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Attorney General Issues Report on Managed Competition

Posted on December 30, 2009

On December 23, 2009, Attorney General Martha Coakley issued a report on the status of insurance deregulation.

According to the report, “the results over the first year have been, at best, mixed. While prices have dropped overall, consumers are currently paying more than they would have had the market not been deregulated. A variety of new insurance companies have entered the market, but most of the new entrants have not offered lower rates overall. Moreover, the new insurers have not caused incumbent carriers to lower statewide prices (indeed, in 2009, many insurers began increasing statewide prices).”

The AG’s report was critical of managed competition, citing several troubling developments during the first year of deregulation including the following excerpts from the report’s Executive Summary:

• Many consumers paid higher prices while companies increased profit targets in the rates.
  • Insurance companies began managed competition by raising their base rates by up to 10%, resulting in excessive rates in an environment where insurer losses have, on average, decreased over the past several years. If drivers are not chosen by insurers for preferential discounts, they will pay these increased rates.
  • The number of rating factors that rely on characteristics other than driving has increased; insurers now charge consumers based on factors such as prior limits of coverage, payment history, and the purchase of homeowners insurance. Many such discounts or rating factors may be proxies for banned factors, such as income and homeownership.
  • Insurance companies have significantly increased their underwriting profit adjustment provisions and shareholder returns loaded in their rates. In 2008, the Commissioner accepted target returns in the insurer rate filings that were over 150% of the 2007 regulated value for some
    insurers.
  • It appears that Hispanics and low income consumers (those earning under $25,000) have been especially disadvantaged by deregulation; a larger proportion of these groups have received rate increases, and fewer have received decreases. Elderly consumers and urban drivers may also ultimately pay increased prices, regardless of driving record.

• Company prices and rating behavior have become less transparent.
  • Deregulation has produced more secrecy and less transparency. Insurers have omitted data and information from their public filings; as a result, the filed rates are unsupported, and it is impossible to adequately assess their accuracy.
  • Many companies have refused to make public key rating information; it is impossible to determine how an individual consumer’s rate is calculated or whether individuals? rates are accurate or fair.
  • The insurers and their rating organization, the Automobile Insurers Bureau, have refused to make public data on claims, premiums, and expenses necessary to determine whether statewide rates are fair and not excessive.
• Consumers do not have easy access to accurate price information.
  • There is currently no easy way for consumers to determine what the market prices for insurance are, what each company will charge a particular individual, and what discounts and special coverages are available.
  • Some consumers have not been offered all discounts to which they are entitled, have had difficulty obtaining quotes from agents, and have received different quotes from different agents for the same insurers.
  • It appears that only a small percentage of consumers switched carriers to take advantage of lower prices (or for any other reason) in 2008.
  • The Division of Insurance’s website, ostensibly designed to help consumers to “shop around,” gives unhelpful and misleading insurance information and steers consumers in many instances to more expensive insurance companies.
    
    
• Consumer protections have weakened.
  • The Commissioner adopted an order to eliminate the Board of Appeal, which provides an impartial forum for consumers to appeal insurers’ fault determinations; the Legislature subsequently passed a law keeping the Board permanently in place.
  • Because insurers are no longer required to offer insurance to consumers they consider undesirable, many good drivers, particularly in urban areas, may be nonrenewed or denied coverage.
  • Consumers refused coverage are randomly assigned to an insurer in the residual market; agents report that many such consumers fail to receive appropriate discounts.
  • Insurers have created new policy provisions and rules that eliminate consumer protections. Some insurers increase prices for not-at-fault accidents, charge for excluded drivers or drivers who already have their own insurance policies, and have adopted problematic provisions related to cancellation, down payment, deductibles, installments, and rating factors. Many consumers are unaware of these changes.
• Significant barriers to competition still exist.
  • Many companies charge “short rate” penalties when consumers switch companies during the policy year, limiting customers’ ability to switch carriers except around the renewal date. Moreover, loyalty discounts may also deter consumers from switching to a better priced carrier
    every year.
  • Many companies offer insurance agents significant bonuses for bringing in specific kinds of customers. Certain agents, as a result, may have an incentive to recommend the policy that offers the most lucrative commissions.
  • Most Massachusetts consumers purchase insurance through an independent agent, yet most agents typically cannot or do not provide price quotes for more than a couple of carriers.
  • Some insurers have been allowed special deals from Commissioner Burnes, creating an uneven playing field in the marketplace. These special arrangements, such as permitting new entrants to avoid residual market costs for two years, harm other insurers, and harm competition.

