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Showing posts with label homeowners. Show all posts
Showing posts with label homeowners. Show all posts
Tuesday, January 15, 2008
Wednesday, January 9, 2008
R.I. firm offers policies on Cape, coastal areas
By Kimberly Blanton
Globe Staff / January 9, 2008
Globe Staff / January 9, 2008
Click here to read about the Narragansett Bay Insurance Company - an option for homeowners who live in coastal areas.
To obtain a quote from Narragansett Bay Insurance Company, contact The Howes Insurance Agency.
Friday, January 4, 2008
By JACK SHEA, Vineyard Gazette
New home construction costs on the Island could increase more than 10 per cent as a result of new state building codes requiring one and two-story buildings to withstand winds of 110 miles per hour beginning Jan. 1.
For some prospective home owners and builders, the changes have already blown away their plans.
Tisbury building inspector Kenneth Barwick said he already has heard from home builders on a budget.
“People have called me to say they cannot afford to go forward,” Mr. Barwick said. “The new rules will significantly accelerate the cost of construction, materials and professional services. The days of pulling the three-bedroom Cape plan out of the closet are over, unfortunately.”
The new building code rules were issued, with last-minute amendments last week, by the state board of building regulations and standards.
The new seventh edition of the state building codes increased structural wind resistance requirements from 90 to 110 mph. The code also created a wind-debris zone one mile inland from mean tide in which houses must be able to handle winds of 110 mph. The new zone could affect the location of new houses relative to the prevailing wind direction and requires more stringent construction methods than houses constructed more than one mile inland.
The new code, four years in the adopting, also increases the requirements for fastening or “tie down” of foundations, walls and roofs as a single unit to reduce wind shear or vertical lift in houses under heavy winds.
Edgartown building inspector Leonard Jason Jr. also noted changes in plumbing and electrical safety wiring and outlets that he said will add some cost to construction.
He said the state also intends to institute new licensing in July for shingling, siding, window installers, roofing and demolition work. A grandfather clause is likely to be included in the license changes, as Mr. Jason reads the prospective license procedures.
Island building inspectors processed a flurry of building permit applications before the end of the year under the sixth edition of the codes and before the new regulations took effect. Harried building inspectors in Edgartown and West Tisbury in particular processed several dozen applications by builders in the final two weeks of 2007 who were seeking to be regulated under the sixth edition building rules.
To complicate matters, the final codes were e-mailed by the state to building inspectors just before they were to take effect.
A principal cost increase for homeowners and builders will come through the cost of windows, which must now be laminated, similar to the glass used in skylights. In some cases, that could double window costs.
Windows typically account for 10 to 18 per cent of construction costs, according to an informal survey of Island builders this week.
Connie O’Doherty, owner of Butterwood Properties Inc., a high-end Edgartown contractor, reported quotes given him for a mid-range standard window would double the cost. Mr. O’Doherty noted, as did several building inspectors, that the changes in window requirements have window makers scrambling to retool in order to meet the new codes.
Despite state extension of the new code deadline from last April 1to Jan. 1, the state did not complete the code until literally at year-end. “The guys the state usually send to educate us are good. I get the feeling they are embarrassed,” Mr. Jason said.
Indeed, additions, amendments and clarifications, many by e-mail, have been trickling across building inspector desks over the past week, frustrating their efforts to answer queries clearly.
For the past week, more detail in the code has become clear as inspectors dealt with analyzing new regulations while processing permits under the old regulations. The complete building code is about 1,600 pages.
West Tisbury building inspector Ernest P. Mendenhall surmised early last week that the code will likely require more services from engineers and architects and more inspection.
“Under these regulations I’ll be at building sites at least once or twice more because of increased regulations with regard to fastening components,” he said.
Mr. Jason and Mr. Barwick concurred. Mr. Barwick noted that newer regulations for small variances in cantilevering, for example, will require an engineer’s stamp, representing a new cost for home builders.
“The code is going to require more engineering and architects, depending on the size of the house,” he said. “Simple repairs and additions will cost more.”
New home construction costs on the Island could increase more than 10 per cent as a result of new state building codes requiring one and two-story buildings to withstand winds of 110 miles per hour beginning Jan. 1.
For some prospective home owners and builders, the changes have already blown away their plans.
Tisbury building inspector Kenneth Barwick said he already has heard from home builders on a budget.
“People have called me to say they cannot afford to go forward,” Mr. Barwick said. “The new rules will significantly accelerate the cost of construction, materials and professional services. The days of pulling the three-bedroom Cape plan out of the closet are over, unfortunately.”
The new building code rules were issued, with last-minute amendments last week, by the state board of building regulations and standards.
The new seventh edition of the state building codes increased structural wind resistance requirements from 90 to 110 mph. The code also created a wind-debris zone one mile inland from mean tide in which houses must be able to handle winds of 110 mph. The new zone could affect the location of new houses relative to the prevailing wind direction and requires more stringent construction methods than houses constructed more than one mile inland.
The new code, four years in the adopting, also increases the requirements for fastening or “tie down” of foundations, walls and roofs as a single unit to reduce wind shear or vertical lift in houses under heavy winds.
Edgartown building inspector Leonard Jason Jr. also noted changes in plumbing and electrical safety wiring and outlets that he said will add some cost to construction.
He said the state also intends to institute new licensing in July for shingling, siding, window installers, roofing and demolition work. A grandfather clause is likely to be included in the license changes, as Mr. Jason reads the prospective license procedures.
Island building inspectors processed a flurry of building permit applications before the end of the year under the sixth edition of the codes and before the new regulations took effect. Harried building inspectors in Edgartown and West Tisbury in particular processed several dozen applications by builders in the final two weeks of 2007 who were seeking to be regulated under the sixth edition building rules.
To complicate matters, the final codes were e-mailed by the state to building inspectors just before they were to take effect.
A principal cost increase for homeowners and builders will come through the cost of windows, which must now be laminated, similar to the glass used in skylights. In some cases, that could double window costs.
Windows typically account for 10 to 18 per cent of construction costs, according to an informal survey of Island builders this week.
Connie O’Doherty, owner of Butterwood Properties Inc., a high-end Edgartown contractor, reported quotes given him for a mid-range standard window would double the cost. Mr. O’Doherty noted, as did several building inspectors, that the changes in window requirements have window makers scrambling to retool in order to meet the new codes.
Despite state extension of the new code deadline from last April 1to Jan. 1, the state did not complete the code until literally at year-end. “The guys the state usually send to educate us are good. I get the feeling they are embarrassed,” Mr. Jason said.
