Consumer Insurance Blog

Does homeowners insurance cover a flooded basement?

2010-03-16T13:06:14Z

Here's a question thousands of homeowners and renters will be asking now that the recent heavy rains are abating: Will insurance cover the water damage in my basement? Unfortunately for most the answer is "probably not." Standard Homeowners' insurance does not cover damage from flooding, so unless you have a specific flood insurance policy, you will have to foot the bill for any water damage from the recent rains. The Insurance Information Institute offers this rule of thumb: water that comes from from top down (ice dams, for example) is generally covered, but when water comes from the bottom up, such as in flooding, it's not covered. Many homeowners who live in a low-risk flood area think they do not need to insure against flooding but the reality is that in any given year, about one-third of all claims paid by the National Flood Insurance Program are for policies in low-risk communities. Over a 30-year mortgage, your home has a 26% chance of being damaged by a flood, compared to a 9% chance of fire. Water damage repair can be costly - you can learn just how costly with this inch-by-inch interactive cost of flooding calculator. You can learn more about floods, your risk of flooding, and the National Flood Insurance Program (NFIP) at Floodsmart.gov. Don't get caught short - talk to your agent about flood insurance options - if you are in a low to moderate risk zone, insurance can be very affordable.

Behind the wheel: when being too polite is dangerous

2010-03-09T17:10:51Z

In this day of road rage and road rudeness, it seems a little crazy to take issues with drivers who are polite -- but in an article by Joseph Younger entitled When Courtesy Turns Dangerous, CarandTravel reminds us that there are times when politeness can inadvertently get you into trouble. This is generally at intersections or right of way situations. "Drivers who cede their legal right of way out of courtesy, thinking that they’re doing you a favor, might actually put you at risk." They offer a handy list of "Dos and Don'ts" - if you are in the "courteous driver camp" it might make you think twice about the error of your ways; and if you are a recipient of such courtesy, it explains why a traffic favor may not be such a favor after all. Rules of the Road Refresher Safety Blog at Consumer Reports comments on this article, and says that the right thing to do in a "right of way" standoff is to follow the rules of the road. They post a handy list of "right of way" rules from New York. Massachusetts right of way rules can be found in the driver's manual beginning on page 17. We've excerpted the main rules, but the manual offers a handy refresher for these and other traffic laws. Intersections not controlled by signals You must yield the right-of-way to any vehicle that has entered the intersection from your right or is approaching from your right. Look for any traffic approaching from the left. Even though you may have the legal right-of-way, make sure that the other driver is yielding to you before you proceed. Four-way stops At an intersection controlled by stop signs in all directions, you must yield the right-of-way to...

Another vehicle that has already come to a full stop at the intersection
A vehicle on your immediate right that has stopped at the intersection at the same time as you

At a four-way stop, vehicles must proceed in the order they stopped. The first to stop is the next to go. If in doubt, give the right-of-way to the driver on your right. Confusion can develop at four-way stop intersections. You should try to make eye contact with the drivers of other vehicles at the intersection to better judge their intentions and avoid accidents. Turning Left When making any left turn, you must first yield the right-of-way to any:

Oncoming vehicle
Vehicle already in the intersection
Pedestrians or bicyclists crossing your intended path of travel

Private Roads, Driveways, and Unpaved Roads If you are entering a paved thoroughfare from a private road, a driveway, or an unpaved road, you must stop first and give the right-of-way to pedestrians, bicyclists, or vehicles traveling along the road you are entering. Through-ways If you approach a designated through-way, you must yield the right-of-way to traffic on the through-way before you turn. Intersection of Single or Two-Lane Road and Multiple-Lane Road If you are traveling on a single or two lane road and come to an intersection with a larger road, you must yield the right of way to vehicles driving on a divided highway or a roadway with three or more lanes. Rotaries Traffic moves in a counterclockwise direction around a rotary. You must always yield the right of way to vehicles already in the rotary (unless directed differently by local signs or police officers) and to pedestrians. You should use your turn signals in the same way as any other intersection: travel through the rotary and, when you are ready to exit, use your right turn signal. Other situations that require you to yield the right-of-way

