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Monday, July 18, 2011

Does Property Value have anything to do with Reconstruction Value?

One of the biggest questions I’ve been asked is ”how is the coverage on my home owners policy determined?". Most people equate it to the market value but the problem here is that the property value has NOTHING to do with what it would cost to reconstruct you home.

Most homeowners policies cover the reconstruction of your home if damaged or destroyed by certain perils (risks). The ”dwelling coverage” on your homeowners policy is what covers the reconstruction of your home, plus tearing out old debris and hauling it off. If properly written, your homeowners policy would have exactly enough “dwelling coverage” on the policy to rebuild you home if it was totally destroyed.

The bottom line is that the cost to rebuild your home has nothing to do with what it would sell or appraise for. Depending on the condition of the home and the market in the area, the sale or appraised value may be less than what it would cost to rebuild that same house. On the flip side, if a house is in good condition and the housing market is stable, then the sale price or appraised value should be greater than what it would cost to rebuild the home.

Here are some practical ideas you can do today to make sure you have the proper reconstruction cost limits on your homeowners policy;

*Contact your agent and ask for a meeting to review your policy.They should be using state approved recosntruction calculators.
*Call some local contractors and ask them to give you a approximate cost per square foot if they were to build a home in your area. Then once you get that cost simply multiply it by the square footage of you home and you can get a good idea of the coverage limit needed on you policy.
*Ask some of your neighbors what their coverage limits are – hoping they have the proper coverage.
*Ultimately for most insurance companies, the responsibility for having enough coverage is on the insured NOT the company. So it is so important that you take the time to be sure you have the right coverage – you don’t want to find out when it’s to late!

Thursday, July 7, 2011

Your auto insurance premiums change: Do you wonder why?

Many factors affect your auto insurance cost. You can control some of them, such as your choice of vehicle, your driving habits, and the coverages and deductibles you choose.

Then there are some factors over which you — and in many instances your insurance carrier — have little or no control, such as medical costs to treat injuries, vehicle repair costs, costs to adjust claims, and uninsured drivers.

Controlling insurance costs
What is Farmers doing to control insurance costs? Actually, quite a lot. Take a look at some of our ongoing initiatives:

We make available a network of reliable auto repair facilities.
We vigorously oppose frivolous lawsuits.
We have an active Anti-Fraud Unit.
We offer a youth driving safety education program to all parents of young drivers.
We actively support organizations devoted to auto safety, including anti-drunk driving efforts and those dedicated to improving youth driving safety.
In many states, we offer annual policies to help keep your rates more stable. Call me to see if this option is available to you.
Farmers offers many discounts that may help you keep your insurance costs low, including:*

Multiple-Policy Discount: Insuring both your home and automobile with Farmers may entitle you to reduced rates on each.
Alternative Fuel Discount: You can save on all major coverages if you drive a hybrid or other alternative fuel vehicle.
Electronic Stability Control Discount: Vehicles equipped with a stability control feature may qualify for a discount on collision coverage.
Professional Affinity Group Discount: Doctors, Registered Nurses, Engineers, Scientists, Educators, Accountants, Police, Firefighters and other professionals may qualify for discounts.
Anti-Lock Brake Discount: If your car is equipped with a factory-installed anti-lock braking system on all four wheels, you may pay less.
Anti-Theft Discount: You may save on your Comprehensive Coverage if your car is equipped with an anti-theft device.
Accident Free Discount: A good driving record could save you even more.
Good Student Discount: Households with young drivers who are students and maintain a "B" average may be eligible for a discount.
Let's get together, review your coverage and discuss your individual needs so you can be sure you're taking advantage of available cost-savings and that you have the coverage you want.

*Discounts apply to select coverages, perils and policy types, and may vary by state. Eligibility and actual percentage of discounts may vary.

Wednesday, July 6, 2011

Texas Lawmakers Pass Sweeping Texas Windstorm Insurance Association (TWIA) Legislation

After weeks of negotiations during a legislative special session, the Texas Legislature finally passed a meaningful Texas Windstorm Insurance Association (TWIA) bill. Gov. Rick Perry placed TWIA on the special session agenda forcing legislators to solve problems that surfaced at TWIA after Hurricane Ike. Texas House members wanted to limit damages to the actual cost of a policy, lawyer fees and interest. However, Texas Senators wanted to keep the ability to sue TWIA for triple damage while adding on hefty interest penalties. House & Senate negotiators met roughly in the middle when forging a compromise on the bill.

The bill eliminates treble damages and an eighteen percent penalty interest. Insureds must file a claim within one year of the date of loss with extensions for good cause. Premium discounts are required for insureds electing binding arbitration. Insured must exhaust administrative remedies, including appraisal where appropriate, before a lawsuit can be filed. The bill will allow double damages under limited circumstances for knowing and intentional violations by TWIA; and impose deadlines for TWIA to complete investigation and notice of claims. A new expert panel is required to recommend how to settle disputed wind v. water claims and where evidence is limited (slab losses).

Other key provisions included in the bill:

Funding. Pre-event bonds can be authorized and the $2.5 billion in aggregate funding for bonds is the maximum in any calendar year. This clarifies provisions of the law passed in 2009. The TWIA board is authorized to purchase reinsurance and if TWIA does not purchase reinsurance, it has to submit an actuarial plan to pay losses in excess of $2.5 Billion.

Operations. TWIA is subject to open meeting and open records act. The insurance commissioner can be present in executive session meetings; TWIA must publish salary information for certain managers and contractors.

TDI Oversight. TDI is allowed to put TWIA into conservatorship. Random claim audits are required after 1,000 claims have been filed following a storm. TDI has authority to issue cease and desist order to inspectors. A study for a single adjuster program is required.

Agent Commissions. TDI must set agent commissions by rule; however, current commissions remain in place until technologies and efficiencies improve the process for the TWIA applications.

Loss Mitigation. Provides for alternative certification requirements for certain noncompliant structures and consumers building to higher code standards can receive premium discounts.

Tuesday, July 5, 2011

President Declares Major Disaster For The State Of Texas

WASHINGTON, D.C. -- The U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) today announced that federal disaster assistance has been made available to the state of Texas to supplement state and local recovery efforts in the area struck by wildfires during the period of April 6 to May 3, 2011