The AG’s Executive Summary concluded with a discussion of the road ahead for managed competition including the following recommendations:

The Road Ahead
Implementation of a truly competitive system has the potential to lower prices for all consumers. Unfortunately, the current experiment in deregulation has thus far not achieved this goal. Instead, managed competition has caused many drivers to be overcharged, and has led to fewer consumer protections. For reform to work, true consumer protections need to be developed, and regulators must ensure that rates are transparent and not excessive.

It is possible to design an effective managed competitive system that meets these goals. Such a system would:

• Provide consumers with the necessary tools to “shop around.” To benefit from a competitive market, consumers must obtain price quotations from a wide range of companies in order to find the best price for their needs. A central web portal would allow consumers to input their information once and obtain comparative quotes from any or all insurers.
• Ensure that underwriting and rating are not unfairly discriminatory. Insurers should not use proxies for prohibited rating factors or refuse to offer insurance to good drivers.
• Strengthen consumer protections. While Commissioner Burnes promulgated regulations and bulletins dealing with managed competition, none of these provisions deal with consumer protection issues such as marketing and unfair practices. Advertising, pricing, and claim practices should be fair and
  consistent.
• Remove impediments to competition. Currently, numerous barriers to competition exist, including inadequate information, non-standardization of policies, and short rate penalties. These barriers should be removed.
• Provide for rigorous review of proposed rates. Insurers now file rates with little or no supporting information or documentation for important rating elements. Rate support should be carefully scrutinized, and inappropriate costs should not be passed on to consumers. Insurance premiums should not be based on inflated projections that overcharge Massachusetts drivers.

To protect consumers, it is important to address the issues outlined above and discussed in this report. While deregulation may ultimately offer advantages to consumers, reforms are needed to increase price transparency, create easy access to accurate and complete information, ensure fair prices, and provide adequate consumer protections. Without these features, insurers and not consumers will benefit from deregulation, and many Massachusetts drivers will continue to overpay for their automobile insurance.

The Attorney General’s Office represents consumers in matters related to insurance. Under managed competition, the Attorney General has reviewed filed rates and called for rate hearings before the Division of Insurance, demanding the rejection of discriminatory and excessive rates; urged the Commissioner to require full and complete filings; provided testimony before the Legislature and Division of Insurance recommending stronger consumer protections; and brought cases against insurance companies that sought to take advantage of Massachusetts consumers. However, while advocacy and enforcement proceedings do help, the market also needs fair and firm rules that create bright-line boundaries for insurer behavior, a level playing field, and strong consumer protections.

Therefore, the Attorney General’s Office intends to promulgate consumer protection regulations under her G.L. Chapter 93A Consumer Protection regulatory authority. In addition, for issues that are not best suited for regulation, the Attorney General’s Office plans to work with the Legislature to explore potential solutions to these problems.

We have posted the AG’s 55 page report and 5 page executive summary on our website. Click here (massagent.com/info/AGReport.pdf) to read and/or download the entire report.

When my client moves, what coverage does his ISO HO policy provide him? If there is a loss during the moving process, will the ISO HO policy respond?

Posted on September 18, 2009

The answer depends on the type/range of perils applicable to Coverage C. Personal Property and the particular loss. The unendorsed ISO (HO-91 or HO-2000) HO-3 Special Form policy provides “named peril” coverage to contents. These 16 named perils are essentially the same as found in the HO-4 Tenants Policy, HO-2 Broad Form Policy or HO-6 Unit-owners Policy.

