As we quickly move into tornado season, the Property Casualty Insurers Association of America (PCI) is encouraging all homeowners, business owners, and renters to review the coverage they carry and get in touch with an agent or their insurance company to discuss any additional coverage they may need.

Tornado season begins in the months of March and April, peaks in the southern plains during May and June, and will take hold of the Midwest and northern plains in June and July. The National Oceanic and Atmospheric Administration’s National Climatic Data Center estimates that over 1,150 tornadoes touched down in 2009. Most were clustered in the Southeast and Midwest, with the largest outbreak occurring on April 10^th, killing two people.

Most losses that occur because of tornadoes, windstorms, hail, and the like are covered by homeowners, renters or commercial policies; tornado losses to your home should be covered under the “windstorm” peril coverage portion of your homeowners policy. Renters insurance would cover possessions lost in severe weather and business owners would have coverage under their commercial policies.

Donald Griffin, vice president personal lines for PCI says, “with wind speeds that can reach nearly 300 MPH, tornadoes can be deadly and cause severe property damage. Because tornadoes can occur rapidly and with little warning, advanced preparation is very important. We encourage consumers to know the warning signals used in their community and be prepared to take cover when alerted. Maintaining an emergency storm kit with a radio, flashlight, batteries and first-aid items is the first step in preparation. Other steps include conducting tornado drills with your family and ensuring that your property is adequately insured.”

So stay alert to warning signs this year during the severe-weather months and be prepared!

This is national Flood Safety Awareness Week, a week during which individuals should be made aware of the dangers of the most deadly type of weather there is – an average of 100 lives are taken annually by floods.

This year, it is important to be sure you are covered with homeowner’s flood insurance if your home is located within a flood zone or an area that is low lying and susceptible to flooding.

According to National Weather Service, flooding is forecast to continue throughout spring in areas of the Midwest. The El Niño influenced winter has also left the South and East portion of the States soggier than usual and more susceptible to flooding.

Currently, more than a third of the U.S. has above average flood risk with the highest threats in Minnesota, Iowa, and the Dakotas. Crests along the Red River Valley may approach the record-setting levels of last year.

Imminent Midwest flooding is evidenced by a snowpack containing in excess of 10 inches of liquid water in some areas. Cold temperatures limited the melting of snow and its runoff until early March. In addition, the Midwest experienced four times above average December precipitation, ground frozen as much as three feet below the surface, and above normal stream flows.

Jane Lubchenco, Ph.D., under secretary of commerce for oceans and atmosphere and NOAA administrator says, “As the spring thaw melts the snowpack, saturated and frozen ground in the Midwest will exacerbate the flooding of the flat terrain and feed rising rivers and streams. We will continue to refine forecasts to account for additional precipitation and rising temperatures, which affect the rate and severity of flooding.”

The Climate Prediction Center of the National Oceanic and Atmospheric Administration (NOAA) is predicting wetter-than-average conditions in the Southeastern coastal regions; warmer-than-average temperatures throughout the western third of the U.S. including Alaska; and below-average temperatures in the extreme north-central and south-central portions of the nation.

The sun may finally be coming up on the mortgage insurance horizon after a long, dark night during which mortgage insurance all but evaporated for coverage of loans above 80% loan to value (LTV).

In an effort to escape continuing problems by hurtling down the slippery slope of the housing market, mortgage insurers actually further crippled an already limping market by eliminating coverage for the majority of loans – not just non-conventional (otherwise known as sub-prime), but for borrowers who had strong credit and solid employment histories wanting to make less than a 20% down payment as well.

These same mortgage insurers have now begun loosening their tight restrictions on at least some of their loan programs, an indication that things may be taking a turn for the better in the relatively near future.  An example – loans up to 97% flex in stable markets granted to borrowers with a 700+ credit score.

Let’s take a look at why this will be good for the housing market as well as our economy. Let’s say a home seller transferring to another area has sold his or her home, but with a large loss of equity; perhaps this person even had to take money from savings to pay the difference between the existing mortgage and the money that was paid for the home when it was sold. This would, quite obviously, leave this individual – who is stable and credit worthy – unable to pay a 20% down payment on a new home.

Buyers who have had long-standing good credit and may have assets they do not want to remove from higher yielding investments are perfect candidates for higher LTV loans despite what still may be considered an uncertain market.

Despite the fact that we are likely facing yet another round of foreclosures and defaults because of resetting rates on conventional mortgages, insurers are feeling a sense of certainty that we have – or are about to – hit rock bottom. There’s nowhere to go from here but up!

Insurance for "Boomerangers"

Like so many things, individuals’ insurance needs have changed in the face of the current down-turned economy. Young adults and new college graduates have so few options, with such a limited number of job opportunities, that many are finding themselves back at home with Mom and Dad, perhaps believing that despite not having a job, they need to find their own health insurance. These unfortunate young people – termed “Boomerangers” by the industry – have been one of the sources of some insurance consequences.

