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Tropical Storm Cindy Causes Insurance Moratoriums Along Gulf Coast

Tropical Storm Cindy Causes Insurance Moratoriums Along Gulf Coast

My email has been bombarded with notices since Monday from most of the insurance companies and brokers I work with. Each one has announced they are issuing a binding moratorium due to Tropical Storm Cindy. I thought this provided a good time to understand what an insurance moratorium is and how it impacts individuals and businesses when they occur. An insurance moratorium or binding prohibition simply means an insurance company, or companies, are placing a temporary halt on issuing new policies or raising limits on existing policies until they determine it can be lifted. Moratoriums don’t happen often, however, they are not an unusual incidence. Moratoriums can be issued for a variety of reasons and can be caused by human events or nature. Examples of moratoriums issued for human related actions include the rioting in Baltimore or Ferguson, Missouri. Nature causes the most moratoriums, usually due to a potential natural disaster such as a hurricane, tornadoes, flooding, earthquakes, and wildfires. Most insurance moratoriums issued in Texas have been caused by hurricanes and tropical storms when they enter the Gulf, flooding, and wildfires. Binding prohibitions are not issued on a statewide basis, but are focused on areas most likely to be impacted by a storm or civil commotion. For instance, the moratoriums most insurance companies have issued for Tropical Storm Cindy are relegated to a few counties along the Texas, Louisiana, and Alabama coast. Texas counties impacted include Orange, Brazoria, Harris, Galveston, Chambers, and Jefferson. Once the threat has passed, insurance companies remove the moratorium allowing new policies to be issued and limits to be adjusted as desired. The reason insurance companies issue binding moratoriums is to avoid paying for immediate and highly probable claims. No company wants to write a policy on a business or home that has a strong likelihood of being destroyed by a hurricane or flooded. To do so would be financially irresponsible for the company and unfair to existing policyholders. Insurance moratoriums may impact individuals, families and businesses. Most of the companies issuing moratoriums for Tropical Storm Cindy have done so on personal lines policies (home, car, and flood insurance), as well as commercial insurance policies (general liability and property). Hopefully, you’ll not experience nor be negatively impacted by an insurance moratorium. One of the best ways to avoid that is taking some time to review your personal and business policies now. You’ll be able to confirm if you’re prepared and have enough coverage before the storm strikes. What do you think? Share your comments, questions, and experiences with me on our Facebook, Google +, and LinkedIn pages. I’d love to hear from you! Thank you! Ed Wise Share...

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Home Insurance for Remodels and Fixer Uppers

Home Insurance for Remodels and Fixer Uppers

You’ve found your new home. It has great bones, hasn’t been updated, and you can make it into something special! All it needs is a little, or maybe a lot, of remodeling love to go with your vision of how to bring it up to date and make it uniquely yours. If you’re planning something like this, don’t let home insurance derail your vision. You may need something other than home insurance to tackle such a project; not all home insurance companies will write a policy for a home about to be or actively being remodeled. To determine which type of policy will provide the right kind of coverage and protection for you two questions need to be addressed: Will the home be occupied during the remodeling project? If not, how long will it take to complete the project, assuming everything stays on schedule? Occupied Remodel: If the home is going to be occupied during the remodel and the project will be completed in a couple of weeks, then a standard home insurance policy will work in most cases. Most home insurance companies won’t write a policy on vacant home while it’s being worked on. Vacant remodel projects increase the risk to the insurance company a claim will be filed for vandalism, theft, or even a fire. If your remodel is short term, or more cosmetic in nature, and you are willing to live through it, then start with home insurance policy. Unoccupied Remodel: If the project will last more than a couple of weeks because it’s more extensive, such as a building out a master suite and bath or gutting the kitchen to put in a new one with flooring, I suggest a vacant remodel or builder’s risk policy. These policies usually run from 30 days to 1 year and are used when the home will be vacant throughout the remodel. Both vacant remodel and builder’s risk policies are designed to cover the home as it is now, what insurance agents refer to as the existing structure, as well as the renovations. Extensive projects, such as these, typically increase the home’s value, and both policies cover the before, during, and completed project valuation change. In addition, these policies usually come with some level of liability coverage to project the homeowner should a worker, or someone visiting the home gets hurt while the remodel is underway. Determining whether a vacant remodel or builders risk policy is needed depends on the project’s timeframe and if structural changes will be made as a part of the project. I usually recommend a vacant remodel policy for projects which will be completed in 6 months or less and...