One of the named perils is “vehicles”. If the moving van is involved in an accident there could be resulting damage to the contents inside. The vehicle peril in the ISO HO policy should respond to this situation. Certainly, if the moving van overturns, the “vehicle” peril would respond to the resulting damage to the contents inside the moving van. If items fell off the vehicle used to transport the items to the new location, again, the “vehicles” peril should respond. If the moving van hit the curbing, sideswiped another object or the top of the van struck an overhang any resulting damage to the contents in the interior of the moving van would be covered under the “vehicles” peril.

The ISO HO policy does not require that there be physical contact by the vehicle, it merely requires that direct physical loss to covered property be caused by a listed peril.

B.	Coverage C – Personal Property We insure for direct physical loss to the property described in Coverage C caused by any of the following perils unless the loss is excluded in Section I – Exclusions.6. Vehicles

Just what is “caused”?
A listed peril must be the “cause” of direct physical loss to covered property. Dictionary definitions of “cause” include:

a.	The producer of an effect, result, or consequence.
b.	The one, such as a person, event, or condition, that is responsible for an action or result.
or
	to be the cause of; bring about.

You know … that whole “proximate cause/efficient proximate cause” or “chain of events” theory. If not for being in a vehicle … if not for the vehicle hitting something … would your property have suffered DIRECT PHYSICAL loss?

The Massachusetts Supreme Court discussed causation in the Jussim v. Massachusetts Bay Insurance Co ., 415 Mass 24, 610 NE2d 954 (1993):

The principle quoted above is based on a test which has long been used by this court to resolve coverage controversies in chain causation cases. That test seeks to determine the efficient proximate cause of the loss. If that cause is an insured risk, there will be coverage even though the final form of the property damage, produced by a series of related events, appears to take the loss outside of the terms of the policy…

The active efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source is the direct and proximate cause referred to in the cases …57

Citing Jussim, a U.S. District Court acknowledged that Massachusetts generally recognizes a “chain of events” rule that permits plaintiffs to recover for an excluded loss if the efficient proximate cause of that loss was covered but nonetheless denied coverage where the policy unambiguously excluded damage caused by a fire that occurs at the same time as, or ensues from, a boiler or machinery breakdown.59

It’s interesting …
How we like to add WORDS to the policy. Some think there is only coverage when the vehicle HITS the covered property … WHERE oh WHERE does it say THAT??? Please there are WAY too many words in the policy already … let’s not add anymore!

How much coverage do I have in the moving van?
The ISO HO policy allows the client complete Coverage C limit to apply while temporarily off the residence premises. Of course, all “special limits” or exclusions as to particular types of property apply.

What happens if the new $2,500 HD Plasma TV is dropped while moving into or out of the moving van?
Dropping is NOT a named peril. The unendorsed HO-3, the HO-4, HO-6 and HO-2 would not cover this scenario. However, if the ISO HO-91 HO-3 were endorsed with the HO-15 Special Personal Property Coverage endorsement, then this claim could be covered. This endorsement can only be added to the HO-3 Special Form policy. It provides “open peril” coverage to the property covered under Coverage C. Or, if your company uses the HO-2000 version then sell the HO-5 Comprehensive form.

If your insured has an HO-6 under either the HO-91 or HO-2000 program then the HO 17 31 Special Form Coverage C endorsement should be added. Under the HO-2000 program there is even an “open perils” endorsement for the Tenant HO-4 form. This endorsement number is HO 05 24

I thought there was “breakage” exclusion under the all risk policies or
endorsements …
Open perils contents DOES have a restriction for breakage of certain articles such as eyeglasses, glassware, statuary, marble, porcelains, bric-a-brac and similar fragile articles other than jewelry, watches, bronzes, cameras and photographic lenses. This “short list” of articles is covered for breakage ONLY if caused by certain named situations and “dropping” is NOT one of them!!!