Indeed, additions, amendments and clarifications, many by e-mail, have been trickling across building inspector desks over the past week, frustrating their efforts to answer queries clearly.
For the past week, more detail in the code has become clear as inspectors dealt with analyzing new regulations while processing permits under the old regulations. The complete building code is about 1,600 pages.
West Tisbury building inspector Ernest P. Mendenhall surmised early last week that the code will likely require more services from engineers and architects and more inspection.
“Under these regulations I’ll be at building sites at least once or twice more because of increased regulations with regard to fastening components,” he said.
Mr. Jason and Mr. Barwick concurred. Mr. Barwick noted that newer regulations for small variances in cantilevering, for example, will require an engineer’s stamp, representing a new cost for home builders.
“The code is going to require more engineering and architects, depending on the size of the house,” he said. “Simple repairs and additions will cost more.”
Saturday, December 29, 2007
Space Heater Safety
2 children killed in Dorchester fireMidnight blaze hits triple-decker
Reported by The Boston Globe
Click here for information from the U.S. Consumer Product Safety Commission about space heater safety.
Friday, December 28, 2007
Mass. Fines Safety Insurance over Home Policy Non-renewals
Courtesy of Insurance Journal
Massachusetts Attorney General Martha Coakley's office reports it reached an agreement with Boston-based Safety Insurance Co. over allegations that the company violated the Massachusetts Consumer Protection Law by cancelling or non-renewing 31 consumer home insurance policies for insufficient reasons.
Safety has agreed to pay $41,000 to the Attorney General's Local Consumer Aid Fund and change its practices, according to the terms of a consent judgment filed in Suffolk Superior Court.
The judgment still requires approval by the Court before it becomes effective.
"Consumers are entitled under the law to a clear explanation if their homeowner's insurance policy is going to be cancelled or non-renewed," said Attorney General Coakley. "Today's settlement represents another step toward ensuring that Massachusetts consumers are treated appropriately under the law by their insurance companies."
According to the complaint, Safety allegedly failed, in some instances, to provide specific reasons for the cancellation or non-renewal of insurance policies. In notices sent to homeowners, Safety offered vague reasons such as "underwriting guidelines" for its decisions. Under the terms of the settlement, Safety is required to send notices containing specific reasons for their cancellation and non-renewal decisions to consumers.
Massachusetts Attorney General Martha Coakley's office reports it reached an agreement with Boston-based Safety Insurance Co. over allegations that the company violated the Massachusetts Consumer Protection Law by cancelling or non-renewing 31 consumer home insurance policies for insufficient reasons.
Safety has agreed to pay $41,000 to the Attorney General's Local Consumer Aid Fund and change its practices, according to the terms of a consent judgment filed in Suffolk Superior Court.
The judgment still requires approval by the Court before it becomes effective.
"Consumers are entitled under the law to a clear explanation if their homeowner's insurance policy is going to be cancelled or non-renewed," said Attorney General Coakley. "Today's settlement represents another step toward ensuring that Massachusetts consumers are treated appropriately under the law by their insurance companies."
According to the complaint, Safety allegedly failed, in some instances, to provide specific reasons for the cancellation or non-renewal of insurance policies. In notices sent to homeowners, Safety offered vague reasons such as "underwriting guidelines" for its decisions. Under the terms of the settlement, Safety is required to send notices containing specific reasons for their cancellation and non-renewal decisions to consumers.
Wednesday, December 19, 2007
Protect Your Home Against Damage from Freezing Weather
As if slippery sidewalks and snow-covered cars aren’t bad enough during the winter, you face another potential headache: ruined carpets and water damage to your ceilings and walls from leaks caused by ice dams or bursting pipes. You can avoid the resulting aggravation and expense by taking several basic steps right now to prevent this kind of damage.
First Things First
If you're handy with a hammer and screwdriver, you can do much of the work yourself. Work involving your home's structure may require a building contractor, however, or even a registered design professional such as an architect or engineer.
Before making any structural changes to your home, check with your local building officials to be sure what you're doing complies with local building codes.
Ice Dams
An ice dam is an accumulation of ice at the lower edge of a sloped roof, usually at the gutter. When interior heat melts the snow on the roof, the water will run down and refreeze at the roof's edge, where temperatures are much cooler. Eventually, the ice builds up and blocks water from draining off of the roof. This, in turn, forces the water under the roof covering and into your attic or down the inside walls of your house. Once an ice dam forms, the potential damage can be serious. Take these steps now to avoid trouble later:
Unfortunately, ice dams may be unavoidable if your home has recessed lighting near the roof. Heat generated from these lights melts snow, which then contributes to ice dam buildup. The only sure way to avoid this problem is to eliminate recessed light fixtures near the roof.
Freezing Pipes
Frozen water in pipes can cause water pressure buildup between the ice blockage and the closed faucet at the end of a pipe, which leads to pipes bursting at their weakest point. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to freezing in extremely cold weather, where holes in your house’s outside wall for television, cable or telephone lines allow cold air to reach them.To keep water in pipes from freezing, take the following steps:
First Things First
If you're handy with a hammer and screwdriver, you can do much of the work yourself. Work involving your home's structure may require a building contractor, however, or even a registered design professional such as an architect or engineer.
Before making any structural changes to your home, check with your local building officials to be sure what you're doing complies with local building codes.
Ice Dams
An ice dam is an accumulation of ice at the lower edge of a sloped roof, usually at the gutter. When interior heat melts the snow on the roof, the water will run down and refreeze at the roof's edge, where temperatures are much cooler. Eventually, the ice builds up and blocks water from draining off of the roof. This, in turn, forces the water under the roof covering and into your attic or down the inside walls of your house. Once an ice dam forms, the potential damage can be serious. Take these steps now to avoid trouble later:
- Keep the attic well ventilated. The colder the attic, the less melting and refreezing on the roof.
- Keep the attic floor well insulated to minimize the amount of heat rising through the attic from within the house.
Unfortunately, ice dams may be unavoidable if your home has recessed lighting near the roof. Heat generated from these lights melts snow, which then contributes to ice dam buildup. The only sure way to avoid this problem is to eliminate recessed light fixtures near the roof.
Freezing Pipes
Frozen water in pipes can cause water pressure buildup between the ice blockage and the closed faucet at the end of a pipe, which leads to pipes bursting at their weakest point. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to freezing in extremely cold weather, where holes in your house’s outside wall for television, cable or telephone lines allow cold air to reach them.To keep water in pipes from freezing, take the following steps:
- Fit exposed pipes with insulation sleeves or wrapping to slow the heat transfer. The more insulation the better.
