News

More Heating Assistance Winners!

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Just as January brought sub-zero temperatures and higher oil prices to Southern Maine. 14 Noyes Hall & Allen clients were among the winners in the this month’s drawing of Concord Group’s A Warm Hand heat lottery. Combined with December’s drawing, Noyes Hall & Allen clients have received $2,600 worth of oil, gas or other heating fuel assistance, courtesy of Concord Group.

We know that many people struggle with paying winter heating bills. We have seen cases where using space heaters, wood stoves and other alternate heating methods have caused fires. We hope that this fuel assistance program will help to reduce these fires.

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

Good luck!


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!

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.

South Portland PD: Beware of Break-Ins

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The South Portland Police Department warned residents yesterday about a current string of burglaries in all areas of the city – averaging about one a day.

Most of the stolen items have been small electronics: video games, iPods, laptop computers and the like.
SPPD recommends that all residents:
  • Lock all doors & windows.
  • Leave an exterior light on at night.
  • Secure valuables in a safe.
  • Record serial numbers of electronics.
  • Mark video games to allow police to return them if recovered.
  • Report suspicious activity to police.

 

From an insurance standpoint, theft is covered by most Maine homeowners insurance policies, subject to the deductible (often $500 or more). Some items (jewelry, firearms, money, silver, and more) are subject to limitations on loss by theft. If you have significant amounts of these items, contact a Maine insurance agent to schedule them separately on your policy. Things stolen from your car are NOT covered under your auto insurance policy, but rather your homeowners or renters’ insurance policy (another reason to purchase a renters policy!).
If your home or vehicle is broken into, you must file a police report in order to file a claim.
Be safe and be smart.
If you have questions about insurance, we’re here to help. Contact Noyes Hall & Allen Insurance at 207-799-5541

A Warm Hand

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Concord Group Insurance just announced a fuel assistance lottery for its Maine homeowners insurance policyholders. The company expects to donate $500,000 in fuel assistance during the one-time program, over $200,000 of it in Maine alone.  

Anyone who had a Concord Group homeowners policy in force as of October 31 can register for a chance at a $100.00 fuel payment. A drawing will be held each month from December through March. For more information, check Concord Group’s public web site,  or register here. 
The State of Maine has enthusiastically welcomed Concord’s generous program. “We appreciate the significant effort being made by The Concord Group to assist policyholders in meeting their home heating expenses this winter,” Governor John Baldacci said. “This unique initiative will help many Mainers remain safe and warm as the weather grows colder.”
Kudos to Concord Group for extending A Warm Hand!

Car Sharing Comes to Portland Maine – with Insurance?

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This week, the Press Herald reported that  Portland UHaul plans to bring its U Car Share program to town in the form of four white PT Cruisers. In August, we addressed the issue of car sharing and insurance in this post.

To reiterate: car-sharing services can be a great alternative for those who rarely need a car. They help to reduce parking congestion, greenhouse gases and other automobile-created problems. But don’t forget that when you get behind the wheel, you’re in a position to put all of your assets at risk. You’re relying on the car sharing service’s insurance to protect you. The U Car Share website doesn’t say what extent of liability protection their policy provides. We recommend that you get the answer to that question BEFORE you join.

 

Are Insurers the Next Bailout Beneficiaries?

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Recent news reports  indicate that the Treasury Department is considering expanding Congress' recently approved  $700 billion bailout program to the insurance industry. The option currently favored involves buying stock in insurance companies adversely impacted by the current financial crisis and credit crunch. 

The insurance industry has consistently opposed federal government regulation in its industry in favor of state regulation. However, media report indicate that some of the largest companies in the industry, including The Hartford,  Prudential  and Met Life  support – and have even lobbied Congress for – a share in the bailout. 

What's going on? 
The financial crisis affects all Americans: businesses and families. The insurance industry isn't immune. However, life insurance companies are more vulnerable to broad declines in stock prices than property-casualty companies. Here's why:
  • Life insurers collect cash (premiums) which is invested primarily in long-term instruments (e.g. stocks). They accumulate huge stockpiles of cash which they invest and hold for a long time. . Because the companies don't plan to pay claims for several years (when the insured dies), they can invest in stocks, which are more volatile, but tend to outperform other investments in the long run. 
  • Property-casualty companies expect to pay claims much closer to the time they collect premiums (in the event of an accident or loss). So, their investments are much more conservative (usually bonds, t-bills and other secure instruments) and readily converted to cash in the case of a disaster. 