Remember … HO loses are paid on an ACV basis …
Whether your client has “named peril” contents coverage or “open peril” contents coverage, losses are paid on an ACV (depreciated) basis. In order to remove this “depreciation” penalty, the Replacement Cost Endorsement HO 04 90 is necessary.

Wouldn’t the moving van business be responsible for the loss, anyway??
Well, yes… maybe. If the client signed any paper work they might have “waived” or “reduced” their rights of action against the moving business in order to get a cheaper rate.

The moving van company might be responsible, but do they have insurance??? The BAP policy
that covers their moving van has an exclusion entitled “Care, Custody or Control”.

The BAP liability portion will NOT cover “Property damage” to or “covered pollution cost or expense” involving property owned or transported by the “insured” or in the “insured’s care, custody or control.”

The CGL policy that the moving van business purchases to cover their “other than auto operations” also has a care, custody and control exclusion.

The CGL property damage liability coverage does NOT apply to “property damage” to personal property in the care, custody or control of the insured.

If the customer makes a claim, it will be directly against the moving business, not against the
BAP or CGL insurance of the moving business.

Could the moving company purchase coverage for this exposure?
Yes, there is inland marine coverage that the business can purchase. But, do they? Or, do they “pass the cost along” to the customer? Does the customer sign away their rights in order to get a cheaper price? Does the customer reduce their actual values received if there is a loss to a lower valuation in order to get a cheaper price?

If the client has the homeowners coverage for the loss caused by the moving company …
By purchasing “open peril” coverage on their contents, most items will be covered for breakage. The HO insurance carrier will make the decision as to whether they will subrogate or not. Also, the insured has the open peril coverage “all year round” now which can be a good thing for losses such as power surge to electronic equipment!

What if the insured moves their OWN property …
The HO policy still applies ….as long as the insured did not INTENTIONALLY damage his/her stuff!

Will the MAP apply to a loss if stuff falls out of the vehicle or gets damaged in the vehicle?
No … Part 4 under the MAP excludes:

6.	To an auto or other property owned by you or the legally responsible person. Similarly, we will not pay for damage to an auto or other property, except for a private residence or garage, which you or the legally responsible person rents or has in his or her care.

The infamous “care, custody, and control” exclusion sends the claim back to a property policy … the homeowners policy.

Yes, the HO deductible STILL applies … so … is the loss worth submitting to the company … if one might lose their loss free credit … or worse yet … the policy renewal!

PS … the AAIS forms … are very similar …
From a “named peril” standpoint Contents starts out with:

“We” insure against direct physical loss to property covered under Coverage C caused by the following perils, unless the loss is excluded under the Exclusions That Apply To Property Coverages:

f. Vehicles

Direct Physical loss merely needs to be “caused by” a listed peril. And … the vehicle peril … also is only ONE word … don’t add any more! The “all risk” coverage is similar in the breakage language to the ISO policy … so moving is covered under the AAIS form … and dropping and breaking can be covered under the “all risk” forms but NOT for eyeglasses, glassware, statuary, marble, porcelains, bric-a-brac and similar fragile articles!

MySpace, Facebook, Blogging, Emails, Texting … The Internet Exposure

Posted on July 22, 2009

What you “say” on the internet…

Some people put some awful stupid statements in writing. YES … All of that IS in “writing”. Libel … the things you write … are easier to prove against you than the foolish things that you say (slander).

People are suing …
People don’t think about these things … until they get sued … and even then … I bet they think that they are covered under their HO policy. Whoops … guess again!

Did you know …
In Hermitage Pennsylvania a high school co-principal is suing four former students for creating a “parody profile” on MySpace.com where this principal “admitted to” smoking pot, having sex with students and keeping a keg of beer behind his desk.

Oh, by the way … this is a FEDERAL lawsuit …
Could this happen to some of YOUR insured’s kids … to the parents of these kids for “negligent supervision????” And … if it does … and your insureds are sued … will their HO policy respond with defense and coverage?