- Seal cracks and holes in outside walls and foundations near water pipes with caulking.
Keep cabinet doors open during cold spells to allow warm air to circulate around pipes (particularly in the kitchen and bathroom). - Keep a slow trickle of water flowing through faucets connected to pipes that run through an unheated or unprotected space. Or drain the water system, especially if your house will be unattended during cold periods.
For more information about protecting your home from damage in freezing weather, check these other publications from the Institute for Business & Home Safety: "Natural hazard mitigation insights: Ice Dams" and "Natural hazard mitigation insights: Freezing and Bursting Pipes."
Review your homeowners insurance policy periodically with your insurance agent or company representative to make sure you have sufficient coverage to protect the investment you’ve made in your home. Report any property damage to your insurance agent or company representative immediately and make temporary repairs to prevent further damage.
For information about filing an insurance claim after an ice dam or bursting pipes have caused damage to your home, contact your insurance agent or insurance company.
Insurance Information Institute 110 William StreetNew York, NY 20038
Thursday, December 6, 2007
Commission report offers solutions to home insurance dilemma, pleasing few
By Steve Myrick, The Martha Vineyard Times - December 6, 2007
When the remnants of Hurricane Noel blew over Martha's Vineyard last month with wind gusts topping 70 miles per hour, Wesley Brown was one of many local homeowners who's property was damaged by the lashing winds. A heavy old tree came crashing down, clipping a rain gutter and taking out a porch post.
In all the years he has insured his Oak Bluffs home, Mr. Brown doesn't remember filing a property claim, and he won't be filing a claim for this damage, either.
Like many Island property owners, his insurance premiums have skyrocketed in recent years. When his insurance company stopped writing policies of any kind on the Vineyard, his only viable option was the FAIR (Fair Access to Insurance Requirements) Plan, a state organized agency considered the insurer of last resort.
The FAIR Plan recently raised its estimate of his home's value, which nudged him into a category of insurance requiring a five percent deductible for wind damage. For Mr. Brown, that means he has to pay the first $33,000 of damage. The harm to his porch didn't merit even a moment's consideration.
"I don't know who came up with the name FAIR Plan, but it's anything but fair," said Mr. Brown. "It's really put a lot of people in a terrible bind."
The matter of $33,000 deductibles was one of many issues addressed in a report issued last Friday by the Special Commission on Insurance, appointed to recommend solutions to the perfect storm of complex, sometimes arcane market conditions that have caused significant premium pain for many Vineyard homeowners. (The report is available here.)
Of the 18-page report, eight pages are dissenting opinions signed by eight of the 16 commissioners, indicating the level of disagreement among the legislators, industry representatives, and public advocates appointed to the panel. Among those signing on to a strongly worded dissent are state representative Eric Turkington and senator Robert O'Leary, who represent Martha's Vineyard residents at the statehouse. The lawmakers did not disagree with the reports recommendations, but they feel it does not go nearly far enough.
"It is imperative," wrote the dissenters, " that we take immediate steps to protect consumers beyond those endorsed by the majority of the Commission.
"There is nothing in the report that will change the cost of protecting Island property. The state legislature and the governor will have to agree on new legislation before any of the report's recommendations make it to the bottom line of anyone's insurance bill.
Catastrophic changes
Among the most significant reforms recommended is creation of a state-run catastrophic event fund. Such a fund would build up a reserve of money that would mitigate insurance company losses should a catastrophe like a strong hurricane, a powerful earthquake, or even a calamitous act of terrorism strike Massachusetts. Insurance industry representatives on the commission argue that these catastrophes are more likely now than in the past. Many insurance companies purchase re-insurance, a kind of insurance for the insurers, to protect themselves in the event that many of their customers experience large losses at the same time. All agree the cost of re-insurance has soared, following large losses experienced after several destructive hurricanes in Florida, and after the September 11 attack on the World Trade Center in New York City.
If a catastrophic event fund reduces the risk for insurance companies, the commission majority reasons that many insurers who left the market would come back, introducing more competition and reducing the cost of premiums.
"I think that's a good step," said Ken Ward, vice-president of Martha's Vineyard Insurance. "If you could write a homeowners policy without wind, you could write it for significantly less. If you take that away, the Cape and Islands is a very safe and profitable place for companies to write insurance."
Mr. Brown says such a fund makes sense from his point of view as a consumer. "That sounds like a good idea," he said. "That would take some of the burden off the insurance companies so they can make their rates a little better. They ought to make all the insurance companies that do business in Massachusetts take a fair share of high risk insurance."
A conspicuous omission from the report, however, is any recommendation about how a catastrophe risk pool should be funded. Sen. O'Leary has filed a bill to create a catastrophic event fund that would be funded jointly by state taxpayers and insurance companies. The goal is to establish a $6 billion reserve, the estimated cost of recovery for a rare but very powerful hurricane.
Models for mayhem
Another recommendation of the special commission is appointment of an independent body to study the accuracy and reliability of the scientific models insurance companies use to predict the risk of catastrophic losses. Currently, those formulas are trade secrets, guarded zealously by the companies that create the models and sell their proprietary expertise to insurers.
The complex equations take into account weather patterns, building codes, property values, and a host of other factors. The changing climate and the rising value of coastal properties mean the models calculated dramatically higher risk in recent years, which has resulted in dramatically higher premiums for consumers.
During the commission hearings, consumers criticized this secretive process of predicting risk, and called for more transparency. While recommending an independent study of the models, the report leaves conspicuously absent any suggestion of how the models should be reviewed, who should do it, or what should happen if a review panel finds the models inaccurate.
Dissent divided
Minority factions of the commission issued two separate dissenting reports.
A report issued by three commission members representing the insurance industry strongly opposes the catastrophic event fund. They contend that such a fund would have unintended consequences, including an increase in insurance costs to all consumers, and the possibility of insurance insolvencies. The dissenters also dispute majority's contention that a catastrophic event fund would reduce the risk to insurers, drawing them back into the Massachusetts marketplace. They say it's more likely that more companies will leave, creating an even more dysfunctional market.
"We do not believe that a catastrophe fund will lower premiums for coastal homeowners," wrote the dissenters. "Premiums have not gone down in Florida, the only state with such a fund, and we see no reason that Massachusetts will be any different. It would be unfair to give people false hope that their premiums will go down."
