28 Apr 2010
A plan to extend the National Flood Insurance Program (NFIP) for five years was forwarded by the U.S. House Financial Services Committee to the full House.
Rep. Maxine Waters (D-CA) submitted HR 5114 recently to the committee, where she is a member for consideration after several short-term extensions of the program overseen by the Federal Emergency Management Agency (FEMA). In recent months, the program has expired with Congress having to reauthorize it retroactively.
“Without being reauthorized, the flood insurance program has been relying on a series of short-term extensions but recently it expired, leaving homeowners and prospective home buyers in affected areas unable to buy insurance,” Waters said in a statement.
If approved by the House, Waters’ measure would still require action by the Senate and President Barack Obama.
The same committee also passed a measure sponsored by Rep. Gene Taylor (D-MS) that would add wind coverage to the NFIP, an effort that has failed previously in the Senate.
Waters’ office noted the increased reliance on the NFIP beyond properties in special flood hazard areas to areas of increased flooding to aid homeowners nationwide.
The proposed measure not only would extend the federal program to Sept. 30, 2015, but also would phase in actuarial rates and increases coverage limits.
“The maximum coverage limits for flood insurance policies needed to be increased because of inflation and higher housing costs,” Waters said. “However, the focus on NFIP should be on providing coverage for those vulnerable to natural disasters, not to subsidize the wealthiest Americans, so we are phasing out premium subsidies for second homes and vacation homes, which will save the program a lot of money.”
Several insurance organizations, including the Property Casualty Insurers Association of America, have supported Waters’ bill to find a long-term solution to the constant reauthorization of the flood program.
“We need a long-term, sustainable solution to the flood program,” David A. Sampson, president and CEO of PCI, wrote in a recent letter to the House committee. “Rep. Waters’ bill takes a responsible approach to making the NFIP more financially stable, providing the program with an important multi-year extension through 2015 and limiting additional federal exposure to natural disasters. The bill also works to increase local awareness of the devastating effects of flooding and the need to purchase flood insurance.”
Article from www.iinc.org
Q. What is underinsurance?
A. Underinsurance describes when an insurance policy has a stated limit that does not adequately cover the replacement cost of the insured item. This could include a home, auto, jewelry or artwork. The process of adequately insuring property is also known as “insuring to value.”
Q. What causes underinsurance?
A. Underinsurance may be caused by many factors, ranging from a failure to update a policy in a timely manner to an underestimate of reconstruction or replacement value. Failure to report new construction or additions to the property or a decision not to purchase sufficient insurance due to cost could also lead to underinsurance problems.
The cost of reconstruction of a home may also be estimated incorrectly, particularly in the event of post-catastrophe construction price spikes. Particularly difficult to predict are changes caused by new building codes enacted after a major disaster. Building code upgrades could be minor changes or may involve complex questions of infrastructure and redevelopment. Homeowners can protect against this by including building code upgrade coverage in their home insurance policies.
Q. How can a homeowner make sure the insurance policy adequately covers the home in the event of a total loss?
A. Homeowners should first fully understand the policy they plan to purchase. Knowing what it covers, what it doesn’t cover and what conditions define the coverage can help avoid problems after a disaster or major insurance claim.
The main coverage, usually called “Dwelling” or “Coverage A,” should be equal to the cost of rebuilding should the home be destroyed. Insurers make an honest attempt to estimate the cost of reconstruction of the home based upon the information provided by the homeowner. However, it is still only an estimate.
Many homeowner insurance policies now offer protection to help avoid underinsurance problems. Some policies provide general upgrades of the coverage limits of 25-to-50 percent. Others provide additional coverage specifically for building code upgrades.
For “Personal Property,” or “Coverage C,” a homeowner should make a complete inventory of all belongings. This will help determine the cost of the personal property so that it is reflected in the policy. A comprehensive home inventory can also serve as a shopping list of everything that will need to be replaced should the home be destroyed or burglarized.
Q. Whose responsibility is it to make sure that a home is adequately covered by insurance?
A. State courts have held that it is the homeowner’s responsibility to make sure that their property is properly insured. Although insurers take many precautions to match coverage to a homeowner’s needs, the homeowner makes the final decision of what they want and what they can afford.
In 2008, in the case of Everett v. State Farm, California’s Fourth Appellate District Court upheld a lower court ruling that placed the responsibility on the homeowner to maintain policy limits equal to the replacement cost of the home.
Additionally, a recent poll commissioned by IINC shows that 61 percent of respondents statewide believe that it is the homeowners responsibility to keep their insurance current.
Q. Is there any research available on whether there was underinsurance after a major California wildfire?
A. Yes. Following the 2003 Cedar Fire, a San Diego Union Tribune analysis of building permits in the Scripps Ranch community found that 96 percent of the destroyed homes were being rebuilt larger than they were before the fire, including 69 percent by more than 500 square feet.
