Month: December 2008

Welcome to High Deductible Health Insurance…Ready or Not!

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Our company recently joined the ranks of employers switching from traditional health insurance plans to high-deductible, HSA compatible plans. We switched from our HMO plan for two reasons: First, the fourth or fifth consecutive year of double-digit premium increases was driving our benefits expenses beyond the palatable. The new model allows us to reduce our premiums. We plowed the savings back into assisting employees with their health care expenses (more about that later).

Second, the high deductible plan encourages us to be more informed consumers of  medical services. In the past, we paid a co-payment for every office visit or prescription, regardless of the real cost of the product or service. Because we’ll be paying 100% of the first $2,500 per person for “sick office visits” and prescriptions, we’re bound to pay more attention to the cost of these things. I know I’ll be more likely to see if there’s a generic alternative to a brand-name drug for example.

Even though I’m in the insurance business, my experience with health insurance is strictly from the consumer side. And, I’m quick to admit that I don’t quickly grasp the concepts of embedded deductibles, co-pays and maximum out-of-pocket expenses. It gives me more sympathy for our clients trying to understand insurance terms that we carelessly toss around every day.

Going from a plan with a $500 deductible to one 5 or more times higher was  a bit scary for me. It took a while to get my head around. As one of the decision-makers, I was also concerned that the plan would work well for our employees. Fortunately, our agent was very patient in explaining the plan repeatedly, and in answering our (ok, mostly my) questions.

How does one absorb such an increase in deductible? Plan participants establish Health Savings Accounts (HSAs), into which they can deposit pre-tax dollars for medical expenses. We decided to deposit $750 in each participant’s account at the beginning of the year, to front-end load their expense account. To further encourage employees to fund their own accounts, we agreed to match the first $750 that they deposited via payroll deduction. So, if they contribute $750, they’ll have a total of $2,250 in their HSA. That goes a long way towards the $2,500 deductible.

My HSA debit card arrived in today’s mail. The plan starts on January 1. I’ll post more occasionally during the year to explain how the plan’s working, and how I’m adjusting to having a high-deductible plan.

“Wanna go for a Ride”?

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This is not new, but it’s still cool. A little over a year ago, Progressive began to include pet injury coverage in their auto policies. If you buy collision coverage from Progressive, they include up to $500.00 of veterinary bill coverage in case your pet is injured in an accident. There’s no charge for this coverage, and you don’t get a discount if you don’t “drive with dogs”. We’re not aware of any other company that does this.

Progressive’s web site also includes some useful safety tips for driving with pets, ranging from the no-brainer (“never leave a pet unattended in a car”) to the easy-to-forget (“make sure that your pet has identification”) to the buzz-killing (“don’t let your pets ride with their heads out the window”).
This is different from “pet insurance”, which is offered by companies like Embrace and Pets Best Insurance. Those are essentially health insurance policies for animals – much broader – and more expensive coverage.
If you’re an animal lover who takes your pet in the car with you, it may be worth getting a Progressive quote. If you’re in southern Maine, our agency would be happy to help you evaluate if this is a good option for you. Wanna go for a ride?

You Never Know Who’s an Uninsured Driver

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Here's an interesting twist to our recent post about uninsured drivers, and the need to adjust your insurance accordingly.

If you're stopped at a traffic light, and rear-ended by a $140,000 Mercedes, you probably don't expect that the driver is cruising around without insurance – but you'd be wrong if that driver was troubled Giants' wide receiver Plaxico Burress. Check out the details, courtesy of the Orlando Sentinel. 

Bottom line: you never know what kind of insurance "the other guy" has – so you need to need to protect yourself. 

Now, if that didn't scare you enough, think about this for a second: what if YOU hit a $140,000 Mercedes, and had only bought state minimum liability limits  of $25,000 property damage?

Heating Giveaway Warms 11 Families

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Good news! Eleven of our clients were winners in Concord Group's A Warm Hand heat lottery. That's $1,100 worth of oil, gas or other heating fuel assistance, courtesy of Concord Group. We worked hard to notify all of our Concord Group homeowners clients about the lottery, including post cards, blog posts and web site links. I think that played a part in so many of our clients being winners in the first round. 