And … in another part of the country … San Antonio, Texas …
An assistant high school principal filed suit against two former students AND their parents for alleged defamatory statements made on their MySpace.com web page. She is suing for “defamation, negligence and gross negligence” for the “lewd, defamatory and obscene comments, pictures and graphics.” She is also suffering because a multitude of miscreants who have viewed“her” page … and contacted her.

The allegation against the parents contains the following language as “allowing access to the Internet, unsupervised and without restraint poses an obvious risk and unreasonable danger that such children would utilize the Internet for illicit purposes.”

For those of you who think … “kids will be kids” … this is a tad different than writing nasty things on the bathroom stall doors.

Internet-related Defamation lawsuits increasing …
106 civil lawsuits against bloggers and others in social networks and online forums were reported in statistics by Citizen Media Law Project at the Berkman Center for Internet & Society at Harvard University. This is up from just 12 in 2003.

What will the unendorsed Homeowners policy do?
The ISO unendorsed homeowners policy covers Bodily Injury and Property Damage liability.

“Bodily injury” means bodily harm, sickness or disease, including required care, loss of services and death that results.

“Property damage” means physical injury to, destruction of, or loss of use of tangible property.

One’s reputation is not “tangible property.” One who suffers mental anguish and emotional trauma over items “written” on the Internet about them does not suffer “bodily injury” … at least not in Massachusetts.

So … if either the named insured or other resident relative writes a defamatory remark about someone else or deliberately writes incorrect information about someone else resulting in a lawsuit … what will the HO policy do?

NOT MUCH …

SECTION II – LIABILITY COVERAGES

A. Coverage E – Personal Liability
If a claim is made or a suit is brought against an “insured” for damages because of “bodily injury” or “property damage” caused by an “occurrence” to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which an “insured” is legally liable. Damages include prejudgment interest awarded against an “insured”; and
2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the”occurrence” has been exhausted by payment of a judgment or settlement.

If the suit or claim is not BI or PD … then the Section II coverage will NOT apply … and therefore there will be no payment of damages or defense coverage.

What if the insured is NOT “guilty”?
Well … I guess that’s great … but how does that get proven? If your insured is sued then there will be a court case. Who will pay for the lawyer? If they have a normal unendorsed HO policy … not the HO carrier!

In today’s world of suit-happy individuals the Internet just provides one more mechanism from which potential problems and lawsuits can arise. And now … so many people have Internet capabilities on their cell phones.

 

1. HO 24 82 (04 02 edition) Personal Injury endorsement

   SECTION II – LIABILITY COVERAGES

    

   A. Coverage E – Personal Liability
   The following is added to Coverage E – Personal Liability:

   Personal Injury Coverage
   If a claim is made or suit is brought against an “insured” for damages resulting from an
   offense, defined under “personal injury”, to which this coverage applies, we will:
   
   

    

   1. Pay up to our limit of liability for the damages for which an “insured” is legally liable. Damages include prejudgment interest awarded against an “insured”; and  

   2. Pay up to our limit of liability for the damages for which an “insured” is legally liable. Damages include prejudgment interest awarded against an “insured”; and

   DEFINITIONS

   The following definitions are added:

   “Personal injury” means injury arising out of one or more of the following offenses, but only if the offense was committed during the policy period:

   1. False arrest, detention or imprisonment;
   2. Malicious prosecution;
   3. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
   4. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; or
   5. Oral or written publication of material that violates a person’s right of privacy.
2. Personal Umbrella policy … might provide such coverage as a broadening applicable over the “deductible”/Self insured retention

In today’s world this is a very REAL exposure, and you SHOULD have this endorsement on your homeowners’ policy. It is inexpensive and one that I certainly want … and have … on MY policy.

