Monthly Archives: August 2014

To File or Not To File – An important Insurance Question

If Bill Shakespeare were alive today and writing about the destruction of MacBeth’s Castle, Cawdor, he might have penned his famous lines as “to file or not to file” – an insurance claim, that is. It may not be a problem on the scale of Hamlet’s, but it is a question that plagues a lot of folks today and simple answers are not easy to come by for most people.

Why not file an insurance claim when the general point of insurance is to manage risk, limit loss and make the policyholder whole? Well, the problem with risk is that it changes with experience. If you have a loss – say an article stolen from your yard – you may see it simply as an unfortunate event while the underwriter at an insurance company may view the loss as an indication of your propensity to leave valuable items lying around unprotected. From that perspective, what the underwriter sees is an increased risk of loss and an increased risk of loss is inclined to mean an increase in premium.

Depending on where you live and who you believe, one claim may not greatly impact your premiums. Some authors contend that a single claim is unlikely to impact your rates, except for claims like dog bite which may clearly signal an underwriting issue. Other national surveys seem to indicate there is a demonstrable increase in premiums following a claim and that the increase varies by state. In Texas, for example, a single claim on your homeowners insurance will not result in an increase in premiums and that is by regulation. In other states the situation differs, sometime markedly. Observed increases in New York, Massachusetts and some other states are low – below 10%; increases in Maryland and Minnesota average about 20% after a single claim. Washington home insurance  premium increases are about in the middle of the pack – 13%.

Whether your premiums increase, and how much, may also be a function of your insurer, the length of time you have been a policyholder and the type of claim. One prominent insurer representative says “if you haven’t been with (insurer) for as long as nine years, you’ll start to see your premiums increase if you have a qualifying claim.” Weather related claims are exempted from this policy for this insurer and others which further underscores the notion that the increase in premiums is related to the underwriter’s perception of increased risk. The underwriters are concerned with homeowners who file claims for damage caused by faulty plumbing and fail to make proper repairs.

So, if weather related claims are less likely to affect your premiums, what claims are most likely to raise them? The answer, logically, are those most related to incidents a policyholder can control. These include dog bite claims, water damage and slip-and-fall claims. Each of these may be an indicator the homeowner is not holding up their end in managing potential risks.

What can help? Take the largest deductible you can afford. Not only will it help keep your premiums down, but having a high deductible will keep you from presenting small claims that may adversely affect your premiums. You can also check with your insurance agent for advice on filing. Their experience in working with individual insurers can be invaluable in deciding whether to file or not.

Oh, and if you are MacBeth and a busted pipe floods your finished basement or your castle goes up in flames, don’t hesitate to file a claim. The claim will give you the money to repair the damage and will greatly outweigh any potential increase in premiums. And that, of course, is the point of insurance.

Boeing and the Peninsula Connection

It was just a little mention in the Seattle Times on Monday, July 15, 2013 but it gave us a few minutes pause to think about the history of Boeing in Washington and its present day impact on the Peninsula.  The mention was simply a “This Day in History” note that on July 15, 1916, Boeing was incorporated in Seattle as the “Pacific Aero Products Co.”  A little research did the rest.

William Boeing was a wealthy man at the time.  He came from a well to do family and was educated in Switzerland and at Yale.  He invested in forest lands around Gig Harbor in the early years of the twentieth century and had bought a boat building facility on Lake Union in 1910.  His interest in planes evidently developed after taking a ride with some barnstormers and he bought a plane for himself – a Martin trainer.  After cracking it up, he discovered it was going to take a while to fix and decided, with a friend, they could build a new one faster than the old one could be repaired.  

He had ample supplies of wood and skilled labor at his boatbuilding operation, so with his friend, Conrad Westervelt they set out to make the first Boeing product a seaplane trainer that they named the “B & W” after the initials of the two designers.  Made of wood, linen and wire, the B & W improved on the Martin trainer by adding better pontoons and a more powerful engine.  It was completed in June of 1916 and on June 15, 1916 William Boeing took the craft called Bluebill on its first flight.  Only two B&W’s were built and they were sold to New Zealand in 1918 after the U.S. Navy had refused to purchase them.  One B&W set speed and altitude records in New Zealand.