More good news! It's not too late to sign up! Concord will draw more names on the 15th of January, February and March. If your homeowners policy was provided by Concord Group on October 31, whether you're a client of our agency or not, you're eligible. Sign up today! 

Good luck!

Beware: More Uninsured Drivers on the Road

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M.P. McQueen reported in Wednesday’s Wall Street Journal on the national trend of more drivers are letting their car insurance lapse because of the faltering economy. Doing this puts themselves and others – including you – at risk.

McQueen did a good job highlighting the irresponsibility of not carrying liability insurance, and the importance of matching  your own liability insurance to the value of your assets.

Are Minimum Auto Liability Insurance Limits Enough?

Maine law requires all drivers to carry at least $50,000  per person / $100,000 per accident of Bodily Injury coverage, and $25,000 of Property Damage coverage. It doesn’t take much imagination to picture this limit as being inadequate to handle even a moderately severe accident, or replacement of even a mid-priced late model car.
Once you blow through your insurance coverage, your assets are fully exposed.

How to Protect Yourself from an Uninsured Driver

Most people don’t realize that the flip side of liability coverage is Uninsured/Underinsured Motorist coverage. This covers your injuries if you’re struck by an at-fault driver who has no insurance, or less than you do.
There’s the rub: if you and the other guy both have state minimum limits, your UIM coverage doesn’t apply, because you didn’t have more than he did. If you suffer more than $50,000 of medical expenses (it doesn’t take all that much – trust me), you’re on your own.
Although we’re in the business of selling insurance, we understand that people have to live within their budgets and prioritize their expenses. If the economy forces you to cut your auto insurance expenses, we suggest:
  • Look at your deductibles first. It might sting to pay the first $500 or $1,000 of repair costs after an accident, but at least it’s a known cost, with a maximum out-of-pocket.
  • If you really need to cut auto insurance to the bone, consider removing physical damage (comprehensive & collision) coverage. If you have a loan or lease on the vehicle, you’re not going to be able to do this. Also, if you don’t have physical damage coverage on at least one car, you don’t have that coverage if you rent a car either. But, desperate times call for tough decisions.
  • If you have more than one car, think about “laying one up”. You can suspend coverage for the time it’s stored. Just remember to call your agent before  you drive it again, because it has no coverage.
  • Try to pay your auto premiums on time. Paying late can jeopardize your coverage, especially if you slip up and your policy actually cancels one time. The Maine Insurance Dept. has an excellent set of FAQ, one of which offers the same counsel.

If you’re fortunate, and in expense-maintenance vs. expense-slashing mode,  make sure that your liability coverage protects your assets, and your UIM coverage is adequate.  And regardless of the law, don’t count on the other driver having insurance.

 

Ice Storm Damage: Another Opinion

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In case you didn't believe our recent posts about ice storm damage, here's corroboration from the State of NH Insurance Department and more from the Maine Emergency Management Agency. See, we wouldn't lie to you!

Remember, you may have purchased coverage that covers some damage that a standard policy does not. Be sure to check with your agent. Whether you had damage or not, now's an excellent time to think about buying such coverage if you haven't yet. 

Ice Storm Damage: Tips for Prevention and Response

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Our last post responded to the most common issues clients called us about following last weekend's ice storm, and whether most insurance policies provided coverage or not. 

Now that the last storm has past, it's time to get ready for the next one (which hopefully isn't any time soon!). Here are a few tips to reduce your chance of an ice storm damaging your property. 

  1. Consider buying a generator. It can take awhile for utility crews to restore your power in times of widespread damage, especially if you live in a rural area. Having a generator to run your furnace, sump pump and refrigerator can be the difference between a minor inconvenience and a nasty loss. Make sure that your generator hookup is done by an electrician; there were cases of improper use of generators causing house fires during this ice storm. It costs about $1,000 for an electrician to rig your house for the generator hookup. The cost of the generator itself varies by size and capacity. This cost can be minimal compared to the time, expense and stress of property damage. 
  2. Keep your trees pruned and healthy. Although several of our clients believed that the trees that fell on their houses, cars, etc. were healthy, some clients admitted that they'd procrastinated on pruning or felling dead limbs or trees. Even healthy tree limbs can succumb to the weight of an ice storm. Reduce the risk of damage by removing limbs that overhang your home, fences or driveway. 
  3.  If you are on well water, fill your bathtub with water in preparation of the storm.  
  4. Keep your chimney clean.  This is good advice for everyone, but especially for those who don't regularly burn wood. Many wood-burners know to have their chimney cleaned at least once a year. Those who only use their fireplaces or wood stoves sporadically often postpone doing that. There were cases of house fires during this ice storm from dirty chimneys. 