Pedestrians who are walking in or crossing a roadway
Any animal that someone is leading, riding, or driving
Funeral processions (in MA, it is against the law to disrupt or cut through a funeral procession)

Risk, insurance, & the movies

2010-03-05T18:47:49Z

Because it's the Friday of Oscar weekend, we thought that films and movies would be an appropriate theme for today's post. You might have opinions about which films had the best acting or the best special effects but can you guess what the riskiest movies of the year were? We're talking natural disasters, filming in multiple foreign locations, impressive stunt work, explosions, car chase scenes - anything that would add to potential risk and liability that the movie studios must bear. Well, now you will be able to regale your friends and family with film-related risk trivia because Fireman’s Fund Insurance Company, a company that has a long history insuring major Hollywood films, has just issued its annual list of The Riskiest Movies of 2009. The awards go to "2012," "Crazy Heart," "Inglorious Basterds," and "Nine," but you'll have to read the article to learn more about why. You can compare this year's crop of risky films to the 2008 list. A 2008 USA Today article Lights! Camera! Risk! Insuring movies is risky business offers a more in-depth look at some of the risk issues involved in film making. These can include such disparate hazards as wild and trained animals, technology glitches, actors who have to leave the set mid-production to go to rehab, and weather related events that may delay production schedules or pose danger to the cast, the crew and the props. Insurance professionals in the movies Over the years,there have been a few excellent films that feature insurance professionals - but they aren't usually very flattering. Marcus Covas reminds us of a few of the more prominent roles, and he offers an interesting list of the Top Movies No Risk Manager/Insurance Professional Should Miss. His list includes ten films, and he discusses the insurance issues that are at play in each of the films. In addition to the roles Covas cites in his article, there was a 1959 film called Alias Jesse James, which starred Bob Hope as an insurance agent. The premise of the film, according to IMDB, is that the outlaw T.J. 'Jesse' James (Wendell Corey) tries to kill insurance agent Milford Farnsworth (Bob Hope) who has been mistaken for him in order to collect on a big policy. If you have the time and the inclination, you can watch the entire film online.

Beware the "free" lunch

2010-03-04T20:17:54Z

It's nice to have a gourmet meal prepared by a celebrity chef - but $70,000 is a little too much to pay for that privilege. That's the amount of money that one elderly couple lost in an unscrupulous investment scheme. They, along with about 90 other investors who "were elderly and of limited means," were cajoled into high risk investment schemes over fancy lunches and dinners. Milt Freudenheim discusses these free-lunch scams in his New York Times article Bad Investment Advice Can Turn a Free Meal Costly.

"Financial fraud is the No. 1 consumer protection issue for AARP," said Andres Castillo, who heads an AARP program that monitors free lunch seminars and similar presentations. In an AARP survey last year of people 55 and older, 9 percent said they had attended a free financial seminar within the last three years. That translates into approximately 5.9 million people, the group said.

Freudenheim quotes one S.E.C. official as saying that if a person tries to sell you something, you should ask two questions before you go further: "Are you licensed?" and "Is the product registered?" Freudenheim also offers consumer resources, some of which we're recommended previously:

FINRA background Check - a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers
The U.S. Securities & Exchange Commission's investor education site - check out brokers and investment advisers
North American Securities Administrators Association - use the map to find your local regulator. The site has other good investor advice, as well.

We would also add: The National Association of Insurance Commissioners map to state insurance departments, where you can review agent licensing information.

