself and your family to a serious financial situation from an automobile accident through "No-Fault" of your own?

Friday, March 5, 2010

How can I save money on my Car Insurance?

Affordable personal auto insurance in today's economy can be a moving target. Here are 5 areas you can control to help you maintain the costs of your auto insurance without sacrificing critical coverage protection for you and your loved ones.

  • Driving Record - The most obvious tip, but it can not be overstated. Your driving history is the biggest factor that insurance companies will look at when evaluating you for coverage. So drive defensively and consider taking a Defensive Drive Course. The course is a great refresher for good driving habits and rules of the rode. The cost of the course will often be recouped in the savings on your insurance in the 1st year and it is good for 3 years.
  • Manage your Credit - The auto insurance companies have established a link between an individuals credit history and their likelihood of having an accident. Using what is referred to as your insurance credit score, they have modeling programs that can predict for them if your likely of having an accident. Managing your credit will help you to keep your rates low.
  • Vehicle Type - You car is a significant factor in the cost of your insurance. Cost, age, body type, engine performance, weight, etc.; all factor in to what your premiums will be. Generally, the newer and more expensive a vehicle, the higher the cost. When you are considering a new vehicle, contact your independent insurance agent and have them give you a quote for your insurance if you were to buy the vehicle. The cost of your insurance should be part of your purchase decision.
  • Premium Payment - Pay on time, another obvious statement that can't be said enough. Insurance companies are less and less tolerant of poor pay customers as they add significant costs to the servicing of the policy. A poor pay history can make you ineligible for preferred pricing. Also, pay in less installments; the less frequently you make payments (i.e. quarterly vs. monthly) the less installment fees you pay. These fees can range from as little as $1.00 to as high as $15.00! Several companies are now even offering a Paid in Full discount!
  • Target Coverage - Make sure you are paying for the coverage you need. It often makes sense on your collision coverage to assume risk (i.e. higher deductibles) of loss to your vehicle or remove it all together if the vehicle is older; and use those savings to maintain higher limits in other areas (i.e. liability, no-fault, uninsured motorist, etc). You may want to consider removing the comprehensive coverage as well, though if wish to keep glass coverage you will need to keep this coverage in place.
  • Fraud - About 10% of your insurance premium is the result of fraud. Insurance companies, regulators and law enforcement personnel are in a constant battle combating fraud. You can help; ask your state legislators to make the fight against insurance fraud one of their priorities. Report insurance fraud to your insurance agent, insurance company or local police when you see or suspect it. Speak out against insurance fraud to your friends, family, and business associates. After all, it's not just the big insurance companies that pay. All those costs eventually filter down to you.

Finally, a significantly important way you can help save money on your auto insurance is by working with an Independent Insurance Agent. An independent agent will advise you in the areas named above and as well as the right coverage for you. Then, with their freedom to go to multiple carriers, they can price out your customized coverage to make sure you are maximizing the discounts and credits you deserve.

Sir Henry Taylor