In case of an extended power outage:

  1. Keep your refrigerator and freezer closed. Food will last surprisingly long in a closed appliance, especially if the house is cold because the furnace isn't working. If you notice that the temperature of the food is dropping too much, consider storing it in coolers, or even outside. Take advantage of winter temperatures!
  2. Remove items from your basement floor. If your sump pump fails, water can back up quickly – more quickly than you thought possible. Plan ahead by lifting things off the floor.
  3. NEVER run a generator in the house! Carbon monoxide, a deadly odorless, colorless gas, is a byproduct of internal combustion engines. These units should never be run in enclosed living spaces. 
  4. Open kitchen cabinets to allow the warmer air in the house to reach your water pipes. Pipes are often against cold outside walls – even colder when the house has no heat, electricity or hot water running through the pipes. 

We hope you find these tips helpful as you think about the next winter storm.  
  

Is Ice Storm Damage Covered by Maine Homeowners Insurance?

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Northern New England was clobbered by an ice storm December 12 that closed schools and businesses (including ours) and knocked out power for over 200,000 Mainers. It brought back memories of Ice Storm ’98, the effects of which are still evident in Maine’s woods and the psyches of its residents.

 

Like the ’98 storm, this one left many people without electricity for several days – some are still without power 3 days later. Fortunately, this storm wasn’t followed by the bitter cold of a decade ago, which seems to have spared many from the misery of frozen pipes. Nevertheless, our office has been busy fielding insurance claims and stories of misfortune.

 

Here are some of the most common situations we’ve seen, and how most insurance policies respond. Of course, this is general information and NOT to be taken to indicate coverage (or lack of coverage) for any individual. To find out if you have coverage, refer to your own insurance policy, agent and company. Also, remember that your property deductible (often $500 or $1,000) applies.

 

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  • Tree falling on your house. Most homeowners policies pay the cost to remove a tree that damages a covered structure (including sheds, etc.), and the cost to repair the damage itself.
  • Tree falling on your car.  Your home policy doesn’t cover this – but your auto policy might. The key is whether you have “comprehensive” (your policy probably calls it “other than collision”) coverage on the vehicle. If so, do a happy dance.
  • Water in your basement. We’re talking about water backing up through a sump hole, usually because the sump pump stopped working when the power died. This one’s far less certain. Homeowners policies don’t cover this unless you buy extra coverage. Companies call the endorsements by different names, but if you’ve bought it, you’ll probably see something like “Water Backup” or “Backup of Sewers and Drains”. We’ve regularly recommended this coverage through newsletters, mailings and blog posts.
  •   Frozen Pipes. The water damage from frozen pipes is covered by most homeowners policies. The cost to repair the pipes themselves is not.
  • Food Spoilage. This usually is covered only if you bought a special endorsement (it’s often packaged with water backup coverage). Even with the extra coverage, it’s usually limited to $500 or so.
  • Cost to rent or buy a generator. Sorry, this one’s not generally covered. Even though you’re getting the generator to keep you from having one of the other claims listed above, it’s considered to be preventative (like having a smoke detector or fire extinguisher to prevent fire claims).

These are just a few scenarios we’ve seen since Friday’s storm. If you have questions about your individual insurance, refer to your policy or consult your agent (preferably, both). In a future post, we’ll talk about how to prepare for some of these disasters, and what action you should take if it happens to you.

Dealing with Increased Risk from Holiday Travel

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As Americans take to the roads, rails and sky for the holidays, an alarming percentage don’t fully understand whether their insurance coverage adequately protects them, according to a new national surveyon travel insurance issues by Trusted Choice® and the Independent Insurance Agents & Brokers of America (the Big “I”).

For the survey, 1021 respondents were asked if they thought that their insurance policies would cover them against common travel risks, such as renting a car, luggage lost by an airline, theft of gifts from a vehicle, or medical expenses from illness or injuries when traveling. An alarming 30 to 75%, either didn’t think they were covered by their current policies in these situations or said they didn’t know.