Jane L. Cline, National Association of Insurance Commissioners President (NAIC) and West Virginia Insurance Commissioner says, “In this economic environment, many young adults and their parents are finding themselves in a position they never expected. A grown child moving back home can create insurance implications that must be considered carefully and understood to ensure everyone stays protected.”

If you find yourself in this circumstance, the NAIC recommends the following:

Review health, auto, and homeowners’ insurance coverage for both children and parents, making sure it adequately reflects your current living situation. You will likely save money by combining existing policies and even ridding yourself of unnecessary ones. Just be sure that the policy you do carry is of a broad enough scope to cover all family members now living together.

Discuss your situation with your agent to determine the right amount of coverage for you and your family. Because of the economic difficulties we currently face, many states are allowing adult children through their late 20s, who don’t have employer-sponsored health insurance, to be insured on their parents’ policies. Contact your state insurance department to learn how your state’s laws affect your and your children’s coverage.

If they don’t qualify to be on a parent’s policy, other options for coverage include:

• Alumni Associations – this may need to take place within a certain length of time after graduation, so check with your or your child’s school for details.
• State Insurance Pools – many states have pools for those who are unable to get private insurance coverage; check with your state insurance department for details.
• Industry Associations – professional groups and associations will often offer members with access to preferred rates; request more information through associations that exist for your industry.

The full story can be found on NAIC’s website, http://www.naic.org, under Headlines – News & Alerts.

Although the point of paying expensive insurance premiums every month is obviously to keep ourselves protected should we fall ill or become injured, insurance companies, unfortunately will likely try to find an excuse not to pay a claim if and when you do need to make one. If your insurance company tries to wriggle its way out of paying your claim, they are engaging in what is known as “insurance bad faith.”

Insurance bad faith, according to a legal term that “describes a tort claim that an insured person may have against an insurance company for its bad acts” is the attempt to skirt the duty they have to pay a claim, implied by the fact that they accepted an individual’s premium in return for coverage. This duty is often referred to as the “implied covenant of good faith and fair dealing” which automatically exists by operation of law in every insurance contract. If an insurance company breaks this duty, it can be sued on a tort claim in addition to a standard breach of contract claim. The insurance company may then be liable for paying damages above and beyond the value of the policy because of bad faith.

Almost every type of insurance carrier has a legal duty to honor their agreements to pay policyholder claims. Types of insurance companies that are sued in bad faith often include: Health, Auto, Life, and Long-term disability.

To protect yourself from going through the ordeal of having to sue an insurance company in order for them to pay your claim, you should always check with the National Association of Insurance Commissioners (NAIC) to make sure the company with whom you’re insured is in good standing, both financially and legally.

Knowledge is Power When It Comes to Buying Insurance

When you’re shopping for insurance, it’s important to know as much as possible in order to compare quotes and find the best insurance for the best price based on your specific needs. The National Association of Insurance Commissioners (NAIC) commissioned a survey to find out the extent of Americans’ knowledge on the subject; their findings were not terribly impressive. The average score on the “insurance IQ” quiz, a 10-question portion of the survey, was a mere four. The low scores are in great contrast to the fact that only 15 percent of those taking the survey felt insecure with matters of insurance, while 60 percent had reported feeling “very confident” in their decision-making abilities.

Here is an example of the questions on the NAIC Insurance IQ quiz portion of the survey:

1. Does auto insurance automatically cover a rental car? (no)
2. Can you own a house without homeowners insurance? (yes)
3. In general, how much life insurance is recommended in relation to your annual salary? (5 – 7 times your annual salary)

The majority of American adults could not answer these questions correctly; if you knew the answers, you are among the few who did!

To take the entire quiz, go to: http://www.insureuonline.org/iiQ_final.htm

The NAIC survey revealed that only 62 percent of Americans knew that accident history, vehicle safety features, and geography are key factors in determining the cost of auto insurance. A mere 19 percent knew that the requirement for private mortgage insurance is based on the size of the down payment and the lender. Just under 40 percent of those taking the survey had any idea of how much life insurance to carry based on a yearly income multiplier. And fewer than 50 percent knew that when choosing COBRA health insurance after losing a job they must cover the entire cost of coverage.

You really MUST educate yourself about whatever type of insurance you plan to purchase so you can utilize the knowledge to compare quotes from various providers. Before signing a policy, you should confirm that the provider or agent is licensed with your state insurance department. Once you’ve decided on which insurance is best for you, be sure to review the policy regularly so you know how well you’re covered should you need to make a claim.

Protect Your Home with Earthquake Insurance

If you are shopping for or updating your homeowners insurance, you need to be aware that, while standard policies will cover natural disasters such as fire, hail, and lightning in addition to burglary and theft, most companies require the purchase of a separate policy to cover any damage your home may sustain in an earthquake.

The necessity of earthquake insurance

It is estimated that nearly ninety percent of Americans live in an area that is susceptible to seismic activity. Because predicting the likelihood and magnitude of earthquakes is difficult to predict, purchasing this additional insurance is a gamble.

