Homeowners Insurance Video

Wednesday Matinee: Homeowners Insurance 101

If you own a home or condo, or even rent an apartment, you need some kind of homeowners insurance, but do you know what that kind of insurance actually covers, or how to choose what you need? This video explains the basics. Enjoy.

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Candles and Fire Insurance

four candles
Four Candles | Credit: | Click to enlarge

We all love candles – on the dinner table, atop a birthday cake, on the coffee table, or in the bathroom. They can be part of your home decor, can be stashed in your linen closet or underwear drawer to act as sachets until you’re ready to burn them, and they make great gifts.

Unfortunately, candles are also a fire hazard. A report from the National Fire Protection Association says that between 2003 and 2007, for example, American firefighters responded to about 15,260 house fires a year, all started by candles. Annually, those fires resulted in an average of $450 million worth of property damage, 1,289 injuries, and 166 deaths. In the same four-year period, the Association’s report says, 10 percent of fire-related home injuries, 6 percent of home fire-related deaths, 7 percent of property damage were caused by candles, which were the cause of 4 percent of all reported house fires.

How did candles cause so much pain and damage? Well, the same report says that in 12 percent of cases people fell asleep while candles were left burning, which also led to 36 percent of candle-fire related deaths. That same percentage – 36 – was also the number of candle fires which began in bedrooms. It shouldn’t be surprising, then, that many apartment complexes and homeowners associations are attempting to ban the use of candles.

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Still, those of us who love our candle power can use candles safely. Here’s how:

  1. Always extinguish candles before you leave a room, or turn in for the night.
  2. Be sure to extinguish a candle’s flame before the candle has burned too close to the bottom of its container – this is especially true with glass containers. Yankee Candle, for example, recommends considering a candle “finished” when there’s half an inch of wax left.
  3. Don’t use candles in place of flashlights or emergency lighting during blackouts.
  4. Always choose sturdy candle holders that will contain the molten wax and are unlikely to tip over.
  5. Never, EVER, use candles (or any open flame) if someone in your home is on oxygen.

If you should have a candle-related accident, the good news is that your homeowners policy covers fire damage, though, depending on the way your policy is written it may only reimburse you for the depreciated value of any destroyed belongings, rather than the actual cost to replace them. Also, you will be paying a deductible if you make a claim.

Before you light your next candle, take time to review your homeowners insurance police, and read the details on fire insurance coverage.

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Louisiana Insurers Lose Ground in Chinese Drywall Battle

The Insurance Journal is reporting that insurance companies in Louisiana are continuing to lose ground in the ongoing battle against a ban on dropping or changing property insurance coverage because of corrosive Chinese-made drywall.

The proposal will now be debated by the state’s full House of Representatives, after finally gaining approval from the House Insurance committee. The Senate has already given the bill, SB 595 – authored by Senator Julie Quinn (R-Metairie) – its unanimous backing.

Representatives of the insurance industry argue that the bill violates existing contracts and could force a statewide increase in insurance premiums. Lobbyists for insurers claim that if the bill is approved, it will be challenged in court because it is retroactive.

Representative Chuck Kleckley (R-Lake Charles), chairman of the House committee, attempted to have the retroactivity clause removed, but a 6-2 vote against him blocked the attempt, and the House then approved the bill without objection. Afterward, Kleckley joked, “I don’t have many friends.”

If approved, Senator Quinn’s bill will prohibit property insurance companies from refusing to renew, canceling, or increasing premiums or deductibles for homes or businesses constructed with Chinese drywall. The wallboard in question is being blamed for health concerns and home corrosion.

The ban would be in force through July 1, 2013, and any insurer found to be violating the terms of the bill would face a penalty of up to $15,000, plus court costs and attorney fees.

Homeowners Insurance Rate Alerts

State Farm Raises Rates in Louisiana

The Insurance Journal reported yesterday that Louisiana’s largest residential insurer, State Farm Fire and Casualty Co., has been approved for an average 9.9 percent rate increase for homeowners’ coverage in that state, with coastal areas vulnerable to hurricanes seeing most of the increase.

Jim Donelon, state insurance commissioner, approved the increase roughly two months after rejecting the insurer’s request for an average 19.1 percent rate increase. Donelon had called that proposal both unreasonable and unjustified.

State Farm explained that it needs higher rates in order to have adequate reserves in place for future storms. The current increase is based partly on past losses, like the four major hurricanes that have hit Louisiana since 2005, and also takes into account the projection of future losses. Last year, it asked for an average increase of 13.7 percent, and received an 8.3 percent increase.

According to State Farm, the New Orleans region will see a 17.7 percent increase, while rates in the Lake Charles region will go up 22.5 percent. Homeowners in Alexandria should expect an increase of 5.5 percent, while rates in Monroe and Baton Rouge will be unchanged and in Shreveport-Bossier City, rates will actually go down about 6 percent.