We advise they consult with their agent to discuss their current policies and what do to in the event that they need to file a claim while on vacation. The good news for consumers is that homeowner’s insurance policies may cover lost property, car insurance policies often offer the option of rental coverage, and medical policies usually have clauses that explain where and when you are covered.

Trusted Choice® independent agents provide the following tips for holiday travelers.

Lost Luggage

Although 75% of homeowners did not think or did not know if they would be covered in the event that an airline lost their luggage containing holiday gifts, most homeowners or renters insurance policies do provide worldwide coverage for most belongings. Additionally, some airlines do have reimbursement policies in the event that they lose your luggage. If you purchased the lost gifts with a credit card, you may have some level of protection with your issuers. Photographing the contents of your suitcase may also help in the event of a loss. Before purchasing baggage insurance, check your current policies. It may be a waste of money.

Renting a Car

The survey found that nearly one third of consumers do not think or do not know if their current policies cover them in a rental vehicle. Maine auto insurance policies provide protection for liability you incur for injuries or property damage you cause to others within the U.S. Driving a rental car is considered to be the same as driving your own vehicle for liability purposes. 

Liability Damage Waiver – It’s not usually necessary to purchase a Liability Damage Waiver from the rental car agency since you usually already have coverage under your own insurance. Always request a copy of the rental agreement to review ahead of time with your independent insurance agent. 

Collision Damage Waiver – Rental car agencies typically try to sell “Collision Damage Waivers” (CDW) for about $8 – $15 per day. These waivers are not insurance. In effect, a CDW is simply a promise made to the rental car agency that they won’t make you repair or replace a damaged or stolen vehicle. If you already carry collision and comprehensive coverage under your own personal auto policy, your insurance will extend to the rental car. Consumers need to carefully evaluate their existing coverage and discuss whether or not purchasing a CDW is appropriate for them. 

There may be gaps in the coverage your insurance policy provides for rental cars.  For example, many car rental companies may hold you responsible for the loss of use of a damaged rental car. Rental car companies may charge you the daily rental rate for every day the car is undergoing repairs. While many auto insurance policies will pay “loss of use” charges, those that do set limits. There are other expenses that most auto policies do not cover. One example is diminished value which can amount to several thousand dollars. Consult your independent insurance agent to find out what’s best for your travel needs.

When CDWs May be Appropriate –  There may be gaps in the coverage your insurance policy provides for rental cars.  For example, many car rental companies may hold you responsible for the loss of use of a damaged rental car. Rental car companies may charge you the daily rental rate for every day the car is undergoing repairs. While many auto insurance policies will pay “loss of use” charges, those that do set limits. There are other expenses that most auto policies do not cover. One example is diminished value which can amount to several thousand dollars. Consult your independent insurance agent to find out what’s best for your travel needs.

• Foreign Travel - As a general rule, when traveling to a country other than Canada and renting a car, you will have to purchase auto insurance in the country where you will be driving. Some personal umbrella policies may provide liability coverage for rental cars abroad; few will cover damage to the rental car itself.  Again, seek professional expert advice from an independent agent before you leave home. 

• Check the Vehicle –  An important way to protect yourself when renting a vehicle is to check over the car carefully for damage in the presence of a representative of the rental car company before you leave the lot and when you return it. Request all prior damages be noted in writing. Car renters have been known to receive damage claims from rental car companies weeks after turning in vehicles. There is no way to prove your innocence at that point. 

What if You Need Medical Attention Out-of-State or in a Foreign Country?

The survey found that more than 35% of respondents did not think or did not know if they were covered in the event that they became ill or injured no matter where they were located. Most individual and employer-provided health and medical insurance policies cover you when you are injured or become sick no matter where your injury or illness occurs for short recreational trips. In general, major medical health insurance plans sold in the U.S. will provide coverage for emergency medical services you require while traveling. Still, insurance companies cannot guarantee the quality of care that is available wherever you travel and some policies have territorial restrictions.

• Domestic Travel:  While the medical services provided in the U.S. may be among the finest in the world, not all facilities and practices may offer the standard of care or access to the latest medical technologies that you may expect.  Therefore, travelers should take some time to find out what is available in the area where they will be traveling and contact their independent insurance agent to assess just how well their insurance coverage will respond to medical emergencies away from home.