Life events that should trigger a call to your insurance agent

2010-03-01T20:23:15Z

All too often, people only think about insurance when they have a loss or when it's time for an annual insurance policy such as auto or homeowners to renew. That's just human nature. Yet insurance is an important part of financial planning and deserves more consideration than a quick search for the cheapest quote come renewal. As with any other purchase, cheapest is not always the best purchasing criteria - you get what you pay for. While there is certainly no sense in spending more than you need to, you should be sure that the insurance package you buy will provide sufficient coverage for your particular situation. The question lies in what's sufficient coverage - and that may very well vary over the course of your life. Insurance is essentially a form of financial risk management that is designed to protect an individual or a business from loss resulting from adverse life events. A single person in their 20s will have very different coverage needs than a middle-aged parent who owns a home and has several dependents. When certain major life events occur, they should trigger a review of insurance coverage. You may need to add a new type of coverage, you may want to raise or lower deductibles on an existing policy, or there may be opportunities for savings or discounts. Your independent insurance agent will be able to inform you about various coverage options - but can only advise you based upon what he or she knows. It's good to keep insurance coverage in the back of your mind, and get in the habit of making a call or dropping a note to your local agent when you experience a major life event, such as any of the following:

Marriage
Divorce
Birth or adoption of a child
Death of an immediate family member
Military deployment
Purchasing a new home, condo, or a second home
Home renovation
Adding buildings to your property
Renting out your home
Moving to a new geographic area
Renting an apartment
A teen child getting an auto license
Changing jobs and job benefits
Starting a small business
Acquiring expensive electronics, antiques, jewelry, furs, or specialty collections
Acquiring a recreational vehicle - boat, motorcycle, snowmobile
Joining a carpool
Retiring

Funny Russian insurance ad makes a serious point

2010-02-26T15:25:01Z

Don't worry - you don't need to understand Russian to get the point of this clever Russian auto insurance ad. It uses fun special effects to make the point that some insurers will go to great lengths to avoid you when you have an auto insurance claim. If you are having trouble finding an insurer that will be there when you need them, that's where your local independent agent can help!

Please rob me: when social networking turns risky

2010-02-18T14:56:08Z

As social networking becomes more and more ingrained in people's lives, many incautious, naive, or new users may be inadvertently heightening their risk of becoming a crime victim. A site called PleaseRobMe.com graphically illustrates this point by highlighting recent tweets in which Twitter users are telling followers where they can be found. The site is simply aggregating public information that is available to anyone - you, me ... and crooks. As the site founder notes,

"The danger is publicly telling people where you are. This is because it leaves one place you're definitely not... home. So here we are; on one end we're leaving lights on when we're going on a holiday, and on the other we're telling everybody on the internet we're not home."

The goal of the site is to raise awareness of the potential dangers of location sharing and to make people think twice about the way they are using various social tools such as Twitter, Foursquare, Brightkite, Google Buzz, and Facebook. Last June, we posted Careful what you Tweet - crooks could be using social networks, too, about the highly publicized case of an active social networker who Twittered about his trip only to return home to find that his home had been burglarized while he was away. While the dangers of the Internet can sometimes be overly dramatized in the media, raising awareness of how social media tools are used is a worthy goal. It's a new era of heightened transparency and we all need to learn to step with care.

Would you recognize this ATM fraud?

2010-02-11T14:56:11Z

Technology security expert Brian Krebs asks if you'd have spotted this skimming fraud device when you went to use your ATM? ATM skimmers are card-reading devices that cover the real card slot, and are usually installed in conjunction with a camera to record the PIN number. Skimmers can be affixed at bank ATMs, freestanding ATMs, ATM-enabled gas station pumps, and anyplace else that an ATM might be found. ATM skimming devices are getting more sophisticated - they've even been found in high-traffic bank lobbies. But experts say that by being alert and cautious, you can minimize your risk of being a scam victims. To help raise your awareness of what to look for, we've gathered some examples with pictures and visuals:

Credit Card Skimming: How thieves can steal your card info without you knowing it
Example from the University of Texas Police Department
How to avoid ATM skimming
Attack of the card skimmers
This 6-minute video from the BBC's The Real Hustle demonstrates gives a fascinating overview of how ATM skimmers work:

Tips to avoid ATM skimmers We've gleaned these "best practice" tips from some of the articles, linked above:

Use well lit, well-trafficked ATMS with security cameras; go inside banks; be particularly careful at freestanding ATMs
When using an ATM, check for anything unusual and be alert for any devices that may be affixed. Look for anything that protrudes from or seems affixed to the machine, any color differences, any unusual stickers. Look for nearby mirrors, pamphlet holders, speakers, or devices that could house a camera.
Always cover the keypad with your hand to shield from any cameras that may be trying to record your PIN
Don't let anyone "help you" at an ATM
Check your bank account regularly to ensure funds have not been taken
If you spot anything suspicious at an ATM, alert the bank or the police right away.