Q. Were there widespread complaints of underinsurance following the 2007 Southern California firestorms?
A. No. The California Department of Insurance reported that out of more than 37,000 claims filed after the 2007 wildfires, only 105 requests for assistance – or .28 percent — referenced underinsurance. About 80 of those requests were of a routine and easy-to-resolve nature, the Department reported.
A CDI study of “Requests for Assistance” shows the number of justified complaints declined statewide from 2002 through 2008. In its 2008 report, only 145 “Requests for Assistance” — or 0.0017 percent of all policies — were re-categorized as justified complaints.
The cost to rebuild a damaged home went up approximately 3.95 percent nationwide last year even as real estate prices were declining, according to a study by a technology firm.
Orem, Utah-based Xactware said in Phoenix, the hardest hit metropolitan region, where average home values fell 32.9 percent in 2008, the rebuilding cost went up 5.38 percent.
Its findings, said Xactware, point to the need to keep updating insurance coverage based on construction costs.
The firm said changes in cost, according to its reconstruction cost index, showed the top five states were led by Alaska, where they soared above 8 percent, followed by Nevada, at over 6 percent. Hawaii, Texas and Georgia were all above 5 percent.
In its regional year-end median cost to rebuild on a per square foot basis, Xactware said for premium homes the cost was nearly $600 in Hawaii, with Northern California, Alaska, Southern California and Florida all at or slightly above $500.
The firm said the construction industry is still coping with the effects of high gas prices “months after they have dropped.”
The cost of 25-year composition shingles, it reported, jumped 71.4 percent, and lumber went up 2.8 percent, with drywall rising 5.77 percent.
Despite a lack of high-profile disasters in 2008, Xactware said the number of insurance claims was higher in 2008 and the total dollar amount reported to Xactware was just over $23.8 billion compared to $13.9 billion in 2007.
According to the company, despite higher costs the pace of increases has slowed and its material and labor index increased 3.16 percent in 2008 compared with 5.87 in 2007.
The study found that average “retail” labor rates for insurance repair work increased 5.43 percent in 2008 compared with 7.68 percent in 2007.
Overall, Xactware said, labor costs have continued to rise over the past several years despite the downward trend in the economy.
More information is available at www.xactware.com.
This is from the CA Department of Insurance website. You can even see the video. OOOPS!
NEWS RELEASE
Insurance Commissioner Poizner Announces Street Race Video
on YouTube Leads to Arrest of Diamond Bar Siblings for Alleged Auto Fraud
Brother, Sister Submit Claim For Nissan GT-R ‘Supercar’ Accident Found on Video Sharing Site
California Insurance Commissioner Steve Poizner announced today that on Friday, March 5, Jay Xi Chen, 21, and his sister, Tracy Chen Chen, 29, both of Diamond Bar, were arrested at their residence on felony auto insurance fraud charges for filing an allegedly false insurance claim surrounding damage done to a Nissan GT-R supercar. Jay was charged with six counts; Tracy was charged with one.
“We are all victims of auto insurance fraud by paying for our fellow consumers’ false claims,” said Commissioner Poizner. “This case also highlights the diligence and creativity with which we will pursue allegedly fraudulent claims.”
A four-month investigation revealed that Jay reported to Farmers Insurance Exchange that his sister had been driving the GT-R when it was involved in a collision on Interstate 10 on March 16, 2009. Tracy corroborated this story. Jay later withdrew this claim, stating he would pay for the repairs himself.
On June 2, 2009, Jay reported another claim with the same vehicle, stating that this time he crashed the auto while driving on Highway 60 in Riverside County.
However, ICC Collision Center reported that it had Jay’s unrepaired Nissan GT-R in its shop since March 2009.
Furthermore, a video found on YouTube (http://www.youtube.com/watch?v=MXKUd8oCKSQ) showed a Nissan GT-R being driven on San Gabriel Mountain Road during what appears to be a street race. The supercar crashed into a wall. Detailed inspection of the video showed the GT-R has the same damage as the one in Jay’s claim. The potential loss of this claim was $76,000.
The criminal charges were filed against the Chens by the San Bernardino County District Attorney’s Office, which is prosecuting the case. Each count could result in a penalty of up to five years in prison and/or $10,000 in fines if convicted.
The arrest resulted from an investigation by the Inland Empire Organized Automobile Fraud Interdiction Team operating out of the California Department of Insurance’s (CDI’s) Inland Empire Regional Office. This team is comprised of CDI and the California Highway Patrol. Farmers also provided assistance during the investigation.
Commissioner Poizner oversees 16 CDI Enforcement Branch regional offices throughout the state. Approximately 2,000 insurance fraud-related arrests have been made by the Department of Insurance’s enforcement division since Commissioner Poizner took office in 2007 – more arrests than have been made during any other two year period, under any previous insurance commissioner.
RENO, NV (AP) — Nevada scientists say the chance of a significant earthquake rocking the Reno-Sparks area over the next half century is on the rise.