Boeing went back to work on the plane that would become the Model C, also a seaplane trainer.  This model was much more successful and the Navy ordered fifty of them.  The Pacific Aero Product Co was renamed the Boeing Airplane Co. in 1917 likely reflecting the fact that William Boeing owned 998 of the 1,000 shares of the company. This and many other factoids can be found on a chronology of the Boeing Company

The Boeing Company has made a huge impact on the lives and fortunes of western Washington; the company and the region have been tied together for nearly 100 years.  One development near and dear to our hearts here on the Peninsula was not in the aerospace business, but in their support for the interests of their retirees.  The Boeing Bluebills are a community institution on the Olympic Peninsula. 

Technically, Bluebills is a name for the Boeing retiree’s organizations in the Puget Sound Region.  They were established in 1995 and named – as you might guess – after the plane built by Bill Boeing and Carl Westervelt.   Ccllectively, the Bluebills provide almost 100,000 hours a year of volunteer services around the Puget Sound region.  

The Peninsula Chapter of the Bluebills was established in 1998 and has been a force in our community ever since.  Bluebills here work on projects that help to keep members of our community living independently.  They install wheelchair ramps and railings, put in grab bars and widen doors for ease of access to help people live safely and independently.  They also work with service agencies in the area – like Dove House – and they partner with other agencies to provide a Christmas for women and children in Domestic Violence and Sexual Assault Programs in Kitsap, Jefferson and Clallam Counties.  Bluebills also provide a link to World Vision working with them to move donated supplied from World Vision to eligible organizations in our area – schools and nonprofit organizations all across the Peninsula. 
The Bluebills are a great local organization and we salute them for their service to the community.

Don’t Overlook Renters Insurance

The majority of homeowners purchase insurance for their homes.  This is often a requirement that comes with a mortgage so it is not surprising that percentages would be high.  Landlords can require renter’s insurance as part of a lease agreement, but this is not so common, which may account for the fact only about 35 percent of renters have renter’s insurance, according to a poll conducted for the Insurance Information Institute. 

Here in Jefferson County, Washington the 2010 census found we had 3,616 renter-occupied places – about 24% of county dwelling places – and at that we are below the state average of 36%.  If you do the math that means it is likely there could be about 2750 uninsured renters here.   Young renters are even less likely to be covered than older renters and if they have little savings may be at great risk for loss; seniors who rent more frequently have renter’s insurance but they may also have a lifetime of accumulated assets they need to protect.  Still, the rate of insurance for seniors barely tops 50%.  

When asked why they do not purchase renter’s insurance, there are a number of common responses that reflect a real lack of understanding of the costs and benefits.  Over half of renters without insurance reported they didn’t think they could afford it.  In fact, while prices fluctuate according to the coverage selected, a National Association of Insurance Commissioners study found the average cost of a renter’s insurance policy was only about $15 per month.  Nearly 20% of renters without coverage said they didn’t believe renter’s insurance was important.  Catastrophes are always those things that happen to other people, but if you look at the risk, there are 374,000 or so house fires every year in the US and while property crime has been declining, there are still 9 million property crimes a year.  Clearly these events are happening to someone.  Another 15% or so of renters assume they are covered by their landlord’s insurance and don’t believe they need renter’s insurance.  The fact is, a landlord’s insurance generally covers damage to the building, not a renter’s belongings.  If your rented home goes up in smoke, your goods are not protected.  A renter’s insurance policy covers personal items that are lost due to fire, smoke, wind, hail, theft, vandalism and, in some instances, even water damage. You may also be able to obtain liability insurance that would cover you for any guest injured in your home or for damages to the building that you may cause.   

There are decisions to make.  How much coverage to purchase and the size of the deductible you choose will have an impact on premiums.  There are online tools you can use to assess the value of your stuff that will help you determine the amount of personal-property coverage you need.  If you are just starting out and buying your furniture at Goodwill you can consider a limited coverage; if you are a high end shopper buy more coverage and if you own particularly valuable items like jewelry, electronics of video equipment consider supplemental insurance in the form of a rider or floater to cover value beyond the policy limits.  