• Foreign Travel:  When evaluating insurance policies for a brief trip or extended stay abroad, it is important to understand any limitations in coverage that each prospective policy might impose.  For example, it is not unusual for "Foreign" (called foreign even though it’s purchased here at home) health insurance to exclude coverage for injuries that occur while participating in hazardous activities. Ask questions and understand exactly what you are buying and what is covered.

Medicare Consideration: Those who rely on the Social Security Medicare program should know that it does not cover hospital and medical services outside of the U.S. Before you leave the country, learn what medical services your health insurance will provide while you are abroad and consider the purchase of additional insurance protection.

Manage the “Four C’s” of Winter Fire Risks

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Thanksgiving, Chanukkah, Christmas, and New Year’s Eve—these holidays mean celebrations, many of them in decorated homes filled with merry-making family members and friends. Unfortunately, this joyous time is also the height of house fire season. The National Fire Protection Association (NFPA) reports that the 10 worst days for fires in homes fall between December 24 and January 6. Although Maine homeowners insurance policies cover fire damage, no one wants to suffer a fire.

 

Fortunately, these risks can be reduced with safe practices that address the “four Cs” of winter fires: chimneys, candles, Christmas trees and children.

 

Chimneys

Creosote buildup or chimney blockage can catch fire. Chimney fires are unpredictable: they can be noisy and fierce, or can smolder undetected.

 

Common-sense tips: 

  • If you haven’t checked or cleaned the chimney in the past two years, don’t use it. 
  • Have a pro inspect the chimney for creosote (which is what builds up in a chimney and fuels a chimney fire)
  • Use dry wood. This minimizes creosote buildup. 
  • Don’t burn wrapping paper, boxes, trash or Christmas trees.
  • Don’t use liquid to start a chimney fire. Use kindling.

 

Remember fireplace basics, too: use a screen to contain sparks; and let ashes cool before disposing of them in a metal container.

 

Candles

Home-candle fires happen on Christmas Day more often than any other day, according to the National Fire Protection Association. Next worst: New Year’s Day and Christmas Eve. How do they start? Half of home-candle fires begin because an item is left near a lit candle. Four of 10 home candle fires start in bedrooms, with bedding, furniture, and curtains igniting.

 

Common-sense tips: 

  • Make sure all candles are out before you leave a room or go to bed.
  • Keep clothing, curtains, furniture, and other flammable items away from candles and flame.
  • Use candle holders that don’t tip over.

 

Christmas Trees

The National Fire Protection Association notes that 300 home fires start each year with Christmas trees. It’s not just live trees; artificial trees also burn. Three major reasons Christmas-tree fires start: electric malfunctions, heat too close to the tree, and children playing with matches, candles, or fireplaces.

 

Common-sense tips: 

  • Buy a cut tree that has green, fresh needles.
  • Buy an artificial tree that is fire resistant.
  • Use a secure stand.
  • Locate trees a minimum of three feet from heat sources such as fireplaces and radiators.
  • Water live-cut trees every day.
  • Use lights listed by an industrial laboratory. Link together, at most, only three strands of bulbs.
  • Throw out lights that have frayed or broken cords. 
  • Pull the plug on lights before going to bed or leaving home.
  • When a tree starts dropping needles, it’s time to dispose of it (outside, not in the house, garage or basement).

 

Children

Perhaps the most unpredictable risks for winter fire are kids who are, naturally, exploring and experiencing the wonders of the winter season. Remember that lights and flames are fascinating to children. 

 

Common-sense tips:

  • Watch the wires. Keep kids away from light strands and power cords.
  • Matches, candles, stoves and ovens often get extra use during the holidays, at a time when adults are occupied with cooking, cleaning and entertaining. Stop and ask: “What might draw a child’s curiosity in this house?” Then shield children from those items, physically and through discipline and direction.
  • Put matches/lighters out of children’s reach. Use lighters that have a child-resistant safety feature. 
  • Train children to tell an adult if they see matches or lighters.

 

As always, our Maine insurance agency stands ready to assist our clients with a homeowners insurance claim. The best claim is no claim, though. Use these common-sense practices to prevent home fires.

If you have questions about home insurance, Maine condo insurance or renters insurance, contact Noyes Hall & Allen Insurance at 207-799-5541.