Keep Super Bowl Sunday super: fans don't let fans drive drunk

2010-02-05T16:09:49Z

On average, about 98.7 million fans tune into watch the game on Super Bowl Sunday. If you're going to be hosting or attending a Super Bowl party this weekend when the New Orleans Saints take on the Indianapolis Colts, you should plan in advance for your safety and that of your guests. The Insurance Information Institute (III) suggests that designating a driver should be at the top of everyone’s super bowl party list. They note that: "According to the most recent figures from the National Highway Traffic Safety Administration (NHTSA), in 2008, alcohol-impaired-driving crashes accounted for 32 percent of total motor vehicle traffic fatalities. On Super Bowl Sunday (February 3 to 5:59 a.m. February 4), 49 percent of the fatalities occurred in crashes in which a driver or motorcycle rider had a blood alcohol concentration (BAC) level of .08 or higher. Overall, more than 13,000 Americans died that year in crashes involving an impaired driver." Whether you plan to be a party host or a party attendee, III offers a list of tips and suggestions to help you stay safe. Plus, party hosts have a particular imperative to protect guests. It's the right thing to do - plus, it may protect you from liability. Here are some additional tips from the Natioanl Highway Transportation and Safety Administration's Fans don't let fans drive drunk program. Tips for party hosts If you are hosting a Super Bowl party, remember, you can be held liable and prosecuted if someone you served ends up in an impaired driving crash. To protect both yourself and your guests:

Make sure all guests designate their sober drivers in advance, or help arrange ride-sharing with other sober drivers.
Serve lots of food—and include lots of non-alcoholic beverages at the party.
Stop serving alcohol at the end of the third quarter of the game and begin serving coffee and dessert.
Keep the numbers for local cab companies handy, and take the keys away from anyone who is thinking of driving while impaired.

Tips for party attendees If you are attending a Super Bowl party or watching at a sports bar or restaurant:

Avoid drinking too much alcohol too fast. Pace yourself—eat enough food, take breaks and alternate with non-alcoholic drinks.
Designate your sober driver before the party begins and give that person your car keys.
If you don’t have a designated driver, ask a sober friend for a ride home; call a cab, friend or family member to come get you; or stay where you are and sleep it off until you are sober.
Research and use a local Sober Rides program.
Never let a friend leave your sight if you think they are about to drive while impaired.
Always buckle up—it’s still your best defense against other impaired drivers.

Additional resources Drunk Driving Laws by State

Don't get taken in by tax-time phishing via phony IRS e-mails

2010-02-03T15:05:18Z

There's a group of thieves who are scheming about how to get your personal financial data this tax season and make no mistake about it - they're good at what they do. Consumer Report's Money Blog offers this advice: as you plan for tax season: Don't become a tax-time phishing victim. No matter how authentic an e-mail from the Internal Revenue Service may look, the IRS doesn't initiate taxpayer communications through email. Know what you're up against - educate yourself about phishing According to Wikipedia, phishing is:

"...the criminally fraudulent process of attempting to acquire sensitive information such as usernames, passwords and credit card details by masquerading as a trustworthy entity in an electronic communication. Communications purporting to be from popular social web sites, auction sites, online payment processors or IT administrators are commonly used to lure the unsuspecting public. Phishing is typically carried out by e-mail or instant messaging,[1] and it often directs users to enter details at a fake website whose look and feel are almost identical to the legitimate one. Even when using server authentication, it may require tremendous skill to detect that the website is fake."