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New Safety Technology for Older Vehicles

New Safety Technology for Older Vehicles

Some friends of ours recently purchased a new Toyota Highlander. It’s equipped with some nice safety technology standard including blind spot and lane departure warning, a backup camera, and automatic breaking so you don’t rear end the person in front of you if they brake unexpectedly. I believe technology like this has the potential to help people be safer drivers and avoid accidents. Sheri’s and my 2012 Camry doesn’t have any of the technology our friend’s Highlander has. However, according to a recent Insurance Journal article, we could add technology if we decided to do so. With cars lasting an average of 11.6 years, you could potentially add this type of safety technology to your car too with a few aftermarket products. Here are a couple of items available now. Forward Collision & Lane Departure Warning: Tech company, Mobileye, offers a forward collision and lane departure warning system which warns drivers when they stray from their lane and when a collision is up to 2.7 seconds away. The cost of the system is about $1,000 which includes installation by a Mobileye technician. Garmin’s Dash Cam 35 has the ability to warn a driver of an impending crash up to 130 feet away if the driver is going 30 miles per hour or faster. You can buy this on Amazon for between $92 and $130 depending on which seller you choose to order from. Blind Spot Detection: These systems notify you when someone is coming up beside you in the next lane. Goshers Blind Spot Detection system, also available on Amazon, runs $299 or less and works using sensors to monitor within 10 feet on either side of the car. Unless you understand auto electronics, this is probably not a DIY project. Backup Camera: Yada, a Chinese company, makes a weather-proof camera with night vision which attaches to the rear of the car. It sends images to a 4.3-inch monitor via a wireless connection anytime the car is in reverse. This can be purchased at Pep Boys for about $129. If you don’t like the idea of a monitor, Auto Vox makes a system that displays the image in the rear-view mirror. It’s available on Amazon for about $139. Emergency Assistance: If you want something like General Motor’s OnStar system, but don’t own a GM vehicle, Verizon has something you may be interested in called Hum. It will call emergency services automatically if you’re in an accident, will send messages to your phone if there’s a mechanical problem, and offers a button drivers can push if they need roadside assistance. Hum is offered on a subscription basis for a cost of $10 a month plus...

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Hurricane Season Insurance Review

Hurricane Season Insurance Review

Welcome to hurricane season which runs from June 1 to November 30th. It’s a great time for Texas homeowners to take a few minutes to review their home insurance keeping in mind a hurricane or named storm can impact north Texas residents as easily as it does our coastal neighbors. Let’s address two key areas of your home insurance policy to review along with two other related policies. Home Insurance:  Review your wind, or wind / hail, deductible. This assumes you don’t have a separate wind policy. Wind coverage may be outlined in one of two deductibles: Wind / Hail Named storm Most Texans are already familiar with the wind / hail deductible. This is usually specified as a percentage of the home’s insured value such as 1% up to 5%, which is the maximum most mortgage companies permit. If your home has an insured value of $200,000 and you have a 1% wind / hail deductible, you’ll be responsible for up to $2,000 of any repair to the home caused by wind damage before the policy takes over. For those with a 2% or higher wind / hail deductible, I recommend setting aside funds to cover the amount of the deductible should a hurricane strike our coastline. The named storm deductible, also referred to as hurricane or tropical cyclone deductible, applies to any storm with a name, such as a hurricane or tropical storm. If your home policy has a separate named storm deductible, determine what is the lowest amount your carrier will write on your policy and that it doesn’t break your budget on the annual premium. I’ve seen a few policies in north Texas which default to a 2% named storm deductible, even from companies that will write a 1% deductible. By the time a hurricane reaches north Texas, it usually has been downgraded to a named tropical storm so this is a good exercise for north Texans to undertake! Wind Insurance: Coastal communities such as Galveston, Corpus Christi, Brownsville, and others may have wind coverage excluded from their home insurance policy and require a separate wind policy. Like flood insurance, wind coverage can be written to cover the home only or it may be written to cover both the home and your contents or personal property. Having coverage on the home only doesn’t help much if you lose your roof and all your personal property is lost or severely damaged. Confirm you have coverage on both and enough to rebuild your home. Flood Insurance: Flood insurance protects you financially whether the home is flooded by storm surge or from rising waters due to the heavy rainfall which accompanies a hurricane...