A new report by the state Bureau of Mines and Geology says there is a 67 percent likelihood that a magnitude 6.0 temblor will strike within 31 miles by 2060.
That’s up from the bureau’s estimate four years ago that put such odds at 50 percent.
A quake that size could be expected to claim 78 lives and leave 900 people homeless. More than 5,000 buildings would be destroyed or badly damages with total damages of $3.7 billion.
Carson City has a 70 percent chance of such a quake by 2060 that likely would kill nine people and severely damage nearly 1,000 buildings.
If you would like to find out what Earthquake Insurance would cost for you in CA or NV call me at 916-797-4454
This article appeared on the Ca Dept. of Insurance Website.
 OVERVIEW
Flooding is the nation’s number one natural disaster. While floods occur in every area of the country, many property owners remain unprepared. The National Flood Insurance Program (NFIP) is a Federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses. Participating in the NFIP is based on an agreement between communities and the Federal Government. The program is administered by the Federal Emergency Management Agency (FEMA) and provides flood insurance protection to property owners, renters, and business owners in communities that participate in the program.
HOW FLOOD INSURANCE WORKS
As long as a community participates in the NFIP, residents are eligible to purchase flood insurance. Flood insurance is sold to property owners through two mechanisms: 1) through state licensed property and casualty insurance agents and brokers who deal directly with FEMA; and 2) private insurance companies through a program created in 1983 known as “Write Your Own”.
Consumers should talk to their insurance agent if they have questions, would like additional information and/or are ready to purchase a flood insurance policy. The policy will take effect 30 days after it is purchased. However, if you buy a house in a designated high-risk area and receive a mortgage loan from a Federally regulated lender, by law, the lender must require the borrower to purchase and regularly renew flood insurance. In this case, the policy will take effect immediately and the borrower does not have to wait 30 days.
FLOOD INSURANCE COVERAGE
In general, coverage is provided for direct physical loss to the property from a flood which is described as:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
a. Overflow of inland or tidal waters
b. Unusual and rapid accumulation or runoff of surface waters from any source
c. Mudflow – defined as a river of liquid and flowing mud on the surfaces of normally dry land areas such as when earth is carried by a current of water. Landslide, slope failures, or saturated soil moving down a slope are not mudflows.
In general, the policy excludes losses caused by:
Earth movement, even if the earth movement is caused by flood. Examples of excluded earth movement include:
- Earthquake;
- Landslide;
- Land subsidence;
- Sinkholes;
- Destabilization or movement of land resulting from accumulation of water;
- Gradual erosion;
The maximum limits available are:
Residential – $250,000 for the structure and $100,000 for the personal property
Commercial- $500,000 for the structure and $500,000 for the contents
The California Department of Insurance does not regulate the National Flood Insurance Program. However, consumers may obtain more information through the FEMA at 1-800-638-6620 or at the National Flood Insurance Program web site.
More Flood Insurance Information by calling me at 916-797-4454
 Tumbling house prices may have you wondering whether homeowners’ insurance premiums will fall too.
Fair question. But the answer is not as straightforward as you might think. Although median house prices in the US are down around 7% year on year, don’t expect to be able to cut your premiums by the same amount.
For a start, your homeowners’ policy covers a lot more than your structure. It probably also covers contents – and the value of those is more likely to have gone up than down – and third party liability.
But the most critical factor in evaluating your cover is that the buildings element of your policy should not be based purely on the market value of your home but more importantly on the cost of reconstructing it.
Although these are hard times for builders, there’s no real evidence that construction costs have fallen. In fact, industry experts reckon that as many as two thirds of American homes may be undervalued for rebuilding purposes.
That means, it makes sense, one way or the other, to regularly check that your homeowners’ policy accurately reflects the cost of rebuilding it. There are several ways:
• Many insurers keep records on rebuilding costs and automatically adjust policies to reflect changes.
• Talk to your agent. Insurance agents have their finger on the pulse and know how to get the information you need.
• There are a number of online calculators which claim to be able to produce accurate figures. If you use these, you’re best to crosscheck between several. Beware: some of them charge for the service.
• You can ask a builder to do a walk-through with you and estimate the reconstruction cost.
• You can pay an appraiser to do a full inspection.
Bottom line: lower real estate values are unlikely to offer much opportunity to cut your homeowners’ premium, though there are other ways to tackle this, such as agreeing to pay a higher deductible or using the same insurer for auto as well as property cover.
If you are looking to save money on your home and auto Insurance in California, you should contact Placer Insurance Agency in Roseville CA. They are one of the largest independent Insurance Agencies in California. They provide both Personal and Commercial Insurance in addition to Life and Health Insurance. If you call for a Home or Auto quote talk to Stephen Makis. He has helped many Homeowner’s take advantage of as many discounts as possible. If you put your Home and Auto with the same carrier you could save an average of 20% on each. Contact Placer Insurance today!
Placer Insurance Agency
www.placerins.com
916-784-1008
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