A minority of five commissioners, including Rep. Turkington and Sen. O'Leary, issued a separate dissent. While supporting a catastrophe fund and many other recommendations, the dissenters charge the commission's proposals don't go nearly far enough to help consumers on the Cape and Islands. They contend that the two risk-forecasting models adopted by the FAIR Plan vary widely in their predictions, and that the models have not been calibrated to reflect historic conditions in Massachusetts.
The group advocates a new hurricane risk model, created and maintained with state funds, with all formulas open to public scrutiny.
"The FAIR Plan must not be allowed to use a model in support of its rate filing unless that model's underlying data, formulas, and calculations are fully disclosed," says the dissenting report.
Middle Ground
While the report offers long-term solutions to the property insurance dilemma, many Island homeowners are faced with a more immediate concern.
On December 15, the FAIR Plan deductible for wind and hail damage, already increased for many, will be increased for all Island homeowners. The deductible will rise from two to five percent of the home's value.
The median price of a home sold on the Vineyard last year was $695,000. Using that figure as an example, the FAIR Plan will only cover damage in excess of $34,750, the five percent deductible.
Also pending is a FAIR Plan request for a 25-percent increase in premiums, in addition to the 25-percent increase approved and implemented last year. The state attorney general is challenging last year's increase before the state's highest court, requesting instead, a 29-percent decrease in premiums.
The insurance commissioner is expected to rule on this year's request for a rate increase early in 2008.
"The commission, they study things, but there's not a lot in here that triggers a reduction to the premium, or the added risk that the citizens are asked to take on," said Paula Aschettino, a Cape Cod-based grass-roots organizer who testified before the insurance commission. "We cannot stop, and won't stop, to look for the proper way to make our rates reasonable. At the moment they are unreasonable and excessive."
"Is there an answer? Yeah, of course," said Mr. Ward. "The answer is probably some place in the middle, which isn't really going to satisfy the folks that feel they're paying too much, and it isn't going to satisfy the insurance people."
When the remnants of Hurricane Noel blew over Martha's Vineyard last month with wind gusts topping 70 miles per hour, Wesley Brown was one of many local homeowners who's property was damaged by the lashing winds. A heavy old tree came crashing down, clipping a rain gutter and taking out a porch post.
In all the years he has insured his Oak Bluffs home, Mr. Brown doesn't remember filing a property claim, and he won't be filing a claim for this damage, either.
Like many Island property owners, his insurance premiums have skyrocketed in recent years. When his insurance company stopped writing policies of any kind on the Vineyard, his only viable option was the FAIR (Fair Access to Insurance Requirements) Plan, a state organized agency considered the insurer of last resort.
The FAIR Plan recently raised its estimate of his home's value, which nudged him into a category of insurance requiring a five percent deductible for wind damage. For Mr. Brown, that means he has to pay the first $33,000 of damage. The harm to his porch didn't merit even a moment's consideration.
"I don't know who came up with the name FAIR Plan, but it's anything but fair," said Mr. Brown. "It's really put a lot of people in a terrible bind."
The matter of $33,000 deductibles was one of many issues addressed in a report issued last Friday by the Special Commission on Insurance, appointed to recommend solutions to the perfect storm of complex, sometimes arcane market conditions that have caused significant premium pain for many Vineyard homeowners. (The report is available here.)
Of the 18-page report, eight pages are dissenting opinions signed by eight of the 16 commissioners, indicating the level of disagreement among the legislators, industry representatives, and public advocates appointed to the panel. Among those signing on to a strongly worded dissent are state representative Eric Turkington and senator Robert O'Leary, who represent Martha's Vineyard residents at the statehouse. The lawmakers did not disagree with the reports recommendations, but they feel it does not go nearly far enough.
"It is imperative," wrote the dissenters, " that we take immediate steps to protect consumers beyond those endorsed by the majority of the Commission.
"There is nothing in the report that will change the cost of protecting Island property. The state legislature and the governor will have to agree on new legislation before any of the report's recommendations make it to the bottom line of anyone's insurance bill.
Catastrophic changes
Among the most significant reforms recommended is creation of a state-run catastrophic event fund. Such a fund would build up a reserve of money that would mitigate insurance company losses should a catastrophe like a strong hurricane, a powerful earthquake, or even a calamitous act of terrorism strike Massachusetts. Insurance industry representatives on the commission argue that these catastrophes are more likely now than in the past. Many insurance companies purchase re-insurance, a kind of insurance for the insurers, to protect themselves in the event that many of their customers experience large losses at the same time. All agree the cost of re-insurance has soared, following large losses experienced after several destructive hurricanes in Florida, and after the September 11 attack on the World Trade Center in New York City.
If a catastrophic event fund reduces the risk for insurance companies, the commission majority reasons that many insurers who left the market would come back, introducing more competition and reducing the cost of premiums.
"I think that's a good step," said Ken Ward, vice-president of Martha's Vineyard Insurance. "If you could write a homeowners policy without wind, you could write it for significantly less. If you take that away, the Cape and Islands is a very safe and profitable place for companies to write insurance."
Mr. Brown says such a fund makes sense from his point of view as a consumer. "That sounds like a good idea," he said. "That would take some of the burden off the insurance companies so they can make their rates a little better. They ought to make all the insurance companies that do business in Massachusetts take a fair share of high risk insurance."
A conspicuous omission from the report, however, is any recommendation about how a catastrophe risk pool should be funded. Sen. O'Leary has filed a bill to create a catastrophic event fund that would be funded jointly by state taxpayers and insurance companies. The goal is to establish a $6 billion reserve, the estimated cost of recovery for a rare but very powerful hurricane.
Models for mayhem
Another recommendation of the special commission is appointment of an independent body to study the accuracy and reliability of the scientific models insurance companies use to predict the risk of catastrophic losses. Currently, those formulas are trade secrets, guarded zealously by the companies that create the models and sell their proprietary expertise to insurers.
The complex equations take into account weather patterns, building codes, property values, and a host of other factors. The changing climate and the rising value of coastal properties mean the models calculated dramatically higher risk in recent years, which has resulted in dramatically higher premiums for consumers.
During the commission hearings, consumers criticized this secretive process of predicting risk, and called for more transparency. While recommending an independent study of the models, the report leaves conspicuously absent any suggestion of how the models should be reviewed, who should do it, or what should happen if a review panel finds the models inaccurate.
Dissent divided
Minority factions of the commission issued two separate dissenting reports.
