Keeping you educated and updated on how homeowners insurance works.
Did you miss your chance to keep low flood insurance rates?
It's one of those "blink and you'll miss it" type things, particularly if you and your family took a weeklong spring break trip.
Insurance companies sent out letters to more than a million homeowners with flood insurance policies telling them to prove that they live in their insured properties -- or face premium increases of 25 percent each year, "effective June 1."
The problem for some of these homeowners is that the letters were mailed in mid-April and arrived while they were on vacation.
Since it's your typical insurance letter with lots of legalese, it probably puzzled policyholders as to just what it means. And, if and when they figure it out, they might have to rifle through their safe-deposit boxes to prove where they actually live.
The National Flood Insurance Program (NFIP) is $24 billion in debt. In 2012 Congress passed the Biggert-Waters Act, which would boost flood insurance premiums to make up for this monstrous shortfall.
What Congress forgot was that homeowners in flood-prone areas couldn't pay these huge increases and so would be forced out. And things only got worse when Superstorm Sandy hit later that year. Those of us who live along the New Jersey and New York coastline, such as myself, are still trying to scrape together the money to rebuild.
Our representatives listened to all of us angry voters and -- in a rare bipartisan move in March -- Congress and the President modified Biggert-Waters to slow down the flood insurance rate increases.
Prove it, and now
This helps, but only if you are the homeowner of record -- and can prove it -- in a hurry. These letters from insurance companies such as Nationwide, which administer the flood insurance program for the NFIP, demand documented proof showing that you live in the flood-insured property. Proof can be in the form of:
- Voter registration card.
- Documentation of where your child or children attend school.
- Driver's license or similar document.
The insurance letter that I read doesn't say whether to send the original or a copy and that the deadline is early May, depending on the date of the letter. Otherwise you will pay 25 percent more each year until, to quote the letter, your "premiums reflect the full-risk rate." Exactly what the "full-risk rate" is has yet to be determined, since the flood maps are being redrawn. I've already been told that flood insurance would cost me $31,000 a year for my $120,000 home.
Needless to say, this makes a lot of people mad, including Ann Pellegrino of Saint Petersburg, Fla., who told me she got her letter on April 18. Fortunately this attorney, who specializes in foreclosures, was home when it was slipped into her mailbox. "I went on 'red alert" to protect my home," she says.
But she is still not confident. The insurer's letter says that "you or your agent" must submit the verification document -- not to the NFIP -- but to the company that sold you the flood insurance.
Hopefully that agent or company will then send it on to the NFIP, which will allow her to keep her residential -- and lower rate - -policy.
But what if her local agent drops the ball and doesn't forward her documentation to the private homeowners insurance company? Or what if the private insurer loses her envelope? Or forgets to send it on to the NFIP before the May cut-off date?
Out of "absolute fear" of some mistake she says she immediately emailed her letter and verification document to her local agent. And, the day after Easter, she rushed to the post office to overnight a second set of verification directly to the insurance company by certified and return receipt requested mail.
Smoke and mirrors
Pellegrino is probably not going to have a problem. But she's worried about her Florida clients and the hundreds of thousands of homeowners around the country who have flood insurance.
Many of them never heard of Biggert-Waters. And those who did probably think that because the premium hikes were rolled back in March they now have nothing to worry about. But if they lose their flood insurance, or have to pay rates that they can't afford, banks will simply yank their mortgages and force them to sell.
"It's all smoke and mirrors," Pellegrino says. "And it's moving America from an ownership to a rentership society."
Daybreak jolt in L.A. sounds alarm for earthquake insurance
The St. Patrick's Day earthquake in the Los Angeles area woke up residents with a 4.4-magnitude rumble, and though no injuries or severe damage were reported, the jolt also serves as a wake-up call for the importance of having 'quake coverage.
Standard homeowners insurance doesn't cover property damage caused by shaking earth movement, but you don't need the luck of the Irish to score a discount on earthquake insurance if you live in Southern California.
The California Earthquake Authority (CEA), California Insurance Commissioner Dave Jones and the Automobile Club of Southern California (AAA) recently announced a new multi-policy discount for qualifying homeowners that includes earthquake coverage. The CEA is a privately funded, publicly managed organization that offers earthquake insurance through participating insurers.
Under the agreement that went into effect Jan. 1, Auto Club members who insure single-family homes through the club's affiliate insurer and also buy or renew a CEA earthquake policy get a home insurance discount of up to 7 percent.