RMV Fee Changes Effective April 3rd at 5 PM

Posted on April 1, 2009

Registration Fees
Amendment	$25.00
Duplicate	$25.00
License & ID Fees - Issue and Renewal
Class A	$75.00
Class B	$75.00
Class C	$75.00
ID/Liquor	$25.00
Out of State License Conversions
Class A	$125.00
Class B	$125.00
Class C	$125.00
Title Fees
Certificate of Title - Clear, Owner Retained, Reconstructed and Recovered Theft	$75.00
Salvage Title - Repairable and Parts Only	$50.00
Other Fees
Instant Issue License/ID	$75.00
Driver History (Paper)	$20.00
Driving Records - Certified and Non-Certified	$20.00
Accident Report	$20.00
Reducible Load Permit Amendment	$20.00
Reducible Load Permit (Overweight Permits)	$50.00 Minimum
Return Check/CC Fees	$15.00

Some of the proposed fee increases will be phased in or require legislative approval. They include:

Passenger Vehicle Registrations
Class D License
Duplicate License
Amend/Remove License Restriction
Driver Ed Final Exam
Certified Copy of License, Registration or Title Information
School Bus Reinspection Fee

* * * * *

Insurance Ratings Upgrades Barely Outpaced downgrades in 2008

Posted on February 24, 2009

Downgrades and upgrades of financial strength ratings of Property/casualty insurers were almost even.  In 2008, 57 companies received downgrades in their ratings, while 59 companies received upgrades.  Upgrades and Downgrades were nearly even in commercial lines.

Make sure your agent has you with a strong company and has the ability to change companies if the ratings drop.

New RMV Policy on Non-Payment of State Taxes

Posted on December 16, 2008

Legislation Requires the RMV to suspend the driver’s license and vehicle registrations of drivers who have outstanding tax obligations owed to the Department of Revenue.  Suspension notices will be issued once the action is entered in to ALARS.  Customers with suspensions due to non-payment of state tax will:

1. Receive a letter stating their licenses/registration(s) will be suspended 10 days from the date of letter.

2. Have a suspension pending on his/her license and /or registration record during the 10-day grace period  or be suspended after the 10 days if he/she fails to clear the obligation.

3. Receive a letter each time the DOR notifies the RMV of any new tax non-payment issues.

4. Pay a $100.00 license reinstatement and/or $50.00 Registration reinstatement fee if they fail to clear the obligation and their license and/or registration is suspended.  Payment of the reinstatement fee is in addition to any costs associated with clearing the issue with DOR.

Customers with suspensions or pending suspensions due to non-payment of state tax must contact the Collections Bureau at the  Department of Revenue to resolve the issue at 617-887-6400

Merchants Insurance Group Lowers Commercial Rates

Posted on August 13, 2008

They are being very aggressive with their rate reductions. The average rates are going down between 11 and 20% depending on types of business and multi policy credits.

COMM’L AUTO - FLEET = 3 VEHICLES!  COMPANION CREDITS, EXPERIENCE RATING & IRPM  WITH UNDERWRITING PERMISSION!  WE WILL NOT BE BEAT & WILL PENETRATE MA & RI AS PROMISED!

Progressive Acknowledges Error in Rate Comparisons …

Posted on August 13, 2008

<In an email letter sent on August 1 to all Massachusetts residents who visited Progressive Insurance’s website, the company acknowledges that the comparison rate quotes it displayed for Arbella Insurance were incorrect and “may have been higher than [they] should have been.”

MAIA applauds Arbella for being aggressive in confronting Progressive for its inaccurate quoting. MAIA has brought to the attention of the Insurance Commissioner and the Office of the Attorney General a number of practices by Progressive which are not in compliance with regulations issued by the Division of Insurance and even Progressive’s own rate filing. We will continue to raise these issues as they come
to our attention.

Five Losses Not Covered by Your Homeowner’s Insurance

Posted on March 18, 2008

The National Association of Insurance Commissioners (NAIC) reports that millions of homeowners incorrectly assume that homeowner’s insurance covers nearly all property losses that occur in and around the home. Here are some of the most common misconceptions about what is covered by homeowners insurance.