Some of the best consumer advice and resources can be found at the Anti-Phishing Working Group's (APWG) site. The following tips are excerpted from their consumer guide on how to avoid phishing scams:

Be suspicious of any email with urgent requests for personal financial information
Don't use the links in an email, instant message, or chat to get to any web page if you suspect the message might not be authentic - call the company on the telephone, or log onto the website directly by typing in the Web adress in your browser
Avoid filling out forms in email messages that ask for personal financial information - you should only communicate information such as credit card numbers or account information via a secure website or the telephone
Always ensure that you're using a secure website when submitting credit card or other sensitive information via your Web browser
Consider installing a Web browser tool bar to help protect you from known fraudulent websites
Regularly log into your online accounts to ensure that all transactions are legitimate
Ensure that your browser is up to date and security patches applied
Always report "phishing" or “spoofed” e-mails to the following groups: forward the email to reportphishing@antiphishing.org; forward the email to the Federal Trade Commission at spam@uce.gov; when forwarding spoofed messages, always include the entire original email with its original header information intact

Additional resources FBI's New E-Scams & Warnings How to spot a fake website and not get phished What to do if you've given out your personal financial information

Sudden acceleration: what to do if it happens to you

2010-01-29T16:08:44Z

Millions of popular Toyotas are being recalled to fix a sudden acceleration problem. While the scope of this recall is huge, the problem is not necessarily limited to Toyotas. According to Consumer Reports, in an analysis of National Highways Safety Institute complaints for sudden acceleration by auto make through August 2009, Toyotas represented only about 41% of the overall complaints. Obviously, these numbers will change, but the point is that it's a safety issue and it could happen for any driver. Would you know what to do? Consumer Reports also offers a useful video about how to safely stop your car if it accelerates suddenly: For additional information, the Los Angeles Times offers a good article with more information on the Toyota Recall Q&A and what to do if you car suddenly accelerates.

Helping senior drivers to make a tough decision: hanging up the keys

2010-01-27T20:07:05Z

Good Morning America has been airing a series on aging and one of the difficult topics they are tackling is the issue of senior driving. In Mom & Dad, we need to talk, they explore the ways that adult children can help their parents make the difficult and often painful decision to hang up the car keys. It's not an issue that should be put off because, at some point, it's a matter of safety - both for the elderly drivers and for the general public. GMA cites some grim statistics:

"Although most senior citizens are careful behind the wheel, according to the National Highway Traffic Safety Administration, drivers older than 70 have a higher fatality rate per mile than any other group, except people under 25. And most of those fatalities happened at some kind of crossroads. A 2007 study released by the Insurance Institute for Highway Safety found that 40 percent of serious crashes at intersections involved people older than 70. Add to this the fact that the number of elderly drivers is projected to double to 70 million by the year 2030 and you have the makings of a potentially dangerous problem."

They also publicize AARP's 10 warning signs for when to limit or stop driving.

Almost crashing, with frequent "close calls"
Finding dents and scrapes on the car, on fences, mailboxes, garage doors, curbs, or the like
Getting lost
Having trouble seeing or following traffic signals, road signs, and pavement markings
Responding more slowly to unexpected situations, or having trouble moving your foot from the gas to the brake pedal; confusing the two pedals
Misjudging gaps in traffic at intersections and on highway entrance and exit ramps
Experiencing road rage or having other drivers frequently honk at you
Easily becoming distracted or having difficulty concentrating while driving
Having a hard time turning around to check over your shoulder while backing up or changing lanes
Receiving traffic tickets or "warnings" from traffic or law enforcement officers in the last year or two

More resources: The Good Morning America series on elderly driving The AARP Driver Safety Program

What's so funny about risk?

2010-01-22T14:15:18Z

These two insurance ads from Travelers are ones from the archives, but they both do a good tackling the topic of risk in a whimsical but enlightening way: And Seinfeld's George Costanza also tackles the topic of risk management - somewhat less successfully so!