News of the bundle discount comes at a time when only 12 percent of California homeowners have earthquake insurance, either from a private insurance company or the CEA, according to the Insurance Information Network of California.
"Efforts such as this first-of-its kind discount are important incentives to encourage more homeowners to protect themselves against the potential for devastating loss," Jones said in a written statement. "In California, it's not a question of if, but rather when the next big earthquake will strike. Living in earthquake country means taking steps to protect your biggest asset from damage and loss."
CEA policies from participating insurers typically carry deductibles of 10 percent to 15 percent, provide personal property coverage from $5,000 to $100,000 and loss of use coverage from $1,500 to $25,000. Private insurers in California may offer different coverage limits. The CEA website has a coverage calculator that lets you figure out estimates of what your CEA policy will cost.
Holiday mishaps: Am I covered by insurance?
Sometimes the holiday season is not always merry and bright. When calamity ensues, it's wise to know if your insurance provides coverage.
One cautionary note: You want to think twice before you phone your agent and put in a claim if your deductible is, for instance, $500 or $1,000 and any damage is likely to be valued at less than that. It wouldn't be worth it to you financially, and there's always the possibility that your insurance company could hike your rates if you do put in a claim.
If gifts are stolen from right underneath your Christmas tree while you are out, you can file a claim with your home insurer. If presents are stolen from your car, your homeowners insurance would cover that, too, though you may be required to show receipts when you file a claim.
A holiday decoration causes dings and dents
If an outdoor holiday ornament breaks loose from your house and rolls down the street crashing into your car causing a dent, your collision car insurance would cover the damage. However, if a holiday decoration gets loose due to wild winds, becomes a flying object, and falls on your car causing damage, that would be a comprehensive claim, says Penny Gusner, consumer analyst for CarInsurance.com.
Be careful looking at holiday lights
What happens if you're driving down the street one evening admiring the houses that are beautifully lit up with holiday decorations and you rear-end the car in front of you? Would this be covered by your auto insurance? You bet, says Pete Moraga, spokesman for The Insurance Information Network of California. "Collision insurance would cover your own vehicle, and comprehensive insurance would cover any damage to your vehicle not caused by an accident," Moraga says.
That darn remote!
One of your kids is playing a video game you gave him for Christmas and the gaming remote accidentally slips from his hand, smashing your television screen. Is this covered by your home insurance policy? The damage would be covered, but you want to consider if the value of the TV exceeds the threshold of the deductible. "Keep in mind that many homeowners keep a deductible of $1,000 and more. Thus, if the TV is worth close to $1,000, it would not be prudent to file a claim. However, if the homeowner's TV is worth a lot more, a claim could be filed and it would be paid out, minus the deductible, if the remote accidentally flies out of someone's hand and breaks it," says Moraga.
Faulty wiring on outside lights
If you hang holiday lights on the outside of your house and a fire starts because you have faulty wiring, you can make a claim on your homeowners insurance, Moraga says.
Say your Christmas tree gets knocked over and all your decorations are damaged. Does homeowners insurance cover this incident? Yes. But, again, you'd want to be sure the value exceeds your deductible before filing a claim.
Homeowners insurance: Bountiful coverage for bad cooking
Thanksgiving Day is typically a chance to carve out some quality time to eat, drink and be merry with family and friends, but if your feast goes foul, knowing what you're liable for and what your home insurance covers will help.
"All hosts should be aware that if someone drives drunk or becomes sick after consuming food at a holiday party, the host could actually be liable," Robert Rusbuldt, CEO of Independent Insurance Agents & Brokers of America (IIABA), said in a written statement.
For protection, the Insurance Information Institute advises taking common-sense steps such as practicing perfect kitchen hygiene, and the IIABA says you should be aware of your state's "social host liability laws."
On the banquet front, keep in mind that the Centers for Disease Control and Prevention say food-borne illnesses are responsible for about 128,000 hospitalizations and 3,000 deaths each year.
If a guest gets food poisoning, a typical homeowners insurance policy would likely cover the cost for a trip to an emergency room. If medical expenses incurred go beyond that, the guest could sue.
Your homeowners insurance policy will generally protect you up to a minimum of $100,000 in liability coverage if anyone decides to take legal action, says Loretta Worters, III spokeswoman. "If your guest gets sick and sues you for damages, your insurer will pay for your legal expenses for a resulting lawsuit, even if the suit is groundless," she says.
Worters adds that you can buy extra coverage -- most agents suggest looking into carrying at least $300,000 to $500,000 of liability protection, depending on the value of your assets. The III also advises another $1 million in umbrella insurance coverage.