1) Auto and boat. Some 68 percent of homeowners surveyed by the NAIC believed that damage to an automobile, motorcycle, or boat would be covered by their homeowners insurance, if damage occurred in their garage or on their property. This is incorrect. If an earthquake causes your garage to collapse on your car, or if a tree falls and crushes a boat, your losses to your vehicles would not be covered by your homeowner’s insurance. Separate insurance is required for vehicles and boats.

2) Earthquake destruction. Thirty-five percent of homeowners believe that earthquake damage is covered by their homeowners insurance. They are wrong. Earthquake insurance is available, but only as a separate insurance policy with the price varying from region to region, depending on the likelihood of an earthquake occurring. The U.S. Geological Survey states that earthquakes have struck 39 states since 1900. Alaska, Hawaii, California, and other western states lead the nation in the frequency and severity of earthquakes, but devastating earthquakes have hit the Mississippi Valley, the Northeast, and the Southeast as well. The Federal Emergency Management Agency states that direct losses from earthquakes total $4.4 billion a year. Because of the high costs and frequency of earthquakes in California, property insurers stopped offering earthquake insurance after the Northridge earthquake of 1994. The California legislature stepped in and mandated that any company offering property insurance in the state had to participate in a state-backed earthquake insurance pool for homeowners.

3) Mold. Severe earthquakes are big, loud, and produce violent motion. Another danger to homes is small, silent, and still. Hidden in the darkness behind drywall, cabinetry, and tile grow colonies of mold. Mold particles can become airborne and make people ill. Removing mold from a home is so costly that insurers have stopped underwriting its elimination. According the NAIC survey, 34 percent of homeowners do not realize mold damage is not covered by their Homeowners Insurance.

4) Flooding. A third of the respondents to the NAIC survey believed that standard home owner insurance covers losses due to flooding. In fact, private insurance companies do not offer flood insurance. Only the federal government does. The reason is simple: the danger of flooding is so widespread and the effects of flooding are so costly that private insurers cannot make a profit by assuming the risk. To protect homeowners from financial disaster in the wake of a flood, Congress created the National Flood Insurance Program (NFIP), which offers flood insurance to homeowners who live in communities that invest in the infrastructure needed to prevent flooding. According to the U.S. Geological Survey, the entire United States is subject to flooding, although some areas face greater dangers than others. Homeowners who live in Special Flood Hazard Areas are required by law to buy flood insurance from the government. For everyone else, flood insurance is optional.

5) Pests. Just less than a third (31 percent) of homeowners believe their homeowners insurance covers losses due infestations of termites and other pests. Just as no areas of the United States are free from the danger of flooding, neither are any areas free from destructive pests such as termites, ants, rats, bats, and mice. As a result, insurance companies cannot afford to insure against the damage natural pests can wreak on a home.

The majority of homeowners realize that their homeowners insurance does not cover every type of damage to the home, but the NAIC survey shows that roughly a third do not realize that their largest asset is not insured against some of the most common dangers that threaten their home. Homeowners need to review their policies to fully understand what exposure they face, then determine if the cost of supplemental insurance is worth the added expense. Considering that the home is the largest asset most people own, it is in their best interest to make sure that a lifetime investment cannot be wiped out in a matter seconds by a natural or manmade disaster.

Mass. Bill Banning Texting Would Allow Insurance Surcharges

Posted on February 5, 2008

The Massachusetts House of Representatives recently passed a bill that would fine Bay Staters who drive while talking or sending text messages on cell phones, and allow insurers to hit all violators with a surcharge on there auto insurance premiums starting July 2009.

The bill would prohibit drivers from making calls without a hands-free device. Pager, personal digital assistant and laptop use while driving would be off-limits.  Navigational devices and audio equipment are exempt from the ban, as are emergency calls or the use of phones by emergency personnel.

Offenders would receive a $100 fine for the first offense, $250 fine for the second offense and a $500 fine for all other offenses. Drivers under 18 would have their licenses suspended for 60 days following a first offense, 180 days after a second offense, and up to a year for a third offense. 

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