A report issued by three commission members representing the insurance industry strongly opposes the catastrophic event fund. They contend that such a fund would have unintended consequences, including an increase in insurance costs to all consumers, and the possibility of insurance insolvencies. The dissenters also dispute majority's contention that a catastrophic event fund would reduce the risk to insurers, drawing them back into the Massachusetts marketplace. They say it's more likely that more companies will leave, creating an even more dysfunctional market.
"We do not believe that a catastrophe fund will lower premiums for coastal homeowners," wrote the dissenters. "Premiums have not gone down in Florida, the only state with such a fund, and we see no reason that Massachusetts will be any different. It would be unfair to give people false hope that their premiums will go down."
A minority of five commissioners, including Rep. Turkington and Sen. O'Leary, issued a separate dissent. While supporting a catastrophe fund and many other recommendations, the dissenters charge the commission's proposals don't go nearly far enough to help consumers on the Cape and Islands. They contend that the two risk-forecasting models adopted by the FAIR Plan vary widely in their predictions, and that the models have not been calibrated to reflect historic conditions in Massachusetts.
The group advocates a new hurricane risk model, created and maintained with state funds, with all formulas open to public scrutiny.
"The FAIR Plan must not be allowed to use a model in support of its rate filing unless that model's underlying data, formulas, and calculations are fully disclosed," says the dissenting report.
Middle Ground
While the report offers long-term solutions to the property insurance dilemma, many Island homeowners are faced with a more immediate concern.
On December 15, the FAIR Plan deductible for wind and hail damage, already increased for many, will be increased for all Island homeowners. The deductible will rise from two to five percent of the home's value.
The median price of a home sold on the Vineyard last year was $695,000. Using that figure as an example, the FAIR Plan will only cover damage in excess of $34,750, the five percent deductible.
Also pending is a FAIR Plan request for a 25-percent increase in premiums, in addition to the 25-percent increase approved and implemented last year. The state attorney general is challenging last year's increase before the state's highest court, requesting instead, a 29-percent decrease in premiums.
The insurance commissioner is expected to rule on this year's request for a rate increase early in 2008.
"The commission, they study things, but there's not a lot in here that triggers a reduction to the premium, or the added risk that the citizens are asked to take on," said Paula Aschettino, a Cape Cod-based grass-roots organizer who testified before the insurance commission. "We cannot stop, and won't stop, to look for the proper way to make our rates reasonable. At the moment they are unreasonable and excessive."
"Is there an answer? Yeah, of course," said Mr. Ward. "The answer is probably some place in the middle, which isn't really going to satisfy the folks that feel they're paying too much, and it isn't going to satisfy the insurance people."
In the Wake of California’s Wildfires
This article contains valuable tips for homeowners. - The Howes Insurance Agency
...wildfires burned through 517,450 acres of Southern California, destroying 2,923 structures and damaging an additional 504. The fires, spurred by the Santa Anna winds, spread across seven counties, leaving many people homeless and many independent agents working overtime to assist customers.
Southern California is picking up the pieces after the worst wildfire outbreak since 2003 and independent agents, including Mike Stromsoe of Stromsoe Insurance Agency in Murrieta, Calif., are doing everything they can to help. Stromsoe, whose own home is located less than a mile from one of the fires, has spent most of the past week in the Fallbrook Community Center answering victims’ questions and setting up claims.
“People would come up to the table and I had a list of all our companies and the special claims numbers we had set up, and we were able to quickly get them set up with claims department,” he says. “Some carriers were on site….and handed over checks right there.
“I wrote a list every day before I started and the thing at top of my list every day was to be compassionate,” he continues. “Just watching them (victims) have to go through this and knowing they have to start all over again was tough. The industry so far has done a very good job and our local community and Fallbrook --- I just can’t say enough. There were more volunteers at the center than there were people who needed help.”
Stromsoe estimates that about 41 of his insureds were affected by the fires, but says the fires should act as an important reminder to all agents and their customers to make sure proper coverages are in place.
“From an insurance standpoint, the No. 1 thing is coverage,” he says. “I think it’s an ongoing process to make sure our clients have the right coverage in place. I can’t tell you the number of people who said ‘I’m not sure if I have enough coverage.’”
According to an estimate from California Insurance Commissioner Steve Poizner, approximately a quarter of the homes destroyed by fire were underinsured.
“I am issuing a declaration which will expedite additional insurance adjusters to California to assist survivors of the fire storms with the prompt processing of insurance claims resulting from this catastrophic event,” Poizner said in a statement last week. “During this state of emergency, I want to ensure Californians that I will do all that I can to help them through this crisis and rebuild as quickly as possible. For many, the first step on the road to recovery is to cut through the red tape and have their loss documented and processed for a claim. We want to remove any unnecessary delays to the system and make sure we have enough adjusters on the job.”
The Insurance Information Institute expects that insurers will pay as much as $1.6 billion in claims to thousands of policyholders in California as a result of the fires. The state’s last major wildfire outbreak in 2003 caused $1.1 billion in losses.
Policyholders whose homes or businesses were destroyed in the fires shouldn’t expect to see an increase in their premiums or have policies canceled, according to the I.I.I., and rates shouldn’t go up for homeowners who don’t live in fire-prone areas of the state. Rates for insureds outside the state also shouldn’t be affected by the fires, according to Robert Hartwig, I.I.I. president.
“The homeowner and commercial markets in California are generally healthy and competitive and, for the most part, events like this are already factored into rates,” Hartwig says. “Despite the magnitude of the loss, this event at this point is well within the range of what insurers anticipated and, in and of itself, should not drive up rates.”
While the wildfires have subsided, many homeowners in the San Diego area are still at risk for another homeowners’ peril --- flooding.
A fire, be it a wildfire or house fire, can clear away everything in its path and leave an area completely barren --- making it more vulnerable to flooding. Agents should encourage their insureds to purchase flood insurance, not just in wildfire-prone areas, but everywhere.
The following is a list of tips on preparing for disaster-related losses compiled from the Big “I,” IBA West and the I.I.I. that agents can pass along to customers:
1. Be prepared for any loss before the loss occurs by having all important documents in one place. These items include: copies of personal identification ( i.e. birth certificates, Social Security cards, passports and driver’s licenses) bank information and credit card numbers; health insurance cards and copies of prescriptions; copies of all insurance documents, including phone numbers for agents and policy numbers; travelers checks for emergencies and a listing of important telephone numbers and contacts.