  The companies that are being mentioned in the bailout proposal are those with significant life insurance exposures in their product mix. 

All of this reinforces some of the danger in starting down the slippery slope of government bailout of private businesses. All publicly-held companies compete with one another for funds in the capital market. They sell stock to the public. Their stock prices reflect the level and stability of their earnings potential: the higher the earnings per share, or the more reliable their projections, the higher their stock price. The higher their stock price, the higher their net worth. By bailing out banks, the government artificially boosted the stock price of publicly held banks, to the detriment of other businesses – including insurance companies.

Life companies were hit by both the declining value of their investment portfolios and the comparative disadvantage in raising capital when compared to the government-supported banks. Now, they're next in line with their hands out. 

Financial Crisis May Affect Insurance Pricing, Capacity

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Insurance consultant Towers Perrin reported yesterday that the current financial crisis may have cut the industry's surplus – an important measure of claims-paying capacity or capital – by over 40 billion in the 3rd quarter. The firm also projected an 80 billion reduction in surplus for the year. See a press release about the report here. 

The study cites several reasons for the reduction in capital, including:
  • Stock market losses in companies' investment portfolios.
  • Catastrophe losses incurred during a hurricane season that produced 15 Atlantic storms and 15 in the Pacific.
  • Deteriorating underwriting results during a prolonged period of depressed insurance rates (known in the business as a "soft market").

Now, compared to crises in the banking and investment sectors of the economy, the insurance industry is in good shape. Because its purpose is to transfer risk from its clients, insurers have been held to a much more conservative reserving standard than those businesses. They must have a strong financial safety net to allow them to pay claims, even in the worst of circumstances. 

And the system has worked. The insurance industry successfully weathered 9/11, killer hurricanes Andrew, Hugo  and Katrina  without threat of a government bailout  or late-night fire sales of insurance companies. 

But if Towers Perrin's predictions are accurate, this could be the beginning of a time of rising insurance rates (known as a "hard market"). Property rates, especially in coastal areas, have increased the past few years, but auto and liability insurance rates have dropped significantly the past few years. This trend could reverse quickly in the face of shrinking industry surplus.  Stay tuned!

AIG’s Wild Week

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It's been quite a week in the insurance business. Industry behemoth AIG saw its stock price drop from over $14.00 to about $2.00 in three days. AIG has been one of the world's largest and most successful financial institutions over the past 20 years, led for years by Maurice R. "Hank" Greenberg. 

On Wednesday, The Federal Reserve Bank of New York was authorized to implement an $85 billion liquidity line, in essence giving the Federal Government control of nearly 80% of the company. 

While this is startling news inside and outside the insurance business, it's important to note the following:

  • AIG's insurance operations remain well-capitalized. The National Association of Insurance Commissioners (NAIC), a regulatory body, said in a September 17 press release  "We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims."
  • By all accounts, AIG's trouble stemmed from its financial holding company assuming more risk than they could handle when investing in complex transactions involving mortgage-backed securities. These investments are financial products, not regulated insurance products. When the housing market took a downturn, these risky investments lost lots of money for AIG's holding company.
  • Non-insurance operations are not held to the same high standards as insurance companies. Think about that when you choose the insurer you trust to protect your assets.     

Even insurance professionals were shocked by how quickly AIG's A.M. Best rating dropped from "A+ (excellent)" to "A (excellent)" , with "negative implications". If insurance people were surprised, how could individual clients keep up with it all? To make matters more confusing, AIG owns over 70 U.S. based insurance companies, with names such as Lexington, New Hampshire Insurance Company, and AIU. Many clients who are insured by them probably don't even know that they're insured by an AIG company. 

Bottom line: find a local insurance professional you trust, and rely on them for advice. These days, they are worth their weight in gold – which, not coincidentally, is an extremely hot commodity .