Dealing with ice dams and other winter weather hazards

2010-01-20T19:20:48Z

For homeowners in snow-prone areas of the country, roof damage or leaks from snow and ice dams are common winter threats to your home. How do you know if you have ice dams? Wikipedia has a good photo of an ice dam forming on a slate roof. Essentially, if you have large icicles hanging from your roof, you probably have an ice dam problem. The icicles are the symptom, not the underlying problem, which is generally one of insulation. How Stuff Works offers a pretty good non-technical explanation of what ice dams are and why they occur. If you have ice dams on your house, you need to address them with a two-fold strategy: First, you need to get rid of the ice dams and minimize the immediate damage. Your best bet is to hire an experienced professional to do this - it can be a risky task. Some folks want to go out and chop away at icicles, but it's not a good idea to be climbing on snow- and ice-covered roofs or using ladders on slippery ground. Plus, using the wrong tools to remove snow or chunks of ice from your roof may cause further damage to your shingles or your gutters. Not to mention damage to you: flying ice chunks can be very heavy and sharp. Many people also use salts or other chemical concoctions to deal with ice dams, a less-than-ideal "fix" because chemicals can damage or discolor your roof and can leach into the ground, damaging plants and greenery. If you have a low roof, one of the most common ways that people deal with ice dams is by purchasing a specially-designed roof rake and removing snow from directly above the ice dam. Again, this can pose risks to both you and your roof. Second, you need to diagnose the underlying problem and take steps to prevent ice dams from forming. While ice dams can sometimes occur as a result of freezing rain, more often than not they are a symptom of an insulation problem which should be addressed because there are other problems besides ice dams that can occur, such as a build-up of moisture that could lead to rot, mildew or mold. Not to mention that with poor insulation, heating costs are almost literally going through the roof. While there are a number of products that can treat the symptoms and prevent ice dams, the best way to protect the value of your house would be to enlist the expertise of a weatherization, insulation, or energy conservation contractor to diagnose the and remedy the root problem. Builder and consultant Paul Frisette offers his thoughts on why ice dams form and how to prevent ice dams by treating the root cause, not just the symptoms. Ice dams and homeowners and rental insurance The Insurance Information Institute discusses what's covered and what's not in terms of water damage: "Standard homeowners and renters insurance provides coverage for burst pipes, wind driven rain and damage resulting from ice dams on your roof." III also offers this helpful rule of thumb: "Generally speaking, water that comes from the top down, such as rainfall, is covered by a standard homeowners insurance policy, while water that comes from the bottom up, such as an overflowing river, is covered by a separate flood insurance policy." When in doubt about your coverage, call your agent - that's what we're here for! Snow overload and other perils for public and commercial buildings Commercial and public buildings with flat roofs are susceptible to other winter woes. In addition to the risk of ice dams, flat-roofed buildings can also suffer damage or collapse from an accumulation of deep snow. Deep snow followed by heavy rain can be particularly perilous, especially for older buildings. One of our insurance partners, Utica National, has issued a handy risk management advisory about severe winter weather and roofs. The advisory includes general guidelines to help estimate the weight of snow.

Children's auto booster seat ratings; child restraint laws

2010-01-15T17:41:00Z

The Insurance Institute for Highway Safety (IIHS) has issued new ratings for children's auto booster seats. They've examined 60 models covering almost all models sold in the U.S. right now, and they've issue 9 "best bet" recommendations and 4 "good bet" recommendations. In addition, they've indicated 11 products which aren't aren't recommended due to poor fit. IIHS states that more than 1,000 children 12 and younger in passenger vehicles die in crashes every year, and more than 100,000 are injured. Parents can reduce the risk to their kids by properly securing them in the back seat of their vehicle.

"Parents can't tell a good booster from a bad one just by comparing design features and price," says Anne McCartt, Institute senior vice president for research. "What really matters is if the booster you're considering correctly positions the safety belt on your 4-8 year-old in your vehicle. Our ratings make it easier to pick a safer booster for kids who have outgrown child restraints."

See the full ratings list with model numbers and photos of seats
Map of child restraint and booster seat laws by state
Also see Keeping Children Safe in Crashes - a comprehensive guide for parents, which includes videos and photo examples.