2. Talk with an agent once a year and review coverage details. Know policy limits and discuss how to insure special items or valuables. Discuss a home inventory and basic disaster plan with an agent. (The I.I.I. has developed a downloadable home inventory software program, “Know Your Stuff,” to document belongings. For more information, click here.)
3. Understand how a policy will provide assistance in the event of an emergency evacuation and/or the partial or total loss of a home.
4. Get instructions from an agent on what steps to take in the event of a loss. Find out who to call, what to do to ensure the loss is contained, what documentation will be required and what to expect during the claims process.
5. Have an evacuation plan for family and pets. Make sure everyone knows what to do and where to go. Also, hold a real-time test of the plan to make sure it works. (The I.I.I. video news release “Ten-Minute Challenge” outlines the importance of practicing for an emergency evacuation.)
Trusted Choice®, the Big “I” and IBA West have been working together to help residents in California affected by the wildfires. IBA West provided assistance to 39 catastrophe centers during the fires and has created a consumer insurance guide, “Southern California Fires: The Recovery Process Begins,” which includes guidelines to coverage for homeowners, renters, auto, RV, motor homes, trailers and watercraft coverage. (For more information on the guide, click here.)
“We got materials out to agents and brokers and offered help to emergency services and in some cases we staffed desks over the weekend answering insurance questions,” says Andrew Valdivia, IIABA’s California director. “I think as an association we were very well prepared because initially what was considered a small, local event turned out to be a regional event and we performed very well during the catastrophe.”
Trusted Choice® also has committed to providing financial assistance to victims of the fires through the Trusted Choice® Disaster Relief Fund. The fund was created to help independent agents, their customers and their communities during catastrophes. For more information on how to apply for a grant or make a tax-free contribution, visit www.independentagent.com.
Michelle Payne (michelle.payne@iiaba.net) is Big “I” writer/editor.
Tuesday, December 4, 2007
Lower your wind deductible
Homeowners who take one or more of the following steps to mitigate the risk of wind damage may be able to have their FAIR Plan wind deductible reduced or eliminated.
Windows: Install impact-resistant glass or shutters that close over window openings to prevent flying debris from breaking window panes.
Entry doors: Install at least three hinges and a dead bolt security lock with a bolt at least 1 inch long.
Garage doors: Install a garage door and track system that is labeled and rated for high wind pressures and debris impact.
Roof and foundation connections: Anchor the roof to the walls with metal clips and straps. The walls must also be properly anchored to the foundation, and, if the house is more than one story, the upper story wall framing must be firmly connected to the lower framing.
Source: MA FAIR Plan
Windows: Install impact-resistant glass or shutters that close over window openings to prevent flying debris from breaking window panes.
Entry doors: Install at least three hinges and a dead bolt security lock with a bolt at least 1 inch long.
Garage doors: Install a garage door and track system that is labeled and rated for high wind pressures and debris impact.
Roof and foundation connections: Anchor the roof to the walls with metal clips and straps. The walls must also be properly anchored to the foundation, and, if the house is more than one story, the upper story wall framing must be firmly connected to the lower framing.
Source: MA FAIR Plan
FAIR plan to hike wind deductible for Cape homeowners
By SARAH SHEMKUS
Cape Cod Times
December 04, 2007 6:00 AM
Thousands of homeowners could soon be on the hook for more of the damages incurred by storms when the FAIR Plan implements a plan to raise wind deductibles on some Cape and Islands policies this month.
The move has drawn the ire of local residents and activists, who claim that increasing deductibles is equivalent to raising premiums.
"I call this a rate hike in disguise," said Paula Aschettino, an Eastham resident and the founder of activist group Citizens for Homeowners Insurance Reform.
A deductible is the amount a policyholder must spend toward repairing damages before the insurance company will cover any costs.
FAIR Plan President John Golembeski defended the deductible increase, which takes effect Dec. 15.
In 2005, he explained, his staff conducted an analysis of the insurance marketplace and determined that the FAIR Plan's wind deductibles on the Cape and Islands were not in line with those of private companies.
"The change was made so that the wind deductibles that we offer are consistent with those that are offered by other insurers," he said. "It is a rule change, not a rate change."
In other regions, including SouthCoast, the FAIR Plan's deductibles were already consistent with the private market, he said.
The FAIR Plan, an association of all the companies that offer homeowners insurance in the state, provides coverage for those who are unable to obtain it on the private market. For the past few years, private insurers have been pulling out of coastal areas, driving more and more homeowners into this insurance of last resort.
As of the end of October, nearly 59,000 FAIR Plan policies were in effect on the Cape and Islands, representing about 44 percent of the region's homeowners.
When the recent changes become effective, FAIR Plan wind deductibles will go from 1 percent of the insured value of the property to 2 percent for two groups of Cape homeowners: those located within a half-mile of the coast and insured for less than $200,000, as well as those located farther from the water and insured for less than $500,000.
Therefore, the wind deductible for a home on the Cape that is insured for $500,000 would go from $5,000 to $10,000.
On Nantucket and Martha's Vineyard, homes insured for between $200,000 and $599,999 will see their deductible go from 2 percent to 5 percent.
At the urging of state Division of Insurance officials, however, the FAIR Plan included provisions that allow policyholders to reduce or eliminate their wind deductible by taking steps to mitigate the risk to their home.
Because implementing some of these measures can be costly, Aschettino questioned whether these mitigation provisions would actually improve homeowners bottom lines.
"I don't know whether citizens really look at that as savings," she said.
Aschettino is also unhappy that Insurance Commissioner Nonnie Burnes approved the change in deductible without a public hearing.
The law does not require such a hearing, but Aschettino said that the public has a right to offer input on a change as significant as this.
"What really concerns us is the Division of Insurance allowing this to happen," she said. "I feel that we are speaking to deaf ears."
Kimberly Haberlin, spokeswoman for Burnes, said that such a charge does not accurately reflect the commissioner's role in the insurance market.
"The commissioner is very concerned about the burdens Cape residents are facing due to the current state of the homeowners insurance market," Haberlin said. "(She) is responsible for helping to create a healthy insurance market so, at the end of the day, companies can meet their obligations and keep their promises to their policyholders. Ensuring that a stable environment exists is in the best interest of all Massachusetts consumers."
Burnes was a member of the legislatively created special commission on homeowners insurance that recently recommended ways to combat the problem of rising insurance costs.
The commissioner's office also recently agreed to a meeting with Aschettino and state Sen. Robert O'Leary, who has been a vocal advocate of homeowners insurance reform.