Earthquakes, of course, are more common in certain regions of the U.S. As a homeowner, it is your right to receive information regarding the seismic activity in the area in which your home is located. Home loan lenders may require those who reside in high-risk areas to purchase an earthquake insurance policy, while individuals who live in lower-risk areas will need to weigh the costs and conditions of a policy against the benefits of having one.

An earthquake insurance policy

Usually, an earthquake insurance policy will carry a high, 10 to 15 percent deductible, which means if your home is worth (and covered for) say $150,000, your deductible will be a minimum of $15,000.

In addition, a standard policy will only cover damages to your primary structure. Additional structures – pools, gazebos, sheds, detached garages – will not be covered if they would also sustain damages during an earthquake.

Options

You may find insurance companies that will provide other extended options for earthquake insurance coverage, so it’s important to be aware of what these might be and the cost involved for each. Compare companies and policies to be sure you find the coverage that will best suit your needs.

Protect Your Home with Flood Insurance

If you have homeowners insurance, your coverage likely provides provisions for certain types of water damage; flood damage, however, is not covered. Flood insurance coverage must be purchased with a separate policy.

Definition of Water Damage:

Water damage is damage that occurs prior to water touching the ground, for example:

• Broken pipes
• Breaking or damaging of windows by natural causes such as ice, hail, or rain
• Roof leaks that cause pooling water in your home when it rains heavily

Definition of Flood Damage:

Flood damage is damage that is caused to your home after water touches the ground, for example:

• River overflow
• Erosion or mudslides that have been caused by heavy rain or flooding
• Water that enters your home because rain has fallen too quickly to be absorbed into the soil

Special Flood Hazard Areas and Mapping:

Congress created the National Flood Insurance Program (NFIP) in 1968 in order to remove some of the financial burden sustained by areas that have experienced flood-related disasters. It also oversees and maps the areas that are prone or susceptible to floods. If an area is at a high enough risk (called Special Flood Hazard Areas), individuals will be required by law to purchase flood insurance.

Policies:

Flood insurance policies will insure up to $250,000 for a single residence; you can, however, purchase additional coverage to help with the replacing of your home’s contents should you sustain damage from a flood. Insured items will vary from policy to policy, so be sure to be as specific as possible when discussing flood insurance with your agent.

Choose Your Homeowners Insurance Coverage Wisely

If you are a homeowner, it is likely that your single largest investment is your home. Protecting it from theft or disaster with insurance is crucial and should be one of your highest priorities. Purchasing homeowners insurance will give you the peace of mind that comes from knowing you are prepared should an unexpected situation occur.

Basic Homeowners Insurance

Most mortgage companies require individuals who purchase a home to carry a basic homeowners insurance policy. This insurance will protect your from any damage to your home that could affect its value. This basic policy will also typically provide you with personal liability and theft coverage.

Comprehensive Homeowners Insurance

A comprehensive policy will additionally cover your home should it sustain damage from fire or water as well as loss of personal possessions, vandalism, and loss of use of your home (assisting you to pay for another place to live while your home is repaired, if necessary). You should be aware that water damage does not include damage from flooding. Federal Flood Insurance handles flood damage and must be bought separately.

Comprehensive also is likely to include a clause that will guarantee covering the cost of rebuilding your home.

Homeowners insurance Quotes

A good way to calculate an appropriate dollar amount for homeowners insurance is to multiply the square footage of the home by the current square footage cost of homes in your area. You can access this information through local real estate agents, building associations, or insurance agencies.

When you request a quote for homeowners insurance, be sure to include any additional information such as other structures (i.e. detached garages, sheds, barns, etc.), special features, and custom built or upgraded portions of the home.

Choose Your Insurance Provider Wisely

When you purchase insurance, whether it be auto, health, home, renters or life, choosing the right provider should be a major part of your decision-making process. You should remember that cost alone should not be the only deciding factor of who to buy your insurance from. Whichever provider you decide upon, your agent should help you get the best possible coverage at the best price.

First, your insurance provider should be licensed to sell insurance in your state; check with your state’s insurance department to verify they are. Do NOT purchase insurance from a provider that is not licensed with your state! The department should also be able to provide you with provider recommendations; they keep files on providers that have complaints as well as those who come highly recommended. Be sure to check into any complaints against a provider you are considering to find out why customers had issues with them. You should also utilize friends, associates, and family for recommendations as well.

Second, look beyond the lowest price when you choose your provider; take their experience into account when you are evaluating companies to make your decision. An insurance agent is paid the same commission regardless of their level of experience. A more experienced provider is likely going to be able to help you maximize your coverage while saving you as much money as possible.

Third, the provider you choose should regularly review your policy; this is a service you should expect. Ask any of the providers you are thinking of utilizing how often they will look over your policy. Consistent reviews will ensure your policy is not outdated and that you have the coverage you need and want.

Finally, you should look for an insurance provider who will fight for you to resolve any claims you may need to make on your insurance. Be sure they will support you if you are involved in an accident, disaster, or catastrophe.

The closer you look into a provider’s reputation, the better off you’ll be; remember, it’ll likely save you money in the long run if you choose the best one!