The largest overall decrease (6.7 percent) will be seen by homeowners in Assumption, Iberia, St. Charles and Vermilion parishes, while the residents of St. James and St. John the Baptist parishes will see the largest increase: a whopping 26 percent.

When he denied State Farm’s earlier request, Donelon questioned the insurer’s use of a loss projection model that called for loss provisions that were 150% higher than those projected by two other industry models, without enough evidence to support the difference. The request just approved did not use the challenged model.

The filing totals $38.1 million for State Farm’s 301,000 policyholders, and will go into effect immediately for new policies, and on July 1 for renewals.

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California Senate Finance Committee Passes Surcharge Bill

A bill has been passed by the The California Senate Banking, Finance and Insurance Committee that includes within it a surcharge to be imposed on commercial and residential fire and multi-peril insurance policies. The surcharge of 4.8% would be used to help the state create an Emergency Response Fund as part of the California State Treasury.

The state of California already has an established California Emergency Management Agency to handle emergency and disaster response service, including those activities which may be necessary to “…prevent, respond to, recover from and mitigate the effects of…” emergencies and disasters to both people and property. The bill , SB 1258, requires that monies be deposited into the Emergency Response Fund, which would then be allocated to the program. The bill also requires the Secretary of California Emergency Management to control the allocation of funds to specific organizations or entities in order to sustain or enhance fire and rescue disaster “mutual aid capacity” to fight the effect of all hazard disasters.

The surcharge, designated as a “special purpose surcharge” imposed on insurers will apply to all policies with combined property and liability coverage that are issued or renewed from July 1, 2010 forward.
The Governor’s office has estimated that monies generated by the surcharge will total $238 million this year, and roughly $480 million/year from 2011 on.

The bill is scheduled to be heard in the Senate Appropriations Committee.

Homeowners Insurance Rate Alerts

State Farm Homeowners Insurance Rates Increase in Louisiana

Consumers seeking cheap homeowners insurance in Louisiana should be advised that State Farm Fire and Casualty Co. has filed a rate increase request for homeowners policies in that state. Across the board, the average increase will be almost 10 percent.

State Farm is the largest home insurer in Louisiana, with roughly 300,000 policyholders in the state.

Earlier this year, State Farm request a much higher rate increase – an average 19.1 percent hike – but state Insurance Commissioner Jim Donelon rejected it, calling it unreasonable, according to a report in the Insurance Journal.

Last year, Louisiana approved an average 8.3 percent rate increase for State Farm, after the insurer filed a request for an increase of 13.7 percent.

The company has also request homeowners insurance rate increases twice in the past year, in Texas, but is reported to have filed suit against the Texas Department of Insurance (TDI) because of its intention to post the rate filings on the Department website. State Farm and the state of Texas have been involved in homeowners insurance rate disputes for several years. In November, 2009, TDI instructed SFL (State Farm Lloyds) to refund $310 million to policy holders in the Lone Star State, after discovering that the insurance company had been overcharging clients for the past six years.

The repayments were halted when State Farm appealed the Texas order. The case remains unresolved.

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London Science Museum Takes Neutral Position on Global Warming

Homeowners in New England are looking at filing flood insurance claims, while residents of the Midwest have had one of the worst winters in years, and even Texas got more than a foot of the frosty white stuff this year. In the midst of all this, the London Science Museum, with sponsorship from Royal Dutch Shell has opened a new climate gallery which is adopting a more neutral position on global warming.

Set to open in November, the $6 million exhibit will provide “up-to-date, accurate” information on the science of global climate change, and is intended to “satisfy the interests and needs of those who accept that human-induced climate change is real, those who are unsure, and those who do not,” said a museum representative in a statement to the press.

According to report by Reuters, the museum’s director, Professor Chris Rapley told the press, “The scientific community has, with some exceptions, concluded that climate change is real, largely driven by humans and requires a response. Our objective is to minimize the shrill tone and emotion that bedevils discussion of this subject.”

The previous exhibit was called “Prove It! All the evidence you need to believe in climate change,” which closed last month. That exhibit featured a poll which shoed that many of its visitors did not believe the scientific evidence behind human-caused climate change. Late last year, after email messages from a British university were released by hackers and latched onto by skeptics who felt they showed that global warming was largely exaggerated, the scientific data was called into question. When an erroneous statement about the Himalayan glaciers melting by 2035 was released in January, shortcomings of the U.N.’s panel of climate scientists were made public. The result was a call for reform from the panel, and the creation of the new Climate Science Gallery.

Other sponsors of the new gallery are Germany’s Siemens, the Garfield Weston Foundation and Britain’s Department for Environment, Food and Rural Affairs.

Other news this week from the London Science Museum is its restated commitment to reducing its carbon footprint.