"We just feel that the market on the Cape, it's just not functioning," said O'Leary. He would like, he said, "to remind (Burnes) of the impact that this is having, and that we see this as a rate increase for all intents and purposes. We'd like her to move more cautiously here."
Cape Cod Times
December 04, 2007 6:00 AM
Thousands of homeowners could soon be on the hook for more of the damages incurred by storms when the FAIR Plan implements a plan to raise wind deductibles on some Cape and Islands policies this month.
The move has drawn the ire of local residents and activists, who claim that increasing deductibles is equivalent to raising premiums.
"I call this a rate hike in disguise," said Paula Aschettino, an Eastham resident and the founder of activist group Citizens for Homeowners Insurance Reform.
A deductible is the amount a policyholder must spend toward repairing damages before the insurance company will cover any costs.
FAIR Plan President John Golembeski defended the deductible increase, which takes effect Dec. 15.
In 2005, he explained, his staff conducted an analysis of the insurance marketplace and determined that the FAIR Plan's wind deductibles on the Cape and Islands were not in line with those of private companies.
"The change was made so that the wind deductibles that we offer are consistent with those that are offered by other insurers," he said. "It is a rule change, not a rate change."
In other regions, including SouthCoast, the FAIR Plan's deductibles were already consistent with the private market, he said.
The FAIR Plan, an association of all the companies that offer homeowners insurance in the state, provides coverage for those who are unable to obtain it on the private market. For the past few years, private insurers have been pulling out of coastal areas, driving more and more homeowners into this insurance of last resort.
As of the end of October, nearly 59,000 FAIR Plan policies were in effect on the Cape and Islands, representing about 44 percent of the region's homeowners.
When the recent changes become effective, FAIR Plan wind deductibles will go from 1 percent of the insured value of the property to 2 percent for two groups of Cape homeowners: those located within a half-mile of the coast and insured for less than $200,000, as well as those located farther from the water and insured for less than $500,000.
Therefore, the wind deductible for a home on the Cape that is insured for $500,000 would go from $5,000 to $10,000.
On Nantucket and Martha's Vineyard, homes insured for between $200,000 and $599,999 will see their deductible go from 2 percent to 5 percent.
At the urging of state Division of Insurance officials, however, the FAIR Plan included provisions that allow policyholders to reduce or eliminate their wind deductible by taking steps to mitigate the risk to their home.
Because implementing some of these measures can be costly, Aschettino questioned whether these mitigation provisions would actually improve homeowners bottom lines.
"I don't know whether citizens really look at that as savings," she said.
Aschettino is also unhappy that Insurance Commissioner Nonnie Burnes approved the change in deductible without a public hearing.
The law does not require such a hearing, but Aschettino said that the public has a right to offer input on a change as significant as this.
"What really concerns us is the Division of Insurance allowing this to happen," she said. "I feel that we are speaking to deaf ears."
Kimberly Haberlin, spokeswoman for Burnes, said that such a charge does not accurately reflect the commissioner's role in the insurance market.
"The commissioner is very concerned about the burdens Cape residents are facing due to the current state of the homeowners insurance market," Haberlin said. "(She) is responsible for helping to create a healthy insurance market so, at the end of the day, companies can meet their obligations and keep their promises to their policyholders. Ensuring that a stable environment exists is in the best interest of all Massachusetts consumers."
Burnes was a member of the legislatively created special commission on homeowners insurance that recently recommended ways to combat the problem of rising insurance costs.
The commissioner's office also recently agreed to a meeting with Aschettino and state Sen. Robert O'Leary, who has been a vocal advocate of homeowners insurance reform.
"We just feel that the market on the Cape, it's just not functioning," said O'Leary. He would like, he said, "to remind (Burnes) of the impact that this is having, and that we see this as a rate increase for all intents and purposes. We'd like her to move more cautiously here."
Monday, December 3, 2007
Holiday Shoppers Misinformed on Insurance Coverage for High-Tech Gifts
Survey finds 96 million households lack key knowledge on protecting electronics.
Last week, as the holiday shopping season kicked off, Trusted Choice® and the Big “I” released the results of their consumer survey regarding insurance coverage on high-tech electronic gifts. The survey found that approximately 42 million American households plan to give or receive high-tech electronic products this year. However, about seven out of eight households don’t fully understand key aspects of their insurance coverage for these purchases.
“With so many people giving and receiving electronics this holiday season, it is important for consumers to understand how to protect these gifts,” says Big “I” President & CEO Robert Rusbuldt. “In fact, any time people acquire an expensive or unusual item, we advise they consult with their Trusted Choice® independent insurance agent. This new research shows us not enough consumers are doing that.
”The survey presented respondents with five questions about insurance coverage for high-tech home electronics. An overwhelming seven out of eight households (96 million) answered at least one of these questions incorrectly. More than 1/3 or 42 million households said they were likely to purchase or receive high-tech electronic products including iPods, iPhones, high-definition/plasma televisions, video game systems and computers. However, only about one-fifth of respondents said they had contacted their insurance agent with questions on coverage for high-tech electronic products when they purchased them in the past.
“As our research shows, so frequently most consumers don’t fully understand their insurance policies,” says Madelyn Flannagan, Big “I” vice president for education and research. “Making matters worse, with the ever-changing technology of these types of electronics, consumers need to keep in mind that policies may not always reflect the latest features.”
Respondents also were presented with five statements and were asked whether they agreed or disagreed that the situation was usually covered by most homeowner’s or renter’s insurance coverage. Their collective responses are as follows:
• More than half (60%) believe small electronic products stolen from them, either from their home or automobile – even those valued at less than $500 – are usually covered or don’t know whether they are or not.
• Approximately 55% believe electronic equipment that is damaged or destroyed as a result of a power surge is usually covered.• People are better informed about damage resulting from home installation or loading/unloading in transport. Less than half (42%) said that such damage is usually covered.
• Only about one-third of respondents (35%) think digital downloads such as iTunes or podcasts are usually covered.
• Finally, only one-third (34%) believes gift cards, regardless of their value, are usually covered.
Along with the survey results, the Big “I” provided consumers a series of tips to help them with some common and important exceptions that many do not understand.
For more information or for a copy of the tip sheet to share with your clients, contact Patrick Royal at Patrick.Royal@iiaba.net. Patrick Royal (patrick.royal@iiaba.net) is Big “I” director of public affairs.
If you have questions about your coverage, contact The Howes Insurance Agency.