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Hurricane Preparation for 2017

Hurricane Preparation for 2017

The 2017 hurricane season started last week running from June 1 through the end of November.  Depending on which forecast you prefer to reference, the 2017 season will be higher than average with 11 to 17 named storms with 5 to 9 of those becoming hurricanes and 2 to 4 of those becoming a category 3 or greater. If the forecasters are correct and one of these hurricanes makes landfall, the damage can be severe.  This makes it a great time to review your insurance and hurricane preparations.  This week I’ll focus on basic preparation and next week we’ll examine the insurance related items to review now. Buy & Organize Now:  There are several things you can purchase now before a panicked run on Home Depot or the local grocery store. Secure 3 to 5 gallons of water per day for each person in your family and store in a cool dry place. Buy enough non-perishable food to feed your family for 3 to 5 days including dry beans, pasta, rice, and canned goods.  Add to that packaged tuna, salmon, and chicken that doesn’t need to be refrigerated. Consider buying a camping stove so you’ll have a way to cook your food if the power goes out. Purchase flashlights and extra batteries to last 3 to 5 days. Have sleeping bags, air mattresses, or extra blankets and sheets. Water purification supplies such as iodine tablets, a steri pen or water filtration system can be purchased from REI or a camping supply store. Create a list of everyone’s medications and make photo copies of prescriptions if you need to refill one.  Keep a list of any special medical needs a family member may have. Have extra baby food, formula, diapers, and other baby supplies ready. Buy disposable cleaning wipes (baby wipes) for the entire family.  It may be a few days until that next shower happens. Buy extra toiletries and personal hygiene items you may need. Prepare an emergency kit for your car including flares, booster cables, maps (cell service may be out), tools, a first aid kit and a fire extinguisher. Buy masking tape, nails, screws and sheets of plywood to cover large windows if you don’t have storm shutters.  This helps prevent wind and water damage caused by breaking windows and the tape protects against flying glass. Buy a hand crank powered emergency radio. Assemble these items and store centrally in a place you can easily access.  They need to be available if you’re unable to evacuate and will be invaluable if you have to leave quickly. Important Documents:  Create a grab and go box for your important documents.  This should be a...

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Car Insurance for Kit Cars

Car Insurance for Kit Cars

Do you get weak in the knees looking at pictures of a Shelby Cobra, an Ultima Evolution, Catarham Seven or a Kirkham 289 Coupe? Do you dream of a Lister Bell STR, the Lamborghini Diablo, or the Ford GT40? You may not be able to afford the real thing, which can cost hundreds of thousands of dollars, or more, but there is a way to come close with a kit car. There are some amazing car kits with nice engines and the perks of our current vehicles for those who are interested. The issue I’d like to address is what kind of car insurance does a kit car need? I answered this question for someone who was referred to me a couple of weeks ago. He owns a hot rod kit car based on a 1940’s era Ford. It’s a beautiful car with a chromed short block V8 engine, short windshield, leather seats, and a paint job to warm the soul. It also has a deep meaty rumble coming from the chromed side pipes that run the length of the car. The limitation of writing a standard car insurance policy on such a vehicle is that it doesn’t consider the kit car’s completed value. A standard policy operates on a depreciation basis so if the car is in a wreck, then the claim will be paid on the vehicle’s depreciated value which may be much less than it’s completed value. The only way to get around this, is to write a car insurance policy which covers the vehicle for its stated value. This is the same approach we take when writing a classic, collector, or authentic antique car (see http://wiseinsurancegroup.com/car-insurance-classic-cars/). In this individual’s case, the value of his completed kit is over $30,000. Depending on the kit type, underlying frame, and engine, kits can go for several times this person’s hot rod which is why a stated value policy provides the most complete protection for the owner’s investment. There are a few items an underwriter will want to review before writing a policy including: Is the car street legal? Was the kit built by the owner or someone who specializes in building cars? Can it be driven over 50 mph? How often will it be driven? Is it registered / titled to the person seeking the policy? Proof of its value such as a purchase receipt, appraisal, etc. Pictures of all four sides, the interior, and in some cases, the engine compartment of the vehicle. Not all carriers will require this information, but it does mean there are more options to choose from. In addition, this type of car insurance doesn’t cost an arm...

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