Worters explains that an umbrella policy takes effect when you've reached the limit on the underlying liability coverage in a homeowners, condo, renters or auto policy. "It will also cover you for things such as libel and slander," she says, adding that a $1 million umbrella policy can usually be bought for about $150 to $300 a year.
Beyond home insurance -- practical steps to take
A recent IIABA survey of 760 families found that about 75 percent admit serving food prepared by others, outside their home, during the holidays. Here's the IIABA's safety advice on various potential holiday pitfalls:
Take the turkey's temperature: "Make sure that you check food and don't put anything out that you suspect may be undercooked, spoiled or contaminated," says the IIABA. "Use only reputable food purveyors (caterers, delis, the local pizza joint and family or friends). When in doubt, throw it out." Check the bird's temperature before serving -- it has to be cooked to an internal 165 degrees.
Put a cap on cocktails: If you want a party atmosphere, plan activities that don't center on drinking. Also, provide "safe, filling food" to counteract the alcohol and provide non-alcoholic beverages. Also, know who the designated drivers are before time. Stop serving liquor, wine and beer an hour before the party is expected to end. And cut off any guests who are clearly drunk or getting there.
Party elsewhere: To lower your liability, have the holiday dinner at a restaurant or bar that has a liquor license instead of a home or office. And call a cab for anyone who has had too much. Or get them a hotel room or let them sleep it off at your place.
Know the law -- and your policy: Finally, the IIABA suggests learning just what the "social host liability" statutes are in your state to see exactly what you could be sued for. Reviewing your homeowners policy each year is also a good idea, especially if you've increased the value of your home and assets, according to the IIABA.
A cornucopia of Thanksgiving stats compiled by the CDC:
2.6 billion pounds --The total weight of sweet potatoes — another popular Thanksgiving side dish — grown by major sweet potato producing states in 2012. North Carolina (1.2 billion pounds) produced more sweet potatoes than any other state, followed by California, Mississippi and Louisiana.
768 million pounds -- The forecast for U.S. cranberry production in 2012. Wisconsin was estimated to lead all states in the production of cranberries, with 450 million pounds, followed by Massachusetts (estimated at 210 million).New Jersey, Oregon and Washington were also estimated to have substantial production, ranging from 14 to 54 million pounds.
242 million --The number of turkeys forecasted to be raised in the United States in 2013. That is down 5 percent from the number raised during 2012.
45 million -- The forecast for the number of turkeys Minnesota will raise in 2013. The Gopher State was tops in turkey production, followed by North Carolina (35 million), Arkansas (29 million), Indiana (17 million), Missouri (17 million), and Virginia (16 million).
6,500 -- Number of members of the Wampanoag American Indian tribal grouping, as of 2010, roughly half of whom reside in Massachusetts. The Wampanoag, the American Indians in attendance, played a lead role in this historic encounter, and they had been essential to the survival of the colonists during the newcomers' first year. The Wampanoag are a people with a sophisticated society who have occupied the region for thousands of years. They have their own government, their own religious and philosophical beliefs, their own knowledge system, and their own culture. They are also a people for whom giving thanks was a part of daily life.
98.3 percent -- Percentage of households with a television in 2011. No doubt, many guests either before, after, or perhaps even during the feast will settle in front of their TVs to watch some football.
32 -- Number of counties, places and townships in the United States named Plymouth, as in Plymouth Rock, the landing site of the first Pilgrims. The two counties, both named Plymouth, are in Massachusetts (2012 population of 499,759) and Iowa (24,907 in 2012). Plymouth, Minn., is the most populous place, with 72,928 residents in 2012; Plymouth, Mass., had 57,463 that year.
7 -- Number of places and townships in the United States that are named Cranberry or some spelling variation of the acidic red berry (e.g., Cranbury, N.J.), a popular side dish at Thanksgiving. Cranberry Township (Butler County), Pa., was the most populous of these places in 2012, with 28,832 residents. Cranberry township (Venango County), Pa., was next (6,608).
4 -- Number of places in the United States named after the holiday's traditional main course. Turkey Creek, La., was the most populous in 2012, with 440 residents, followed by Turkey, Texas (415), Turkey, N.C. (295) and Turkey Creek, Ariz. (294). There are also two townships in Pennsylvania with "Turkey" in the name: Upper Turkeyfoot and Lower Turkeyfoot.
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's.
Follow him on Twitter @destoups