Last week, as the holiday shopping season kicked off, Trusted Choice® and the Big “I” released the results of their consumer survey regarding insurance coverage on high-tech electronic gifts. The survey found that approximately 42 million American households plan to give or receive high-tech electronic products this year. However, about seven out of eight households don’t fully understand key aspects of their insurance coverage for these purchases.
“With so many people giving and receiving electronics this holiday season, it is important for consumers to understand how to protect these gifts,” says Big “I” President & CEO Robert Rusbuldt. “In fact, any time people acquire an expensive or unusual item, we advise they consult with their Trusted Choice® independent insurance agent. This new research shows us not enough consumers are doing that.
”The survey presented respondents with five questions about insurance coverage for high-tech home electronics. An overwhelming seven out of eight households (96 million) answered at least one of these questions incorrectly. More than 1/3 or 42 million households said they were likely to purchase or receive high-tech electronic products including iPods, iPhones, high-definition/plasma televisions, video game systems and computers. However, only about one-fifth of respondents said they had contacted their insurance agent with questions on coverage for high-tech electronic products when they purchased them in the past.
“As our research shows, so frequently most consumers don’t fully understand their insurance policies,” says Madelyn Flannagan, Big “I” vice president for education and research. “Making matters worse, with the ever-changing technology of these types of electronics, consumers need to keep in mind that policies may not always reflect the latest features.”
Respondents also were presented with five statements and were asked whether they agreed or disagreed that the situation was usually covered by most homeowner’s or renter’s insurance coverage. Their collective responses are as follows:
• More than half (60%) believe small electronic products stolen from them, either from their home or automobile – even those valued at less than $500 – are usually covered or don’t know whether they are or not.
• Approximately 55% believe electronic equipment that is damaged or destroyed as a result of a power surge is usually covered.• People are better informed about damage resulting from home installation or loading/unloading in transport. Less than half (42%) said that such damage is usually covered.
• Only about one-third of respondents (35%) think digital downloads such as iTunes or podcasts are usually covered.
• Finally, only one-third (34%) believes gift cards, regardless of their value, are usually covered.
Along with the survey results, the Big “I” provided consumers a series of tips to help them with some common and important exceptions that many do not understand.
For more information or for a copy of the tip sheet to share with your clients, contact Patrick Royal at Patrick.Royal@iiaba.net. Patrick Royal (patrick.royal@iiaba.net) is Big “I” director of public affairs.
If you have questions about your coverage, contact The Howes Insurance Agency.
Tuesday, November 27, 2007
Take inventory of your valuables
By David Colman Special Columnist
Sunday, November 25, 2007
Can you name all the valuables in your home? You might remember Grandma Betty's pearls and the antique dresser in the foyer, but what about the make and model of the kids' computer? Or how much would it cost to replace all the tools in the garage?
An inventory of your belongings is vital if you have homeowner's or renter's insurance and you want to recover your losses from a fire, tornado, flood or burglary.
Just ask the 1,800 homeowners and renters in the Southern California hills devastated by the recent brush fires, or the victims of the tornadoes that have ravaged the Southern and Mid-Western states this year.
A detailed home inventory should include an itemized description of your belongings room-by-room and photos or video of the items in each room.
Home inventory software is available free from the Georgia Insurance Information Service at www.giis.org. Find the blue button on the left side of the screen, click on the "download" button and follow the directions.
After the software is installed, a separate section can be created for each room in your home. Identify each item and fill in the information about its description, initial cost, where purchased and manufacturer, make and model and serial numbers, if possible. After your items are entered, you also can add digital pictures of each item.
At the low end of the technology scale, just use a note pad and list each room.
Then list columns with the same headings as discussed in the inventory program.
Remember to take pictures all the way around the outside of your home to document how the building looked before the incident so it can be rebuilt the way it was.
Under a renter's or homeowner's policy, your belongings can be covered in two ways: actual cash value or replacement cost. There is a significant difference between the two.
ACTUAL CASH VALUE is less expensive when purchasing your policy, but each item claimed in your loss is depreciated based on its age and condition. For instance, your reimbursement for a 5-year-old 26-inch TV would be pennies on the dollar.
REPLACEMENT COST COVERAGE would allow the policyholder to replace the item and then be reimbursed by the insurer for its cost.
David Colmans is the executive director of the Georgia Insurance Information Service, a nonprofit, nonlobbying trade association of property and casualty insurers doing business in Georgia. Contact him at dcolmans@giis.org.
From the Monday, November 26, 2007 edition of the Augusta Chronicle
Sunday, November 25, 2007
Can you name all the valuables in your home? You might remember Grandma Betty's pearls and the antique dresser in the foyer, but what about the make and model of the kids' computer? Or how much would it cost to replace all the tools in the garage?
An inventory of your belongings is vital if you have homeowner's or renter's insurance and you want to recover your losses from a fire, tornado, flood or burglary.
Just ask the 1,800 homeowners and renters in the Southern California hills devastated by the recent brush fires, or the victims of the tornadoes that have ravaged the Southern and Mid-Western states this year.
A detailed home inventory should include an itemized description of your belongings room-by-room and photos or video of the items in each room.
Home inventory software is available free from the Georgia Insurance Information Service at www.giis.org. Find the blue button on the left side of the screen, click on the "download" button and follow the directions.
After the software is installed, a separate section can be created for each room in your home. Identify each item and fill in the information about its description, initial cost, where purchased and manufacturer, make and model and serial numbers, if possible. After your items are entered, you also can add digital pictures of each item.
At the low end of the technology scale, just use a note pad and list each room.
Then list columns with the same headings as discussed in the inventory program.
Remember to take pictures all the way around the outside of your home to document how the building looked before the incident so it can be rebuilt the way it was.
Under a renter's or homeowner's policy, your belongings can be covered in two ways: actual cash value or replacement cost. There is a significant difference between the two.
ACTUAL CASH VALUE is less expensive when purchasing your policy, but each item claimed in your loss is depreciated based on its age and condition. For instance, your reimbursement for a 5-year-old 26-inch TV would be pennies on the dollar.
REPLACEMENT COST COVERAGE would allow the policyholder to replace the item and then be reimbursed by the insurer for its cost.
David Colmans is the executive director of the Georgia Insurance Information Service, a nonprofit, nonlobbying trade association of property and casualty insurers doing business in Georgia. Contact him at dcolmans@giis.org.
From the Monday, November 26, 2007 edition of the Augusta Chronicle
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