A renter’s insurance policy does not cover everything and it is important to read your policy carefully or seek good advice before purchasing.  Insurance policies in general will not cover flood damage and if you are living in a college dormitory, hotel or executive housing, you should be aware that temporary living situations are not covered by renters insurance. Finally, in your planning, remember your deductible.  If you have a $250 deductible and have your $500 laptop stolen, you can expect only a $250 check.  

If you need help with a renter’s insurance policy – whether it is advice on coverage, deductible questions or a quote – call us here at Homer Smith Insurance.  We have the experience to help you make informed choices.  

Wine, Wine, Wine!

So, you say that some of your liquid assets are really liquid, as in bottles of fine Bordeaux or that case of Leonetti you have laid away in the cellar. If you are an oenophile or even just someone who has managed to squirrel away a few bottles of expensive wine, you’ll be happy to know that you can purchase a standalone wine insurance policy to manage some of the risks associated with an interest that can be both pleasant and expensive.

If you don’t know how expensive wine can get, take a look at this article on the “12 Most Expensive Wines Ever” from the Huffington Post.  It pictures wines ranging from $24,000 to $304,000 a bottle. Clearly, your Washington homeowners policy is not going to cover your risk here and if you have an expensive collection it may be worth your looking into a policy. 

The experts say that anyone with a collection worth more than $25,000 or having single bottles valued over $1,000 is probably a candidate for wine insurance.  The general figures for premiums run from a high of $.70 per $100 worth of value to a low of $.20 per $100 – depending on factors such as the size of the collection, security and quality of storage.  

What are the risks?  It turns out that the majority of claims for wine come about through storage failures – refrigeration generally.  Theft and water damage are also significant sources of claims; perhaps it is not surprising that breakage is a relatively infrequent event accounting for less than 5% of claims. 

A wine insurance policy should cover accidental breakage (but maybe not the accidental breakage that occurs if your teenage throws a party in your wine cellar) theft, fire, and water-related damage and particularly and loss or damage caused by mechanical breakdowns of refrigeration equipment or power outages.  Nice to have features include coverage for wines stored off-site, damage to wine in transit, immediate coverage for new purchases and blanket, rather than itemized, coverage..  You can obtain policies with or without deductibles and, as you would expect you can adjust your premiums some by selecting a level of deductible.  

Coverage is pretty affordable given the costs of the wine.  Based on a midrange estimate of $.50 per $1000 of coverage, a collection insured at $250,000 would cost roughly $1,250 a year to insure

Home Security and Insurance

Insurers offer discounts either as a means of encouraging people to be more careful or to reflect their existing efforts to mitigate their risk; helping prevent claims lowers premiums in the long term. The efforts you take to secure your home against risks can often result in discounts to your home insurance premium.

Some aspects of home security are built in to your housing choices. For example, if you live in an area of high crime or vandalism, you may expect that to be reflected in premium costs. Conversely, living close by your local fire department may result in some reduction in your premium. It is pretty easy to understand why this might be the case. There are an estimated 374,000 home fires a year resulting in over $7 billion in losses. Anything you can do to prevent fires, or identify and respond to them quickly can be helpful in reducing losses and some efforts may translate into credits or discounts. .

There are similar benefits to protecting your roof from damage. In our part of the State, hail is less a concern for your Washington home insurance than wind, but the roofing industry is producing more impact-resistant roofing materials and some insurers have begun to offer rate discounts to homeowners as an incentive to invest in roofing that is resistant to being blown off as well as damaged by impact.

Automatic detection devices of various kinds can also qualify you for discounts on your insurance premiums. Smoke detectors and alarms have been around for a long time and these systems together with early response systems like sprinkler systems are valuable in reducing the cost of claims from fire. Home security systems ranging from deadbolt locks to alarm systems and 24-hour monitoring or security guards may impact your premiums as well, although at the higher end of this effort, premium reductions likely only offset the costs of implementation.

More recently, new types of sensors have reached the market which can reduce the probability of harm from water damage and gas leaks.  There are passive water sensors available that test for the presence of moisture and sound an alarm when water is detected. A more expensive variation is a sensor that actually turns off the water source when a leak is detected. Gas detectors are generally passive – like a carbon monoxide detector but whole house systems can be installed.

If you need help understanding how these home security investments may impact your home insurance premiums, give us a call at Homer Smith Insurance. We can help you find out which investments may bring a return on your home safety and your home insurance bill.